Ask the ChinaFAQs Experts: “With New Chinese Leadership, What Are the Prospects on Climate & Energy Policy?"

Chinese Vice President Xi Jinping, expected to become president next year, is visiting Washington the week of February 13th. This has drawn attention to the future of the U.S.-China relationship. The visit presents an attractive platform to discuss climate and energy issues, which have often represented areas of cooperation between the two countries. We asked our panel of ChinaFAQs experts to provide their insights on top issues for new leadership to address on climate and energy, as well as prospects for the U.S.-China relationship on climate and energy under a Xi presidency.

Image on the left courtesy of Barack Obama and licensed for reuse under this Creative Commons License. Image on the right courtesy of Eric Draper and is in the public domain.

Deborah Seligsohn

Principal Advisor, China Climate & Energy Program, World Resources Institute

Chinese Vice Premier Xi Jinping, all but assured to be the successor to President Hu Jintao, will be visiting the US the week of February 13th. These visits by successors have become an important part of both the grooming process for Chinese leaders and ensuring stable diplomatic relations between the United States and China. It gives leaders in the United States, not just within the government, but in the business, non-profit and academic communities, a chance to establish some rapport with this likely leader, and it gives him a chance to get to know them and to establish his approach to international diplomacy when the scrutiny is somewhat lower than it is for a sitting Chinese President.

Somewhat lower scrutiny, however, is a fairly high bar, especially at this time in US-China relations. In fact, President Obama just singled out China’s trade practices as of concern in the State of the Union address. Trade and investment disputes are just one of many issues on the table during Xi’s upcoming visit (for a full list of hot issues, see the Congressional Research Service’s preview of the visit. Xi’s itinerary has changed some since this was posted to the web, but the list of top issues is very handy.) Much of what will engage Xi and his interlocutors, including President Obama, are political and security issues, but the CRS mentions a huge economic issue, "China’s economic model."

The reality is that much of what concerns businesses and workers in the United States is not so much individual programs or specific trade infringements, but the appearance that China has structured an economy toward promoting the success of its businesses. However, that is what the President, and many in Congress and among the American people would like to do for the United States, as well. As there is concern about Chinese support for renewable energy, for example, many Americans also would like to see support for the US wind and solar industry. But China and the United States often use quite different approaches to promoting these types of goals.

Nevertheless, many of the challenges we face in the United States are those that China faces, too. In overall economic terms, China, too, is highly concerned about sustaining growth and generating enough new jobs for its workers. When we look specifically at energy and the environment, the two countries have a number of shared challenges, including

  • How to develop renewables as a cost effective and significant part of the total energy mix,
  • How to address the carbon dioxide from fossil fuel use, including developing carbon capture, use and storage technologies (CCUS),
  • How to promote energy efficiency, especially in buildings and transportation,
  • How to use unconventional natural gas (especially shale gas) in an environmentally safe and responsible manner,
  • How to improve air and water quality, while promoting jobs and development,
  • How to ensure the public has access to the information it needs and can participate effectively in the many decisions and trade offs that are inevitably part of these policy choices.

Bilateral meetings are often framed around issues or opportunities, but in reality the two go together. There are indeed benefits to be gained by the US and China working together in energy and the environment and seeking to build on each other’s success. But we need to recognize that each country also is pursuing its own national interest. Cooperation will be best served by discussions that address not only how to work together in areas of convergence, but how to manage competition fairly and transparently.

Stephen Hammer

Lecturer in Energy Planning, Department of Urban Studies and Planning, Massachusetts Institute of Technology

From a global energy and climate perspective, China’s urbanization trends are one of the most critical factors going forward, and there is much that is already being done to put China’s fast growing cities on a more efficient, low carbon path. Other ChinaFAQs commentators will likely have much to say about the adequacy of these efforts.

However, part of any successful low carbon strategy necessarily involves a strategic focus on economic development, emphasizing the growth of manufacturing and service firms that can supply both local and global market demand for clean energy, clean water, and other ‘green’ technologies or services.

This notion of green growth plays extremely well with local government officials in China responsible for improving local environmental quality, but a fundamental retooling is necessary if such growth is to be maximized. The default approach emphasizes a business-as-usual mentality, meaning cities look to these sectors solely in export opportunity terms. China has clearly heard the siren call for new energy technology, and is working overtime to satisfy global demand for inexpensive solar and wind systems. Chinese firms will likely also play a major role in meeting growing global demand for electric vehicles and car batteries. What’s missing, however, is the focus on local needs and opportunities.

