This article is part of a Synergies series on climate and trade curated by TESS titled Addressing the Climate Crisis and Supporting Climate-Resilient Development: Where Can the Trading System Contribute? Any views and opinions expressed are those of the author(s) and do not necessarily reflect those of TESS or any of its partner organizations or funders.

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Reconciling climate ambition with climate justice is essential to combat climate change and its impacts. Climate justice—and indeed effective and ambitious global climate action—requires trade rules that support equitable development, low-carbon futures, and just transitions. To enable climate-resilient development and transitions towards low-carbon economies, developing nations need access to green technologies, investments, and markets.

From the perspective of developing countries, many trade policies appear to negatively impact their capacity to effectively pursue environmental transitions. The securitization of global trade and the resulting emphasis on the geopolitical interests of powerful countries or blocs, for example, may weaken global supply chains and narrow access to green technologies, reinforce power asymmetries, and undermine multilateralism and regionalism efforts in developing countries.

While trade-related policies such as the European Union’s Carbon-Border Adjustment Mechanism (CBAM) aim to position it as a global leader on climate action, African and other developing countries question its compliance with the Paris Agreement and perceive it as a potentially protectionist trade policy. Research suggests that African countries could lose up to $25b annually as a direct result, and that the proposed amendments may not always stand to benefit African exporters. And although the EU had economic partnership agreements with African countries prior to the African Continental Free Trade Agreement (AfCFTA), it continues to pursue fragmented bilateral deals that undermine Africa’s continental integration agenda and weaken the coherence of regional trade strategies.

Another illustration is the International Maritime Organization’s recent (contentious) agreement for a fuel carbon emissions tax on shipping, set to kick in only in 2028, which falls far short of the carbon levy developing countries had hoped for that could have funded low-carbon transitions, adaptation efforts, and capacity building in the most climate-vulnerable countries. In addition, mechanisms such as investor-state dispute settlement (ISDS) present a significant barrier to climate-aligned trade and investment policy. ISDS provisions in international investment treaties can often undermine African countries’ policy space to regulate in the public interest and advance green industrial strategies.

Yet in discussions on how climate justice and climate ambition can be bridged amid geopolitical tensions and in a fragmented trade landscape, there are opportunities for African countries, including through scaling regional trade.

The intersection of trade and climate policy has become increasingly salient in global discussions on sustainable development. This heightened attention is occurring as we progressively shift from a normative interest in climate change issues to one where there is growing interest in using climate ambition as an opportunity for real economy investments. Meanwhile, global trade is taking place in the context of a broken World Trade Organization (WTO), with a definite move away from core principles of non-discrimination and cooperation to increased geopolitical and economic self-interest among certain large trading partners.

A number of advanced and emerging economies are using fiscal stimulus measures, subsidies, and a range of policy tools, including trade policies, to align climate ambition with domestic green industrial growth, thereby seeking to reconfigure the rules of global economic engagement. There is a rush to gain (green) industrial advantage—especially as a means to counter the threats emanating from China’s dominant position in global production and trade in green industries, developed over the last decade on the back of combining fiscal expansion, industrial capability, technical knowledge, subsidies, capture of green technology markets, control over critical minerals, and dominance of supply chains. Meanwhile, the United States’ recent decision to once again withdraw from the Paris Agreement further erodes global trust and weakens multilateral climate cooperation, raising concerns about the consistency of developed countries’ commitments to the climate-development agenda.

Yet a fractious global trading system also invites realignment and the emergence of new opportunities. South Africa’s G20 Presidency, despite the enormous external constraints it faces in reaching consensus, presents an opportunity to establish a framework for trade policy that is more suitable for simultaneously managing climate risks and energy transitions. Indeed, with the G20 being hosted in Africa there is an opportunity to foster a more balanced outlook, bringing together issues of climate risk, just transitions, and the need for green industrial development as part of a long-term vision to advance increased economic diversification on the continent.

