US-China Cooperation is Good News for the Climate

The US-China Joint Announcement on Climate Change is a landmark for the bilateral relationship in terms of its specificity and ambition. This is especially true given that many Chinese wonder at the direction of US policy given that none of the Republican candidates in next year’s election support strong climate policy. While those in the administration have told me the subject has never come up in formal bilateral discussions, I suspect that is more in the nature of diplomatic politesse (don’t impugn the other guy’s government) than a reflection of real Chinese analysis. Chinese academics who directly advise the Chinese government have repeatedly raised the issue of the stability of US policy with me. But that means the Chinese commitment is all the more remarkable and is good news. President Xi Jinping has chosen this international “hand-tying approach” – making a formal public commitment where failure to meet it would be an international embarrassment – because he has domestic reasons to want to do more on energy policy and climate change.

The domestic drivers for the Chinese are not likely to surprise – the need to do something about China’s enormous air pollution challenge, the desire of the government to raise China’s industrial game into high-tech and value-added sectors and away from dirty, heavy industry, and their desire as well to see a real economic shift to services.

A nationwide cap and trade system will drive all these trends. The Chinese have actually committed to control far more sectors that the US. The US commitment is its power sector plan. The Chinese plan to control power, but also iron and steel, chemicals, building materials, paper-making, and nonferrous metals. This broader scope speaks directly to the Chinese desire to deemphasize some of these heavily polluting industrial sectors. While we can expect to see important advances in the Chinese power sector, including the continued growth of nuclear and renewable energy, many of the low-hanging fruit are in these other sectors. A cap-and-trade system could act as a compensation system in that paying for the credits from inefficient producers could provide the financing to close them down. We have already seen significant closures of small plants in all of these sectors, and we are likely to see more under this program.

A nationwide cap-and-trade system may be a bit of a misnomer, or at least an ambition rather than the immediate reality. Most of Chinese energy governance has been at the provincial sector, and I would not be surprised to see cap-and-trade expanded nationwide, but that most trading (as is currently the case for actual power trading on the grid) happening within provinces. I also wouldn’t be surprised to see that much of the trade is “managed” in that the province acts as matchmaker between cleaner and dirtier facilities and arranges trade. This has already happened with a number of pollution credit trades. Does this matter? I would argue not. As an international partner, we in the United States should be focused on the outcome – will Chinese action lead to an early peak and then a reduction in emissions? These statements suggest that outcome is increasingly likely.

This joint statement is good news for the December United Nations Framework Convention on Climate Change (UNFCCC) meeting in Paris. Better climate relations between the world’s first and second largest emitters cannot help but add momentum to those negotiations. The two countries have explicitly committed to support the multilateral effort, and each has committed substantial funds to supporting the climate-related needs of least developed nations: The US has committed US $3 billion, and the Chinese RMB20 billion (which at the current exchange rate is actually somewhat more than US $3 billion). This is a remarkable commitment, especially from China, which still has a smaller GDP than the United States, and on a per capita basis is much poorer.

Author Information:
Deborah Seligsohn is a researcher in environmental governance at the University of California, San Diego.

Photo Credit:
Official White House Photo by Pete Souza