Are local officials working similarly hard to promote energy efficiency in local industries or improve their waste management system and water supply and treatment network? Absolutely. But rarely is this planning or investment being done in a way that strategically uses these initiatives to maximize sectoral job creation, promote local innovation clusters, or build links with local schools and universities to create career pathways for local workers. Part of the problem lies with the traditional siloed nature of local government in China, where different departments are responsible for economic planning and environmental protection or services. In this regard, Chinese cities have much in common with cities in the west, but Central Government can do more to push local government to break down these walls, promoting more effective joined-up thinking.

In some cases, there is little activity because the baseline information necessary to promote local green growth is lacking. There are unfortunately few cities in China that have vulnerability assessments detailing how climate change may affect that city. Such analyses are critical, however, because they point to specific areas of action and job growth potential. This can include a heightened need for ‘green infrastructure’ to handle water runoff from extreme weather events, or vulnerabilities of a newly constructed power plant or mass transit system to sea level rise. In the case of green infrastructure, construction and maintenance jobs can be created, while in the case of a vulnerable power plant, it may imply both the production and installation of distributed generation technologies. Absent the baseline climate vulnerability assessment, however, businesses in each sector may develop very slowly, if at all.

Over time, local officials will inevitably wake up to the value of a locally-oriented green growth strategy, as they see other cities benefit in multiple ways from such planning. Job numbers may not be high at first, but given the massive environmental and energy needs of many cities, local green jobs could ultimately employ thousands of low or moderately skilled workers. Cities win, China wins, and the rest of us win if Central Government amplifies its focus on the role of local green growth as an integral component of the country’s low carbon city planning efforts.

Joanna Lewis

Assistant Professor, Georgetown University

Chinese Vice-President Xi Jinping’s visit to the United States comes at a contradictory time in clean energy relations between the two countries. On the one hand, significant progress has been made under the clean energy cooperation agreements signed by Presidents Hu Jintao and Barack Obama in the fall of 2009. On the other hand, the two countries may be on the verge of a clean energy trade war. As a result, the positions that Xi and Obama take on these issues over the next week may well set the tone for the future of that relationship for better or worse.

China and the United States have launched numerous energy cooperation initiatives during the past 30 years. Only over the past decade, however, have they become global leaders in the relevant technologies, both as users and manufacturers. China now leads the world in wind power deployment, followed by the United States. Chinese investments in clean energy exceeded those of any other country in both 2009 and 2010, but the U.S. was back to number one in 2011 (where it had been for several years prior to 2009). The seven new bilateral clean energy initiatives launched in 2009 focused on key areas, including renewable energy, advanced coal technology, energy efficiency and electric vehicles. The US-China Clean Energy Research Center (CERC) in particular has established a new model for cooperative clean energy research, development and demonstration that spans the public and private sectors and involves top researchers from universities and national laboratories in both countries. These programs have propelled numerous other collaborations, some of which—if the two sides decide to emphasize clean energy cooperation over competition—may be included in major announcements during Xi’s US visit.

However, at the end of last year the United States initiated antidumping and countervailing duty investigations into China’s practices in the solar and wind sectors, and the Department of Commerce will decide soon whether to impose duties on Chinese solar panels and wind turbine components. Meantime, election year politics and a slow economic recovery are fueling competitive tensions, and President Obama announced in his State of the Union address last month that he would establish a new trade enforcement unit to speed investigations of unfair trading practices by China. Beijing has (not surprisingly) responded with its own investigation into American clean energy support programs. This comes as the US renewable energy industry is increasingly divided over China’s role. For example, the “Coalition for Affordable Solar Energy” (a US solar industry association) has asked the “Coalition for American Solar Manufacturing” (another US solar industry association) to drop its petition which launched the solar panel investigation. A CASE report estimates that higher US import duties on Chinese solar panels will eliminate up to 60,000 American jobs and hurt US consumers even more than US producers.

We are entering a period in which the incentives for conflict may overpower the incentives for cooperation. China and the United States are the world’s two largest economies, and should be leaders in establishing and enforcing the rules of the global trading system. But as the largest producers and consumers of energy, as well as the largest greenhouse gas emitters, they also have a responsibility to develop domestic, clean and affordable sources of energy for themselves as well as for others. Both nations recognize the vital importance of strengthening innovation systems to inspire economic competitiveness, and both are increasingly becoming the leaders of the clean energy industry. These technologies are global industries with global supply chains, however, and national technology providers increasingly are crossing borders for both innovation and production. Our leaders would be well served to focus on how the two nations can work together to develop crucial energy technologies for the future, rather than on how to create even more obstacles.

