Few trade relationships will determine the pace and outcome of the global energy transition more than the world’s relationship with China and its manufacturers of clean energy technologies. The role of the Chinese state in the rise and dominance of its domestic producers across the solar photovoltaic supply chain embodies the country’s controversial but effective use of subsidies and other supports to promote the clean-economy industries China perceives as its future: electric vehicles, batteries, and solar. While other economies in the Group of 20 have sought to grow these industries in their own markets, several—including the United States—have done so in part by increasing tariffs on importers of Chinese-made clean energy products. These measures often accompany allegations that China has impermissibly subsidized such products and injured domestic producers in the nation imposing tariffs. To escape a climate-negative doom loop of trade conflict wherein geopolitical rivals raise barriers to each other’s green goods ever higher, this Note proposes a “Green Pact” among G20 countries. Taking lessons from China’s successful support of its solar photovoltaic manufacturers, a Green Pact would preclude retaliation against foreign green subsidies, encouraging members instead to support production of low- or zero-carbon energy-intensive trade-exposed goods and clean energy products. By making qualifying subsidies non-actionable, a Green Pact would seek to use trade tools to help, not hinder, a just transition, with benefits for least-developed countries and rich countries alike.

Continue Reading The Case for a Green Pact: How the Group of 20 Can Wield the Power of Green Subsidies Like China’s Solar Industry