E3G

Rising to the challenge of interdependency

By Jennifer Morgan

The mutuality of interests between the EU and China is the biggest opportunity they have for cooperating on energy and climate security. Both are working for an international system based on cooperation and the rule of law, free from the domination of one single power. The EU has a strategic interest in building a relationship with China to reflect its mutual interests: concerns about its rising dependence on imported oil and gas; its goal to accelerate energy efficiency, renewables and new technologies; and a common interest in establishing technology standards for coal. To build this relationship with China, Europe needs to be able to engage China on a scale commensurate with the shared dilemmas both face, and to move beyond widespread anxieties based on exaggerated fears of Chinese competition in a globalised economy.

There is no shortage of money, technology or policy, and there is a lot of room within existing energy systems to make a difference in the next couple of decades. What we are short on is political will. Investment and political capital need to be connected, and the first place they should connect is in the area of energy efficiency. Both Europe and China have national efficiency goals; both want to reduce energy demand and experience the benefits of reduced air pollution and carbon emissions. However, both are struggling with implementation. Working together to scale up efficiency efforts and devise effective approaches would bring massive benefits for all, and should be a top priority.

For example, harmonising efficient product standards in the EU and China – and lowering the relevant tariffs – is a concrete initiative that would be in the interests of both parties. Indeed, the energy and climate security benefits of cheap and highly efficient Chinese appliances in Europe outweigh any possible “competitiveness” issues around tariff reduction.

In the same way, Europe (and the rest of the world) has a greater interest in ensuring energy and climate security than in over-protecting intellectual property rights (IPR) around clean technologies. Fears about IPR protection are holding up EU-China cooperation in areas that include renewable energy technologies, coal and efficiency. However, many European companies already successfully manage access to IPR as part of their commercial and governmental relationships in China and India, showing that a strategic balance of risk and reward can be found if the ultimate objectives are clear. The facts and the myths about IPR in China must be brought out into the open and analysed according to each technology and its stage of development.