CBAM, which is set to go into effect at the start of 2026 once it is confirmed by the European Council and European Parliament, is a tariff on carbon-intensive imported goods like cement, iron, steel, aluminum, fertilizers, electricity and hydrogen. Through these efforts, the EU pushes cleaner production abroad and a decrease in carbon leakage. The agreement effectively urges governments to step up their climate efforts or risk losing competitiveness in the market, making the EU the global leader in sustainability. 

While the deal may seem like a step in the right direction, the developing world has expressed serious disapproval toward the tariff, arguing that the measure discriminates against poor nations that do not have the administrative capacity or climate regulations to comply with CBAM. For instance, India’s Finance Minister Nirmala Sitharaman denounced the tariff as “unilateral and arbitrary,” acting as a “trade barrier” to the fastest-growing economies. As a result, New Delhi notified the WTO of their plans to retaliate via a retaliatory tariff. 

The EU’s largest exporters in sectors covered by CBAM include Russia, Turkey, Ukraine, Norway, Iceland, Switzerland, Egypt and Morocco. However, some of these countries, particularly the EU’s trading partners with developing economies such as Mauritania, Sierra Leone, Mozambique, Bhutan and Jamaica, lack the economic and geopolitical power to impose tariffs. The GDP of developing countries is expected to decline between 1.4% and 2.4% depending on the final Greenhouse gas (GHG) price. As a result, their response will likely take the form of legal disputes at the WTO. 

Furthermore, CBAM can be viewed as a message to major economies and significant GHG emitters of the EU’s commitment to safeguard its domestic priorities. Zhao, Deputy Minister of China’s Ministry of Ecology and Environment, claimed China staunchly opposed any unilateral measures that increased costs. “China always respects multilateral practices,” he added. This perspective also anticipates retaliatory responses, such as potential trade conflicts. 

Researchers at the Swedish Institute for European Studies have expressed that expanding BRICS coalition could act as a counterbalance to the EU, potentially competing to shape the future global economic and trade landscape. Green protectionism can force countries to join cooperative partnerships that could reverse decarbonization efforts by encouraging less environmentally aligned economic interests. Consequently, addressing the geopolitical and geoeconomic challenges posed by the CBAM will be a crucial task for the EU. 

While impending trade disputes and wars pose a significant threat to the multilateral trade regime, the pressing urgency of the climate crisis makes it vital to not abandon the CBAM. Rather, the EU must ensure it accommodates the economic needs of developing nations to foster a less discriminatory and effective approach to global trade. 

The EU should adopt a carbon-pricing mechanism that goes beyond a direct carbon tax. It should include both explicit prices and other indirect measures that impact the cost of emitting GHGs, like taxes on fuel or cuts to fossil fuel subsidies. In short, it counts all the costs that make carbon-emitting activities more expensive, even if those costs aren’t labeled specifically as carbon fees. For many developing countries, direct carbon taxes or emissions trading systems are challenging to implement because they require significant resources, infrastructure and administrative capacity. However, virtually every country already has policies that indirectly discourage emissions, like fuel taxes or energy efficiency standards. It would also encourage a gradual transition so developing nations could build up their climate policies without facing immediate trade penalties. Reforms that reduce subsidies to fossil fuel consumption have taken place in many developing countries, such as Ghana and Sudan.

Lastly, the EU’s current CBAM doesn’t qualify as a “border carbon adjustment” according to the WTO because it violates articles II, III, XI and XIII of the General Agreement on Tariffs and Trade (GATT). A border carbon adjustment (BCA) that includes explicit and indirect measures is compatible with WTO law because it is not a unilateral action. According to the 2015 Paris Agreement, BCA mechanisms designed to allow for more leeway in climate policy should be seen as “multilateral universalism”. Thus, policies of this nature should face less stringent scrutiny under WTO rules as the GHG pricing mechanisms being introduced have been implicitly accepted by WTO members. This is evident from their collective endorsement of international climate agreements such as the 2015 Paris Agreement and the 2021 Glasgow Climate Pact. Even nations like China are likely to be supportive.

Thus, the EU must implement a fair and bold carbon border tax now. Absent a WTO-compliant BCA, Daniel Esty, a leading expert on climate change governance, warns, “I can imagine a scenario whereby they’re challenged not once or twice, but a dozen, 15, 20, 30, 40 times within the first six months.” Such legal uncertainties could also escalate into a global trade war, threatening economic stability and international cooperation on climate action. For the EU, this moment calls for decisive action to lead by example and pave the way for a sustainable and equitable global trading system.

The United Nations Framework Convention on Climate Change is an international treaty designed to facilitate international cooperation in combating climate change. Originally signed in 1992, it aims to limit further increases in average global temperature by regulating nations’ greenhouse gas emissions.

