[Senate Prints 111-24]
[From the U.S. Government Publishing Office]
111th Congress S. Prt.
COMMITTEE PRINT
1st Session 111-24
_______________________________________________________________________
BROADENING THE BILATERAL:
SEIZING THE OPPORTUNITY
FOR MEANINGFUL U.S.-CHINA
COLLABORATION ON CLIMATE CHANGE
__________
A REPORT
TO THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
One Hundred Eleventh Congress
First Session
July 21, 2009
U.S. GOVERNMENT PRINTING OFFICE
51-032 WASHINGTON : 2009
-----------------------------------------------------------------------
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800
Fax: (202) 512�092104 Mail: Stop IDCC, Washington, DC 20402�090001
COMMITTEE ON FOREIGN RELATIONS
JOHN F. KERRY, Massachusetts, Chairman
CHRISTOPHER J. DODD, Connecticut RICHARD G. LUGAR, Indiana
RUSSELL D. FEINGOLD, Wisconsin BOB CORKER, Tennessee
BARBARA BOXER, California JOHNNY ISAKSON, Georgia
ROBERT MENENDEZ, New Jersey JAMES E. RISCH, Idaho
BENJAMIN L. CARDIN, Maryland JIM DeMINT, South Carolina
ROBERT P. CASEY, Jr., Pennsylvania JOHN BARRASSO, Wyoming
JIM WEBB, Virginia ROGER F. WICKER, Mississippi
JEANNE SHAHEEN, New Hampshire JAMES M. INHOFE, Oklahoma
EDWARD E. KAUFMAN, Delaware
KIRSTEN E. GILLIBRAND, New York
David McKean, Staff Director
Kenneth A. Myers, Jr., Republican Staff Director
(ii)
?
C O N T E N T S
----------
Page
Letter of Transmittal............................................ v
Executive Summary................................................ 1
1. Summary of Climate Change Science............................. 3
2. United States and China Emissions History..................... 5
Energy Usage................................................. 5
Energy Production............................................ 6
3. A Review of Current Domestic Actions in China................. 7
Energy Efficiency............................................ 8
Renewable Electricity........................................ 9
Nuclear Power Generation..................................... 9
Transportation............................................... 10
4. Current Areas of Collaboration................................ 10
Areas of Tension............................................. 12
5. Areas of Bilateral Focus Moving Forward....................... 12
I. Build a Bilateral Laboratory............................ 14
II. Create Green Landmark Projects.......................... 15
III. Train a Clean Energy Corps............................. 15
(iii)
LETTER OF TRANSMITTAL
----------
United States Senate,
Committee on Foreign Relations,
Washington, DC, July 21, 2009.
Dear colleague: On Monday, June 27, the United States
Government will host the inaugural meeting of the Strategic and
Economic Dialogue, the framework governing our bilateral
relationship with China. The stakes are high. We must show our
own governments and our people that our two countries can and
do collaborate. And we must jointly tackle one of the most
important and complex global issues: the threat of catastrophic
climate change.
As we move toward the U.N. climate change negotiations in
Copenhagen in December, I am hopeful that our two countries
will close the remaining gaps in our high-level positions on
climate change. I also believe we must visibly and powerfully
extend our cooperation on all levels.
The attached staff report establishes the scientific
arguments and domestic emissions and policies in both countries
and reviews the current areas of U.S.-China energy
collaboration. It also recommends three areas for the
Administration to pursue more robust cooperation in support of
a global climate change agreement.
Sincerely,
John F. Kerry,
Chairman.
BROADENING THE BILATERAL:
SEIZING THE OPPORTUNITY
FOR MEANINGFUL U.S.-CHINA
COLLABORATION ON CLIMATE CHANGE
----------
Executive Summary
Negotiations for a global climate change treaty at
Copenhagen are only five months away. Landmark legislation has
passed in the House, and parallel legislation is now being
drafted in the Senate. In short, climate change has finally
taken its proper place among the most significant international
challenges facing this country and the global community.
With the upcoming launch of the Strategic and Economic
Dialogue (S&ED)--the talks that govern our bilateral
relationship with China--on July 27 and 28, 2009, the United
States and China have acknowledged that their relationship is
perhaps the most important in the world.
This report from the Senate Foreign Relations Committee
looks at these two crucial international issues in tandem, by
focusing on U.S.-China climate change and clean energy
collaboration. Our cooperation has the potential both to drive
global efforts to address climate change and to strengthen and
deepen our vitally important bilateral relationship. The report
draws on a series of hearings and briefings conducted by the
committee, Chairman John F. Kerry's May 2009 visit to China,
and a host of independent reports on U.S.-China climate
collaboration.
There is increasing agreement among policy makers, national
security specialists, and private sector leaders--and near
universal consensus in the scientific community--that climate
change poses a potentially catastrophic threat to the
environment and to global security. There is also a growing
realization that addressing the policies and emissions of the
United States and China is the key to a global solution. Both
countries have recognized the importance of the threat, and the
need for their engagement; both have begun taking domestic
action to alter their energy use patterns and emissions
profiles. However, neither has yet been willing to take the
dramatic actions that many experts deem necessary to achieve
critical mass for a global effort. Many in the United States
frankly doubt China's commitment to reduce emissions. The
ranking member of the committee, Senator Lugar, remarked in his
opening statement on June 4, ``The American domestic debate on
the issue will be profoundly influenced by perceptions of
China's willingness to set aside doctrinaire positions and
agree to verifiable steps to limit greenhouse gas emissions.''
\1\
---------------------------------------------------------------------------
\1\ Opening Statement of Senator Lugar, hearing on ``Challenges and
Opportunities for U.S.-China Cooperation on Climate Change.'' 4 June
2009.
