Every year, the United Nations Climate Change Conferences are held in the framework of the United Nations Framework Convention on Climate Change (UNFCCC). The conferences serve as the formal meeting of the UNFCCC parties and are the Conference of the Parties, more popularly known as COP. This year's COP30 climate summit was organized in Belém, Brazil, from 10 to 21 November. It marked more than the usual global check-in on greenhouse-gas pledges. The Amazon-hosted gathering came at a moment of deep geopolitical fracture: with several of the world’s richest nations wavering on climate ambition, and the United States Government notably scaling back its presence. Into this vacuum stepped the People's Republic of China. China did not only use its diplomatic clout, but also its commanding weight in clean-energy manufacturing, trade and investment to recast itself as a central actor in the global climate transition.

China’s interests at COP: clean-tech superpower meets diplomacy

Indeed, China is currently still the world’s biggest polluter. China has restructured much of its domestic economy around renewables and clean energy. According to Chinese officials at COP30, by mid-2025 the country’s total installed renewable energy capacity (wind, solar, hydro, etc.) reached 2,160 gigawatts (GW), representing over 40% of global capacity. Within that, installed wind and solar capacity alone surpassed 1,670 GW, exceeding China’s prior 2030 target of 1,200 GW - six years ahead of schedule. This early overachievement helped renewables overtake fossil fuels in capacity nationwide by end-2024.

This industrial scale matters, and not just for China’s electricity mix. China now leads “almost every segment of the clean-energy economy”: solar, wind, batteries, electric vehicles, grid technologies, This shapes global cost structures, supply chains and market expectations. Put bluntly: China’s clean-energy output and manufacturing capacity give it leverage. Its sheer scale allows it to undercut global prices for solar panels, batteries, turbines. Many other countries now depend on Chinese supply chains or offer Chinese-made technologies in their own green transitions. As of 2024, China manufactures 92% of the world’s solar modules and 82% of wind turbines. As one side-effect, this gives Beijing a form of industrial — and diplomatic — soft power.

COP30 offered a platform to showcase exactly that. At the conference’s China Pavilion, national officials and executives from major Chinese firms made their pitch: clean-energy cooperation, technology transfer, and green-growth partnerships. China’s Pavilion at COP, normally much smaller, was this year located centrally in the entrance hall at the conference grounds.

China did more than simply highlight its domestic green transition. At COP30 it framed itself as a partner for the global clean-energy transition. At a high-level side event on “innovation and green development,” the head of the Belt and Road Initiative International Green Development Coalition (BRIGC), Zhao Yingmin, declared that China was ready to “help other countries share opportunities and pursue common development through green cooperation”. Meanwhile, the Ministry of Ecology and Environment of the People’s Republic of China (MEE)’s COP-delegation leader, Li Gao, said China aims to strengthen green-innovation cooperation, apply scientific and technological achievements globally, and build “shared, mutually beneficial green development demonstration projects”.

In short: China’s interests at COP30 combined industrial ambition, economics and diplomacy. China seeks to export clean-tech capacity, shape global climate standards, and position itself as indispensable to any serious global transition, all while projecting leadership without necessarily binding itself to the deepest emission-cutting commitments.

Trade, CBAM and the new carbon-border battleground

A major new theme at COP30 was not just emissions, but trade and industrial competitiveness. For many exporting countries, the incoming European Union Carbon Border Adjustment Mechanism (CBAM) has become a looming threat: imports of steel, cement, fertilizers, aluminum and other carbon-intensive goods into the EU may face carbon-price adjustments. This effectively penalizes producers outside Europe.

Against this backdrop, a coalition led by China, with backing from states including India and Saudi Arabia, pushed to add “unilateral trade measures” to the COP discussion agenda as a counter, arguing that CBAM-type policies risk unfairly penalizing developing-country exporters and undermining shared but differentiated responsibilities. Yet China did not seek to turn COP30 into a full-scale trade showdown. As Liu Zhenmin, China’s climate envoy, put it: “All parties need to cooperate to avoid unilateral measures that might damage international collaboration”.

At the same time, Beijing — along with several other countries including Brazil, Japan and South Korea — acknowledged the legitimacy and potential of domestic carbon-pricing instruments. On the other hand, critics and defenders of CBAM rejected the portrayal of the mechanism as protectionist. As the EU’s climate commissioner declared at COP30: CBAM is part of a broader “climate toolbox,” and should not be seen as a trade barrier but as a measure to prevent carbon leakage.

