Home > Opinion > Columns

Why climate must be at the core of global commerce

Published: 24 Feb. 2025, 00:01

Chung Keeyong

The author is an ambassador and the deputy minister for Climate Change at the Korean Ministry of Foreign Affairs.

Trade and climate policy are at a crossroads as economies grapple with rising emissions, shifting industries and urgent sustainability needs. With extreme weather intensifying and geopolitical tensions escalating, the decisions made today will shape the resilience, competitiveness and sustainability of the global economy for decades to come.

According to the Copernicus Climate Change Service, January 2024 set a new record for global temperatures, with the air surface temperature averaging 13.23 degrees Celsius (55.8 degrees Fahrenheit) — 1.75 degrees Celsius above preindustrial levels. This milestone prompted UN Secretary-General António Guterres to declare that "the era of global warming has ended; the era of global boiling has arrived." For the first time, the global annual average temperature increase exceeded 1.5 degrees Celsius, a longstanding warning of worsening climate impacts.

Wildfires in California and floods in Spain have displaced communities and strained infrastructure. These disasters are reshaping economies, food security and migration patterns worldwide.

Scientific assessments indicate that limiting warming to 1.5 degrees Celsius requires emissions to peak before 2025 and decline 43 percent by 2030, compared to 2019 levels. However, current trends suggest the world remains off track, increasing the cost and difficulty of the transition.

International climate cooperation also faces setbacks. The United States' recent decision to withdraw again from the Paris Agreement, along with uncertainty from other nations, raises concerns about global climate action. This has led to a collective action dilemma, where countries may question adhering to their Nationally Determined Contributions (NDCs) if major economies step back.

At the same time, advances in AI, cloud computing and EVs are pushing global electricity demand to new heights. By 2030, global data center power demand could rise by 165 percent, according to Goldman Sachs Research.

Trade and energy markets are evolving due to economic nationalism, resource competition and shifting industrial policies. The U.S.-China rivalry has deepened divisions, affecting tariffs, export controls and subsidies in key industries, with implications for clean energy supply chains.

For developing economies, access to financing, technology and infrastructure remains constrained, making clean energy transitions difficult. Without improved capital accessibility, they risk being locked into fossil fuel dependency while others decarbonize — creating a two-tier transition.

Global instability further complicates cooperation. Conflicts in Ukraine and Gaza have disrupted energy markets, destabilized supply chains, and diverted financial and political capital from climate efforts.

A path forward: Strengthening climate-trade synergies
An open letter from The Elders, including Ban Ki-moon, calls for reforming climate negotiations with greater transparency and continuous engagement beyond the annual Conference of the Parties (COP) summit hosted by the United Nations Framework Convention on Climate Change (UNFCCC). While COP remains important, its slow and reactive nature has hindered progress. Instead of being the sole venue for broad negotiations, COP could serve as a clearing house for year-round, topic-focused dialogues.

Traditional forums like BRICS, the G20, IPEF and APEC play a role in shaping climate and trade policy. However, geopolitical tensions and nonbinding commitments often limit effectiveness. A more agile, issue-based climate-trade initiative — including key stakeholders like the Republic of Korea — could align trade policies with climate action. Such an initiative could establish common frameworks for clean technology investment and energy security while ensuring trade mechanisms drive decarbonization rather than reinforcing carbon-intensive practices. While the World Trade Organization (WTO) provides a global trade framework, its institutional gridlock has hindered climate integration. A dedicated climate-trade initiative would fill this void, demonstrating how trade policies can accelerate climate action while preserving economic competitiveness.

Broadening carbon pricing mechanisms, such as the EU’s Carbon Border Adjustment Mechanism (CBAM), Emissions Trading System (ETS) and carbon taxes, could create a more level playing field for low-carbon industries, provided it does not unfairly burden SMEs. Article 6 of the Paris Agreement, which has begun implementation through cooperative approaches, presents an opportunity to link emissions reduction with trade incentives and green investment.

Upcoming global forums — including COP30, the G20 climate discussions and the APEC Summit in Gyeongju, North Gyeongsang — will be key to shaping trade policies that support carbon pricing, sustainable investment and climate-aligned trade frameworks. Elevating climate considerations in these discussions can drive more effective policies.

Technology and investment are central to the clean energy transition, but closing the development gap is critical. A well-coordinated strategy requires both industrialized and emerging economies to mobilize financial flows toward green infrastructure. Institutions such as the Green Climate Fund (GCF) and the World Bank play crucial roles. Expanding financing windows, streamlining approvals and enhancing blended finance models could unlock capital more efficiently.

Beyond financial flows and trade policies, real progress depends on countries leading by example and upholding climate action as a global public good. The clean energy transition is not just a climate necessity — it’s a multi-trillion-dollar economic opportunity. Global investment in renewables, efficiency and green infrastructure is projected to exceed $4.5 trillion annually by 2030, according to the International Energy Agency (IEA). Nations at the forefront of climate-aligned trade policies will gain a competitive edge, securing high-value jobs, stable supply chains and sustained growth.

The Republic of Korea has reinforced its role as a "green ladder," recently advancing initiatives in clean energy financing and technology cooperation. Korea has invested over $600 million in climate initiatives, including through the GCF, the Global Green Growth Institute and the Loss and Damage Fund. But no single country can drive this agenda alone. A truly effective transition requires greater ambition, sustained cooperation and the collective determination of all major economies.

The choices made today will define the future. Korea is ready to do its part, but real progress requires bold leadership and shared commitment. Climate action cannot be outsourced — it must be owned. The world must act, and it must act together.