At home, protectionist policies slow clean energy deployment. For instance, China produces about 4 in 5 solar photovoltaic cells and modules. According to one study, if countries require domestic manufacturers to supply a growing share, by 2030 solar module prices will be 20 to 25 percent higher than in a fully globalized scenario.
It was nice to hear about the agreement between Washington and Beijing on Wednesday to renew cooperation on climate. Still, the trade war with China, started by President Donald Trump and embraced wholeheartedly by President Biden, has probably already raised global greenhouse gas emissions. In 2022, China accounted for only 16 percent of U.S. imports, down from 22 percent five years earlier. Chances are, this number will shrink further.
Modeling by researchers in China, the Netherlands and Denmark found that global greenhouse gas emissions would rise by up to 1.8 percent if the United States and China stopped trading. This increase would be mostly driven by a jump in Chinese emissions and increases along the value chain in other Asian countries due to the shift of exports and imports to different markets and suppliers.
Consider the early days of the trade war: In 2018, China responded to U.S. tariffs by raising barriers against American soybeans. U.S. exports to China tumbled. Brazilian soybean exports picked up the slack. And rainforest deforestation — fueled to a great extent by demand for soybean acreage — reached its highest level in a decade, adding to Brazil’s greenhouse gas emissions.
“The Amazon rainforest could become the greatest casualty of the U.S.-China trade war,” wrote a group of alarmed scientists from the Karlsruhe Institute of Technology and the University of Edinburgh.
The Inflation Reduction Act and the Bipartisan Infrastructure Investment and Jobs Act have devoted hundreds of billions of dollars to deploying electric vehicles, solar and wind energy, and other clean-energy systems. Their incentives for cutting-edge technologies, such as green and blue hydrogen, carbon capture from the air and clean jet fuel, could also accelerate decarbonization around the world.
Technology diffusion will make the climate transition cheaper in rich and poor economies alike. Research and development travel along value chains, pushing innovation across trading partners. One study estimated that the carbon price required for a given amount of CO2 reduction would be 16 percent to 47 percent cheaper in a world with knowledge diffusion than in a fragmented world.
The White House’s protectionism, then, threatens not only to make the U.S. decarbonization path more expensive but also to undermine the global progress its environmental policies might otherwise spur. If everybody follows the U.S. example, the energy transition would become costlier and less ambitious. To hit global climate targets, the world needs more international cooperation, not less.
The United States once understood this. The domestic content and labor standards the Inflation Reduction Act imposes on, for example, subsidies to electric vehicles represent a sharp break with Washington’s past opposition to protectionism. That opposition made sense. U.S. exporters would be hurt if other countries followed Washington’s lead. Frustrated by some of the Inflation Reduction Act’s trade restrictions, European leaders are talking about imposing similar protections. Washington’s policies could fracture the bits of the world order that the United States would rather preserve.
The Biden administration’s protectionism comes with some plausible benefits: Come 2024, subsidies to create green jobs and industries might help the president in battleground states. They might also protect climate policy from a future Republican administration seeking to undo it. Some of the other goals are more dubious, though. Despite the protectionism, the Labor Department still projects a 1 percent loss in manufacturing jobs between 2022 and 2032.
The Biden administration has reasonable concerns about U.S. dependence on China for the minerals needed for the green transition, about ensuring that imported Chinese solar equipment was not made by forced labor and about preventing China from acquiring sensitive technologies. But Mr. Biden should proceed with a clear sense of the trade-offs. Promoting “friendshoring” — deriving more lithium, say, from friendly nations — should be a priority when addressing reasonable concerns about Chinese supply chains.
Fighting climate change requires the best green-energy technologies be deployed quickly and widely. For the sake of the planet, the United States should seek to keep global exchange as open as possible.
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