Thus, China’s stance was both critical and pragmatic. China is critical by warning that blanket border-tariffs risk fracturing global supply chains. It is, in a sense, also pragmatic: China recognised carbon pricing’s role in decarbonisation, but maintained that trade-climate disputes belong in proper trade fora, not in the heart of UN climate negotiations. This trade-climate nexus marks a new wrinkle in global climate diplomacy: increasingly, climate policy and industrial/trade policy are overlapping. For China, COP30 was an opening to help shape rules that can protect its exports and amplify its global influence.

Geopolitics and power shifts: China fills the vacuum

A striking dimension of COP30 is how much space opened for China by the absence or withdrawal of traditional climate powers. For the first time in decades, the United States did not have a high-level delegation and there was no visible U.S. pavilion footprint. Into that vacuum stepped China. The China Pavilion at the COP entrance hall was among the largest and busiest. Chinese companies and officials held a series of high-profile presentations and side-events. As Li Shuo, Director of China Climate Hub at Asia Society Institute, put it, “when you enter the COP venue the first national pavilion that you see is the China pavilion”.

That visibility, paired with China’s clean-tech credentials, fueled a narrative of China as a “guarantor” of the global climate regime. At COP30, China had the capacity to bring together a wide range of developing-country interests: from large emerging economies to smaller, climate-vulnerable states.

Still, this geopolitical assertiveness comes with caution. China appears to prefer pragmatic cooperation, not radical emissions-cuts or fossil-fuel exit mandates. In an interview with The Guardian, Wang Yi, the vice-chair of China’s expert panel on climate change, noted that China “doesn’t want to lead alone” on climate policies. Wang emphasized that China’s priority at COP30 was to support the Brazilian presidency in achieving a successful conference and showing the benefits of multilateral cooperation. He stressed that there is a need for “comprehensive leadership,” signalling that China does not celebrate the U.S. stepping back from their climate commitments.

Regardless, the result is a reshuffling of climate-diplomatic influence: where U.S. weight has receded, China’s industrial and diplomatic muscle is shaping the new centre of gravity.

Outcomes of COP30: China’s reading

At the end of COP30, the official outcome — the so-called “Belém Political Package” — included a number of important commitments: a major boost in adaptation financing for developing countries, recognition that climate action can drive economic growth and jobs in clean energy, and strengthened emphasis on “just transition” for workers and communities.

From China’s perspective, the summit appears to have been a success. According to Chinese state media reporting on remarks by Li Gao, the conference showed “strong political will” from all parties and demonstrated that the global green transition is “irreversible.” The Chinese delegation reportedly participated in nearly 100 agenda items, contributing “constructively and solution-oriented” throughout. Moreover, Chinese state media emphasized that despite challenges, COP30 showed the success of multilateral climate decision-making.

COP30 also elevated China’s domestic climate framework. At the pavilion, officials highlighted how China expanded its national emissions-trading system (ETS) to include major industrial sectors (steel, cement, aluminum). By end-October 2025, cumulative trading volume reportedly surpassed 770 million tonnes of carbon allowances, valued at over 51.8 billion yuan (≈ US$ 7.3 billion). This signals that China hopes its ETS could serve as a model for other countries. Chinese media reports that Valerie Hickey, global director for Climate Change at the World Bank, called China's ETS “a model of steady and expanding growth”.

Yet the outcomes also reflect limitations. The final COP30 text avoided any firm roadmap to phase out fossil fuels. As activists and analysts noted, while the adaptation-finance pledges and clean-energy emphasis are important, the omission of fossil-fuel exit language represents a retreat from the ambition many hoped for. For critics, that underscores how COP30 was more about consolidating influence than accelerating deep decarbonisation.

COP30: a pivot point, not a guarantee

COP30 in Belém may not have delivered a definitive fossil-fuel phase-out plan, but it did deliver a new alignment of power, trade and climate ambition. China’s role at the summit underscores a shift: from climate as a matter of national targets, to climate as a domain of industrial strategy, global standard-setting, and geopolitical positioning.

By leveraging its clean-tech capacity, shaping carbon-market architecture and pushing climate-industry cooperation, China has signalled it wants to be more than another negotiator — it wants to be the backbone of the global green transition. Whether that amounts to genuine leadership on deep decarbonisation, or a rebranded industrial strategy, remains to be seen. Time will tell how far willing China is to take its new found role as climate leader.

This article is part of The Outside World, ftrprf’s very own research center.

