A climate twist to economic uncertainty

When governments set their national targets, formally known as nationally determined contributions (NDCs), at the Paris Summit in 2015 to limit global warming to 1.5°C, the principal focus of climate plans was on cutting carbon emissions. 

Ten years down the line, cutting emissions may not be the only prerogative of NDCs if governments listen to the observations of UN’s climate change executive secretary Simon Stiell. 

While the world usually keeps climate issues delinked from geopolitics and geoeconomics, Stiell, in a recent address, tied the two together and said national climate plans must be updated to address economic uncertainty and help growth. 

“Trade and economic uncertainty have been dominating headlines over the past months, but rarely due to the climate impacts that imperil it. Because, yes, global supply chains, the lifeblood of every economy, are being fractured. But climate chaos stands to have even more serious and sustained impacts,” Stiell said last Tuesday (May 20) at the 2025 Nature Summit in Panamá City, Panamá. 

To explain how trade, economy, and climate change are interlinked, Stiell gave the example of the Panama Canal, perhaps because he was addressing a meeting in Panamá City. 

“Here, in the Panama Canal, climate change has already driven water levels lower, slowing shipping and disrupting trade routes. For the average person, this means costs going up and less money to spend,” he said. 

The UN climate chief feels that robust climate policies can help get trade flowing and economies growing. This is why he has called for a “new generation” of NDCs that are relevant to the current geopolitical shifts and trade wars. 

NDCs represent a country’s commitment to mitigate and adapt to climate change by setting specific targets, policies, and measures, contributing to the global goal of limiting the temperature rise to 1.5°C. 

Done right, experts say, NDCs can not only rein in greenhouse gases, but also serve as blueprints for reducing poverty, improving human health, bolstering food security and expanding energy access, all while creating trillions of dollars in investment opportunities. 

Some of the biggest benefits of climate action plans are, a) they can create jobs and generate investment opportunities, b) save lives and improve human health, c) help people save money, d) protect nature and biodiversity, and e) build national security. 

Stiell’s comment should serve as a wake-up call for governments that are more focused on trade wars and geopolitical alignments, even as the world braces for the possibility of slipping on the Paris climate target. 

As it is, the global fight against climate change suffered a blow earlier this year when the US, under Trump 2.0, once again initiated the process of pulling out of the Paris Agreement. 

Promises notwithstanding, NDCs are hard to meet. Aware of the fact that NDCs proposed in the Paris Agreement would be insufficient to limit warming to 1.5°C, governments then agreed to update those targets. 

In 2023, they agreed to revise these targets, and, according to the latest arrangement, countries will have to submit reworked NDCs for 2035 before this year’s climate summit in Brazil. 

Reports suggest that only 20 countries have so far submitted 2035 NDC targets, while 173 countries are yet to do so. India is also among the laggards as the country missed the initial February deadline of submitting the 2035 NDCs. It is not clear when India will draw up the revised NDCs as financing remains a big issue. 

Past experiences indicate that financing is a key determinant for developing nations to draw up and execute NDCs. And, developed and developing nations are perennially at loggerheads on picking up the financial tab for climate change. 

As a result, governments often fall behind in meeting climate targets and are loath to go into fresh commitments. Experts say that to navigate challenging times and capitalise on the $2-trillion clean energy market, there is an urgent need for active stakeholder involvement from various countries and sectors to combat climate change and share its benefits.

In this context, it could be challenging for governments to respond to Stiell’s plea and incorporate trade and economic parameters and submit revised NDCs before the Brazil climate summit this year. 

However, given the immense economic benefits, other than trade, that well-planned NDCs can deliver, countries will do well to take note of Stiell’s request and work on their future strategies as the fight against climate change is not a one-time event but a sustained process.

Authored by Abhijit Kumar Dutta