Table of Contents

When speaking about climate change, it is necessary to differentiate between two types of response in policymaking. On the one hand, climate change demands a reorganization of societies and international relations as well as shifts in energy, production, and consumption systems. These fundamental transformations are ushered through by transition policies.

On the other hand, even if societies managed to transition tomorrow, past greenhouse gas emissions have locked the world into climate-related disruptions. This calls for adaptation and mitigation policies to rebuild institutional and ecological systems and craft responses that are better suited to dealing with a series of shocks that will accelerate in pace, intensity, and number over multiple geographies.

Transatlantic cooperation is essential for the design of both transition and adaptation strategies. In fact, climate action can provide a pathway for a renewal of transatlantic purpose in a world that is rapidly changing in the face of many structural challenges and accelerating disruptions.

Where the European Union and the United States Stand on Climate Policies

With its European Green Deal, the European Union (EU) is the first regional bloc to offer unequivocal and binding commitments on climate action, thereby breaking the quandary inherent to climate transitions: moving out of an energy and production model has high risks, so countries prefer to remain path dependent until others have paved the way for the transition and made it less expensive.1 By framing climate action as a path toward socioeconomic and political progress as well as renewal, the EU is in a position to shape new types of diplomacy and incentivize climate action across the globe with credibility.2

Olivia Lazard
Olivia Lazard is a visiting scholar at Carnegie Europe. Her research focuses on the geopolitics of climate, the transition ushered by climate change, and the risks of conflict and fragility associated to climate change and environmental collapse.
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In the United States, President Joe Biden plans to frame the transition as a catalyst for a renewal of the American economy and chart a new path for global leadership.3 In a welcome move, he has recommitted the United States to the 2016 Paris Agreement on climate change. He comes into office, however, at a time when doubling down on climate action is needed rapidly. The Paris commitments fall short in the face of an accelerating climate emergency, partly as a result of U.S. rollbacks on climate action and environmental protections.4 Yet, Biden faces a domestic political landscape in which both climate change and the U.S. global leadership style have played into destructive polarization,5 restricting his agency for rapid transformational action even though runoff elections in the state of Georgia secured him a Democratic majority in the Senate.6 The last U.S. presidential administration was a clear indicator of Americans’ rebuttal of the growing costs of unilateral leadership.

As the largest cumulative greenhouse gas emitter and a fundamental pillar of the rules-based order, the United States obviously needs to commit to climate action. But the country’s relative power decline means that Biden now needs to adhere to an international playing field in which leadership is more distributed among actors. In other words, the United States needs trusted allies. As a transition-committed partner, the EU has complementary strengths to offer the United States so it can move the needle on climate action decisively at the international level and avoid a domestic backlash.

Intentional and Strategic Cooperation

There is another impetus for stronger cooperation on climate change. Just as polarization is a defining feature of climate action in the United States, so too is the growing structural rivalry with China—a reality that the EU shares, albeit with a different approach to dealing with such competition.7 China’s growing power is not only a function of the size of its markets and politico-economic choices. It is also a result of Beijing’s ability to harness raw materials such as rare earths in such a way that Chinese production is now central to energy transitions, most notably in renewables and smart systems.

While China still powers its own economy mostly with energy from fossil fuels, it exports materials and technology to transitioning economies, which are therefore increasingly dependent on China for their political and economic transitions.8 This dependence on an authoritarian power creates dilemmas for the EU and the United States, to which they need to develop joint approaches. Both partners are becoming more vulnerable to this dependence, and the competition that stems from it, by dealing with it separately as a matter of energy security. The EU and the United States should instead explore how their differences in approach can generate a better way to navigate rivalries, cooperation, and competition. 

Climate issues have long been depicted as areas where soft-power cooperation can be productive in international relations. This interpretation fails to acknowledge the transitional aspects of climate change as well as the exposure to varying degrees of risk. Climate change demands and accelerates simultaneous political and economic transformations and changes in energy systems at the national and international levels. Power imbalances, political polarization, and economic inequalities play out within the race to net zero carbon emissions, not outside it. The climate crisis is thus not just a technical question; it is a systemic one.

Change has been a long time coming, but the race to zero is now a defining characteristic of geopolitical and power dynamics. Shocks and disasters are locked into this race. It is against this background that the EU and the United States should strategically and intentionally work on redesigning the transatlantic relationship to ensure mutual resilience and deliver on global public goods. The question of what resilience, security, health, and human rights should look like in this changing world will be a necessary continuous exploration to redefine the transatlantic relationship with adaptive purpose. To start with, though, the United States and the EU should explore specific points for immediate action and quick wins.

Leveraging Joint Economic Power to Incentivize Climate Action

The EU has been doing a lot of work on emissions-trading systems and is now moving into finalizing a carbon border adjustment mechanism (CBAM). This would counteract the risk of carbon leakage when companies transfer production to countries that are less strict about emissions by putting a price on imports of certain goods from outside the EU.9 China and the United States have historically proved refractory to such a tool. However, with an accelerating U.S. transition, there is an opportunity to investigate the co-design of a joint mechanism. This could generate quick traction on world markets and accelerate transitions across key emitting sectors. Ideally, the United States and the EU should seek to involve other partners, such as Japan, in this co-design process, with the aim to leverage the economic weight of countries committed to an effective transition across regions and turn distant pledges into immediate action.