For organizations, it’s pivotal to thoroughly understand what is happening in society. We help companies generate comprehensive insights into societal change and its potential effects on their strategy and operations, both negative and positive. With actionable societal insights, courageous plans, and a can-do mentality, we connect the outside world to your company's strategy. For these outside-world insights, we use a rigorous methodology that includes data processing, quantitative and qualitative analysis, and a thorough review process to ensure the accuracy and consistency of our findings.

For more information, please contact theoutsideworld@ftrprf.com.

The Outside World Weekly

Read this week's news highlights in The Outside World Weekly, your curated, interactive digest of the ideas, events, and tensions shaping our time.

Next articleMisaligned Systems: The Hidden Flaws in Climate Policy Design

In recent weeks, a review of more than 25 years of carbon-offset projects delivered a sobering conclusion: the vast majority of these projects have failed to produce meaningful reductions in greenhouse-gas emissions . Forests that were never in danger of being cut down were suddenly “saved.” Emissions reductions were counted multiple times. Promised climate benefits proved temporary, while the emissions they were meant to offset were permanent . The findings highlight a paradox in modern climate strategies. Across the world, governments, companies and institutions are increasingly eager to “do the right thing.” Net-zero pledges proliferate, ESG strategies are drafted, climate targets are announced. However, the systems designed to turn these ambitions into reality are often lacking. Sustainability is often decided not by individual virtue, but by the design of the system. The ambition to do less harm and move faster toward a low-carbon economy is widely shared. But as these ambitions expand, they gradually translate into layers of rules, procedures and oversight. Reporting obligations multiply, and third-party audits, compliance frameworks and verification protocols increasingly dominate the sustainability landscape. Climate action becomes something that must be documented and ticked off, while no institution or organisation feels the benefit of their good intentions. The consequence is that organisations begin to optimise their behaviour not around what most effectively reduces emissions, but around what is easiest to measure, verify and report. What can be counted receives priority; and what matters but resists quantification often is left behind. Companies learn how to look green within regulatory frameworks without fundamentally changing their operations . Governments reward activities that satisfy formal criteria, even when real-world emissions barely move. Over time, a gap opens up between what the system claims to achieve and what it actually delivers . This leads to an uncomfortable question in climate policy: Does complying with climate regulations always produce sustainable outcomes? In theory, the answer seems easy. Closing a coal plant, abandoning a high-emission process, tightening internal standards; these should all lead to positive environmental change. In practice, such decisions often trigger a chain of second-order effects. Economists refer to this phenomenon as “leakage.” When pollution does not disappear; but moves . A factory closure in one country may result in increased imports from regions with weaker environmental standards. A company withdrawing from a controversial activity may simply be replaced by a competitor with fewer constraints and less transparency. The moral action remains intact, but the environmental benefit evaporates . This shows the friction between individual responsibility and system logic. Firms and consumers can make better choices in isolation, but aggregated outcomes are governed by market structures, price signals and policy design. When regulation focuses primarily on deterrence without ensuring that cleaner alternatives become the default, it creates a vacuum. And vacuums in markets are usually filled by actors who are less regulated, less accountable and less sustainable . Few mechanisms illustrate this better than carbon markets. There are basically two types of carbon markets, and they work quite differently. The first is offset systems, where companies or countries buy emission reductions that have already happened somewhere else. A company or country pays for emissions reductions that have already taken place somewhere else, like a new forest that absorbs CO₂ or a wind farm that replaces fossil energy. The idea is that you can “compensate” your own emissions by supporting reductions elsewhere. Originally conceived as a pragmatic market-based tool, offsets were meant to channel capital toward the cheapest and fastest emissions reductions worldwide . A company unable to eliminate all emissions could compensate by financing equivalent reductions elsewhere. This doesn’t automatically lower total emissions in the system; it’s more about saying, “we’re doing something good, even if emissions still exist somewhere else .” Investigations have repeatedly shown that many offset projects fail the basic test of “additionality”: they would have happened anyway. Others suffer from permanence problems, especially forestry projects where stored carbon can be released again through fires, disease or logging. Verification remains complex and uncertain, and the same reductions are sometimes sold and counted multiple times . Even when projects are technically real, the trade in offsets is ambiguous. The emissions being offset are effectively permanent. The storage meant to compensate them often is not. Offsetting is frequently cheaper and more convenient than genuine operational