This article was published by

Alex Wang

Visiting Assistant Professor of Law, UC Berkeley School of Law

Some sobering developments confront us on the climate and environment front as Vice-President (and future head of China) Xi Jinping prepares to visit the United States this week. Despite an unprecedented push to reduce pollution and develop cleaner energy sources, China’s emissions of greenhouse gases and traditional pollutants have continued to soar. Chinese annual greenhouse gas emissions (GHGs) surpassed the US in 2007. In 2010, they were 20% greater. By 2015, Chinese GHGs are projected to exceed US emissions by 50%. In the meantime, opponents of climate change action in the US – the world’s largest historical emitter of GHGs – have largely been successful in blocking comprehensive federal action on climate change, and US efforts to develop “green tech” industries remain fragile and under continual attack.

In past meetings, the US and China have established a modest, but constructive, platform for clean energy and environmental cooperation. But, given still-weak progress toward a comprehensive climate solution, what should China and the US do next to build upon this foundation?

What the US can learn from China – embracing the economic opportunity in clean energy and environmental protection.

In its 11th and 12th five-year plans, China has turned to clean tech and environmental protection industries as a way to upgrade its economy and build profitable, job-producing industries for an energy-constrained 21st century. Energy security and continuance of China’s “economic miracle” are prime motive forces. In the US, we know the global competition for energy resources will continue to increase, and we are well aware of the tremendous costs of fossil fuel use. Yet, we have been unable to take the steps necessary to compete for the clean energy industries of the future. The point that the US is losing out to China in the clean energy race has been made many times in recent years. But it needs to be made again. We have either not heard the message, or those with a stake in the fossil fuel economy have been too successful in blocking efforts to move the US toward a cleaner, more prosperous future.

What China can learn from the US – implementation.

China’s efforts to promote energy efficiency and pollution control have born some fruit. But weak rule of law and limited transparency have allowed long-standing implementation problems to persist. Some of the worst problems occurred in 2010 when a number of cities shut down power to hospitals or other public services in order to “meet” energy efficiency targets. The recent PM2.5 (fine particulate) air pollution controversy in Beijing has thrown China’s data quality problems into stark relief. Stories of power plants installing, but not using, pollution control equipment abound. These sorts of implementation problems damage the credibility of China’s environmental efforts, and make it difficult for China to improve energy security and limit the harms of environmental degradation. Power outages and “cancer villages” do not go away just because environmental targets have technically been met. Genuine implementation needs to occur. In this respect, the US has a great deal to offer. It has a mature enforcement framework with a long history of successfully enforcing environmental laws without slowing economic growth. Continued US-China collaboration on enforcement and rule of law can help China to bolster its ability to implement its goals at the local level, and offer the globe some breathing space as it looks for broader solutions to climate change.

In recent years, climate change and environment have become central issues in the US-China relationship, yet these problems remain far from a resolution. Let’s hope the two nations take advantage of Xi’s visit next week to push forward more concrete initiatives and meaningful further action.

Angel Hsu

Doctoral Student, Yale School of Forestry and Environmental Studies

Climate change and energy issues will undoubtedly be central issues for a China under Xi Jinping’s new leadership. Although China was successful in achieving a 19.1 percent reduction in energy intensity during the 11th Five-Year Plan period, duplicating these reductions will be more difficult when Xi ascends China’s top leadership position. The IEA reported that 2010 was a record year for emissions globally, and, although China’s carbon intensity decreased, its overall emissions increased. With most of the low-hanging fruit to achieve efficiency gains already picked, U.S.-China cooperation on technology will be critical in working collaboratively and innovatively for China to meet carbon intensity reduction goals outlined in the 12th Five-Year Plan.

Xi’s meeting with President Obama could help to ease tensions over clean energy subsidies that may threaten future cooperation on climate change and energy. Positive dialogue last January during President Hu Jintao’s meeting with President Obama led to announcements by the Chinese that they would end domestic subsidies for its wind industry. This move was seen as a huge success by U.S. trade representatives, and similar discussions this round could also set a positive tone for cooperation on clean energy during the new leadership.

Xi will also have to better define China’s role in global climate negotiations. Overall, China played a constructive role in the latest round of UN climate talks in Durban through its openness and willingness to discuss binding commitments post-2020 and discussion of absolute emission targets by Chinese experts. However, although China demonstrated considerable leadership in Durban, the country still appears unsteady in this position, with recent opposition to the E.U.’s plans to tax airlines for carbon emissions. This tension portends a China that continues to play a constructive role in the global climate regime and further its own efforts on climate change, but largely keeping its own domestic interests in the forefront – a position not too unlike that of the U.S.

