Author: Editorial Board, ANU
Like it or not, the structure of global trade in green technologies and the raw materials required for their manufacture is being decided in an era when geopolitics trump markets, and the WTO’s credibility to check the abuse of national security exceptions is near rock bottom.
The upshot, as Mari Pangestu explains in this week’s lead article, excerpted from the upcoming edition of the East Asia Forum Quarterly, is that the green transition is greasing the political skids for a resurrection of inward-looking industrial policy.
‘Achieving net zero carbon emissions will require an estimated seven-fold increase in demand for transition-critical minerals between 2021 and 2040’, Pangestu highlights. Yet because of China’s dominance in the processing of these minerals, and in the production of the batteries that need them, ‘developed countries have introduced industrial policies such as reshoring the sourcing of transition-critical minerals and the production of low-carbon technologies’.
Nowhere is this more apparent than in the electric vehicle (EV) sector. The decarbonisation agenda has dovetailed with a resurgent scepticism of trade and free markets that cuts across left–right divides in the United States. The Inflation Reduction Act’s measures to make EVs built with Chinese inputs uncompetitive in the US market, along with efforts by Japan and Europe to force carmakers to diversify their sources of EV inputs…
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