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US-China Climate Change Engagement: This is the Way

February 9th, 2009 · 3 Comments

The US-China climate change reports issued last week by the Asia Society/Pew Center on Global Climate Change  (”ASP Report“) and the John L. Thornton China Center at Brookings  (”BI Report“) should be read in tandem.  They are solid pieces of work and provide the best framework for bilateral engagement on climate change.  Implementation of their recommendations should begin immediately. 

Neither report proposes specific outcomes for Copenhagen.  Indeed, they both purport to deal only with US-China engagement on “clean energy.”  Of course the reports note that joint efforts in the “clean energy” arena can “contribute to the success of multilateral climate change negotiations,” but they do not advocate specific outcomes for those negotiations 1.  This seemingly narrow scope is designed partly as a rhetorical trick and partly as way to speed Chinese engagement on the issues; who opposes clean energy?

Nevertheless, both reports assume that in this bilateral relationship the US will “lead” by adopting a cap on carbon emissions as of a specified date with commitments to substantial reductions over time.  The US cap and reduce plan will presumably mirror what it is willing to agree to in December at Copenhagen (or whenever things end up having to be agreed to).  If the US leads, the BI Report in particular makes it clear that China must follow.

It is the BI Report’s description of what would constitutes an acceptable response by China that leads me to support this proposal.  The balance of this post will address that issue.  Subsequent posts will examine the reports’ specific proposals for initially engaging China and sustaining cooperative momentum. 

China must respond to US cap and reduce actions by accepting binding commitments of its own.  The BI report lists several measures that would constitute an acceptable initial Chinese response and warns of the consequences if China fails to act responsibly. 2 

The BI report (pp. 53-54) suggests that China’s initial commitments could take the form of “binding:” 

  • “intensity targets” (limiting emissions per unit of GDP);
  • renewable energy requirements;
  • emissions limits in specific sectors; or
  • “policies and measures” such as shutting down old inefficient plants or adopting and enforcing appropriate building efficiency standards

Each approach would include “metrics to gauge level of effort and results.”  Of course, as the BI Report acknowledges, none of these measures “cap,” much less reduce China’s carbon emissions.  At best they would slow the rate of growth of  emissions below “business-as-usual levels.”  The report suggests that these commitments be effective for a “minimum of five years.” 

I assume there will be considerable debate concerning the length of this initial commitment period.  Some in the US will push for a shorter time frame; the Chinese will no doubt push for a longer period.  I can live with five years or so especially since this nicely coincides with Chinese planning cycles, and these initial limits could be incorporated into the 12th Five Year Plan (2011-2015) (I’m ignoring for now how these time frames mesh with pre-existing treaty and convention frameworks).

The BI Report does not mention them, but the imposition of carbon taxes during this initial period should also be explored.  China has often noted that a large portion of its carbon emissions result from the fact that it has become the world’s factory.  It implies that the world, therefore, must pay to reduce these emissions.  Fair enough, place a carbon tax on the export of these products, especially those products produced in energy- intensive processes.  The proceeds from this tax could be used to help reduce carbon emissions.

After these initial commitments expire, “[s]ubsequent commitments should be determined based upon the science of climate change, as it evolves in the years ahead, and changes in the economies of both countries.”  While allowing some wiggle room, my assumption is that the BI Report contemplates that at this point China would join the developed countries and implement a meaningful, if slightly less stringent, “cap and reduce” program-an outcome which will have become much more palatable as a result of the mutual trust building actions and success of the joint efforts that form the main recommendations of the BI Report. 

China, in its pre-Copenhagen posturing, has refused to accept any binding commitments.  This position will, obviously have to change. 3  It has also reiterated a desire for technology transfers and financial aid.  The BI Report (p. 69) also attempts to bring expectations on these points back to earth.  

  • “Technology transfers:”  

most clean energy technology in the United States is owned by private businesses, which have little incentive to transfer it on concessional terms. U.S. businesses identify lack of intellectual property protection as a significant barrier to technology cooperation with China. While these issues must be addressed, there is also major opportunity to engage in co-development of clean energy technologies, as each side has considerable complementary capabilities in this sphere. 

  • “Financial aid:” 

Chinese officials cite the need for additional financing to support the shift to a clean energy economy. Significant U.S. federal appropriations for this purpose in the years ahead are extremely unlikely, as any proposal to spend U.S. tax dollars in China would meet with stiff resistance on Capitol Hill. In practice, good projects tend to generate necessary funding, and that will be even truer as the economic crisis is resolved over time.

