It's not yet February and the biggest climate change story of the year may already be written. The story is simple enough--as the U.S. drags its heels on clean energy, China marches ahead.
China's leaders may be concerned less by global warming itself than by the economic consequences of suffocating air pollution in its major cities, but they are nonetheless launching dozens of new clean energy projects this year in the electricity generation, transportation, and manufacturing sectors. The country's twelfth Five Year Plan, to be formally adopted in March, sets out ambitious benchmarks for increasing renewable energy and efficiency while reducing greenhouse gas emissions through the mass deployment of wind turbines, solar panels and other green technologies. Responding to these signals, Chinese and foreign companies alike are rushing to stake their claims in what a recent report by Ernst & Young called the world's most attractive market for renewable energy.
Meanwhile, the Obama administration is complaining to the WTO that Chinese subsidies for wind turbines violate international trade rules. This charge strikes many in China as particularly hypocritical, since the U.S. argued that its failure to ratify the Kyoto Protocol was due to concerns that China would gain a competitive advantage as the U.S. shrank its carbon footprint. Now China is leapfrogging ahead of us on solar and wind power, and the worry has become that we cannot compete on clean, not dirty, energy.
Fortunately, a visit to Washington next week by Chinese President Hu Jintao provides the perfect opportunity for a different kind of narrative, one characterized less by competitiveness and pessimism than by cooperation, creativity and confidence about our shared future.
Climate change is not high on the list of issues for negotiation when President Hu sits down with President Obama at the White House on Wednesday. The leaders already have much to discuss, from China's persistent trade surplus, distorting currency controls and nonexistent intellectual property protections to North Korean belligerence and Iranian sanctions. But it would be a mistake to sideline climate and energy issues; U.S.-China cooperation in this area, even if largely symbolic for the time being, may help set the stage for a new round of climate change negotiations in South Africa this November. Moreover, a clear statement from Presidents Hu and Obama articulating a shared vision for bilateral cooperation on climate has the potential to elucidate solutions to some otherwise intractable international problems.
Here are three major themes for a new climate story this year:
Trade. The Obama administration's recent complaint at the WTO was initiated by a petition from the United Steelworkers union, which worries that Chinese subsidies for wind energy are undercutting U.S. manufacturers and jobs. There may be some truth to this charge, but the U.S. government subsidizes many of its domestic industries in contravention of trade rules (the 2009 bailouts of General Motors and Chrysler being only the most obvious example). Furthermore, countries such as Spain and the United Kingdom spend roughly the same proportion of GDP as does China on their own clean energy subsidies, with nary a peep from the U.S. As a signal of good will, President Obama should announce that he is dropping the WTO complaint on wind subsidies when President Hu comes to the White House next week. In exchange, he should pursue tough concessions from China on currency controls and intellectual property, and seek a bilateral statement on WTO reform so that international trade law does not continue to create barriers to the rapid deployment of clean energy technologies.
Innovation. China's demand for energy is soaring, while some in the U.S. worry that greenhouse gas regulations may hinder an already fragile economic recovery. New, clean technologies hold out tremendous promise for spurring future low-carbon growth, but most have yet to be commercialized on a scale large enough to drive down costs, leaving them uncompetitive with traditional fossil fuels. China's enormous domestic market provides the perfect real world laboratory for experiments in clean energy innovation, with winning ideas reproduced on a scale large enough to drive down costs worldwide.
The joint US-China Clean Energy Research Center, launched during President Obama's visit to China in 2009, is already showcasing cutting edge research on tough problems such as carbon capture and sequestration. In 2011, the U.S. and China should redouble efforts to find energy breakthroughs that can make a real difference on climate change, while ramping up production of proven technologies to make them cost competitive with coal and oil.
Development. Economic growth is lifting millions of people out of poverty in China and across much of the developing world. But in Africa, Asia, and Latin America, energy constraints threaten to choke off this growth just as it is getting underway. For many developing countries, the choice is not between cheap coal and expensive wind energy, but rather between relatively expensive power from whatever source is available and no energy (PDF) at all.
Again, the sheer scale of China's domestic market means that the manufacture of solar panels and wind turbines there can help bring down the cost of such technologies for everyone else. What's more, the growing presence of Chinese businesses in Africa and elsewhere in the developing world means that Beijing can help foster sustainable development in other ways, for example by mandating that Chinese state-owned firms operating overseas use wind turbines instead of diesel generators to power their new facilities. This small change can make a lasting impact, as infrastructure decisions made today can "lock in" a country's energy systems for decades to come.
At the same time, the deployment of clean energy at home will help quench China's rapacious thirst for foreign resources. And less dependence on imported oil from Iran, for instance, may make Chinese diplomats more agreeable to a tough sanctions regime. The U.S. and China should look for opportunities to work together on development assistance projects that prioritize clean energy technologies, while working to speed China's own transition to low-carbon growth.
Next week's U.S.-China summit may not yield a major breakthrough on climate change. But with any luck, the biggest climate story of the year will wind up featuring friendly cooperation between the worlds' top two greenhouse gas emitters, not bitter recriminations.