In Dubai, more than 100 countries are calling for a phase-out of fossil fuels. We can do this if we build a new system for the global economy with binding commitments, starting with the EU and China.

As we write, negotiations are ongoing and more ambitious language is being discussed. But whatever text is finalised, it may not have the teeth it needs.

Colombia's Minister of Mines, Irene Vélez, born in 1984, told world leaders at the Dubai negotiations that when the government announced its intention to move away from fossil fuels and keep oil in the ground, interest rates went up and international agencies downgraded Colombia's credit rating. As long as the rules of the economy remain unchanged, we will continue to burn fossil fuels.

The leadership of the EU

2020 was a turning point. The international climate context changed. For the first time, the political will to act was taking shape. In just a few months, results were achieved that would have been unthinkable for 30 years. Much of the credit goes to the European Union. The EU, followed by other major economies, made unilateral and unconditional commitments (2030-2050) to climate neutrality, breaking the 30-year 'prisoner's dilemma' of the COP negotiating system. China's 'dual carbon' targets — to peak carbon emissions by 2030 and achieve carbon neutrality by 2060 — were formally set by President Xi Jinping at the United Nations General Assembly in September 2020.

von der Leyen’s strategic vision for an ecological economy

The Green Deal is central to the vision of von der Leyen's Geopolitical Commission. If successful, it can become the EU's new founding pact in a politically integrated continent. One of its strengths, as we shall see, is the integration of climate and environmental parameters into all EU sectoral policies.

Brussels, London, Washington and Beijing are integrating climate and sustainability into their international trade agreements (Brexit, CTA, US-EU agreement to reduce steel and aluminium tariffs). The blocs are building a "working modality and blueprint" for WTO reform that could accelerate the energy transition and the shift to a more sustainable, circular and resource-efficient economy, in line with the Paris, UN SDGs and biodiversity goals.

Policy and common standards for a “level playing field”

In this context, the novelty lies in the definition of common environmental and industrial standards that contribute to economic and market convergence and create a level playing field for all actors. Fiscal measures and price signals address market and competitive distortions, while economic factors change costs and investment decisions.

The COP has failed

All recent COPs have shown that, without a background of common policies and rules, it is virtually impossible to make decisions that go beyond the now-ritual reaffirmation of political commitments on climate change.

It is therefore necessary to 'align' industrial standards and policies with environmental climate change objectives. To ensure that climate protection is a tool for the growth and rebalancing of the global economy, we must bear in mind that different levels of development and 'carbon intensity' require different targets and measures for individual countries or groups of countries, as well-represented by the positions of the Brazil, China, India and South Africa group.

As things stand, no COP can hope for positive results unless developed and emerging countries commit themselves to a new framework of international relations based on mutual obligations and "competitive cooperation". In this perspective, COPs may be the place to set environmental targets for climate protection, but certainly not the place to decide on the necessary sectoral policies and rules. Climate change is moving much faster than political decisions.

Binding agreements and verification

We need to break out of the COP rituals, adopt an effective and fast-track negotiating process, and ask the world's major economies — within the framework of 'common but differentiated responsibilities' — to decide on rules and policies to tackle the climate crisis before it hits.

A global framework of cross-sectoral policies is needed, a new format for decision-making. Only coordinated action by all actors in the international community can ensure that such important measures are agreed and implemented. Responsibility for a global agenda on the economics and geopolitics of climate change must be shared by the highest representatives of governments and international financial institutions, including the major multinational energy and other strategic industries. This can be done along the lines of the Montreal Protocol to protect the ozone layer, "an example of outstanding international cooperation: probably the most successful agreement between nations," according to former UN Secretary-General Kofi Annan. Barbados President Mia Mottley's Bridgetown Initiative is essentially working in the same direction.

An EU-China platform for the green economy

As far as China is concerned, an alignment on climate and the environment would allow Brussels and Beijing to exploit the competitive advantages gained through smart policies on renewables and green technologies and the development potential inherent in the eco-economic transition, but also to better resist the pressures of the many actors — state and non-state — penalised by the ongoing industrial revolution.

While competing — fairly — among themselves, they would ensure that there is no "race to the bottom" imposed by trading partners who undermine the transition through their commitment to polluting technologies.

When it comes to energy and energy independence, the geopolitical interests of Beijing and Brussels — two net importers of fossil fuels — are closely aligned.

However, the differences between Europe and China remain deep and cannot be ignored.

If short-term electoral deadlines, national egos and growing geopolitical rivalries prevail over the need and urgency for multilateral management of the common interest, humanity will have very few cards to play.

Open to the world

The EU, with its Green Deal, can champion the design of a programmatic and operational platform for global decarbonization, in cooperation with the G20 group and the World Trade Organisation (WTO). With a long track record of constructive relations with China on climate and environmental issues, and as a natural ally of the United States, it has an opportunity to build the foundations of the future in the common house.

The EU and China are in the best position to build a platform to address the global climate challenge, building on their existing cooperation, policies and ongoing programmes on climate change, decarbonisation and the circular economy.

The environmental transformation of global economies is a matter of programme and project management and market design. In a recent project, I helped a French SME to integrate quantitative climate and environmental KPIs into the hierarchy of a digital twin, which becomes a system of supra-governance of processes with a full life-cycle perspective, integrating the dimension of time, and shifting the financial and investment logics from CAPEX to OPEX. The same has to happen in the governance of economic and trading systems.

Xie Zhengua signals cautious openness

It is possible. At the Dubai COP, the Chinese envoy signaled an openness to discussing more ambitious positions on fossil fuels. But, he warned, consensus would be needed at the end of the day to achieve a result within the process.

Enhanced cooperation is the only way forward for the EU, China and the US to move beyond the COP system and establish real climate action as a global industrial and economic governance model.

illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.