Isabel Hilton

Editor, Chinadialogue

When the man who will most likely be China’s next president meets the man who will most likely be re-elected US president, it’s wise not to expect any concrete outcomes. Domestic political priorities will be on both men’s minds: Xi Jinping’s road to power may be less transparent than Barack Obama’s re-election campaign, but the contest is none the less intense and brutal for that. Xi needs to demonstrate that he can handle top-level dealings with China’s key strategic rival. President Obama needs to show his political critics that he can defend US interests against a contentious rising power that many in the US believe to be accelerating US decline. It is not a conjuncture likely to produce a groundbreaking deal.

Demonstration exercises for domestic constituencies have their importance, however. If they go wrong, they threaten future, more substantive meetings, and this one comes with complications for potential future partnerships in renewable energies. In theory, there is much to gain: the combination of US technologies and Chinese low cost manufacturing and large markets could bring benefits to the world’s two largest emitters of greenhouse gases – between them they account for 40 per cent of the world’s current emissions. Better, cheaper and more widely available clean technologies are urgently needed. Getting to real cooperation, however, has proved difficult.

To add to complaints of Chinese IP theft, there is now the contentious question of subsidies, with each side accusing the other of unfair practices. The global clean energy sector is worth $240bn a year, but in two key sectors, wind and solar, manufacturers are struggling with over-supply and faltering demand. Since the US investigation into Chinese wind subsidies in 2010, and further investigations in 2011 into Chinese solar cells and panels, China has come under pressure from its own domestic industries. The result is an investigation into US subsidies for clean energy and Chinese hints of for counter-measures. In the spotlight are $1.7 billion US sales of polysilicon, used in Chinese solar panels. Mutual recriminations and threats of retaliatory action are currently drowning out the warmer messages.

The spectacular -- and, for some, threatening -- growth of China’s wind and solar industries is not necessarily the product of strategic subsidies. China still enjoys cheap labour and a large domestic market, along with impressive supply chains and the benefits that come with economies of scale, all of which have helped to generate a China price that has brought the cost of some renewables almost to par with fossil fuels, threatening the viability of the industry elsewhere and stimulating calls for higher tariffs and anti-dumping measures against Chinese imports.

But the issue is more complex than simply unfair Chinese subsidies. US subsidies of fossil fuels, the lack of a global climate deal and the political warfare that rages around the commitment to clean energy in the US have helped to undermine domestic renewables. The cuts to subsidy regimes for renewables programmes in Europe, brought on by the global financial crisis, have weakened the global market and left Chinese manufacturers overstocked with unsold goods. Despite the chilly atmosphere, however, the overall trade picture is brighter than these exchanges suggest. Although the EU remains China’s largest trading partner, Sino-US trade continues to grow, reaching a new high of $446.7 billion last year. US exports to China grew by 20 per cent to $122.2 billion in the same period. Both sides stand to lose if these incipient trade disputes get out of hand and the potential gains from cooperation remain tantalizingly seductive. This visit, however, is unlikely to resolve the immediate difficulties: the best outcome would be a promise to keep the potential gains in sight and to go on talking in a constructive spirit.

Kevin Tu

Senior Associate, Carnegie Endowment for International Peace

Once the Communist Party of China convenes the 18th National Party Congress in late 2012 to make critical personnel changes at both national and sub-national levels, the Chinese new leadership will immediately need to deal with at least the following climate and energy challenges: first, after China surpassed the United States as the world’s largest carbon emitter in 2006, Beijing has reluctantly agreed to join a post-2020 international climate regime with legal force by 2015 under the Durban Platform for Enhanced Action in December 2011. Nevertheless, according to the International Energy Agency, China alone is projected to account for more than 40 percent of worldwide growth on carbon emissions by 2035. So how to balance China’s continuous need for economic growth with the pressing requirement of global environmental integrity will be a rather sticky political issue for Chinese new leadership to address in the years to come.

Second, coal has undoubtedly played a key role in China’s rapid economic growth since the country was opened to the outside world in 1978. Nevertheless, China’s heavy reliance on coal has also created enormous environmental, social and safety challenges. In 2009, carbon dioxide emissions from Chinese coal combustion alone have exceeded national carbon emissions of the United States. Since the inception of the People’s Republic of China in 1949, more than 250 thousand miners have died in China’s numerous mining accidents. Not surprisingly, how to improve efficiency, reduce the environmental and carbon footprint, and ensure safety throughout the Chinese coal value chain — from coal mining, to preparation, transport and end use — has become an imperative policy challenge for Chinese new leadership to address.

