COP30 Spotlight: Tackling Emissions in Trade for a Fairer, Low-Carbon Future

The Paris Agreement, signed by nearly 200 countries, remains the world’s most comprehensive effort to combat climate change. At COP30 in November, signatories will review their climate plans for the third time, with one pressing issue under discussion: emissions embedded in international trade.

Currently, roughly 25% of global greenhouse gas emissions come from traded goods, yet these emissions fall outside standard climate reporting frameworks. Addressing them could unlock finance for low-carbon production while ensuring trade supports global net-zero goals.

Why trade emissions matter
Professor Laurence Tubiana, President of the European Climate Foundation, explains that traditional climate commitments focus on territorial emissions, leaving a blind spot for emissions from traded goods. For the EU, imported emissions account for nearly 40% of its GHG footprint. Integrating trade emissions into policy could incentivize low-carbon production abroad while curbing domestic consumption emissions.

Dr Arunabha Ghosh, CEO of the Council on Energy, Environment and Water, adds that 20–30% of global CO₂ emissions are linked to trade. He highlights the risks of unilateral measures like the Carbon Border Adjustment Mechanism (CBAM), which can strain developing countries without proper support. Well-designed trade-related climate policies, however, could encourage green investment, supply chain diversification, and tariff reductions for clean technologies.

Pathways for action
Experts suggest several approaches:

• Incorporate trade emissions in NDCs: Countries can include sectoral targets, low-carbon production standards, and support for carbon accounting systems.

• Strengthen international cooperation: Bilateral dialogues, such as those between India and the EU, can quantify and reduce emissions linked to imports without needing preferential trade deals.

• Support developing economies: Capacity-building and phased timelines ensure equitable transitions and prevent greenwashing or trade disadvantages.

Professor Tubiana emphasizes the importance of framing trade emissions as co-dependent: “My imports are your emissions.” Recognizing this can encourage regulatory, financial, and technological support to lower embedded emissions globally.

Leveraging private sector action
Corporate commitments to net-zero targets and supply chain decarbonization are already underway. Over 1,200 companies worldwide, including 30 in India, have declared net-zero ambitions. Policies like the EU CBAM incentivize supply chains to reduce embedded emissions, showing how regulation and investment can drive practical climate solutions.

Looking ahead
Mitigating trade emissions is a complex but necessary step for a just, inclusive, and sustainable global economy. COP30 provides an opportunity for countries, businesses, and multilateral institutions to align trade and climate policies, ensuring equity, transparency, and effective decarbonization across borders.