How US-China Rivalry Impacts Global Climate Efforts

When geopolitics collides with climate action

The United States and China together produce roughly 40% of global greenhouse gas emissions. For years, that shared responsibility created a foundation for cooperation. The 2015 Paris Agreement emerged partly from sustained diplomatic work between Washington and Beijing. However, geopolitical tensions have increasingly undermined their ability to work together on emissions reduction. As competition intensifies over technology supply chains, trade practices, and regional influence, climate cooperation has become collateral damage.

This matters because meeting the Paris Agreement’s 1.5°C threshold depends heavily on whether these two economies can coordinate action. Their rivalry now threatens the feasibility of global emissions targets. For UK businesses navigating net zero commitments, supplier relationships, and public procurement requirements, the consequences extend far beyond diplomacy.

How bilateral climate talks broke down

During the Obama administration, US-China climate relations followed an unusual pattern. Competition between the two nations paradoxically drove progress, particularly in renewable energy deployment and electric vehicle development. They negotiated jointly on emissions frameworks and presented a unified front in international climate diplomacy. Analysts called this the “G2” approach to global climate leadership.

This cooperative period peaked with the 2021 Glasgow Climate Declaration following COP26. The statement outlined shared commitments on methane reduction and climate finance. Subsequently, the 2023 Sunnylands Statement reaffirmed bilateral cooperation on narrower issues including hydrofluorocarbon emissions reduction and sustainable agriculture.

The progress proved fragile. In August 2022, Beijing suspended formal climate dialogue with Washington for over a year. The suspension followed House Speaker Nancy Pelosi’s visit to Taiwan. According to analysts at the Belfer Center for Science and International Affairs at Harvard University, the move signaled that climate talks could not be insulated from broader geopolitical tensions.

Donald Trump’s withdrawal from the Paris Agreement during his first administration inflicted lasting damage to US climate credibility. As the Asia Society Policy Institute notes, Trump’s exit was “irrevocably damaging” to US-China cooperation and global trust in the United States as a climate leader. The reputational consequences extend beyond bilateral relations. Trump’s climate backsliding has fueled conservative sentiment in Chinese domestic politics, making Beijing increasingly skeptical about Washington’s ability to follow through on long-term commitments.

Clean technology supply chains become a battleground

China has built unrivaled dominance in critical clean energy supply chains through decades of state intervention. According to the Brookings Institution, China deployed nearly 300 gigawatts of wind and solar capacity in a single recent year. That figure dwarfs the US pace of 40 gigawatts. China has already surpassed its 2030 wind and solar targets. The country now accounts for over 50% of all new energy vehicle sales globally.

This dominance has become a flashpoint for economic competition. The Inflation Reduction Act imposed extensive subsidies for domestic US clean technology firms and production in March 2024. Essentially, Washington is attempting to decouple American supply chains from Chinese manufacturing. The US has also deployed high tariffs on Chinese clean technology imports, alleging unfair trade practices and intellectual property theft.

China responded by filing a World Trade Organization complaint. Tensions escalated further. As researchers at the University of Pennsylvania’s Kleinman Center for Energy Policy note, the geopolitical rivalry creates a paradoxical problem. US policy responses aiming to limit China’s global dominance in solar panels and electric vehicles may be counterproductive to the global clean energy transition.

Decoupling clean energy supply chains for national security reasons risks higher costs, reduced innovation, and slower global decarbonization. These tensions appear to be accelerating a trade war dynamic that threatens to spread beyond clean technology. For UK manufacturers sourcing components or competing for international contracts, the implications are significant. Supply chain resilience planning now requires factoring in geopolitical risk alongside carbon reporting requirements.

China’s contradictory energy policy complicates the picture

China’s own energy strategy adds complexity. Simultaneously the world’s largest clean energy deployer, China is also permitting new coal-fired power plants at rates unseen in a decade. Following energy shortage events in 2021 and 2022, Beijing’s leadership has reasserted coal’s central role in energy security. Reliable domestic supply has taken priority over emissions reduction targets.

This apparent backsliding has generated international skepticism about Beijing’s climate leadership credentials. It provides ammunition for critics who argue that Chinese climate commitments cannot be trusted. That perception further erodes incentives for US cooperation. Meanwhile, businesses operating in or trading with China face uncertainty about the regulatory trajectory for carbon-intensive sectors.

