Energy Could Be a Key Area of Cooperation for the U.S. and China

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Gou Yige / AFP / Getty Images

A coal mine at Holingol, in China's northern Inner Mongolia region

Going into the U.N. global-warming summit in Cancún last month, U.S. negotiators had one big reason to be worried: China. At the 2009 climate summit in Copenhagen, an obstinate Beijing repeatedly blocked progress on an agreement, with Chinese negotiators even snubbing President Barack Obama when he arrived for last-minute talks. China signed onto the limited agreement Copenhagen did produce only reluctantly, and during much of 2010 seemed to back away from any climate commitments — although U.S. failure to pass climate legislation during the same period didn't help. When they arrived in Cancún, American diplomats were worried that they would face a Chinese wall again — and this time they said they were all but willing to abandon the U.N. climate process if Beijing didn't play ball.

Maybe it was the sunny clime, but Chinese negotiators went to Mexico ready to compromise. The result was the Cancún Agreements — not a legal treaty, but a diplomatic pact that for the first time committed both developed and developing nations (including China) to act on greenhouse-gas emissions. That agreement bolstered the faltering international climate process, but it also provided hope that the U.S. and China — increasingly at odds over the global economy and geopolitics — might be able to come together on climate and energy. "Our cooperation at the U.N. climate conference in Mexico was critical to the conclusion of the Cancún Agreements," said U.S. Secretary of State Hillary Rodham Clinton in a speech on Jan. 14. "Now we must build on that progress by implementing the agreements on transparency, funding and clean-energy technology."

This week, there will be a splendid opportunity to do just that, when Chinese President Hu Jintao makes a state visit to Washington to meet with President Obama. Though the agenda will be packed with knotty global issues — trade and currency policy, North Korea and human rights — climate and energy will be a focus of the meetings as well, and could provide a welcome area of accord and agreement. If so, the benefits will flow well beyond merely China and the U.S. "This is not just a matter of the two countries," says Zou Ji, China country program director for the World Resources Institute. "It's a matter for the entire world."

The good news for those who do care about the entire world is that when it comes to energy, China and the U.S. have been forging an alliance under the radar since before Obama moved into the White House — and it began to yield results shortly after. In November 2009, the two governments launched the joint U.S.-China Clean Energy Research Center. The project has headquarters in both countries, with teams of scientists and engineers supported by at least $150 million in funding over at least the next five years, split evenly between the U.S. and China. (That time frame is important — many research projects are rarely assured of more than a few years of funding.) The initial research priorities include building energy efficiency, clean coal, and carbon capture and storage — areas that both countries, which depend heavily on coal, are motivated to push forward. That is helped by the fact that both nations also have scientific and engineering expertise to bring to the table. "This is not a zero-sum game," says Kate Gordon, vice president for energy policy at the Center for American Progress.

At least, that's the hope. But while American and Chinese scientists can freely cooperate on energy research, clean tech hasn't been excluded from the economic competition that has complicated other parts of the Beijing-Washington relationship. Last year the United Steelworkers called on the Obama Administration to launch a formal investigation into whether China is violating international free-trade agreements by providing unfair assistance to its clean-tech sector. That help includes offering government export subsidies, low-interest loans and access to cheap land for factories. (The steelworkers have pushed the issue because of union fears that Chinese dominance in clean tech could mean more manufacturing jobs outsourced abroad.) While it's not clear where the complaint will go — last month the U.S. requested consultations with Beijing, which could be a prelude to taking up the matter with the World Trade Organization — the dispute could undermine broader cooperation on energy and climate, especially with Congress growing increasingly suspicious of China. "I worry that short-term political opportunism could derail long-term needs for both countries," says Elizabeth Wilson, an associate professor of environmental policy and law at the University of Minnesota.

Do the steelworkers have a case? Certainly China has lavished investment on its burgeoning renewable-energy sector, both to build a solar-photovoltaic industry for export and to grow wind power at home. (China invested over $50 billion in clean tech last year, and now has over 40 gigawatts of installed wind-power capacity, more than any other nation in the world.) But China defenders say that Washington can hardly accuse Beijing of cheating when America largely refuses to act on climate and energy. "The Chinese are not saints, and they play a tough game," says Robert Kapp, a former president of the U.S.-China Business Council. "But they're putting their money where their mouth is."

Certainly American businesses will oppose any trade action against Beijing — they want a slice of China's growing domestic clean-tech market, although Beijing guards access closely. But at the same time, environmentalists have sold climate and energy action on the promise that it will deliver green jobs to American workers. If they see photovoltaic factory jobs going to Chongqing, rather than Columbus, Ohio, good luck getting comprehensive energy and climate legislation passed. Still, the threat of climate change is so enormous — and the need for the two major world powers to find some common ground so necessary — that you can count on a few clean-tech trade agreements coming out of Hu and Obama's time together. "The world can't afford to have either of these countries stand on the sidelines," says Kapp. It's up to the U.S. now to get into the game.