Europe can join hands with Beijing on emissionsUnited Kingdom
China hosts the latest round of UN climate talks in Tianjin this week, against a backdrop of a new drive towards energy efficiency and rumours that it will embrace carbon trading. It is a stark contrast with the depressing failure of the US Senate to pass meaningful climate legislation. Yet despite America’s lack of progress, China’s move gives Europe a chance to build a new alliance with the world’s biggest economy in waiting – and perhaps push forward the US climate debate, too.
America’s stall comes despite upwards of $100m in lobbying, the alignment of a Democrat-controlled Congress and presidency, and the biggest oil disaster to hit the US. With elections in November likely to see gains for the largely anti-climate action Republicans, we must accept that climate change doesn’t cut it in a country where suspicion of science, special interests wedded to the status quo and constitutional “checks and balances” all produce paralysis.
This political reality on the other side of the Atlantic has caused some in Europe to question our commitments on climate change. In particular there have been calls to review the European Union’s emissions trading scheme. After all, even if the EU does its bit, the US must do more, too, if we are to avoid catastrophic climate change. But this would be a strategic error. Given stasis on this issue in America and power shifting east, it is time for Europe to look east, too.
The EU is China’s biggest trading partner. Co-operation between both is growing, as Wednesday’s EU/China summit in Brussels showed. China has also been pushing ahead with ambitious plans to build low carbon businesses. It is already the world’s largest manufacturer, and user, of solar panels and the largest investor in renewable energy. The planet’s fastest high-speed rail services are in China, too.
More significant is the prospect that China’s next five-year development plan, due in early 2011, could include a mandatory domestic carbon trading system to help it achieve a 40-45 per cent reduction in the carbon intensity of gross domestic product from 2005 levels, by 2020. This rumour gained credibility following a July story in the China Daily, revealing that a decision to push ahead with the scheme was made at a meeting this summer chaired by Xie Zhenhua, the minister at the powerful National Development and Reform Commission.
If true this would demonstrate the seriousness with which China is taking climate change, while also showing it is willing to follow the EU’s lead in developing market-based mechanisms to cut emissions. The US rejection of cap-and-trade was a blow to Europe and commentators expected political pressure within Europe to abandon its scheme as a result. China’s decision turns that idea on its head.
Opportunities now abound for the EU and China to bring together the world’s largest manufacturer with the world’s largest single market. China still has many relatively cheap emissions reduction opportunities, particularly relating to energy efficiency. The rate at which it is currently deploying capital also means that it has the ability to bring down the costs of new technology faster than anywhere else in the world.
Of course, there is a long way to go before China has a fully fledged carbon market, or one that could be linked to the EU. But the potential is clear. Businesses within the EU’s emissions trading scheme could buy carbon credits at lower cost from China, and China would be able to invest in emissions reductions – potentially by buying EU expertise and know-how – knowing it had the biggest single market as a buyer of credits.
Not only could such co-operation build low carbon industries in both regions, it would also align the EU to the world’s future largest economy, improve political ties and strengthen business links. Perhaps most importantly an EU/China partnership with emissions trading at its heart could make waves in the US, too. A deal that pressured the US on clean energy jobs, technology and competitiveness might just kick the US Congress into passing comprehensive climate legislation. Chinese and European leaders meeting in Brussels should grasp the opportunity with both hands.
The Rt Hon John Gummer, Lord Deben, is a member of the House of Lords and, as president of GLOBE International, will jointly chair an international legislators’ forum on climate change with the Chinese National People’s Congress in November
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