The EU and China warned US President Donald Trump at the weekend that he is making a big blunder by withdrawing from the Paris climate pact. The joint condemnation of Trump came at the climax of the landmark China-EU political and business summit in Brussels.
The important meeting, held in the framework of the jointly agreed 2020 strategic agenda for cooperation, focused on bilateral political and economic relations, in addition to global and regional issues. It was global warming, however, where the most fruitful bilateral dialogue was held, with both parties agreeing to cooperate on developing a cost-effective low carbon economy under the terms of the 2015 EU-China climate change declaration.
At the summit, Chinese Premier Li Keqiang, European Council President Donald Tusk and European Commission President Jean-Claude Juncker blasted Trump and re-emphasised their very strong support of Paris. This is a very important statement of intent as, collectively, the EU and China account for around one third of global greenhouse emissions.
The reason why EU-China discussions on climate change are so cooperative is that, fundamentally, both parties share a vision of a prosperous, energy-secure future in a stable climate and recognise the need for bilateral collaboration on this agenda. Their 2015 agreement, for instance, agreed to intensify cooperation in domestic mitigation policies, carbon markets, low-carbon cities, greenhouse gas emissions from the aviation and maritime industries, and hydrofluorocarbons.
In contrast to Trump, both sets of leaders recognise that there is a potentially massive ‘win-win’ opportunity on the horizon from accelerating the transition to a low carbon future, and bolstering economic growth in both China and Europe at a time of uncertainty about the global economy. And this collaboration looks set to only deepen in coming years, including on emissions trading, with Beijing’s plans to establish a nationwide emissions trading system by 2020.
Staggering investment
China’s planned investment in the green economy is staggering, a fact that the EU is increasingly recognising. For example, Chinese domestic investment is already planned at more than £200 billion (Dh946.18 billion) in renewable energy and £380 billion in ‘smart grids’, not to mention the £170 billion committed to tackling chronic air pollution.
This investment is buttressed by Beijing’s policy commitments on the climate, clean air and energy agendas. In recent Chinese Five-Year Plans, for instance, a strategic direction has been set for the economy, with determination to change the country’s development model from low-grade labour-intensive manufacturing toward a greater emphasis on services and innovation.
For instance, China has expressed its ambition of achieving up to a 40-45 per cent reduction in the carbon intensity of gross domestic product (GDP), a mammoth goal that may not be fully realised. Another signal of the seriousness of Beijing’s climate ambitions is the fact that it is using the experience of its sub-national pilot trading schemes to inform development of its future national model. Here, Beijing is proving open and willing to learn from Europe’s extension experience in this area, while adapting its models for China’s domestic circumstances.
Europe has clear strengths in area that China (now the world’s largest emitter of greenhouse gases) needs here. As the latter continues on a trajectory to potentially become the world’s largest economy, there are thus substantial commercial opportunities for EU-based organisations. European technology and science firms are leaders on much of this clean technology agenda. For instance, as the United Kingdom renews its own energy infrastructure, the opportunities for its companies in China are enormous.
Importantly, this collaboration will not just be one-way traffic. Indeed, China is already the world’s largest manufacturer and user of solar panels and the largest investor in renewable energy, and it is increasingly possible that technology transfer will be a two-way process.
To be clear, there is still a way to go before China has a fully-fledged carbon market, and both parties have yet to develop new low carbon standards in key industrial sectors. However, the direction of travel is clear: cooperation could build low carbon industries in a range of sectors, and also align Europe more closely to the world’s future largest economy.
More needs doing
In this context, many European countries, key architects of the Kyoto Protocol before the Paris agreement, have recognised that they must defend Paris and continue to lead the international fight against climate change. To this end, EU heads of state have signed up to a deal which will see a 40 per cent cut in greenhouse gases by 2030 compared to 1990 levels. However, numerous parties have highlighted that, welcome as these commitments are, they may need to be enhanced further. This is reflected in the fact that some European countries, including Germany, are potentially willing to go further than the 40 per cent figure.
Critics of Europe’s current position are not just the obvious suspects like environmental groups. For instance, the European Trade Union Confederation has asserted that the EU’s targets need to be higher to reap the full economic benefits, including jobs, of a cutting-edge, clean energy economy.
Taken overall, and with the Paris agreement now under attack from Trump, it is clear that both the EU and China have much to gain from a deeper partnership on this agenda, but the window of opportunity to collaborate may not remain open indefinitely. Now is thus the time to intensify cooperation to bolster growth, and define the landscape of the 21st century clean energy economy.
Andrew Hammond is an Associate at LSE IDEAS at the London School of Economics.