A number of events during President Hu Jintao’s visit to the United States will underscore that the energy dialogue between the United States and China continues to be a key area of engagement, where both sides can point to recent successes, but it is not without threat of derailment.
Both the United and China face the daunting task of transforming their energy systems to deal with the economic, security, and environmental risks of continued primary reliance on fossil fuels. At their upcoming summit, Presidents Obama and Hu have an opportunity to reiterate and reinforce their commitment to address these global issues of energy security and climate change.
Because the United States and China represent nearly 40 percent of total world energy consumption and are the world’s major producers of carbon emissions, this shared commitment is critical in the global effort to provide a cleaner and more secure energy future. Without meaningful efforts by these two countries, the global effort will fail. Moreover, the energy agenda has the potential to be a win-win situation for China and the United States.
The transformation of energy infrastructure will require concerted efforts to introduce a wide array of new and advanced technologies to improve the efficiency of energy consumption, expand the production of energy by nonfossil fuel energy sources, including renewables and nuclear, and begin to capture and sequester the carbon emitted by the burning of fossil fuels.
Driving the transformation fast enough to have a chance to avoid the economic, security, and environmental risks requires government action in the form of increased funding of research and development and new regulations and subsidies (incentives) to accelerate the deployment of clean energy, as well as to achieve large enough market scale to reduce their costs. Both countries have made major commitments to this transformation, including several major cooperative efforts, but real and lasting progress requires sustained attention.
Both the United States and China have mixed reputations when it comes to the commitment to transition toward a cleaner energy profile. The United States has increased efficiency standards (most notably for vehicles), spent unprecedented levels of funding on clean energy technology, and reengaged in international climate negotiations. The United States has fallen short, however, in putting in place long-term policies and incentives necessary to transition to a low-carbon future.
China, on the other hand, has worked to develop a pathway for its domestic low-carbon energy future, determining how such a pathway would fit into other strategic goals, including economic growth, energy security, local environmental concerns, and natural resource development plans.
Through the 11th Five Year Plan and development of the 12th plan, the Chinese government has put in place a number of policies to improve energy efficiency, encourage diversity of energy sources, establish targets for renewable energy, and establish timelines for reducing carbon emissions.
Even with this impressive level of commitment and progress, however, the impact of China’s energy use on the local and global environment and energy security will be significant.
Through government-to-government dialogue and collaborative initiatives, the United States and China have, so far, tried very hard to strike a cooperative and productive relationship on energy and climate. The effort to develop and deploy new technologies in a difficult economic environment has led to growing concerns that each country is using “unfair” policies to capture jobs and other economic benefits. The spirit of collaboration must be continually reinforced, and every effort should be made to deal with disruptive trade, investment, and other tensions. Some of the steps that Obama and Hu should consider to maintain a productive relationship include:
Making a clear statement that they understand the need to transform their energy sectors and that they intend to continue their domestic efforts;
Committing to closer and more intensive collaborationn to accelerate the development and deployment of clean energy technologies;
Committing to work together to assure that adequate supplies of conventional energy will be available during the transition to a lower-carbon future;
Agreeing that open markets are critical to creating the necessary scale for the deployment of new clean energy technologies and that incentive policies that inhibit global trade and investment flows must be avoided; and Pledging to work together within the various international fora—including the G-20, Asia-Pacific Economic Cooperation (APEC), World Trade Organization (WTO), International Energy Agency (IEA), Major Economies Forum (MEF), and World Bank—to create the policy, financial, technology, and trade framework necessary to accelerate the creation of a sustainable energy system.