In disagreement over trade, technology and capital markets, the world’s leading economic superpowers are turning their attention to climate change as the next path to commercial supremacy, says a CNBC report.
China spent more than twice as much as the US on investments related to the energy transition between 2010 and 2020, according to BNEF data cited by Bank of America’s ESG research team in a report last month.
Key points include “supply chain dominance, domestic-focused manufacturing policies, human rights laws and carbon-related trade tariffs,” said BofA analysts.
BofA’s managing director of research, Haim Israel, said that a “climate war” between Washington and Beijing would follow the technological war and the trade war, as climate change became the dominant political and economic issue in the coming decades.
“It’s not just about saving the planet. We believe that climate strategies offer a path to global supremacy, as much more is at stake here: the economic impact of climate could reach $ 69 trillion this century and investment in energy transition needs to increase up to $ 4 trillion a year ”Said Israel.
Israel told CNBC that the United States would seek to increase legislation, innovation and capital flows for renewable energy, such as wind, solar, batteries and hydrogen.
“We also see an increase in the number of electric cars. Remember that today, more or less, 50% of all the oil in the world is destined for the transport market, and the automobile is a big part of it ”, he added.
Tensions between the USA and China
Tensions between the U.S. and China continued under President Joe Biden’s administration, with U.S. Secretary of State Antony Blinken, leading to thorny discussions with Chinese delegates in Alaska last month.
Harry Broadman, managing director and president of emerging markets and CFIUS practices at the Berkeley Research Group, told CNBC last week that the ability of developed countries to create, execute and sell products that advance the climate agenda without adversely affecting the labor market shape the economy in the years to come.
“As long as people believe there will be a market for these technologies and that will be dictated by how cheap it is, and whether it destroys or creates jobs – it doesn’t necessarily have to destroy jobs – this is going to be imperative, and I think the race is already going on” , said Broadman.
China has pledged zero net carbon emissions by 2060. Countries operating on net zero pledges currently account for just under half of all global emissions, with China representing about two-thirds of them, according to a recent research report capital of Goldman Sachs.
However, this can be a difficult task, since China is by far the biggest polluter on the planet. The country is responsible for about 30% of the world’s CO2 emissions, more than double that of the USA, and is classified by the Climate Action Tracker as “highly insufficient” under the principle of “fair participation” in combating climate change.
Goldman analysts led by stock business unit leader Michele Della Vigna plotted the country’s potential path to zero net by sector and technology, tracing the $ 16 trillion in clean technology infrastructure investments that China will need to embark on. until 2060.
Collectively, they could create 40 million new net jobs and boost economic growth.
China’s spending on research and development increased 10.3% to 2.44 trillion yuan ($ 378 billion) in 2020, exceeding the U.S., according to the National Bureau of Statistics.
Clean technology countries
Meanwhile, Europe is home to eight of the ten largest “clean technology” companies in the world, with the potential for a four-fold global increase in clean technology capacity by 2030, BofA analysts projected. Investors have also shown growing interest in companies seen as pioneers in the energy transition, from electric vehicles to clean energy.
As China finds itself “increasingly without access” to US and other G-7 technologies, Broadman suggested that there would be a dissociation of standards, creating a “China-centered orbit” and a “G7-centered orbit. ”.
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