---------------------------------------------------------------------------
The United States has begun to change its stance. President
Obama has made clear his support for binding emissions
reductions. In addition, the American Clean Energy and Security
Act recently passed in the House would require emissions
reductions of at least 17 percent by 2020 and 80 percent by
2050. However, the absence of specific emissions reduction
commitments from China has stoked fears of an unfair economic
advantage for China, a hobbled U.S. economy, and an
insufficient response to the threat of global climate change.
After an investigation by the committee's staff and the
Chairman's frank conversations with Chinese leaders, it is the
Chairman's strong view that China recognizes the dangers of
climate change and is prepared to work with the United States
and other members of the international community to address it;
though, as Senator Lugar noted, the American perception of
China's actions will remain equally important. At the most
senior level, as Al Gore noted in his testimony on January 28,
2009 before the committee, China has recognized climate change
as an issue of paramount importance to itself and the world,
and is committed to action.\2\ Vice-Premier Li Keqiang in his
conversations with the Chairman explicitly stated his
commitment to making the negotiations in Copenhagen a success.
Over the past several years this leadership has begun to build
consensus among national policy makers and gain support from
certain local and provincial government leaders that dramatic
steps must be taken. Internal hurdles remain, but the Chinese
Government appears willing to engage.
---------------------------------------------------------------------------
\2\ Testimony of the Honorable Albert A. Gore, Jr. before the
Senate Foreign Relations Committee, United States Senate, hearing on
``Addressing Global Climate Change: the Road to Copenhagen'' 28 January
2009.
---------------------------------------------------------------------------
Of course, achieving an agreement on climate change policy
that includes fixed commitments from China will still continue
to prove extraordinarily difficult, as evidenced by the
important, but limited, movement during the recent G8 and Major
Economies Forum in July 2009. This report therefore has focused
on the areas where the United States and China should
concentrate their efforts now, particularly in the context of
the S&ED, in order to move closer on climate issues and to
begin incorporating climate change into the bilateral
framework.
There exists a strong base on which these cooperative
efforts can build. Many governmental, private-sector, and non-
profit entities have already succeeded in building strong
partnerships, and the two countries made a great step forward
with the signing of the U.S.-China 10 Year Energy and
Environment Cooperation Framework (10 Year Framework) under the
previous administration. Today there is an opportunity to
dramatically expand the collaboration and to include addressing
climate change as an explicit goal of the cooperation
framework. China itself has recognized that collaboration,
broadly speaking, is essential--and desirable. As Foreign
Minister Yang Jiechi said in March:
Exchanges, cooperation and mutual benefit should be
the defining features of the 21st century. Gone should
be the days when countries competed at the expense of
each other's interests under a zero-sum mentality
because those who preach such a competition approach
and model are bound to be the biggest losers today.
China and the United States should and can set an
example in achieving win-win progress and making
greater joint efforts for an even better world.\3\
---------------------------------------------------------------------------
\3\ http://www.fmprc.gov.cn/eng/wjdt/zyjh/t542505.htm
By focusing on three areas, (i) Building a bilateral
laboratory, (ii) Creating green landmark projects; and (iii)
Training a clean energy corps, the United States and China can
deepen their ties, build trust, and ultimately catalyze a
binding, comprehensive, and fair global agreement on climate
change. We have already seen signs of progress on the first
area, with Secretaries Chu and Locke's announcement in China of
a joint clean energy research center.
If the United States acts now to extend and deepen this
relationship-and begins incorporating climate change goals into
its bilateral energy relationship with China, there is a very
real opportunity for this country, with China, to lead the
international community to a global solution to one of the
world's most pressing problems.
This report addresses these issues in five sections.
1. Summary of Climate Change Science
2. United States and China Emissions History
3. A Review of Domestic Actions in China
4. Current areas of Collaboration Between the Two Countries
5. Areas of Bilateral Focus Moving Forward
1. Summary of Climate Change Science
Today, there is near-universal consensus within the
scientific community that climate change has begun, is
accelerating, and will have catastrophic effects--both physical
and human--if efforts are not taken address it.
Ice core analysis and atmospheric measurements indicate
that, since 1750, the concentration of carbon dioxide in the
atmosphere increased 38 percent, from 280 to 385 parts per
million (ppm). Current levels are higher than at any other
point in the past 800,000 years. In the absence of limits on
greenhouse gas emissions (GHG), atmospheric concentrations are
expected to reach 600-700 ppm by 2100. In order to avoid the
risk of catastrophic climate change, the scientific community
led by the Intergovernmental Panel on Climate Change (IPCC),
the world's authoritative scientific body on climate change,
recommends that atmospheric concentrations stabilize at 450
ppm.\4\ This represents a global average temperature increase
of 2 C above pre-industrial levels, and matches the agreed
target reached during the July, 2009 G8 meeting.
---------------------------------------------------------------------------
\4\ IPCC, ``Summary for Policymakers of the Synthesis Report of the
IPCC Fourth Assessment Report'' (Intergovernmental Panel on Climate
Change, 2007), at http://www.ipcc.ch/index.htm (accessed November 27,
2007).
---------------------------------------------------------------------------
While a number of factors contribute to atmospheric carbon
dioxide concentrations, the IPCC has concluded that the primary
cause of this surge in carbon dioxide has been the human use of
fossil fuels.
Increasing atmospheric concentration of carbon dioxide has
already caused temperatures to rise globally, by three-quarters
of a degree Celsius over the 20th century. In fact, the 10
warmest years on record have all occurred since 1997. These
changes have already resulted in significant impacts on the
physical environment. This is most evident in the Arctic, where
temperatures are rising at twice the global average and where
the consequences of warming are immense, as Al Gore made clear
in his testimony. In 2007, the Arctic experienced record ice
loss--almost 40 percent below the long-term average. The past
six years have produced the six lowest levels of winter ice
coverage on record. Experts project that the North Pole could
see its first ice-free summer as early as 2013. These effects
are not restricted to the poles. The U.S. Global Change
Research Program issued a report in June 2009 demonstrating the
impacts of climate change on every region of the United States.
