by Pier Paolo Raimondi, Margherita Bianchi, Nicolò Sartori, Maria LelliThe External Dimension of the Green Deal, between Cooperation and Competition IAI - Istituto Affari Internazionali2Paper produced in the framework of the IAI-Enel Foundation project “European Green Deal: Reaching Beyond Borders”, October 2022.Pier Paolo Raimondi is Research Fellow in the Energy, Climate and Resources Programme at the Istituto Affari Internazionali (IAI) and PhD candidate at the Università Cattolica del Sacro Cuore, Milan. Margherita Bianchi is Head of the Energy, Climate and Resources programme at IAI. Nicolò Sartori is Senior Researcher at the Enel Foundation. Maria Lelli is Researcher at the Enel Foundation.Copyright © 2022 Istituto Affari Internazionali (IAI)Via dei Montecatini, 17 – I-00186 RomeTel. +39 066976831iai@iai.itwww.iai.itISBN 978-88-9368-272-5 IAI - Istituto Affari Internazionali3IntroductionClimate policy has taken centre stage in the political debate since the 1990s mainly driven by scientific awareness, rising socio-political pressure and clearer perception of the cost of inaction.1 The Paris Agreement has raised the global consensus on climate to a whole new level – in such a powerful way that Daniel Yergin affirmed we can define two eras: “before Paris” and “after Paris”.2 Differently from the Kyoto Protocol’s top-down architecture, Paris offers greater flexibility, with nationally and internationally determined elements that can be combined in many ways, making it easier to sit at the table. The important milestone reached in Paris illustrates the positive benefits of cooperation among major economic superpowers, such as the European Union, USA and China, within the international climate framework, starting from the United Nations Framework Convention on Climate Change (UNFCCC) arena. The Paris Agreement also served as a compass for government action and the engagement of financial institutions in the wake of the Covid-19 pandemic – in Europe, NextGenerationEU is conceived as a tool to support the political vision of the Green Deal. A further steep acceleration has occurred in the past three years. An increasing number of countries have been announcing carbon 1 Implementing mitigation measures makes sense in financial terms, as investing toward that global goal of net-zero by 2050 is estimated to be by far outweighed by the related economic benefits. See Natalie Marchant, “This Is How Climate Change Could Impact the Global Economy”, in World Economic Forum Articles, 28 June 2021, https://www.weforum.org/agenda/2021/06/impact-climate-change-global-gdp; and Andrea Januta, “Economists Support ‘Immediate and Drastic Action’ against Climate Change”, in World Economic Forum Articles, 1 April 2021, https://www.weforum.org/agenda/2021/04/economists-global-action-climate-change-natural-disasters.2 Daniel Yergin, The New Map. Energy, Climate and the Clash of Nations, New York, Penguin Press, 2020.The External Dimension of the Green Deal, between Cooperation and Competitionby Pier Paolo Raimondi, Margherita Bianchi, Nicolò Sartori and Maria Lelli IAI - Istituto Affari Internazionali4neutrality targets by and around mid-century3 and have committed public and private spending in low-carbon energy sectors.The EU has increasingly taken the lead in global climate ambitions with the European Green Deal (EGD) as major institutional mover in this field. The EU aims to become the first climate-neutral continent by 2050 – a goal enshrined into legislation with the European Climate Law.4 In 2021, the European Commission turned the net-zero vision into real-world policy proposals by releasing its strategy (the Fit for 55 package5) to accelerate the transition in the 2020s. The EGD is evidently a decarbonisation strategy – but also much more than that: the EU has elevated it to its normative vision, a new economic growth paradigm, a fresh narrative for the revitalisation of the European integration project and a potential route to a political Union.What is clear is that, besides internal transformations, the EGD will have a significant external impact in a globalised and connected world. Amongst the most obvious consequences is that the EGD might trigger effects on hydrocarbon-producing countries, for which the EU is and has been a key destination market; or it might have implications on trade, which should increasingly need to consider the carbon component of its products.6 The EU will need to elevate its foreign policy to the challenge and engage with other countries, manage the direct and indirect geopolitical repercussions of its EGD, foster its green leadership and a “global just transition”, and recognise that decarbonisat