Urgent attention should be given to states that are highly vulnerable to climate impacts—on their trade and economies)—that risk being further sidelined by measures such as CBAM, which, as it stands, departs from UNFCCC principles of just transition and common but differentiated responsibilities and respective capabilities and risks exacerbating inequalities within Africa. To avoid such negative consequences, the policy—which has the potential to be a decarbonizing trade tool— should be carefully implemented through a multilateral approach consistent with these principles. Indeed, there are calls for using CBAM revenues to support green transitions in low-income countries. It is also important, however, to support green transitions in those states that are highly dependent on fossil fuels for their coffers. The question here is how can trade policy be used as a tool to foster climate-resilient development and economic diversification? It is worth emphasizing that diversification is key to both economic and climate resilience. 

There are several linkages between the trade and climate regimes, typically dealt with under Article XX of the WTO framework. However, since the Appellate Body of the WTO is now defunct, there is no authoritative overview of Article XX exceptions and legal ambiguity prevails, including in relation to environmental trade measures. This can result in a chilling effect on climate regulation, not least for developing countries which fear retaliation for environmental measures they may adopt. Developing countries are disproportionately affected, weakening confidence in the multilateral trading system and stalling just transitions.

In this context, regional initiatives such as the AfCFTA offer an opportunity to reimagine trade as a development tool with a pro-social outcome. By boosting intra-African trade and resilience, the AfCFTA can help unlock new pathways to economic security, food sovereignty, and climate adaptation. In a global environment where consensus around climate-trade policies seems impossible to achieve, regional trade agreements and coalitions may offer more promising ways forward. 

While navigating the fragmentated geopolitical landscape, African countries must deepen intra-African trade in climate-resilient goods and services in priority sectors such as agriculture and food systems or energy. Strategic partnerships—rooted in development priorities rather than extractive relationships—can build long-term economic resilience.

In relation to green technologies and industries, there has been much more focus in trade policy on climate mitigation aspects rather than adaptation. There may be room—and this needs to be explored further—to build in adaptation measures in trade agreements to support climate vulnerable and poor countries' key industries from extreme weather effects. For example, Mozambique is emerging as a potentially significant player in the global critical minerals market and is also disproportionately vulnerable to the negative impacts of the climate crisis, limiting its fiscal space and ability to respond to and also embark on green transitions. There is research and policy work to be done to explore how trade policies could support Mozambique’s adaptation and resilience efforts, a critically overlooked and underfunded area.

Safeguarding developmental gains, prioritizing regional integration initiatives, and diversifying supply chains to achieve climate resilience—especially in trade and investment protocols—is something that the Global South and developing countries should prioritize. 

Initiatives like the African Climate Foundation’s Green Industrial Development Experts Panel (GIDEP) reflect a growing appetite for homegrown solutions. GIDEP promotes green industrialization as both a development strategy and a climate solution, demonstrating African leadership on sustainable trade policy. The initiative is attracting huge interest because one of its key goals is to provide a coordinated and regional approach within Africa to deal with green industrial development. 

The AfCFTA’s Investment Protocol also provides the opportunity to facilitate regional value chains and intra-African investment flows and support for trade in environmental goods and services. There are many green business opportunities for Africa, especially in key sectors such as renewable energy, agriculture, waste management, and manufacturing. This could tie in well with the establishment of country platforms across the continent that bring together development partners, donors, private sector actors, and other stakeholders to streamline investment in the country’s national development goals aligned with climate justice. 

While the new context—marked by self-interest and a failure in global leadership—certainly contains much uncertainty and risk, it also presents an opportunity: to insert the vision for green and climate-resilient solutions that did not feature strongly within past trade frameworks. There is a need for new thinking and more equal relationships between the Global North and South, and when this turbulent period settles, we can put on the table a new trade and climate dispensation; one that honours climate ambition and supports low-carbon and green transitions across industries while upholding principles of cooperation and justice, such that developing countries are not left behind but supported on their journey.

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Saliem Fakir is Founder and Executive Director of the African Climate Foundation.

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Synergies by TESS is a blog dedicated to promoting inclusive policy dialogue at the intersection of trade, environment, and sustainable development, drawing on perspectives from a range of experts from around the globe. The editor is Fabrice Lehmann.

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