The design of the mechanism is critical. It must include gradual implementation rather than raise abrupt barriers to trade that may end up splintering interdependencies and generating protective blocs.10 Instead, the system must create a market magnet, whereby those countries and sectors that want to export to the United States, the EU, and partner markets need to actively step up their short- and medium-term decarbonization ambitions. To ensure the CBAM yields results in that direction, it should be coupled with two propositions.

The first consists of climate justice and a transition stimulus. Revenues from the CBAM must be at least partly reinvested into a climate justice mechanism whose funds go into stimulating political and economic transitions in countries that need it. This would demonstrate that the CBAM is not an antagonistic trade measure but a true commitment to global public goods. Wealthy economies have so far failed to deliver on climate justice mechanisms.11 Using the CBAM to serve climate justice would generate greater buy-in.

The second proposition involves negotiating and monitoring specific short- and medium-term goals. While several countries, such as China, have communicated long-term goals on decarbonization, short- and medium-term goals are what will make the difference. The design of a joint CBAM can accelerate bi- or multilateral negotiations on the setting of such goals, providing the ground for clear benchmarks. In support of those objectives, CBAM architects could help other countries to stimulate production and economic activity in line with environmental, social, and corporate governance (ESG) standards—even when it means backing protectionist measures for the development of clean sectors. The EU has made strong headway with the revision of its ESG standards, along with a sustainable finance taxonomy that can accompany CBAM design.12 The United States and the EU should therefore explore ways to harmonize their ESG standards, and work jointly on making climate-related information disclosure compulsory for private sector actors.

Beyond market-incentivization measures, the EU and the United States can combine their efforts in key geographic areas of priority, particularly the Amazon. Biden has already mentioned he is thinking of imposing punitive economic measures on Brazil for its assault on this vital ecosystem.13 Yet, he currently lacks credibility and legitimacy, and he risks creating further backlash in Brazil. Moreover, the plundering of the Amazon has many causes in many countries. Economic sanctions would fail to tackle the complex drivers of deforestation, which are embedded in poverty, inequality, insecurity, and global market incentives. The United States needs help in tackling this complexity, which the EU can support. Both partners should play on complementary approaches.

The EU is currently in trade negotiations with countries in Mercosur (a South American trade bloc). France and Germany have voiced reservations about the proposed trade agreement over deforestation in the Amazon.14 If the negotiations go forward, the EU can work toward making an agreement conditional on stringent protection of the Amazon, revision of Brazil’s Forest Code, support for the rule of law, and application of ESG standards in the Mercosur region.15 Simultaneously, the EU and the United States should work together in approaching Amazon countries with a mix of support, ranging from payments for ecosystem services and debt-for-nature swaps to tailored economic and legal support as well as security support where it is needed.16 The CBAM would be a particularly important tool in the context of negotiations with Brazil.17

Pooling Resources for Mutual and Global Resilience

Cascading risks from climate change will unfold and intensify over the coming years. Because of the globalized nature of economic, political, social, and supply-side interdependencies, risks happening anywhere can reverberate quickly everywhere. In this context, it is essential to strengthen systemic security and resilience, as opposed to securitization. This requires pooling predictive and foresight capabilities, combining response resources, and developing new diplomatic approaches for resilience, adaptation, and development abroad.

The EU and the United States should cooperate on better understanding the nature and effects of climate-related risks. The EU has started by funding the Cascades research project, which explores how the risks of climate change in and beyond Europe might affect the continent.18 The EU can build on this type of initiative to identify how to cooperate with the United States on pooling further research and intelligence.

Moreover, the EU and the United States can jointly harness predictive early-warning tools to anticipate disasters and deliver preemptive information as a global public good. On the basis of this predictive analysis, the transatlantic partners should work on two areas.

First, the EU and the United States should reflect on how to partly repurpose the North Atlantic Treaty Organization (NATO) for predictive and responsive disaster management as well as environmental regeneration to the benefit of NATO members and partner countries.19 The EU and the United States would thus bolster the disaster preparedness and response role of the alliance. This is as much about shouldering the costs of disaster management, including in the United States, as it is about redefining security.

Second, the EU and the United States should design a preparedness diplomacy that is geared toward supporting vulnerable countries with resilience and mitigation. This is of particular importance in light of the way China’s Belt and Road Initiative builds its development proposition on transactional relations and the externalization of polluting industries.

The climate transition offers pathways for renewal at home in both the EU and the United States. It equally offers a pathway for renewal of the transatlantic relationship. This relationship must be designed for mutual benefit and global co-leadership. This does not necessarily translate into continuous alignment on all issues. The differences between the EU and the United States enable room for nuanced action, yet the transatlantic partners should adopt joint approaches when economic and political power can incentivize climate action without antagonizing other powers or countries.

