COP texts are always an exercise in compromise and the final text from COP30: Global Mutirão: Uniting humanity in a global mobilization is an impressive display of tightrope walking. Nowhere is this more evident than the passage on trade.  

The final text states that “measures taken to combat climate change, including unilateral ones, should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade” with parties agreeing to hold three annual “dialogues” on trade at the Bonn meetings in 2026, 2027 and 2028. 

The main source of friction was Carbon Border Adjustment Mechanisms (CBAM) and their adoption by the European Union and United Kingdom. For defenders of CBAMs, the instrument  is either a measure that aims to drive investment in decarbonising the production of materials like steel and concrete. The international impacts of CBAM have already been significant – it is notable how countries including China, India, Brazil and Turkiye have responded to the CBAM by bringing forward plans to add steel to domestic emissions trading schemes. 

It isn’t all good news though. Those same countries have vigorously attacked CBAMs as an attempt to protect markets in Europe from competitors based in emerging economies. Effectively imposing a global carbon price and setting it at levels which don’t recognise historic emissions or relative levels of industrial development has been decried as imperialistic and a barrier to a just transition.  

Finding a way out of this seemingly intractable dispute won’t be straightforward – and probably won’t happen if it becomes a discussion solely about the rules governing trade. As Carbon Brief highlighted the EU “feels strongly” about the ways trade measures support climate action, but also developing countries have “real concerns” about how those measures play out for their economies.1 

It’s worth noting that CBAM became a convenient distraction used by some of its opponents and supporters. For example, the Saudi Arabian delegation was quoted as saying that unilateral trade measures would “hinder [climate] ambition.”2 Almost as brazenly, the EU stood fast against all criticisms of CBAM even as it is locked in bitter internal negotiations about the future of the EU’s climate policy that could see an end to CBAM. 

Towards a more productive relationship between trade policy and climate action 

There are three things that Climate Group think could help smooth the way towards an agreement on applying carbon-based levies to international trade by focusing on climate finance, industrial decarbonisation and state support for these industries. 

  1. A clearer link between the revenues from carbon border adjustments mechanisms, and climate finance being made available to less developed countries. For those countries most exposed to disruption and least able to finance the transition, significant support needs to be made available to help speed up the adoption of more sustainable production methods. Governments imposing carbon border adjustment measures must ensure that the resources are available for less developed countries to take action to reduce their exposure to charges.
  2. International cooperation on industrial decarbonisation. There are promising signs. The recent agreement between ResponsibleSteel and parties in Europe and China3 links the majority of world’s steel production under global and regional standards for low-emission steel. This is an opportunity kickstart both supply and demand of lower emission steel.
  3. Address overcapacity and dumping. The deindustrialisation narrative has driven policy makers in Europe and North America to pay particular attention to the challenges facing steelmakers and other traditional heavy industries. Opponents of CBAM argue that the loss of jobs rather than concern for the environment is the real motivation behind CBAM. This may or may not be true, but what is undeniable is that overcapacity has massively depressed prices and, in many countries and sectors, exports are being used to prop up local production in the absence of domestic demand. 

This an issue where we cannot afford for disagreement to further delay action. Steel and concrete are essential to modern life and the decarbonisation of the global economy. But they also account for around 15% of global carbon emissions, with demand for both materials forecast to grow significantly. Put simply, without action to address the environmental impacts of steel and concrete, we stand little chance of containing global temperatures. As we look forward to the trade dialogues that were agreed at COP30, we need to ensure that the discussions focus on emissions reductions. That means finding ways to tackling the fairness concerns around CBAM by making finance available and addressing some of the structural overcapacity challenges in global markets for goods like steel which are fuelling emissions rises and making it harder to justify investment in new less environmentally harmful steelmaking technologies. 


Andrew Forth – Head of Policy and Advocacy