E3G

Climate change: EU-China and economic growth

By Quentin de Molliens

EU-China

We will all make more effective policies on energy if we address the opportunities through external engagement better to achieve our domestic goals. That can for example help drive down the cost for our consumers of the energy choices we want to encourage.

Let me illustrate this by looking at the economic relationship between the EU and China. There are growing opportunities in the energy sector to secure our goals more effectively by acting together, harnessing the market power of the world’s largest single market to that of its fastest growing economy.

We have similar interests. We both need to accelerate energy investment and face strategic choices about how to develop the infrastructure our economies will need. We both aim to produce and consume energy more efficiently. We both want to diversify, including through renewable energy and other advanced technologies. We are both vulnerable, as consumer economies, to rising dependence on potentially uncertain supplies of imported oil and gas. We have a shared interest in a stable and predictable oil price through a faster global transition to greater fuel efficiency.

These factors give us a common interest in bringing down the relative cost in our economies of certain energy technologies, goods and services. One of the most effective ways to bring down costs is to accelerate the growth in markets. Indeed for many of the technologies concerned the size and rate of growth of markets are key determinants of price.

Vice Premier Zeng Peiyan spoke of China’s desire to support its energy policies through international trade and investment. For the EU too, this is an equally important aspect of energy policy.

Well designed measures to stimulate two-way trade and investment in low-carbon technologies, goods and services would make it cheaper for customers in the EU and China to make energy efficient, low carbon choices. It would offer commercial benefits for our companies, since our combined scale gives us the opportunity to set global technology standards. By slowing down the growth in demand for imported energy, it might create more favourable terms of engagement with our main energy suppliers.

These benefits will only arise if cooperation takes place on a strategic scale, with a high degree of coherence across a wide range of policy areas including trade, investment, energy, technology and climate. Strategic cooperation of this kind would put the scientific concept of development at the heart of the economic relationship between the EU and China.

This is only an example of the kind of new thinking we will all need to develop if we want to meet our energy needs while moving towards low carbon. Approaches of this kind would not of course be a replacement for what we are doing in the UN climate process. On the contrary, we will need such approaches to help us achieve the goals we have set in the UN.