The global green transition is no longer confined to environmental sustainability; it has emerged as a central arena of geoeconomic competition, where states deploy climate policy as a tool of power, influence and strategic advantage. The shift from fossil fuels to clean energy is reconfiguring global supply chains, trade regimes, and technological hierarchies, thereby reshaping international relations.
At its core, geoeconomics refers to the use of economic instruments—trade, investment, subsidies, standards and supply chains—to achieve geopolitical objectives. The green transition exemplifies this phenomenon.
The decline of fossil fuels has not eliminated resource dependence; it has transformed it. Critical minerals such as lithium, cobalt, nickel, copper and rare earth elements have become indispensable for renewable energy systems, electric vehicles and energy storage. Control over their extraction, processing and downstream manufacturing has become strategically vital.
China’s dominance—accounting for a major share of global rare earth processing, battery manufacturing and solar module production—has triggered concerns of strategic vulnerability in the US, EU and Japan. In response, advanced economies are reshoring, friend-shoring and subsidising clean industries, signalling a departure from liberal trade orthodoxy.
This has led to a resurgence of green industrial policy. The US Inflation Reduction Act, the EU Green Deal Industrial Plan and China’s state-led clean energy push reflect competitive climate capitalism, where decarbonisation is pursued alongside domestic economic advantage. Subsidies, local content requirements and export controls increasingly blur the line between climate action and protectionism.
Another dimension of geoeconomic power lies in standard-setting and regulation. Mechanisms such as the EU’s Carbon Border Adjustment Mechanism (CBAM) extend domestic climate regulations beyond borders, effectively reshaping global trade norms. While justified on environmental grounds, such instruments risk disadvantaging developing economies with lower technological capacity and higher carbon intensity.
For the Global South, the green transition presents a dual challenge: accessing climate finance and technology while avoiding a new form of dependency—this time as suppliers of raw minerals rather than finished goods. Climate justice thus intersects with trade equity and development rights.
In this context, the green transition is best understood not as a cooperative global shift alone, but as a contested restructuring of global economic power, where climate ambition, strategic autonomy and economic nationalism increasingly intersect.