Floods, droughts, storms and other extreme weather events are
projected to increase throughout the United States. China has
already seen extended droughts in the north, extreme weather
events and flooding in the south, and rising sea levels along
its densely populated coast. According to Elizabeth Economy,
Director for Asia Studies at the Council on Foreign Relations,
farmers in rural China often cite climate change as the cause
of poor land quality and water scarcity.\5\
---------------------------------------------------------------------------
\5\ Testimony of Elizabeth Economy before the Senate Foreign
Relations Committee, United States Senate, hearing on ``Challenges and
Opportunities for U.S.-China Cooperation on Climate Change.'' 4 June
2009.
---------------------------------------------------------------------------
While these physical impacts are the most visible, the
effects of climate change extend far beyond our natural
environment. Climate change is a threat to public health:
changing temperatures already have increased the areas
susceptible to malaria outbreaks worldwide. Heavier
precipitation events, which are predicted to become
increasingly prevalent, will lead to increased outbreaks of
e. coli and cryptosporidium.\6\
---------------------------------------------------------------------------
\6\ Paul Almendares and Paul R. Epstein, Climate Change and Health
Vulnerabilities. Climate Change. 2009
---------------------------------------------------------------------------
Climate change exacerbates conflict. Growing competition
for scarce resources, due to desertification and water
shortages, threatens to lead to increased conflict and to
inflame pre-existing tensions. In South Asia, India's rivers
are not only vital to its agriculture, but central to its
religious practice. Pakistan, for its part, is heavily
dependent on irrigated farming to avoid famine. Both share the
water that flows from the Himalayas and which could disappear
completely by 2035.\7\ At a moment when the American Government
is working to decrease tensions and preparing to invest
billions to strengthen Pakistan's capacity to deliver for its
people, climate change is working in the opposite direction.
---------------------------------------------------------------------------
\7\ (Citing report by Syed Hasnain, a scientist at the Energy and
Resources Institute (TERI)). http://www.telegraph.co.uk/earth/
earthnews/3458927/Himalayan-glaciers-could-disappear-completely-by-
2035.html
---------------------------------------------------------------------------
Climate change also leads to massive population migration.
Estimates of populations displaced by climate change, either
from natural disasters or evolving changes to the climate,
range from 25 to 200 million. These migrations put enormous
strain on governmental institutions, as well as the traditional
international institutions, like the Office of the United
Nations High Commission for Refugees, which has traditionally
worked with these groups.
2. United States and China Emissions History
While the United States remains the world's largest
historical emitter of GHG, China surpassed the United States in
2007 to become the largest current annual contributor.\8\
Combined, China and the United States represent more than 40
percent of global annual emissions.\9\ Any strategy to address
climate change that does not include China and the United
States is doomed to fail.
---------------------------------------------------------------------------
\8\ Includes CO2 emissions only as China does not report
non CO2 emissions. http://cdiac.ornl. gov/trends/emis/
top2006.tot
\9\ ``Energy, Emissions, and National Circumstances'' by the Asia
Society.
---------------------------------------------------------------------------
This section lays out the primary sources of emissions in
each country. Although some observers have expressed concerns
with the accuracy of Chinese data, most experts agree that
current estimates are relatively accurate.\10\ The main driver
globally of GHG emissions is energy--both its production and
its end usage.\11\ While China and the United States differ
significantly in their current and projected usage, both
countries share similar energy production profiles.
---------------------------------------------------------------------------
\10\ China has officially reported one year of emissions data,
1994, which was only released ten years later. To estimate emissions,
most groups use energy consumption statistics; however, due to poor
reporting at the local level and at times immature data systems, the
energy data that China does release can often be inconsistent (e.g.,
national data and aggregated provincial level data often vary
significantly). In general the discrepancies do not appear to stem from
intentional manipulation.
\11\ Other important sources of emissions include land-use changes,
especially forestry issues, agriculture, biomass, and coal fires.
---------------------------------------------------------------------------
ENERGY USAGE
In the United States, the majority of emissions derive from
the production of electricity. By end use,\12\ transportation
is the largest share, at just over one third of total
emissions. Residential buildings and industrial facilities each
represent about one quarter of total emissions, with commercial
buildings consuming just under one fifth. Historically, U.S.
emissions have been affected by two major trends. First, energy
``intensity''--the ratio of energy consumption to GDP--has
fallen over time, primarily from the United States' movement to
a more services-oriented economy. Second, emissions growth has
historically tracked closely with population growth. Since
1990, the population has grown 19 percent and emissions have
grown 16 percent.
---------------------------------------------------------------------------
\12\ Defined by the EIA as Residential, Commercial, Industrial, and
Transportation.
---------------------------------------------------------------------------
China's energy profile, by contrast, is dominated by
industrial emissions. Of total emissions, around 70 percent
come from industry. Emissions from this sector have accelerated
over the past decade, increasing by 46 percent from 2002-05 and
then another 32 percent from 2005-07.\13\ These dramatic
increases have been driven by the rapid industrialization of
the country, including infrastructure development and a surge
in heavy industry.\14\ In addition, as supply chains have
integrated across Asia, China has increasingly become a hub for
final assembly.
---------------------------------------------------------------------------
\13\ EIA, 2008, Emissions of Greenhouse Gases Report, available at:
http://www.eia.doe.gov/oiaf/1605/ggrpt/carbon.html; China emissions
calculated using 1996 revision of IPCC default carbon emission factors;
commercial fuels only, not including biomass.