decarbonisation. Instead of transforming production processes, companies invest in paperwork-heavy accounting systems that sustain the appearance of climate neutrality. The result is a bureaucratic apparatus of certification and carbon accounting that produces reassuring numbers, while global emissions continue to rise. The second type of carbon market is what we can call a cap-and-trade system, or Emissions Trading System (ETS). In an ETS, companies buy and sell pollution permits, each one giving the right to emit one tonne of CO₂. Unlike voluntary offsets, the ETS imposes a legal cap on total emissions. If a company emits one tonne, it has to give a permit back to the government. Since the total number of permits is capped, there’s a hard limit on overall emissions in the system . At first, this seems far more robust. And in many respects, it is. The total emissions ceiling is real. But here too, system design matters. When a company covered by the ETS reduces emissions, by closing a coal plant or improving efficiency, it uses fewer allowances. That looks like progress. However, since the total number of allowances is fixed, those unused permits do not disappear. Instead, most firms sell them or bank them for future use rather than cancel them, which increases supply on the market, pushes down prices, and enables other firms to emit more. Also, national coal phase-outs have sometimes led to increased electricity imports from neighbouring countries under the same ETS. Emissions shift across borders rather than declining overall . Economists describe this as the “waterbed effect" : press down in one place, and emissions rise somewhere else. The total remains unchanged unless allowances are permanently removed or the cap is lowered. This undermines countries that have higher ambitions than the system . The same mechanism becomes visible during economic downturns. When emissions fall for reasons unrelated to climate policy — as they did during the financial crisis of 2008 or the Covid-19 pandemic — demand for allowances collapses . Permit prices drop, pressure on industry eases, and the incentive to invest in long-term decarbonisation weakens. In a cap-and-trade system, such temporary shocks do not automatically translate into lasting reductions. Unless surplus allowances are permanently removed or the cap is tightened, lower emissions in one period simply make it easier to emit more in the next. Unless, for example, having surplus allowances would be rewarded. But now, the system absorbs the shock rather than locking in the gain. The EU has attempted to address this dynamic through the Market Stability Reserve, which automatically withholds surplus allowances when supply becomes excessive. Introduced in 2019, the mechanism has helped prevent a repeat of the post-2008 collapse in carbon prices, and has strengthened the long-term investment signal . Yet the rebound in emissions after the Covid-19 pandemic also reveals the limits of such corrective tools . The Market Stability Reserve can absorb shocks, but it does not eliminate them. When economic activity recovers, emissions rise again unless the cap itself tightens fast enough or demand for carbon-intensive production falls. The return to pre-pandemic emission levels is therefore not evidence of policy failure, but of a system designed to stabilise markets rather than guarantee structural decline on its own. If climate policy is to succeed, it must move beyond obliging compliance with ambiguous regulations and start redesigning incentives. That means shifting the focus from compliance to outcomes, cutting through unnecessary bureaucracy, and freeing resources for genuine innovation and transformation. Most importantly, sustainable choices must become the default rather than the exception. Unsustainable alternatives should either disappear or become prohibitively costly, whether through effective carbon pricing, minimum standards, border adjustments, or outright bans. Policymakers also need to anticipate behavioural effects. Demand does not decrease simply because supply changes; unless both sides of the equation are addressed, emissions will continue to shift rather than fall. One option is a straightforward carbon tax: instead of relying solely on tradable allowances, emissions would be taxed directly, and the revenues could be earmarked for nature conservation, ecosystem restoration, or climate adaptation. This would ensure that every tonne of CO₂ emitted carries a real and unavoidable cost, independent of market dynamics or surplus allowances. At the same time, the system could reward genuine over-performance. Firms that reduce emissions beyond regulatory requirements and create surplus emission rights should not merely sell them back into a market that enables others to pollute, but could be rewarded through permanent cancellation of those allowances, tax rebates, or direct financial incentives. This would align private incentives with collective climate goals, ensuring that emission reductions translate into real, system-wide progress rather than simply reshuffling emissions across actors. Effective climate policy is not about encouraging people and companies to “do good”, but about avoiding the trap of symbolic compliance that satisfies regulations without delivering real impact. The challenge is not only ethical but structural: we must redesign the rules of the game so that sustainability becomes the most logical choice in everyday decisions. Shall we?

2025-12-23

Misaligned Systems: The Hidden Flaws in Climate Policy Design

China at COP30

China’s interests at COP: clean-tech superpower meets diplomacy

Trade, CBAM and the new carbon-border battleground

Geopolitics and power shifts: China fills the vacuum

Outcomes of COP30: China’s reading

COP30: a pivot point, not a guarantee