The US-China Climate Deal: Not a Free Ride for the Chinese

Girl in China under polluted skies

President Obama’s critics have lambasted his November 9 climate agreement with President Xi Jinping as an exercise in economic self-destruction. They contend that it sacrifices US jobs and competitiveness in return for a meaningless gesture by China. Senator McConnell, soon-to-be majority leader, put the case starkly:  “I was particularly distressed by the deal he’s reached with the Chinese on his current trip, which, as I read the agreement, it requires the Chinese to do nothing at all for 16 years, while these carbon emission regulations are creating havoc in my state and other states across the country.”

That the agreement gives China a blank check until 2030 while the US labors to reduce emissions may be a useful political narrative but it’s not grounded in reality. China’s emissions will only peak in 2030 if far-reaching changes in its energy system are implemented now. This will require strong government policies, carried out aggressively at all levels of China’s sprawling bureaucracy, which will inevitably place heavy demands on the Chinese economy.

What It Will Take to Cap Emissions in 2030

Chinese emissions rose by a striking  171 percent between 2000 and 2011 because of a rapid increase in energy consumption driven by strong economic growth. Coal has been dominant in China’s energy mix, accounting for a large share of emissions from the electricity and manufacturing sectors. With further increases in coal consumption, China’s emissions would likely continue to rise indefinitely.

But China is already taking steps to change its emissions trajectory. At the Copenhagen climate conference in 2009, China pledged to reduce carbon intensity (the ratio of carbon pollution to GDP) by 40-45 percent and to increase the share of non-fossil energy to 15 percent by 2020. At the 2013 Communist Party Plenum, China’s leaders committed to reduce coal’s share of primary energy below 67 percent by 2017 by implementing higher resource taxes or caps on coal use. Just last week, China’s State Cabinet released details of plans to cap coal consumption at 4.2 billion tons in 2020, a limit that will require severe cuts in coal use in Beijing and other large coal-dependent regions.

With the US-China climate agreement, more aggressive steps are in the offing. As part of the agreement, China raised its goal for non-emitting power sources (nuclear and renewables) to 20 percent of total energy production, to be achieved by 2030.  Since non-carbon energy now represents 9.8 percent of China’s energy production, this will require a sharp acceleration of ongoing programs to build nuclear capacity and increase wind, solar and hydro generation. Projections are that nuclear and renewables will account for $ 1.77 trillion in new investment by 2040, representing 79 percent of total funding for new power plants and a sharp shift away from fossil fuels. Chinese experts also predict that new policy tools will be adopted, including a carbon tax and cap-and-trade programs (which are now being implemented in certain regions). 

Redirecting capital investment away from fossil fuels in the power sector and penalizing carbon-intensive industry will inevitably have far-reaching impacts on China’s economy. Jobs will be lost in mining and other sectors; some enterprises that heavily consume coal may become unprofitable and close their doors; China’s electricity grid may be stressed as it accommodates expanded generation from nuclear and renewable sources; and some regions may fare more poorly than others because of their mix of industry, geography and proximity to coal production.  These are the very same challenges that the US faces in implementing EPA’s Clean Power Plan.

Equal Burdens, Not Identical Emission Goals

Nonetheless, some skeptics in the US argue that, because China and the US will not be reducing emissions at the same rate, the Chinese will bear a smaller burden than the US and our economy will necessarily be at a disadvantage in global markets. This is fallacious thinking that ignores the vastly different circumstances of the two countries. 

The US began its heavy dependence on fossil fuels in the late 19th century as it rapidly industrialized. In the twentieth century, it was far and away the world’s largest consumer of fossil fuels and its emissions of greenhouse gases began a steep unbroken climb that only reversed course in the last decade. Throughout that period, we were the world’s top emitter, a position only relinquished to China within the last few years.  US emissions account for by far the greatest portion of historic emissions – 26 percent as compared to China’s 11 percent.

As the US industrialized, China had a pre-industrial economy and minuscule greenhouse gas emissions. This changed only with China’s remarkable growth spurt in the 1980s, when its heavy investment in energy infrastructure and carbon-intensive manufacturing and transportation mirrored similar trends in the US decades earlier. China’s per capita emissions rose rapidly but, even now, are half of those of the US, evidence that the average American accounts for significantly larger consumption of fossil fuels than the average Chinese.

The recent decline in US emissions reflects a host of factors – the movement of heavy manufacturing to low-cost producers like China, the rise of services and information technology as drivers of economic growth, greater efficiency in producing and using energy and, not least, the shift away from coal because of low-cost natural gas and growth in renewable resources.  These are also trends that over time will enable China to lower its carbon footprint.  But in the near-term, China faces bigger obstacles than the US, including its concentration of heavy industry with high energy intensity, the slow development of its consumer and service sectors, the persistence of widespread poverty and the pressure for high GDP growth.

Because of these factors, it would be unreasonable to expect China to make immediate cuts in emissions.  However, an aggressive effort to cap and then lower emission no later than 2030, 25 years after the US took the same step, represents welcome progress.

We should demand a comparable level of effort in the US and China, not lockstep emission reduction goals. All the evidence suggests that ending emissions growth by 2030 will require a heavy lift by China, much like emission reduction efforts in the US, and that neither country will get a free ride.

Accountability and Transparency

Some have voiced suspicion that China is “gaming” the US and does not intend to fulfill its part of the recent agreement. This seems highly unlikely, given that China’s leaders clearly recognize that dramatic changes in energy use are needed to reverse the heavy toll that pollution is taking on public health and political stability (even apart from the threat of global warming). 

However, the Chinese have not yet detailed the steps they will take to cap emissions by 2030, just as the US has not explained how it will reach the 26-28 percent reduction which President Obama has targeted for 2025. Demanding specifics from all major emitters is critical to ensure seriousness of purpose and good faith.  We should insist that countries back up their pledges with action plans and interim milestones and that the climate agreement reached next year in Paris include strong measures for ensuring accountability and tracking progress.  

In sum, it’s time to  stop bashing the US for making a “bad deal” with China and make sure that both countries step up to their ambitious but essential commitments.