\14\ Zhou, Nan, Levine, Mark, and Fridley, David. Taking out one
billion tons of CO: the magic of China's 11th five year plan? Energy
Policy, No. 26. 2008, December 2007. LBNL-757E.)
---------------------------------------------------------------------------
While industrial emissions currently dominate China's
emissions profile, two population trends have the potential to
alter that balance. China's per capita emissions are currently
only one-fifth of the U.S. figure. However, the ongoing
urbanization of China will result in 350 million Chinese moving
to the cities by 2030--the equivalent of a new city of 1.25
million people every month.\15\ Given that meeting the needs of
urban-dwellers (including constructing housing and urban
infrastructure) requires approximately 3.5 times the energy
required to meet the basic needs of rural Chinese, this mass
migration will contribute to growing emissions in the
future.\16\ In addition, Chinese per capita incomes have risen
rapidly in recent years, driving increased consumption of
energy-consuming products like vehicles and appliances.
---------------------------------------------------------------------------
\15\ Testimony of Ken Lieberthal before the Senate Foreign
Relations Committee, United States Senate, hearing on ``Challenges and
Opportunities for U.S.-China Cooperation on Climate Change.'' 4 June
2009
\16\ John L. Thornton China Center at Brookings. ``Chinese Climate
Policy.'' Overcoming Obstacles to U.S.-China Cooperation on Climate
Change. 31-2.
---------------------------------------------------------------------------
ENERGY PRODUCTION
While China and the United States are, respectively, the
first- and second-largest consumers of renewable electricity,
both countries are also highly dependent on coal. Coal supplies
about 70 percent of China's energy, and results in 81 percent
of its CO2 emissions.\17\ Coal generates 22 percent
of U.S. energy-more than the European Union, Japan, Russia and
Indonesia-and accounts for 36 percent of its total emissions.
Half of U.S. electricity is generated from coal; in China that
figure is 80 percent.\18\ Experts predict that China will
remain highly dependent on coal as its economy continues to
grow. Kenneth Lieberthal, a visiting fellow at the Brookings
Institution, testified on June 4, 2009 in a hearing before the
committee, ``There is no serious alternative to coal for many
decades to come.'' \19\
---------------------------------------------------------------------------
\17\ National Bureau of Statistics, China Statistical Abstract,
various years.
\18\ Asia Society
\19\ Testimony of Ken Lieberthal before the Senate Foreign
Relations Committee, United States Senate, hearing on ``Challenges and
Opportunities for U.S.-China Cooperation on Climate Change.'' 4 June
2009.
---------------------------------------------------------------------------
With relatively large coal deposits in both countries, the
question of coal extends beyond emissions and into energy
security. For China in particular, where 97 percent of its
fossil fuel base is coal, there is a strong domestic security
incentive to continue using coal, rather than switching to
natural gas or oil, both of which are relatively scarce
domestically.\20\
---------------------------------------------------------------------------
\20\ National Bureau of Statistics, China Statistical Abstract,
various years.
---------------------------------------------------------------------------
In light of this situation, both China and the United
States have become global leaders in coal technology. China has
improved upon the most common coal technology to create some of
the world's most efficient plants, allowing for higher energy
production from the same quantity of coal. The United States
has pioneered new technology that also increases efficiency and
simplifies any subsequent carbon capture and sequestration
(CCS). Despite these advances, both countries will have to
address the question of emissions from coal, which will require
further technological progress and investment, especially in
CCS.
3. A Review of Current Domestic Actions in China
The United States has already begun to tackle the question
of climate change, and the recent passage of the American Clean
Energy and Security Act in the House of Representatives
suggests that the U.S. Government may adopt a cap on emissions.
While many analyses have explored the range of federal,
regional and local U.S. action on climate change, changes in
Chinese policy are significantly less well understood.
In 2005, China unveiled its 11th Five Year Plan, which
featured a new focus on energy and the environment. In 2008,
the environmental agency was elevated to Ministry status, a
significant internal political move, reflecting the heightened
priority of environmental matters in the government. Moreover,
outside observers, including the Chairman, have noted a
significant change in public and private rhetoric on the
question of climate change. As the Chairman noted in his speech
to the Council on Foreign Relations on June 15, 2009:
What I saw and heard from top Chinese political and
military leaders, energy executives, scientists,
students, and environmentalists was enormously
encouraging. People who, a few short years ago, weren't
even willing to entertain this discussion, are now
unequivocal: China grasps the urgency of the problem,
is eager to embrace clean energy, and is ready to be a
``positive, constructive'' player in negotiations going
forward.
Still, the political situation in China remains complex.
Senior leaders in Beijing appear to acknowledge tacitly that
China must eventually sign on to a binding agreement to reduce
emissions, but they face many hurdles. First, as former Foreign
Minister Li Zhao-xing made clear to Chairman Kerry in Beijing
in May, 2009, China is unwilling to take on commitments that it
may not be able to achieve. And while the central government
may be close to a consensus on the importance of addressing
climate change, many regional and local governments, who
ultimately will be responsible for enforcing emissions targets,
have a mandate to maximize economic growth. They may not yet be
convinced that their own interests will be best served by
moving decisively to implement sustainable growth strategies.
As in the United States, measures to curb carbon emissions
face stiff opposition from certain heavily affected geographic
areas and industrial sectors. The regional mayors and industry
leaders, often from poorer provinces, have exerted pressure on
the central government to postpone any binding commitments. To
them, environmental and emissions restrictions are seen as
limiting economic growth.
