What happens to climate in a winner-takes-all world?
The rise of neo-mercantilism is dangerous, but might not be all bad
January 22, 2026 — Financial Times economics commentator Martin Wolf recently offered an intriguing way of thinking about the strange new world we find ourselves in 2026: a revival of the mercantilist worldview that dominated diplomacy in the 17th and 18th centuries.
“Mercantilists’ underlying belief was that international economic policy is primarily a tool of state power,” Wolf writes. “Since power, unlike prosperity, is relative, mercantilists think of international economic engagement as ‘zero sum’: you win, I lose.”
China, Wolf asserts, has long been more-or-less open in its strategic use of industrial sectors – think EVs, solar technologies, and more recently rare earth metals. It’s now plain to see that the Trump administration sees few limits to its use of economic levers. Export controls, investment restrictions, industrial policy, and supply-chain re-shoring now sit alongside tariffs as core instruments of American power. For the rest of the developed world, neo-mercantilism is a rude shock, particularly when the global, liberal, free-trade paradigm of the past several decades has delivered unprecedented global economic growth and prosperity.
If Wolf is right, what will be the impact on climate?
The obvious answer is “nothing good,” at least in the short term. Continued efforts to undermine global climate initiatives – like the US pulling out of the Paris Agreement and blocking the International Maritime Organization’s plan to price carbon emissions from shipping – make it much harder for countries to cooperate to counter climate change.
But there are reasons to be more optimistic, particularly over the longer term.
First, US Presidential rhetoric does not necessarily reflect the reality on the ground. In the US, official figures forecast that renewable energy will continue to grow strongly, far outpacing estimated growth for oil and gas. And despite Trump’s vocal support for it, his own US Energy Information Administration expects coal to decline even further.
Looking beyond the US, however, it has long been clear that the effectiveness of global climate action will depend in large part on the developing world: More than 90% of emissions growth is projected to come from emerging and developing economies. According to the International Energy Authority, by 2030 almost all of the world’s growth in electricity demand and new power capacity will come from emerging and developing economies. And between now and 2040, Asia alone will account for two-thirds of global energy demand growth.
Most of the developing world’s growing energy demand will very likely be met by green sources, driven by both economic considerations and energy-security needs. Much of that shift will be enabled by neo-mercantilist China, which dominates the relevant technologies and supply chains, enabling it to make cheaper and more reliable alternatives to fossil fuels readily available.
Pakistan shows how quickly this change is already happening: between 2019 and 2025, imports of cheap and accessible Chinese solar panels exceeded the country’s entire previously installed power generation capacity. Urbanisation will also be a driver: as the world adds roughly 2.5 billion new urban residents by 2050, almost entirely in developing countries, China is well positioned to make sure that the majority of new city-dwellers get around using its electric cars, buses and trains.
China’s neo-mercantilist competitors will no doubt be wary of swapping their dependence on US, Russian or Middle Eastern fossil fuels for a dependence on China’s clean energy technologies. Unlike fossil fuels, which economies must keep buying at volatile prices, however, clean technologies are purchased once and then deliver benefits for years at almost no marginal cost. That will tip the balance for many, if not most.
China’s prowess in these climate-friendly sectors is rightly lauded. But don’t count out the US. From nuclear fusion to industrial thermal energy storage, hydrogen-electric aviation, zero-carbon cement, and not least AI-driven energy systems and smart grids, the US remains a formidable source of innovation. Any neo-mercantilist US administration is likely to back continued development and ultimately global adoption of these innovations. The same could be said for Europe’s support of its own leadership in offshore wind, grid management, green hydrogen and industrial decarbonisation.
While the rise of renewable energy won’t be halted by a new, neo-mercantilist world order, fossil fuels will remain strategically vital in the short term. Indeed, fossil fuels are among the primary tools neo-mercantilist powers like the US can use to assert their power, or, in Russia’s case, pay for their continued aggression. But if global demand for oil and gas decreases over the long term, as many expect it will, the intrinsic power of oil and gas-rich states will naturally diminish.
Renewables will weaken the old, fossil fuelled global power structure, but they won’t eliminate energy geopolitics. Which countries will emerge as winners or losers will depend on who controls the manufacturing, minerals, grids, and technologies that replace oil. As Wolf makes clear, the rise of neo-mercantilism presents massive challenges and is a clear and immediate threat to global stability. But – if we manage not to blow each other up first – it may also nudge us closer to a more sustainable future.