Executive Summary: Climate Clubs as a Lightning Rod for Tensions in Trade and Industrial Competitiveness

Overall, however, there are tremendous opportunities. With the Inflation Reduction Act in the US, a race seems to have begun between major industrial powerhouses, the United States, the European Union, China and increasingly India, to seize these opportunities through ambitious industrial policies. At the same time, the COVID-induced supply chain crisis of 2021/22 and the Russian assault on Ukraine have contributed to a push to secure and relocate key strategic supply chains under the banner of industrial policy. Consequently, concerns have been raised that these two developments are leading to the introduction of protectionist measures that may ultimately harm global decarbonization.

While it is clear that we will need an innovation race to build green industries to support the global transformation, we need to ensure that this race takes place under fair conditions and in a spirit of international cooperation rather than cut-throat competition. In this transatlantic online workshop, we explored options for facilitating a fair distribution of opportunities. In particular, we looked at the role of climate clubs.