Since 1995, the Convention’s signatories have annually gathered for what is known as the Conference of Parties (COP). At this conference, individual countries’ inventories of their yearly emissions are reviewed to assess the efficacy of each signatory’s measures against climate change. This data is used to evaluate the progress made towards the Convention’s overarching goal. 

Citing the “need [for]action, not more talk,” Papua New Guinea vowed to skip this year’s COP29. If PNG keeps its promise, it will become one of the first states to completely withdraw participation from a COP summit. 

However, it is far from the first body to criticize COP’s attempts to address climate change. 

Climate activists have long criticized the COP for failing repeatedly to deliver on its lofty promises to address the consequences of climate change. In its third year, the COP summit was labeled a “tragedy and a farce” by environmental protection group Greenpeace. This was in response to COP3 delegates settling on emission reduction targets far below those recommended by the Intergovernmental Panel on Climate Change. 

Additionally, COP has faced much censure from developing nations for allowing advanced countries to dominate policy negotiations at their expense. This is particularly evident in the decade-long struggle to secure “loss and damage” funding for developing nations significantly impacted by climate change. Though Vanuatu introduced the concept of such funds as early as 1991, developed nations were reluctant to acknowledge that they are disproportionately responsible for climate change and consequently owe reparations to those suffering its effects. As such, these funds were not mentioned in an official UNFCCC document until 2007 and not implemented until 2022. 

In particular, the Pacific Islands are a major source of COP criticism because they are one of the regions most vulnerable to the effects of climate change. Thanks to warmer waters and ocean currents, sea levels rise twice as fast as the global average. Over the next thirty years, NASA predicts that sea levels around the Pacific Islands will rise by at least six inches, posing great danger to the 90% of the region’s residents who live within three miles of a coast. 

Future aside, climate change has already begun transforming life in the Pacific Islands for the worse. Rising sea levels contaminate freshwater sources, threatening local water supplies needed for drinking and agriculture. Furthermore, the ocean is acidifying and its surface temperature is increasing, prompting changes in the behavior of local marine species that endanger locals’ fishing livelihoods. These effects simultaneously enable the spread of climate-sensitive diseases and increase the threat of health risks stemming from environmental hazards like unsafe water.  

Despite their position on the frontline of the battle against climate change, the Pacific Islands have been shut out of COP negotiations. After COP28, delegates from the Pacific Islands reported that they “weren’t in the [plenary]room when this decision was gavelled.” In other words, the remaining countries finalized the terms of COP’s concluding agreement for the year without input from anyone with a stake in the region. 

As a result, the final text contains a “litany of loopholes.” For example, it reads that countries will “transition away” from fossil fuels because parties could not choose between “phase out” or “phase down.” According to Pacific climate campaigner Drue Slatter, the imprecise nature of “transition away” merely encourages a reduction in fossil fuels rather than demands it. 

This all but spells disaster for the Pacific Islands. 

As Samoan climate activist Brianna Fruean explains, “science tells us that 1.5 degrees is [the Pacific Islands’]survival line. And in order for us to make it to 1.5, we need a phase-out of fossil fuels.” However, the final wording of the COP28 agreement does not specify the extent to which fossil fuels need to be cut or establish a timeline for doing so, thus allowing nations to get away with continuing to use fossil fuels. 

Given the increasingly dire stakes and the inefficiency of COP negotiations, PNG’s withdrawal from COP29 is far from unreasonable. 

However, other leaders and climate activists from the Pacific Islands are concerned that PNG’s boycott of COP29 will undermine the region’s overall authority at the summit. Kim Allen, a climate activist from Papua New Guinea, said that the COP summit is an opportunity to amplify the voice of the Pacific Islands by presenting a united front. From this point of view, PNG’s absence could reduce the Pacific Islands’ ability to leverage its influence as a collective region, potentially diluting its role in COP29 negotiations. 

On the other hand, PNG’s withdrawal may eventually generate more effective results than the ones COP can produce. In his announcement of the boycott, Tkatchenko shared that PNG will instead pursue bilateral climate agreements with “like-minded countries” who “can do 100 times more than COP.” Focusing on bilateral agreements would reduce the number of competing demands that must be addressed, minimizing the challenges associated with writing an agreement that satisfies the almost 200 countries attending COP29. 

With those challenges out of the way, Papua New Guinea can devote more attention to creating and implementing actionable climate commitments that address climate change in a specific and timely manner. Strategically picking nations to work with also eliminates the risk of progress being hindered by nations who do not share the same dedication to mitigating the effects of climate change.   

As world leaders prepare for COP29, Papua New Guinea’s withdrawal from the summit sends a clear message that climate-vulnerable nations can no longer afford to wait for COP to deliver measurable results. More than that, it is a declaration that they are ready to chart their own course in the fight against climate change. 

As Tkatchenko said, “Papua New Guinea will no longer wait for empty words while our people suffer. We are taking control of our destiny.” 

The views expressed in opinion pieces do not represent the views of Glimpse from the Globe.