Climate cooperation between China and the West may be a mirage

Despite recent cooperation between China and the West on climate change, David Uren writes that different paths pursued by the US, Europe and China signal conflict on the issue will arise before this year's UN Climate Conference in Glasgow.

Climate change has emerged as a rare zone of cooperation and civility between China and the West this year, but it remains to be seen if this will last through to, or beyond, the 26th UN Climate Change Conference in Glasgow in November.

Where US Secretary of State Antony Blinken had a shouting match when he met his Chinese counterpart in Alaska in March, President Joe Biden’s climate envoy, John Kerry, was welcomed warmly in his visit to Shanghai in April with a joint communique promising cooperation and concrete action.

The 2016 Paris climate agreement allows nations to set their own targets and pursue their own methods of getting there, subject to the common goal of keeping the rise in global temperature to no more than two degrees above pre-industrial levels, and subject to parties increasing their ambition at each negotiation.

However, the different paths pursued by the US, Europe and China create the potential for conflict.

The first flashpoint is likely to be the European Union’s carbon border adjustment mechanism — essentially a carbon tax on imports — the details of which are to be announced in coming weeks.

President Xi Jinping flagged China’s concerns about the proposal in a video meeting with Germany’s Angela Merkel and France’s Emmanuel Macron in April. Climate change ‘should not become a geopolitical chip, a target for attacking other countries or an excuse for trade barriers,’ he said.

China, which notoriously torpedoed the 2009 Copenhagen climate summit leading then prime minister Kevin Rudd to label their negotiators as ‘ratfuckers’, has more recently moved to the fore of emerging nations in global climate politics. Xi used his address to the United Nations last September to commit China to achieving carbon neutrality by 2060 and a peak in emissions before 2030.

It was a commitment which put China ahead of the United States, which had abandoned its emissions mitigation commitments under Donald Trump, although Trump’s challenger Biden was promising to make climate change his central mission.

Xi followed what the Chinese had billed as a ‘climate summit’ with Merkel and Macron by attending Biden’s own ‘climate summit’ alongside 40 world leaders held on ‘Earth Day’ a week later.

Biden used that gathering to announce the US would reduce carbon emissions by 50% to 52% below 2005 levels by 2030. This was a lot more ambitious than the commitment under Barack Obama’s administration to a 26% to 28% cut by 2025.

By calling the summit, Biden was asserting US global leadership of the fight against climate change, but the recency of the switch in policy enables others to reserve judgement.

Xi said China welcomed the US ‘return to the multilateral climate governance process’ and, in a carefully worded comment, said ‘we must maintain continuity, not reverse course easily; and we must honour commitments, not go back on promises.’

A Chinese foreign ministry spokeswoman, Hua Chunying, was less diplomatic saying the US return to the Paris climate agreement was not so much an exercise in global leadership as ‘a truant getting back to class’.

Both China and the US face questions about the credibility of their climate commitments. Biden has eschewed a price on carbon, to which Republicans are opposed, in favour of a mixed regulatory and government investment plan to achieve his target, which includes a carbon neutral power sector by 2035 and a big push to electric vehicles.

However, the administration’s US$2.3 trillion ($3 trillion) climate change and infrastructure bill also faces an uncertain path through Congress with Republicans, many of whom are sceptical about climate change, arguing it will put electricity prices up and kill jobs.

China has been running pilot carbon trading programs since 2013 and is due to start a formal scheme in the electricity sector this month, including 2,225 power companies, with trading in both Shanghai and Wuhan. Companies have to buy emissions permits if their generators exceed carbon intensity benchmarks. It’s not clear that those benchmarks will be set low enough to drive meaningful reductions in coal consumption.

An analysis by the Peterson Institute for International Economics says China’s latest five-year plan, released in March, sets binding targets for reducing carbon emissions per unit of GDP by 18% and energy use per unit of GDP by 13.5% by 2025, however it does not spell out how these are to be achieved beyond simply calling on government agencies to formulate plans.

China has indicated that it expects its carbon trading scheme will suffice to exempt it from the EU border tax, however this is unlikely to be the case. The border tax, which is to apply from 2023, is expected to impose a levy that would raise the cost of imports to the level that would apply if the foreign suppliers had paid for the embodied carbon in their goods at the going European carbon price.

The tax will be introduced gradually but is likely to be imposed first on high-carbon-intensity goods like steel, aluminium and cement. China accounts for about a quarter of the embodied carbon in goods imported to Europe. This reflects both the relatively high use of coal in China’s power generation and its manufacture of energy-intensive goods.

A Bank of Finland study estimates that the proposed border tax would add between 2% and 5% to the cost of China’s annual €380 billion ($598 billion) in exports to Europe. Analysts expect that unless China gets the exemptions it seeks, it will take the EU’s tax to the World Trade Organization as a breach of trade rules and an exercise of protectionism.

All parties are expected to have details of how they plan to achieve their carbon reduction targets by the Glasgow summit in November. China is expecting that along with other emerging nations, it will be held to a lower standard of ambition than the advanced countries. Xi told Biden’s climate summit that the principal of ‘common but differentiated responsibilities’ in climate governance put the onus on advanced nations to assist developing countries in reducing emissions.

Europe and the US will argue China is making this claim to shirk its responsibilities. While China points to the global stock of greenhouse gasses and per-capita emissions, which put the advanced nations—led by the US—at the top, those nations argue China has the highest emissions in total and that its emissions are growing the fastest.

Indeed, the latest data shows China’s emissions are growing at the fastest rate in a decade. The record 12 billion tonnes of carbon dioxide emitted in the past year was 5% ahead of pre-COVID-19 levels seen in 2019. Coal-fired power rose by 12% and delivered 73% of the increase in total electricity generation in the past year.

Steel was the biggest industrial driver of emissions, with 90% of China’s production using coal. China’s plan calls for the use of scrap to rise to 40% of steel production by 2030, but it’s unlikely to achieve that target.

David Uren is a non-resident fellow with the United States Studies Centre at the University of Sydney.

Banner image: Thermal power plant. Credit: chuyuss, Shutterstock.

This article originally appeared on ASPI's The Strategist on June 2, 2021.