Slowly, the central government has sought to alter this
viewpoint. It has made adjustments to the all-important metrics
by which regional and local leaders are evaluated, decreasing
the importance of economic growth and increasing the importance
of environmental issues. Local officials have now been told
that their jobs will be in jeopardy if they fail to meet
targets to reduce energy intensity and emissions. It has also
successfully ``piloted'' greater environmental control in
specific cities, like Dalian, to demonstrate that economic
growth need not run counter to environmental health. However,
it will still take time to build consensus among the 650 cities
across China that will ultimately enforce any such agreement.
In spite of the internal political difficulties of
committing to a binding emissions agreement, China has
established targets in a variety of areas, including energy
efficiency, renewable energy, nuclear power, industry, and
transportation. In fact, as James Rogers, CEO of Duke Energy,
noted in his testimony on May 19, 2009, ``China now has
renewable energy, energy efficiency, and fuel economy standards
that are all more aggressive than our own.'' These targets have
been repeatedly strengthened as China has exceeded its own
interim benchmarks. Beyond specific targets, China has also
continually sought to improve the efficiency of its standard
coal plants and, in the past few years, some argue China has
surpassed the United States in power generation efficiency.\21\
---------------------------------------------------------------------------
\21\ http://www.serc.gov.cn/jgyj/ztbg/200903/
W020090324593421835268.pdf
---------------------------------------------------------------------------
In addition to ordinary funding for these initiatives,
China has also made significant commitments in its 2008
economic stimulus program to green efforts, including energy
efficiency and renewables. While stimulus infrastructure
spending is frequently allocated with abbreviated environmental
impact assessments and little scrutiny, the additional funding
for energy and climate issues is significant. These
investments--if effective--will shift Chinese patterns of
energy production.
To date the progress has been impressive. Investment in new
renewables capacity is now second in the world, only to
Germany, with more than $12 billion in 2007 alone.\22\ China's
wind capacity grew at an astonishing 91 percent in 2008, making
the country the fourth largest wind market globally. Success in
solar photovoltaics (PV) has likewise been remarkable: Suntech,
the market leader, grew from just 20 employees in 2002 to a
market value of $6 billion, making its founder at one point the
richest man in China. Today, China is the largest producer of
PV panels, with more than 200 manufacturers creating 1700
megawatts of the panels in 2007, which amounts to about half of
the world's total production.\23\
---------------------------------------------------------------------------
\22\ http://www.renewableenergyworld.com/rea/news/article/2008/03/
powering-chinas-development-the-role-of-renewable-energy-51586
\23\ http://www.scientificamerican.com/article.cfm?id=chinas-big-
push-for-renewable-energy
---------------------------------------------------------------------------
ENERGY EFFICIENCY
Energy efficiency improvements are a focal point for
Chinese energy policy. For more than two decades, China saw its
energy intensity\24\ decrease annually by approximately 5
percent. However, between 2002 and 2005, energy intensity
increased by 2 percent annually. In response to this new and
troubling trend, the government announced a 20 percent energy
intensity reduction target for the period from 2006 to 2010.
From 2005-08, due to a variety of programs, energy intensity
has decreased 10 percent, with a 4.6 percent decrease from 2007
to 2008.\25\ Among the most important programs in this effort
are the ``Top 1,000'' enterprises programs, which cover a set
of enterprises responsible for one third of all energy
consumption in China. This effort requires companies to perform
and publish energy audits and calculate their energy intensity.
Each enterprise is then required to draw up plans to achieve
required reductions, and report annual, measurable results to
the National Development and Reform Commission (NDRC), a
government body with broad administrative and planning control
over the Chinese economy.\26\
---------------------------------------------------------------------------
\24\ Energy use per unit of gross domestic product.
\25\ Eleventh Five-Year Plan: Reducing 20% of energy consumption
per unit GDP by 2010. Energy Weekly. CHINA5E E-Magazine, May 26, 2009,
Vol. 204.
\26\ The Challenge of Reducing Energy Consumption of the Top-1000
Largest Industrial Enterprises in China, Lynn Price, Xuejun Wang, Jiang
Yun. Page 7-8. Berkeley, CA: Lawrence Berkeley National Laboratory. See
also, Price, L., Xuejun Wang, Jiang Yun, 2009. ``The Challenge of
Reducing Energy Consumption of the Top-1000 Largest Industrial
Enterprises in China,'' Energy Policy.
---------------------------------------------------------------------------
There is significant funding behind these efforts. Annual
spending on energy efficiency increased from $244 million in
2007 to $1.3 billion in 2008 to $1.8 billion in 2009.
RENEWABLE ELECTRICITY
China has one of the most ambitious renewable energy
programs globally. In 2005, the government released a target of
10 percent renewable electricity generation by 2010 and 15
percent in 2020. China has already exceeded its 2010 generation
target and, in response, tripled its wind production goal and
increased its solar production goal by five-fold. Zhang
Xiaoqiang, the NDRC's vice-minister in charge of international
cooperation, has publicly suggested that the 2020 target, which
does not include hydroelectric power, may need to be revised
upward as well. He suggested China could reach 18 percent, or
even 20 percent, renewable power generation by 2020.
Much of this success has stemmed from the significant
investments from the Chinese central government in renewable
energy, with commitments of almost $300 billion between now and
2020. China's progress in building local industries for wind
turbines and solar panels, among other renewable technologies
has also resulted in vastly lower prices and speedier adoption
rates.
NUCLEAR POWER GENERATION
China is also investing in nuclear power, committing to
large deals with the major nuclear providers, including Areva
and Westinghouse. In their energy planning, they have
continually increased their nuclear targets, which currently
stand at 60GW by 2020, but may be increased again to somewhere
between 75 and 100 GW of installed capacity. During the
Chairman's visit, officials stated that 110 GW would be
installed or under construction by 2020.
