A partnership between China and Europe is needed to tackle climate change

China’s planned investment in the green economy is staggering

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The Independent Online

This article was co-authored with Andrew Hammond, an Associate at LSE IDEAS at the London School of Economics

In recent months, there has been considerable emphasis placed upon the emerging strategic partnership between China and the United States to tackle climate change. John Kerry has made multiple trips to Beijing since he became US secretary of state last year, and both he and President Barack Obama will be in China again from November 10-11 for wide-ranging talks that will include tackling global warming.

However, important as this partnership could ultimately prove to be, it is Europe’s relationship with China that may be key to the prospects of securing a new global climate treaty next year. Fundamentally, both major powers share a vision of a prosperous, energy-secure future in a stable climate and their cooperation on this agenda could enable a comprehensive, ambitious deal in 2015.

The question is whether current political leaders have the vision to develop and grasp the massive opportunity? If they do, the prize will not just be acceleration of the transition to a global low carbon economy, but also bolstering growth in Europe and China at a time of continued international economic uncertainty.

China’s planned investment in the green economy is staggering. For example, investments are already planned of more than £200 billion in renewable energy and £380 billion in ‘smart grids’, not to mention the £170 billion committed to tackle China’s chronic air pollution.

European companies are well positioned as leaders in much of this area. For instance, as the United Kingdom renews its own energy infrastructure, the opportunities for collaboration are enormous.

However, a potential risk is Europe (a key architect of the Kyoto Protocol, which Lord Prescott helped negotiate as UK deputy prime minister in 1997) could be losing ground in the fight against climate change. To be sure, EU heads of state on October 23 signed up to a deal which proposes a 40 per cent greenhouse gas cut by 2030 compared to 1990 levels. In addition, they also agreed 27 per cent targets for renewable energy market share, and energy efficiency gains (the former is binding only on Europe as a whole, while the latter is optional).

However, numerous parties have highlighted that, welcome as these commitments are, they may not be ambitious enough. This is reflected in the fact that some leading countries, including Britain and Germany, are willing to go even further than the 40 per cent figure.

And, the critics here are not just the ‘obvious suspects’ like environmental groups. For instance, the European Trade Union Confederation has asserted the EU targets are too low to reap the full economic benefits, including for new jobs, of a clean energy economy.

Meanwhile, China's 12th Five Year Plan is the clearest signal yet to Europe about Beijing’s intent on the climate, clean air and energy agendas. The plan sets a strategic direction for China's economy and underlines that there appears added determination to change the country’s development model from low-grade labour-intensive manufacturing towards a greater emphasis on services and innovation.

Europe has clear strengths in areas that China (now the world’s largest emitter of greenhouse gases) needs here. As the latter continues on a trajectory to become the world's largest economy, there are thus substantial commercial opportunities for European firms.

The Five Year Plan includes policies and measures designed to help China achieve a 40-45 per cent reduction in the carbon intensity of GDP from 2005 levels by 2020. While this is a mammoth ambition that may not be fully realised, it is expected to be underpinned as a political commitment in Beijing’s first national climate change law.

The fact China is using the experience of its sub-national pilot emissions trading schemes to inform development of a national scheme is another signal to Europe. It shows that Beijing is open and willing to learn from Europe’s extensive experience in this area and adapt its models for China’s domestic circumstances.

 

Importantly, an enhanced bilateral relationship will not necessarily just be one-way traffic; it is increasingly possible that technology transfer could be two-way. For instance, China is already the world's largest manufacturer, and user, of solar panels and the largest investor in renewable energy.

To be clear, there is still a significant way to go before China has a fully-fledged carbon market, or both parties develop new low carbon standards in key industrial sectors. But the potential direction of travel is clear: co-operation could build low carbon industries in a range of sectors as well as align Europe more closely to the world's future largest economy.

While both powers have much to gain from a deeper partnership on this agenda, the window of opportunity may not remain open indefinitely. Now is thus the time to intensify collaboration to bolster growth, and enhance prospects of a global climate agreement in 2015.

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