In response to those on the US side who would seek faster action by China to cap and reduce, the BI Report does a good job of explaining why such efforts are doomed to fail.  I’ll address that issue tomorrow.  For now, suffice it to say that as surely as we live in a world threatened by the march of climate change, we also live in a world where action in China is constrained by a Byzantine power structure.  It can be encouraged to engage bilaterally and to mobilize the will and resources necessary to undertake effective action, but that engagement and mobilization require the alignment of a number of factors.  The BI Report sets forth as good a proposal as we are likely to get in the time we have left to achieve the proper alignment.  We should all work to make it happen.

  1. This fact explains the rather uncritical parroting of China’s conception of “common but differentiated responsibilities” which I noted upon my initial skim of the ASP Report
  2. “Should the United States take this set of issues far more seriously, but prove unable to find ways to enhance cooperation and mutual trust with China on them, the level of suspicion regarding long-term motives and sincerity is likely to grow considerably.”  BI Report, p. 16
  3. I suppose if UN officials directly involved in the climate change negotiations are permitted to express their opinions on how climate change negotiations should proceed, the Secretary General is certainly free to express his.  As noted by the Guardian : “Ban Ki-moon told the Delhi Sustainable Development Summit that although “China and India have . . . taken steps,” it is “not enough, they have to do more.”  He said that climate change was a “common and shared” responsibility and that the time for arguments about who caused and contributed to global warming was over. “We should not argue who is more responsible, who is less responsible, who should do more. . . . This is a common, shared responsibility.”

Tags: 12th Five Year Plan · US-China relations · carbon emissions · climate change

3 responses so far ↓

  • 1 Greg // Feb 9, 2009 at 1:42 pm

    1. China should direct its forex reserves and GDP away from face building space, military and African development programs and put that money into building its own green economy jobs program instead of going to international monetary bodies, the US, Japan and the EU and ask for/demand handouts while boosting said military and diplomatic programs.

    2. There is a growing chorus stating that GHG cap and trade is just another bubble and another BS way for traders to make a ton on fees with no real reduction in CO2. And here’s why:

    Think of the Earth as a sealed house (which it essentially is, we can’t “go outside” freely). Charlie and I are at opposite ends of the house and I have a coal stove in my room to heat the house. I don’t want to breathe the gases and neither does Charlie but I have other items that Charlie needs. So I give him some items as payment to take the stove into his room. But eventually, the house will still fill with gases and we’ll still both get sick. A third person may exist (the carbon trader) transports the stove and collects a part of what I give to Charlie, so I either have to give up more to pay the trader’s fee or Charlie has to accept less or both. But the house will still eventually fill with gases.

    Very simplistic, but on target.

    3. Technology transfers. A problem if you are interested in controlling production and distribution, which I am not. I am willing to do a full IP transfer under the right circumstances.

  • 2 zhirui // Feb 12, 2009 at 11:08 am

    @greg: I think you’re missing one critical point in your critique of cap and trade — the reductions required by the cap. It’s true that trading doesn’t reduce a single ton of anything. The cap, however, should be set at a level that requires the universe of affected sources to reduce emissions. The sources have the option (not requirement) of using trading as a way to generate revenues to offset investment in emission reductions (sellers) or a way to reduce costs (buyers). If the cap is enforced, emissions decline.

    One of the advantages of a flexible approach such as cap and trade is that it lowers the cost of compliance for the universe of affected sources (perhaps not each source). This makes it possible to set even stricter emission reduction requirements than could be required under a more rigid (and more expensive) approach. Cap and trade is not a solution to all problems, but it can be very effective if designed right.

    Regarding the profits to brokers, I see the problem as one of market development. Because the compliance market is still young and not very liquid the transaction costs are high. An effective global cap and trade program would significantly increase transaction volume and reduce transaction costs. That doesn’t, however, mean you’d find brokers asking if you can spare a dime.

  • 3 Greg // Feb 13, 2009 at 3:30 am

    @ Zhirui

    I can agree that the system was created with the best of intentions, and that the payees in the system would direct the funds towards improving overall manufacturing and energy production efficiency. But we already know how many nations squander international aid on military programs, fleets of armored luxury cars and elite schools for the children of glorious leaders.

    And no one is going to seriously accept “real” restrictions. Look at how many of the Kyoto signatories aren’t following through despite their criticisms of the US not signing on, and all of the rhetoric over the definition of a “developing nation” or some countries simply sending out the troops to turn back international treaty verifiers.

    The only people that are going to benefit from this program are the guys on the carbon trading floor and their companies.

    The human race rarely does the right thing until its back is against the wall at one minute before midnight.

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