Why 2035 targets represent a critical threshold

Both nations have committed to economy-wide, all-greenhouse-gas nationally determined contributions due in early 2024. These targets cover the decade to 2035. They are crucial because China’s emissions trajectory after its promised pre-2030 peak will significantly influence global temperature pathways. As the Asia Society Policy Institute emphasizes, the extent to which China’s emissions plateau versus declining rapidly will influence the temperature pathway of the entire world.

China has indicated the possibility of cutting CO2 emissions by at least 30% below 2023 levels by 2035. Non-CO2 emissions reductions of 35% have also been mentioned. However, the geopolitical context casts doubt on whether these commitments will be reinforced through sustained bilateral engagement. Economic tensions may undermine them instead.

One emerging challenge is enforcement and verification. The Paris Agreement created mechanisms allowing individual climate action regardless of bilateral cooperation. Historical precedent suggests that when major economies withdraw from collective efforts, international climate determination weakens over time. Chinese policymakers have grown skeptical about whether US climate targets will survive political transitions, noting Trump’s previous exit from the Paris framework.

Climate finance becomes a proxy for strategic competition

China’s Belt and Road Initiative has extended into climate and clean energy cooperation in developing nations. Beijing positions itself as a great power offering climate solutions to the Global South. This has triggered US counter-positioning. Washington now views Chinese climate finance and technology transfer through a competitive rather than cooperative lens.

According to the Stockholm International Peace Research Institute, this dynamic means climate action is caught in the increasingly volatile push-and-pull between cooperative global governance and great power competition. Clean energy investment in third countries has become a proxy for broader strategic competition. Resources and attention are diverted from coordinated global decarbonization.

The consequences fall disproportionately on vulnerable nations. Climate change impacts are global, but they disproportionately affect some countries more than others, according to Angel Hsu, founder of the Data-Driven EnviroLab at the University of North Carolina. Poorer nations in the Global South face intensified droughts, floods, heat waves, and biodiversity loss. Recent natural disasters have claimed many lives and caused tens of billions in damages. Working families, small businesses, and underrepresented communities bear the brunt.

These vulnerable populations have minimal influence over US-China negotiations. They become victims of geopolitical conflicts they did not create. For UK businesses operating in or supporting developing markets, this instability complicates long-term planning for nature-positive investments and climate adaptation projects.

Three principal risks threaten climate cooperation

Research from the Kleinman Center identifies three principal risks that geopolitical rivalry poses to deep climate cooperation. First, political-military conflict represents an acute threat. A military confrontation over Taiwan or another regional flashpoint could precipitate a more sustained collapse in US-China climate cooperation. That would hamstring international emissions reduction negotiations.

Second, economic trade war escalation poses medium-term risks. Continued competition over clean technology could provoke broader protectionist measures, export controls, and reciprocal tariffs. The European Union and other major economies might become involved. This would impede global decarbonization and deadlock technology transfer discussions.

Third, institutional breakdown threatens the foundation of collective action. Without cooperation, the UN climate framework itself becomes less effective. The 2022 suspension of bilateral climate talks demonstrated this vulnerability. The inability to achieve ambitious collective goals follows naturally from institutional weakness.

What this means for UK businesses and supply chains

UK companies face direct commercial consequences from US-China climate tensions. Manufacturers sourcing components from Chinese suppliers may encounter tariff barriers or export controls. Those selling into US markets might need to demonstrate supply chain independence from Chinese inputs to qualify for Inflation Reduction Act subsidies or procurement preferences.

Public sector suppliers face particular pressure. PPN 06/21 and similar procurement requirements increasingly demand carbon reporting and reduction commitments. Companies relying on Chinese manufacturing for cost efficiency must now balance those savings against compliance risks. Carbon footprinting becomes more complex when supply chains cross geopolitical fault lines.

Technology costs may rise. If the US successfully decouples from Chinese clean energy supply chains, global prices for solar panels, batteries, and electric vehicle components could increase. That affects the business case for decarbonization investments. Projects that looked financially viable at current technology costs may require reassessment.

Trade route uncertainty also matters. Companies shipping goods through Pacific trade routes or operating in markets exposed to US-China tensions need contingency planning. Currency volatility, tariff changes, and regulatory shifts can emerge with little warning. Supply chain resilience planning must account for geopolitical scenarios, not just operational risks.

Nevertheless, opportunities exist. European manufacturers may benefit from nearshoring and friend-shoring trends as US and Chinese buyers seek alternatives. UK companies with credible net zero programs and transparent carbon reporting may gain competitive advantage in tenders that prioritize supply chain security alongside emissions reduction.

