Report Findings
Over the course of the past year, the European Climate Foundation (ECF) conducted a comprehensive strategic foresight process exploring what trade could and should look like in a world that seeks to reach net zero greenhouse gas emissions by mid-century to curb climate change.
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Foreword
Prof Laurence Tubiania, CEO European Climate Foundation
I am delighted to introduce this report which sheds much-needed light on the importance of trade in the fight against climate change.
There is no doubt that trade is essential to establishing green economies and delivering net zero.
Russia’s war on Ukraine has highlighted the extent of countries’ interdependence in food and energy supplies, and the severe consequences that arise when trade between them is disrupted – not least in terms of the soaring cost of living.
But that mutual reliance extends to many other sectors too – and while greater self-sufficiency and circularity measures have a role to play, these risks cannot be entirely mitigated. Looking to the not-so-distant future, we expect exponential growth in demand for the critical raw materials associated with delivering batteries, electric vehicles and many other aspects of net zero economies.
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This will see many countries rely heavily on each other for materials and know-how – perhaps as never before. And this report makes abundantly clear that this will require countries to forge new kinds of trading relationships. For instance, countries trading with those in the Global South will need to finally recognise long-standing demands for greater value-retention.
Recognising the huge challenges of the present and facing up to what the future likely holds is deeply uncomfortable but absolutely necessary if we are to avert the worst-case scenarios and adapt to the rest.
This report does exactly that. It sets out three sobering but plausible scenarios for trade in 2040. Between them, they outline not only the severe potential disruptions to trade in everything from food to critical raw materials, but also the growing geopolitical headwinds that challenge our ability to recognise our common needs and cooperate.
Most importantly, it sets out a positive, practical vision of how to future-proof our current trade agenda and face up to these unprecedented challenges.
As a final note, I would like to thank our partners at Foresight Intelligence for helping develop the scenarios and vision set out in this report and the many and varied experts who contributed their time and knowledge in the numerous workshops that were at the heart of this project.
Executive summary
The report consists of five key elements.
Three are "Explorative scenarios" that were developed to explore a future for trade that is both very unpredictable and unlikely to be a linear continuation of the past, as recent geopolitical events made clear. Each is a plausible, even if unlikely scenario for the evolution of trade and climate to 2040. Somewhere between them can be found what will likely play out over the next 17 years or so.
A fourth scenario is an ideal state or vision for a climate-aligned trade regime in 2040. The Vision describes a world committed to tackling the climate emergency cooperatively.
The fifth element is a set of seven Strategic options are intented to inform European actors (and others) in shaping developments towards The Vision, taking account of the challenges identified in the Explorative scenarios.
Download the full executive summary in English, French, and Spanish.
1. Politics, politics, politics! National interests fragment trade
Explorative scenario
In 2040, trade is contentious, regional, and expensive. The world is divided into fuzzy Northwestern and Southeastern trade spheres, imposing diverging standards and redirecting supply chains...
English/French/Spanish/ captions available via drop-down menu.2. From competition to cooperation to disintegration. The water trigger
Explorative scenario
In 2040, trade is highly restricted, deglobalised and disrupted by extreme climatic and weather events...
English/French/Spanish captions available via drop-down menu.3. Coming together, but missing the Paris Goals
Explorative scenario
In 2040, trade is booming and mostly decarbonised – net zero goods and services are default options...
English/French/Spanish captions available via drop-down menu.4. A vision for a climate-aligned trade regime
The Normative scenario
The vision describes a world committed to tackling the climate emergency cooperatively. Many countries have developed new eco-social contracts by including all sectors of society in participatory deliberations on economic and ecological development models...
English/French/Spanish captions available via drop-down menu.Strategic Options
Taking account of The Vision developed by the normative track, as well as the challenges identified in the Explorative scenarios, the report details seven ideas for strategic action which are intended to help European actors to start shaping developments towards that "ideal scenario". The first three initiatives have been honed as the most easily deployed options on a short timeframe, with the best prospects to contribute to The Vision, while the remainder have been shown to be robust against the widest range of uncertainties set out in the Explorative scenarios.
Methodology
This work builds on a dozen workshops that brought together some 80 experts from diverse disciplines to engage in strategic foresight.
After having identified key uncertainties with high impact on the future of trade and climate, participants elaborated plausible, explorative scenarios and their underlying policy narratives to 2040. A normative track then developed a vision to align trade and climate, and a set of robust strategic options to support it.
Strategic foresight was adopted as a methodology that provides a robust, rigorous framework for imagining a highly uncertain future by telling us where to look and allowing to plan for and shape the path ahead. This process has entailed countless hours of debate, deliberation, voting and validation among group members, resulting in the scenarios and options presented in the report.