These agreements have been among the largest nuclear deals
ever concluded and include significant technology transfer.
They may also hasten the advance of new nuclear technologies,
as the opportunity to build plants results in more efficient
techniques and greater opportunity for at-scale
experimentation.
TRANSPORTATION
China has pursued significant improvements in the
efficiency of its vehicle fleet and has put in place a
corporate average fuel economy standard of 36 mpg by 2008
(stronger than the accelerated U.S. target for 2016). China
also is in the process of setting fuel economy standards for
trucks and agricultural vehicles.
In addition, China has heavily invested in electric
vehicles, with a $1.5 billion subsidy for electric vehicle
technology. The federal government hopes to pioneer the use of
electric vehicles in public fleets in thirteen cities over the
next four years.\27\ In January, for the first time, more new
cars were sold in China than the United States, and while
China's installed base remains relatively small, it is likely
to increase rapidly.\28\
---------------------------------------------------------------------------
\27\ ``China-made electric cars to enter US market,'' People's
Daily Online (23 February 2009).
\28\ http://worldblog.msnbc.msn.com/archive/2009/02/09/1787089.aspx
---------------------------------------------------------------------------
China is also pursuing an expansive public transit system.
It plans to extend its high speed rail system by 38 percent by
2013 and build more than 170 mass transit systems by 2025.
These investments are transforming the urban landscape and
fundamentally changing the mobility of the Chinese.
4. Current areas of collaboration
The United States and China are already working together
through a wide variety of venues and organizations to share
technology and expertise on climate change and energy issues.
To date, most of these collaborations have focused primarily on
energy and energy efficiency, rather than directly addressing
climate change and greenhouse gas emissions.
Admittedly, these efforts have proved challenging. Low
levels of funding, fluctuations in support for programs, and
lack of continuity of organizations or personnel often decrease
effectiveness. In addition, the sheer number of programs can
result in agencies working in overlapping areas and at times
contradicting each other. But although some programs have been
undermined by lack of follow-up or coordination, many of these
efforts have built lasting and productive bilateral
relationships and concrete results to support future bilateral
cooperation on climate change.
Simply at the federal level, there are dozens of bilateral
agreements, including memoranda of understanding (MOUs) and
cooperative agreements, which provide political clearance and
frameworks for technical cooperation. Bilateral programs have
been supported with federal funds, typically through the
Department of Energy (DOE) or the Environmental Protection
Agency (EPA) but are often carried out through national
laboratories or through environmental or energy non-
governmental organizations and research institutes. Many of the
successful programs have included broad partnerships among
different organizations providing special expertise, and have
involved the private sector as well.
One of the first major U.S.-China bilateral partnerships on
energy issues was the U.S. Country Studies Program, which was
initiated in 1992 under President George H. W. Bush. Under this
program, officials from DOE, EPA, and others worked with
officials from China's Energy Research Institute, State
Planning Commission, and Chinese Academy of Sciences to develop
a methodology to inventory China's greenhouse gas emissions.
This effort laid the foundation for China's 1994 inventory
submission to the UN Framework Convention on Climate Change
(UNFCCC). The Country Studies Program also assessed the impacts
of climate change and options for adaptive response policies;
identified technological options for GHG mitigation and
analyzed their socioeconomic and environmental implications;
developed integrated modeling capabilities to support policy
analysis; and supported climate policy dialogue between the
Chinese and U.S. governments. Many projects since the mid-1990s
have grown out of the Country Studies Program.
Several long-standing partnerships have evolved, including
several centers established in China as focal points for
research, training, and information sharing on energy
efficiency and environmental technologies and measures. DOE and
EPA have supported technical projects to expand natural gas
production and use, renewable electricity and nuclear power
production, energy efficient building codes, and planning for
carbon capture and storage technologies.
Among the most fruitful collaborations has been work
undertaken in China on energy efficiency with help from U.S.
experts--both from the private sector and our national
laboratories. Notably, Lawrence Berkeley National Laboratory
(LBNL) has provided technical assistance to the Chinese
regarding energy efficiency for over 20 years, including
assistance related to the development and implementation of
China's Top-1000 program. Working together with researchers and
policy-makers in China, LBNL helped design and pilot the
initial efforts in Shandong Province that lead to the national-
level Top-1000 program. LBNL has also worked closely with the
China National Institute of Standardization in the development
of over 20 minimum energy efficiency standards and energy
efficiency labeling specifications.
Last year, the two countries consolidated and formalized
their cooperation with the signing of the 10 Year Framework.
This agreement represents the closest collaboration thus far on
climate change-related issues and provides an umbrella
agreement under which the two countries can address a variety
of concerns. Notably, from the Chinese side, both President Hu
and Premier Wen played a significant role in establishing this
accord and approving all provisions.
The 10 Year Framework covers six areas: (1) Clean and
Secure Electricity Production and Transmission; (2) Energy
Efficiency (3) Clean Water; (4) Clean Air; (5) Clean and
Efficient Transportation; and (6) Conservation of Forest and
Wetland Ecosystems. Notably, the agreement does not currently
include climate change or emission reductions.
Three breakthroughs in this Framework are worth
highlighting. First, significant progress was achieved
regarding technology transfer, as defined in the text:
For purposes of this cooperation as an exchange of
expertise between our two countries and cooperation to
jointly reduce or remove barriers including costs
associated with technology research and development,
commercialization and deployment.
This definition recognizes the significant efforts,
including government-to-government transfers of energy
efficiency technology and private sector transfers of
technology, which are already ongoing and emphasizes the
importance of competition and commercialization in lowering
costs associated with technology.