Third, after a prolonged and often turbulent government restructuring process, the administrative power of China’s energy sector is still fragmented among many government agencies. To make the matter worse, Chinese national energy companies have behaved rather belligerently in both domestic operations and overseas markets. As a result, how to improve the effectiveness of China’s energy governance structure and tame those overly powerful interests in China’s energy sector is a rather pressing policy challenge for the new leadership.

While the list goes on, closer cooperation between China and the country’s major international counterparts especially the United States will be beneficial for Chinese new leadership to tackle the aforementioned climate and energy challenges. Even so, the prospects for Sino-US relations on climate and energy under a Xi presidency are expected to be rather uncertain. On the one hand, the need for closer collaboration between the world’s two largest economies has never been so pressing. On the other hand, how to overcome the increasingly counterproductive partisan politics in the United States and the overly aggressive state capitalism at the expense of the private sector and foreign companies in China will certainly require political wisdom from both sides. While the advance of each country’s climate and energy agenda with appropriate recognition of the other’s core national interests is considered to be extremely important, how to achieve a mutually acceptable or even a win-win bilateral collaboration on the climate and energy arena is still an open-ended question for top leadership in both countries to answer in the decade ahead.

Fuqiang Yang

Senior Adviser on Climate, Energy and Environment, NRDC China Program

Climate Issues

China and the U.S. account for roughly 42% of the world’s CO2 emissions. Hence, Chinese and U.S. government attitudes towards the climate change negotiations are critical. At the last climate change conference in Durban, the two countries strengthened mutual understanding and moved the climate change negotiations forward. Besides improving cooperation at the UNFCCC conferences, the two countries should also strengthen mutual understanding and make further progress at the G20 and Major Economies Forum (MEF) meetings.

China and the U.S. should continue to cooperate on climate change actions, especially bottom-up cooperation at the state-province level and between cities on low-carbon city plans. In addition, they should strengthen and focus on enterprise to enterprise and NGO to NGO cooperation, establishing China-US low-carbon city alliances, enterprise alliances and low carbon civil society organization alliances.

The countries should also solidify cooperation on technology transfer and exchange, a topic that is widely discussed at the climate change negotiations but is difficult to act upon. If China and the U.S. could make progress with technology transfer, it would greatly further technology transfer discussions at future negotiations.

Energy Issues

U.S.-China cooperation in the energy and environment field is among the most noteworthy areas of bilateral cooperation, with some of the most notable successes. To improve the effectiveness of this cooperation, the Chinese and U.S. governments should increase investment in cooperative projects by two to three times current levels, using both government and private funds.

Both sides are most interested in energy efficiency and should focus on building energy consumption in their bilateral cooperation, particularly energy efficient and green buildings. In addition, China and the U.S. should develop cooperation in the hotel industry. Although hotel buildings are few in number, they represent more than 5% of all building energy consumption and the potential for energy savings is great.

China and the U.S. in 2010 respectively consumed 3.22 billion and 1.0 billion tons of coal, making them the world’s two largest producers and consumers of coal. They should continue to strengthen cooperation on the development and use of cleaner coal technology, saving water and land and reducing pollution, furthering research on public health impacts and reducing or controlling the excess consumption of coal.

Shale gas development in the U.S. has huge potential for providing a cleaner energy source. The U.S. produced 141 billion cubic meters of shale gas in 2010, reducing its reliance on foreign natural gas. China and the U.S. both have abundant shale gas resources, and China is now beginning to exploit its shale gas. Many U.S. best practices in shale gas development policies and regulations; technology development; investment incentives; and environmental protection standards, water usage efficiency and pollution prevention, etc. would be worthwhile for China to study and adopt.

China and the U.S. should also strengthen exchange and cooperation on R&D, demonstration, and deployment efforts in a few key technologies, including CCS, bio-ethanol, solar power generation, new types of pollution-free nuclear power plants, nuclear fission, etc.

China and the U.S. are leading worldwide investment in renewable energy and should seek to resolve trade disputes and eliminate protectionist trade policies. The U.S. should carefully address sales of Chinese renewable energy products in the U.S. market and seek to reduce trade barriers. Similarly, China should investigate challenges facing the sales of U.S. renewable energy and other products in the Chinese market, and resolve cases of hidden discrimination so that both countries can mutually benefit.

Environmental Issues

China, in its 12th Five Year Plan, is developing PM 2.5 monitoring and abatement policies in most of its major cities. The U.S. is years ahead of China in research and abatement work on PM 2.5 and can offer China a great deal of valuable experience and lessons. The U.S. can also provide China a great deal of useful experience in other types of pollutant emission control and abatement, including for heavy metal pollution, mercury, NOx, HFCs, and black carbon.