Climate change is the area in which China has shown perhaps the strongest international leadership. As China hosts the G20, we can expect energy and climate to be front and center.
China’s Domestic Climate Achievements
China has met or exceeded most of the energy and climate goals it has set so far and it is on track to achieve its Paris goals ahead of schedule. While its main goal – to peak emissions by 2030 – had initially seemed somewhat challenging, many signs now point to a far earlier emissions peak. Coal use has been declining since 2013, which is a good sign, but there is still major overcapacity in the sector. The transition away from coal will be a challenging one for China. It has already made amazing achievements in clean energy, but the coal industry is a major employer, and the coal companies are very powerful. We are seeing some of China’s leading coal companies like Shenhua look to diversify their investments and expand into renewables, which is a very positive trend.
Most important to watch now will be China’s ability to continue the economic transition that is facilitating emissions reductions and a shift in the energy mix. Chinese government policy has strongly supported the expansion of renewable and non-fossil energy while restricting coal consumption and production. This expansion has been motivated by concerns not only about climate change, but also local air pollution and energy security, as well as a broader industrial strategy to increase innovation in strategic industries, including cleantech. China’s entire Science and Technology support system is in the process of being overhauled in an attempt to make R&D investments more competitively allocated and more effectively utilized. This could mean more strategic support for clean energy innovation under the new S&T support system, which could further increase China’s competiveness in clean energy technology industries.
There are still real challenges in expanding renewables in China—namely widespread curtailment resulting in wasted green electricity. This year so far about a fifth of wind power generated was not used, and in some parts of the country with very high wind power production, closer to half of the power is being wasted. The good news is the leadership is addressing this from all sides, though it remains to be seen whether new policies introduced this year will solve the problem. In March, regulations were announced that set an annual minimum purchase guarantee for wind and solar generation, helping to make sure these projects could cover their investment costs. In addition, there are new rules that require that renewable energy power plants get compensated by fossil fuel power plants that result in their curtailment if they don’t meet that guaranteed minimum share. This is a great step towards executing “green dispatch,” which is something China had previously said it would implement, including in the joint US-China climate statement last September.
The Obama Administration’s Legacy on Climate Cooperation with China
The upcoming presidential summit in advance of the G20 is probably the last chance for a final joint climate change statement, and the US will want it to be a good one. Climate change, but specifically engagement with China, is most certainly a legacy issue for the Obama Presidency. US-China cooperation has been a key driver of global climate action as we saw heading into Paris, and it could also be important in driving action at the G20. Climate has also been the cornerstone of the US-China bilateral relationship, allowing for constructive dialogue between the two nations to continue even as tensions run high in other areas.
There have been several major achievements in the energy and climate track of the US-China strategic and economic dialogue. The Climate Change Working Group (CCWG) launched in 2013 was extremely important to creating a forum for dialogue in advance of the Paris negotiations. Without the CCWG, communications would likely have been more difficult in the run up to the Paris negotiations. Having a clear line of communication ensured a successful outcome in Paris because China and the United States were in constant communication and their leaders were on the same page. The result of this and by far the biggest bilateral achievement was the 2014 Joint Announcement, primarily for the signal it sent to the world, and for its role in building global momentum for the Paris Agreement.
At the technical level, there has been solid progress made on clean energy technology cooperation in the CCWG and beyond. Almost all bilateral agreements (including those signed long before 2009) have been continued and expanded so that pretty much every issue of importance in the energy and climate area is covered within the bilateral dialogue mechanisms. Now that there are so many tracks for technical cooperation between the two countries, if anything there is some concern about coordination across them. On the US side, interagency coordination has become increasingly complex as cooperation involves multiple agencies working on related topics. In addition, some of the more promising tracks have gained less attention in recent years. For example, the US-China Clean Energy Research Center (CERC)—perhaps the most ambitious of the clean energy cooperation mechanisms—recently has been expanded from three tracks to five. This requires coordination of hundreds of researchers and projects, and millions of dollars of funding to ensure successful research outcomes. While the two new tracks focusing on energy and water and on trucks hold great promise, hopefully they can learn from the challenges to date experienced by the other tracks.
China’s Leadership at the G20 Summit
After many years of fruitful technical cooperation between the US and China in the clean energy space, there is a need to critically assess what was accomplished and what lessons have been learned in order to structure future bilateral partnerships more effectively. These lessons will be useful far beyond just the United States and China, as these sorts of partnerships are expanding around the world. Looking forward, the big opportunities for climate cooperation span beyond the US-China relationship exclusively.
As the role of China in global multilateral financial institutions grows, there is room for it to help shape the use of public finance for green and low carbon investment and determine the rules for such investments around the world. In the last two joint statements with the United States, China agreed to take “new steps to control public support for high carbon activities” and to strengthen “its green and low-carbon policies and regulations with a view to strictly controlling public investment flowing into projects with high pollution and carbon emissions both domestically and internationally.” But there is still much more work to be done to increase multilateral coordination in this area and to have a larger influence on global norms and practices.
At the G20 Summit, leaders may put forth formal announcements of ratification or joining the Paris agreement so that it can swiftly enter into force. The US and China are poised to lead the way among the G20 so that the other countries will follow. Other issues where the US and China have made progress in bilateral negotiations may also show up in G20 outcomes, including negotiations about the greening of brown overseas assistance to developing countries. Green finance has become a flagship issue for China, especially with its leadership on South-South support, and it has set up a Green finance study group under its G20 presidency.
The G20 is the most powerful economic and political club in the world, and China’s hosting is a great opportunity for it to demonstrate continued climate leadership in the global spotlight.
Click here for G20 press call of August 26th, 2016, including comments of Joanna Lewis, WRI President Andrew Steer, and other WRI experts.
Joanna Lewis, Associate Professor, Georgetown University’s Edmund A. Walsh School of Foreign Service
U.S. Embassy the Hague via Flickr
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