Second, the 10 Year Framework has given rise to a large
number of government facilitated ``eco-partnerships'' that
continue to deepen the relationship between the two countries.
Whether between academic institutions like Tulane University
and East China Normal University, or public-private efforts,
like those that Denver, Colorado and Ford Motor Company, have
undertaken with Chongqing municipality and Changan Auto Group
Corporation, these partnerships increase the density and depth
of the U.S. relationship with China on energy and climate
change.
Lastly, the most recent agreement on the timeline for a
Chinese roadmap to introduce low-sulfur fuels, despite the cost
increase that this switch would entail, suggests a growing
potential for the U.S. and China to work collaboratively to
address emissions questions.
AREAS OF TENSION
Despite significant progress on clean energy technologies
and practices, direct collaboration on climate change issues
and emission reductions continues to encounter resistance.
Collaboration appears to be constrained due to the entrenched
positions both countries continue to maintain within the
UNFCCC. In the lead-up to the Copenhagen negotiating session,
China has staked out a particularly demanding and
uncompromising position, calling for 40 percent cuts in
greenhouse gas emissions by 2020 by developed countries, as
well as additional assessed contributions, indexed to GDP and
as high as 0.5-1.0 percent of GDP, for emissions reductions. It
is also not clear how willing China is to address this problem
should it require significantly compromising near-term economic
growth. As Senator Lugar noted in his opening statement to the
committee on June 4, 2009, China's actions have been ``complex
and contradictory,'' with a burgeoning appetite for renewable
energy juxtaposed against a rapid build-out of coal power
plants and its collaborative relationship with the United
States on energy in contrast to its often strident rhetoric in
multilateral fora.
5. Areas of Bilateral Focus Moving Forward
This month, the United States and China will formally
relaunch their bilateral relationship with the meeting of the
S&ED, the successor to the Strategic Economic Dialogue (SED) of
the previous administration. As discussed in the prior section,
the SED successfully launched the 10 Year Framework, and the
S&ED has the opportunity to broaden and deepen U.S.-China
collaboration on these issues.
Over the past year, a variety of institutions have analyzed
the various areas where the United States and China could
broaden their collaboration. Among them are the Asia Society,
the John L. Thornton China Center at the Brookings Institution,
the Council on Foreign Relations, the Center for Strategic and
International Studies, McKinsey & Company, the Natural
Resources Defense Council, the Pew Center on Global Climate
Change and the World Resources Institute. This committee has
also conducted a series of relevant hearings and briefings, and
the Chairman visited China in May 2009 to meet with political
leaders, academics, businesses, and non-governmental
organizations to discuss climate change and the bilateral
relationship.
One clear conclusion emerges from this broad set of
analyses: the United States and China must jointly address the
question of climate change. Without these two countries, it is
impossible to achieve the global reductions necessary. There is
broad recognition that achieving this collaboration will not be
easy. Both countries have been hesitant to accept any binding
cuts or caps. Neither country is comfortable acting without
commitments from the other. China, as discussed earlier, has
unveiled a particularly problematic list of demands.
The United States recognizes, as Special Envoy on Climate
Change Todd Stern described in his testimony before the
committee on April 22, 2009, that developing nations and
developed nations will undertake different actions, but
fundamentally China must agree to ``significant national
actions that . . . they quantify and that are ambitious enough
to be broadly consistent with the lessons of science.'' \29\
Under the guiding principles of the UNFCCC, the commitments of
all parties to take actions to mitigate climate change must
incorporate their common but differentiated responsibilities.
But, as the Chairman has noted, per the negotiations in 2007 in
Bali, Indonesia, every country should be responsible for
measurable, reportable, and verifiable commitments.
---------------------------------------------------------------------------
\29\ Testimony of Todd Stern, Special Envoy for Climate Change,
before the Senate Foreign Relations Committee, United States Senate,
hearing on ``Global Climate Change: U.S. Leadership For A New Global
Agreement.'' 22 April 2009.
---------------------------------------------------------------------------
These are challenging starting conditions. However, deep
relationships already exist on energy and environmental issues.
Moreover, many of the key elements of a climate agreement have
already been agreed to in the 10 Year Framework. Using the
Framework as a base, there is a real and significant
opportunity for the United States and China to reach an accord
and become leaders on this pressing global issue.
It is worth noting that these bilateral negotiations
support and do not supplant the multilateral process. The
negotiations in Copenhagen will determine the global course of
action, but without some kind of understanding between the
United States and China in advance of these talks, it will be
very difficult to reach a robust treaty. As noted by Todd
Stern, ``If the two goliaths on the world stage can join hands
and commit each other--at the highest levels--to a long-term,
vigorous climate and energy partnership, it will truly change
the world.''\30\
---------------------------------------------------------------------------
\30\ Remarks from Todd Stern as Prepared at Center for American
Progress 6/3/09.
---------------------------------------------------------------------------
The Chairman strongly encourages the United States and
China to build upon existing relationships and continue
deepening and broadening ongoing partnerships, with a goal
toward an expanded energy and environmental cooperative
agreement that includes a shared perspective and set of actions
to combat the threat of climate change.
The Chairman believes that three areas offer significant
potential to bring the two countries closer on climate change
issues and, in turn, lead to a global agreement. Finding
visible opportunities to work together also reminds key opinion
makers in China and in the United States (including Congress)
that our two countries can and do collaborate effectively.
i. Build a bilateral laboratory focusing on mutually
beneficial technologies, such as advanced vehicles,
carbon capture, and smart grid technology.
ii. Create green landmark projects by jointly designing,
financing and implementing pilot projects to test key
near-commercial technologies, including carbon capture
and storage methods and concentrated solar power.
iii. Train a clean energy corps within each country, focused
on energy efficiency, policy design, monitoring and
verification, and enforcement of standards.
