Trade Tools for Climate Action

For decades, the world has witnessed explosive growth in the volume of international trade and the level of greenhouse gas (GHG) emissions. Those two trends have long been linked, with the rise of international trade contributing significantly to climate change, as the production and transportation of an ever-increasing number of goods has required a parallel increase in the burning of fossil fuels. The World Trade Organization estimates that those traded goods contribute 20–30 percent of all GHG emissions. More recently, however, many analysts of international trade and the environment have begun examining the flip side of that coin—the ability for trade and trade policy to help address the climate crisis. 

While GHG emissions affect the entire planet, just a handful of countries are the primary emitters. Today, the United States, China, and the European Union are the leading producers and exporters of traded goods, capturing more than two-thirds of global gross domestic product. North America (largely the United States) still accounts for one-third of global emissions, with the European Union trailing not far behind. China only recently surpassed the United States as the largest annual GHG emitter, accounting for one-quarter of total emissions, though it became the world’s largest exporter of goods long ago. If those three GHG emitters could work together to decarbonize, it would go a long way to supporting a healthier environment and sustainable future. Furthermore, as demand for low-emissions goods—such as electric vehicles and sustainable construction materials like bamboo and energy-efficient insulation—increases, there is an added incentive for all to invest in the green transition and to lead the production, research, and development of environmental technologies.  

The geography of emissions also shows that all countries have a part to play in improving climate outcomes, with both supply- and demand-side factors driving the growth of carbon emissions. In fact, there is an East-West divide in C02 emissions embedded in trade, with Asia and eastern Europe as net exporters, and the Americas, Western Europe, and some parts of Africa as net importers. This is often referred to as consumption-based emissions, and unsurprisingly, wealthier countries tend to account for higher amounts of C02 consumption.  

In recent years, governments around the world have been faced with a host of problems rooted in climate change: severe weather events, population displacement, drought, and biodiversity loss, among others. Those problems are evident domestically, too. In the United States, wildfires, floods, droughts, and hurricanes have taken a significant toll on the daily lives of Americans. Some people have been displaced by these natural disasters, such as the recent L.A. fires, and are joining a growing movement of climate migrants. The U.S. Climate Vulnerability Index takes a variety of factors into account when ranking the susceptibility of U.S. states to climate impacts, such as extreme events; social, economic, and health indicators; infrastructure challenges; and pollution. The bottom line: every American is affected in some way. 

The scale and urgency of addressing the climate crisis is resulting in new efforts to find solutions. The purpose of Trade Tools for Climate Action is to focuses on developing trade-related climate policies for the United States and to shed light on the ways in which trade can support decarbonization around the world. The project’s analysis zeroes in on where investments in the United States would be practical, politically feasible, and make the greatest contribution to fighting climate change. Whether through incentivizing decarbonization, investing in environmental-technology innovation, or greening the trade rules, Trade Tools for Climate Action presents a range of ways both citizens and the government can be informed and take action on one of the most critical global issues. We invite you to explore our research and be part of the conversation.  

Trade Tools for Climate Action is a project codirected by Jennifer A. Hillman and Inu Manak, in collaboration with Georgetown University Law Center’s Center on Inclusive Trade and Development.