To create meaning and value in international relations out of disruptions and shifting global structures, it is essential that the transatlantic relationship shifts from a culture of transaction to one of co-design based on commitment to fundamental values. A renewed transatlantic relationship must pursue a joint commitment to global public goods and seek to generate resilience and security at home and abroad.

 

Notes

1 “A European Green Deal,” European Commission, https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en; Tim Harford, “Climate Change and the Prisoner’s Dilemma,” Financial Times, January 24, 2020, https://www.ft.com/content/5312691c-3d3c-11ea-b232-000f4477fbca.

2 Lorna Hutchinson, “‘Europe’s Man on the Moon Moment’: Von der Leyen Unveils EU Green Deal,” Parliament Magazine, December 11, 2019, https://www.theparliamentmagazine.eu/news/article/europes-man-on-the-moon-moment-von-der-leyen-unveils-eu-green-deal.

3 “The Biden Plan for a Clean Energy Revolution and Environmental Justice,” Biden/Harris U.S. presidential election campaign website, https://joebiden.com/climate-plan/.

4 “Climate Change: Can Biden Make a Difference?,” The Real Story, BBC, https://www.bbc.co.uk/programmes/w3cszcnv.

5 Olivia Lazard, “The World Is Tackling Climate Change, With or Without America,” November 9, 2020, Carnegie Europe, https://carnegieeurope.eu/2020/11/09/world-is-tackling-climate-change-with-or-without-america-pub-83160

6 “How Climate Change Became Partisan and Weaponized | Interview with Dr. Michael Mann,” Academic Influence, November 11, 2020, https://academicinfluence.com/interviews/earth-sciences/michael-mann.

7 “The Sinatra Doctrine: How the EU Should Deal With the US–China Competition,” European External Action Service, August 27, 2020, https://eeas.europa.eu/headquarters/headquarters-homepage_en/84484/The%20Sinatra%20Doctrine.%20How%20the%20EU%20Should%20Deal%20with%20the%20US%E2%80%93China%20Competition.

8 Janka Oertel, Jennifer Tollmann, and Byford Tsang, “Climate Superpowers: How the EU and China Can Compete and Cooperate for a Green Future,” European Council on Foreign Relations, December 3, 2020, https://ecfr.eu/publication/climate-superpowers-how-the-eu-and-china-can-compete-and-cooperate-for-a-green-future/.

9 “EU Green Deal (Carbon Border Adjustment Mechanism),” European Commission, https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12228-EU-Green-Deal-carbon-border-adjustment-mechanism-.

10 Nikos Tsafos, “How Can Europe Get Carbon Border Adjustment Right?,” Center for Strategic and International Studies, August 7, 2020, https://www.csis.org/analysis/how-can-europe-get-carbon-border-adjustment-right.

11 Fiona Harvey, “Rich Failing to Help Fund Poor Countries’ Climate Fight, Warns UN Secretary General,” Guardian, December 9, 2020, https://www.theguardian.com/environment/2020/dec/09/rich-failing-help-fund-poor-countries-climate-fight-warns-un-chief-antonio-guterres.

12 “EU Taxonomy for Sustainable Activities,” European Commission, https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/eu-taxonomy-sustainable-activities_en.

13 Jake Spring, “Brazil’s Bolsonaro Slams Biden for ‘Coward Threats’ Over Amazon,” Reuters, September 30, 2020, https://www.reuters.com/article/us-usa-brazil-environment-idUSKBN26L2US.

14 “EU Conditions Ratification of Trade Deal With Mercosur: France and Germany Lead Objections,” MercoPress, September 22, 2020, https://en.mercopress.com/2020/09/22/eu-conditions-ratification-of-trade-deal-with-mercosur-france-and-germany-lead-objections.

15 “Brazil’s Forest Code Will Lead to Rise in Deforestation, Critics Say,” Yale Environment 360, December 19, 2011, https://e360.yale.edu/digest/brazils_forest_code_will_lead_to_rise_in_deforestation_critics_say?title=brazils_forest_code_will_lead_to_rise_in_deforestation_critics_say&id=3259.

16 “Payments for Ecosystem Services,” World Wide Fund for Nature, https://wwf.panda.org/discover/knowledge_hub/where_we_work/black_sea_basin/danube_carpathian/our_solutions/green_economy/pes/; “Debt for Nature Swaps,” United Nations Development Program, January 17, 2017, https://www.sdfinance.undp.org/content/sdfinance/en/home/solutions/debt-for-nature-swaps.html.

17 Jean Fouré, Houssein Guimbard, and Stéphanie Monjon, “Border Carbon Adjustment and Trade Retaliation: What Would Be the Cost for the European Union?,” Energy Economics 54 (February 2016): 349–362, https://doi.org/10.1016/j.eneco.2015.11.021.

18 “Cascading Climate Risks: Towards Adaptive and Resilient European Societies,” CASCADES, https://www.cascades.eu/.

19 “Climate Security Challenges for NATO,” summary report of the twelfth meeting of the Brussels Dialogue on Climate Diplomacy, September 17, 2020, https://static.s123-cdn.com/uploads/3692253/normal_5fb3c1c64e805.pdf.