I. BUILD A BILATERAL LABORATORY
The United States' system of national laboratories has
proven an extraordinary breeding ground for cutting-edge
scientific developments. Though China does not have a parallel
system, the country has a variety of topnotch research
institutions working on next generation technologies--and among
the highest research outlays in the world.\31\ By focusing
talent and resources on the joint problems of the two countries
in a dedicated bilateral laboratory, the two countries would
have access to some of the best minds, the best resources and
the biggest markets. Secretaries Chu and Locke have begun down
this road, but it remains to be seen how collaborative an
entity the proposed joint clean energy research center will
become.
---------------------------------------------------------------------------
\31\ Shahid Yusuf and Kaoru Nabeshima, Strengthening China's
Technological Capability (Washington DC: World Bank, Development
Research Group, August 2007).
---------------------------------------------------------------------------
To be effective, this new laboratory should, of course,
take advantage of the deep scientific communities in both
countries, but also focus on specific areas of mutual interest,
receive joint funding from the two nations, and include a
mechanism for reporting on and updating the mission of the
center. Its primary goal would be the research, development,
and small-scale demonstration of new technologies with the
potential to deeply reduce GHG emissions. By working together
to combine know-how on topics of shared interest, the two
countries can not only bring about significant change in these
areas, but also streamline commercialization and deployment
through joint testing and certification.
Expert opinion has focused on a few high priority
technologies: carbon capture and storage, new renewable energy
technologies such as solar PV and biofuels, ``smart''
buildings, electric vehicles, and efficient grid technologies.
In many of these areas, the United States and China already
have complementary technologies under development. On both
sides of the Pacific, giving relatively greater attention to
``human dimensions'' and related barriers to technology
deployment could reap mutual benefits--like the installation of
smart metering. In particular, collaboration may be
particularly helpful on the design of incentives for businesses
and households.
II. CREATE GREEN LANDMARK PROJECTS
The United States and China have independently accomplished
some of the world's most impressive feats of engineering. By
working together to build ground-breaking environmental
projects at scale, they can help commercialize near-to-market
technologies and inspire further commitment to these issues. In
so doing, they also encourage and facilitate firms in both
countries doing business in the other.
Combining the technical, financial and manufacturing
resources of both countries promises significant breakthroughs.
By identifying key technologies that are close to market, but
that have not had either the testing or the scale construction
necessary, and then realizing these projects at full potential,
China and the U.S. would prove their technical leadership to
the world, significantly reduce costs, and accelerate their
adoption globally. Beyond the choice of projects, this effort
would also require the United States and China to work together
to streamline import and export processes for high priority
advanced technologies, simplify the process for foreign firms
to do business, and consider supportive provisions under the
World Trade Organization.
Coal-fired power generation should be a priority area for
collaboration. Experts broadly agree that U.S.-China efforts
should target the construction of commercial-scale, integrated
carbon capture and storage pilot projects. The U.S. is moving
forward with the FutureGen project in Mattoon, Illinois, and
China has three projects at various stages of development. By
working to improve the efficiency and performance of power
generation technologies and link them with carbon capture
mechanisms, the United States and China could bring this
critical technology closer to financial viability for global
deployment. And by viewing these projects as more than
technical feats but as visual landmarks of the bilateral
relationship, these two countries can inspire the 1.6 billion
Americans and Chinese to actively engage in solutions to
climate change.
III. TRAIN A CLEAN ENERGY CORPS
Experts broadly recognize energy efficiency improvements as
a near-term and cost-effective opportunity for real changes in
energy use patterns and associated emissions. To capture this
low-hanging fruit, the two governments should establish and
train a clean energy corps of efficiency experts, architects
and students from the U.S. and China to expand access to the
lowest-cost energy solutions on an accelerated schedule to
achieve the greatest short-term reductions.
In China, many of the small-scale ``distributed''
opportunities--like energy efficient building practices--have
proven difficult to implement. These decisions are typically
implemented at the provincial or municipal level, where there
is insufficient knowledge about opportunities and practices for
improvement. The United States has one of the best information
and monitoring systems of any country, and a track record in
working with other countries to improve their own. Local-to-
local partnerships can also play an important role. Often,
where leaders share analogous responsibilities, opportunities
and challenges, and the implementation capacity is both
severely lacking and extraordinarily important.
In addition to our first-class programs at the Department
of Energy, including the Industrial Assessment Centers as well
as the Energy Savings Now program, our state utility
regulators, private energy service companies, and green
building councils have a broad range of experience conducting
energy audits and implementing effective, cost-effective energy
efficiency solutions. By translating our energy efficiency
expertise to the provincial, local, and business level, the
U.S. will significantly improve China's ability to implement
some of the easiest and least expensive reforms.
``The most important single issue for the future . . .
might be how the United States takes a leadership role to
encourage, under tremendous international and domestic
pressure, India and China to join with us in becoming much more
efficient.'' These were former President Carter's words to the
committee during his testimony on May 15, 2009. With emissions
from China more than four times those from India, it is truly
the United States and China relationship that will dictate our
success or failure.
The three action areas highlighted in this report do not
encompass the full set of activities where the United States
and China can or should collaborate. But they do represent
three arenas where concentrated effort to build consensus both
within and between governments could lead to growing
understanding and ultimately to agreement on the thorny
questions of GHG emissions gaps and reductions.
Ultimately the opportunity at stake, as well as the
potential cost, is enormous. As the United States and China
open the first Strategic and Economic Dialogue, just a few
months before the United Nations climate change negotiations in
Copenhagen, Chairman strongly encourages both parties to build
on the impressive work and partnerships already underway and
begin to lead the world towards a global solution.