Commercial and compliance considerations for UK firms

• China deployed nearly 300 gigawatts of wind and solar capacity in a single recent year, compared to 40 gigawatts in the United States, demonstrating the scale of clean energy manufacturing concentration.
• The United States and China together account for approximately 40% of global greenhouse gas emissions, making their cooperation essential for meeting Paris Agreement targets.
• China suspended formal climate dialogue with Washington for over a year in August 2022, demonstrating that climate talks cannot be insulated from geopolitical tensions.
• The Inflation Reduction Act imposed extensive subsidies for domestic US clean technology in March 2024, effectively attempting to decouple American supply chains from Chinese manufacturing.
• China has indicated the possibility of cutting CO2 emissions by at least 30% below 2023 levels by 2035, with non-CO2 emissions reductions of 35%, though geopolitical context casts doubt on implementation.
• Poorer nations in the Global South face disproportionate climate impacts including intensified droughts, floods, heat waves, and biodiversity loss, while having minimal influence over US-China negotiations.

Policy responses and engagement strategies

Policy experts across multiple institutions converge on key recommendations. Top leaders in both countries must consciously separate climate negotiations from disputes over trade, technology, and regional influence. The previous approach of incremental progress despite tensions appears insufficient given escalating geopolitical stakes.

Following the model of the 2021 Glasgow Declaration and 2023 Sunnylands Statement, both nations should focus on collaboration on less politically charged issues. Methane reduction, hydrofluorocarbon elimination, and sustainable agriculture represent confidence-building measures. These narrower areas of cooperation may prove more durable than economy-wide coordination.

With bilateral trust eroded, engaging through multilateral institutions may prove more effective than direct negotiations. The UNFCCC, World Bank, and regional development banks offer frameworks that reduce dependence on bilateral goodwill. UK businesses can support this approach by engaging with industry bodies that work through multilateral channels rather than bilateral trade associations.

US policymakers must recognize that decoupling from China on clean technology requires more nuance. While it may be positive from a national security perspective, it risks resulting in less innovation, less climate action, and higher prices. UK firms can advocate for balanced approaches that maintain supply chain security without unnecessarily inflating technology costs or slowing decarbonization.

For businesses, the practical response involves diversification and transparency. Companies should assess supply chain dependencies on single-country sources for critical inputs. Building relationships with manufacturers in multiple geographies reduces exposure to bilateral tensions. Meanwhile, investing in robust carbon reporting and ESG compliance systems provides evidence of due diligence when tender requirements or customer expectations evolve.

Looking ahead to 2026 and beyond

The 2026 climate landscape presents a critical inflection point. New nationally determined contributions will be implemented. Renewable energy technology competition continues to accelerate. Geopolitical tensions remain high. The next decade will reveal whether climate cooperation can survive great power rivalry or whether environmental imperatives will be sacrificed to strategic self-interest.

As the world approaches the Paris Agreement’s critical 1.5°C threshold, the question is no longer whether the US and China can cooperate on climate. Instead, the question is whether geopolitical realities will permit them to do so. The answer affects not only global temperature pathways but also the commercial environment for UK businesses navigating net zero commitments.

Companies that plan for multiple scenarios will be better positioned than those assuming stable conditions. Supply chain resilience, transparent reporting, and diversified sourcing strategies become more valuable as geopolitical uncertainty increases. Those investments may cost money in the short term. However, they reduce exposure to disruption and position businesses to capture opportunities as markets shift.

Where to find additional guidance and resources

For more detailed analysis of US-China climate tensions and their implications, the Brookings Institution provides comprehensive research on where both countries stand on addressing climate change. The Asia Society Policy Institute offers ongoing analysis of US-China relations and climate cooperation.

UK businesses seeking guidance on supply chain resilience and carbon reporting requirements can consult UK government procurement guidance on environmental and social value. For specific advice on navigating PPN 06/21 compliance and net zero commitments in the context of supply chain uncertainty, businesses may benefit from structured support programs that address both carbon measurement and geopolitical risk assessment.

The Kleinman Center for Energy Policy at the University of Pennsylvania publishes research on climate action in the age of great power rivalry. Their work examines how geopolitical tensions affect clean energy investment and technology deployment. The Stockholm International Peace Research Institute provides analysis of climate finance and geopolitics, particularly regarding China-US factors affecting developing nations.