China–US Climate Change Deal Coming?

For many years China and the United States have faced off over climate change. Now, action is one of the few things the two powers can agree on. A new view on the benefits of climate action goes some way to explain this shift.

Since the start of international climate negotiations, China has insisted that rich countries must act first to cut emissions and should pay for the costs of emissions reductions in China and other developing countries. Meanwhile, the United States has insisted that China and other developing countries must be part of action on climate change and used China’s apparent inaction to excuse their own.

Things began to change with the 2009 Copenhagen Accord, where China pledged to cut the emissions intensity of its economy by 40-45 percent from 2005 to 2020. The US pledged to cut its absolute emissions levels by 17 percent over the same time period.

Many doubted that countries would comply with their pledges at Copenhagen because they were not legally binding. But both China and the US are now on track to meet their targets. This creates confidence that deeper reductions are possible for the 2020s. Much deeper cuts are needed to effectively address climate change, and new analysis done in 15 major countries under the Pathways to Deep Decarbonization project shows that this is possible.

All countries have been called on to submit their pledges for the post-2020 period by the end of March 2015, to become part of a new climate agreement at the December 2015 Paris Conference of Parties to the UN Framework Convention on Climate Change.

The US and China see themselves as leaders in this process. It is understood that Chinese and US experts are working in tandem on analysis for the pledges, and it is widely thought that they are planning early announcements, possibly before the end of the year. The two largest emitters revealing their pledges early would set the global benchmark. The fact that there are few other issues the two countries agree on may help make climate change a priority in bilateral relations.

At the 2014 UN climate summit on Sept. 23, China announced that its future commitments will result in a peak of its carbon dioxide emissions “as soon as possible” and reaffirmed the commitment to a national carbon market.

Behind the change is not so much altruism about limiting future climate change, but a new facet of national self-interest driven by circumstances and, to some extent, a change in perceptions.

For China, urban air pollution has become an issue of high importance. Coal plants in and near the northern and coastal cities are being closed down. Bans on low quality coal have been brought in. As well as air pollution, China’s policy change is about physical and economic energy security. China imports an increasingly large share of its oil, coal and gas. An energy system running on fossil fuels is vulnerable to trade disruptions and fuel price fluctuations. Greater energy efficiency and more renewable energy is the answer.

China is also motivated by the prospect of becoming a leader in emerging energy technologies. It has become the world’s largest producer of solar panels and wind turbines. And the race is on for global leadership in transformative energy technologies such as electric cars and smart electricity grids.

Across the Pacific, new methods for extracting gas and oil are revolutionizing the energy sector, with large volumes of cheap unconventional gas displacing coal. This makes it easy to cut carbon emissions from coal combustion and underpins the Obama administration’s new regulatory standards for power stations. There is also sizeable investment in improving energy efficiency and deploying renewable energy generators, both of which may offer large and easily accessible emissions reductions in America.

As pointed out by the New Climate Economy group climate change action is also in the economic self-interest of nations. Actions to cut emissions can enhance economic growth by raising efficiency in the use of resource, investment in low-carbon infrastructure and stimulating innovation. In this view, there is not necessarily a trade-off between growth and climate protection, not even in the short term.

This perspective jells with the vision put forward by China’s leadership — that is, that China should shift to a more balanced and sustainable model of growth that also improves environmental outcomes. The New Climate Economy report was launched in Beijing with speeches by very senior politicians last month.

But fossil fuel producers and exporters are not so easily convinced. With very large amounts of fossil fuel money highly concentrated in the hands of owners of large installations and mines, it is no wonder that there is a powerful backlash against the idea that a transition away from fossil fuels is not just possible but desirable.

Australia and Canada, under their present governments, are examples of fossil fuel politics. With Australia’s climate pendulum having swung to an extreme, the Abbott government has recently defended brown coal, the world’s dirtiest large-scale fuel, as an energy source of the future.

The alternatives are plentiful. As shown in our contribution to the Pathways to Deep Decarbonization report, Australia can be an energy superpower in a low-carbon world. Australia has overwhelming potential for renewable energy. A low-carbon world economy would be eminently in Australia’s interest, as it is one of the developed nations most vulnerable to the impacts of climate change.

This is not to belittle the magnitude of the task of transitioning to a low-carbon economy. It would need to be done with care, balancing interests across different groups, and in the context of widespread international action.

The question is whether and to what extent the superpowers will choose to push for change in the fossil fuel supplying countries. We will see the outcome when Australia and Canada announce their post-2020 climate pledges — just don’t expect them to go first.

Frank Jotzo is Director of the Center for Climate Economics and Policy, Crawford School of Public Policy, the Australian National University. He wrote this for the East Asia Forum, based out of the Crawford School of Public Policy at the Australian National University,