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Rising to the challenge of interdependency

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Rising to the challenge of interdependency

China and Europe share similar concerns when it comes to energy security and the future of our changing climate. Increased cooperation lights the way ahead.

So writes Jennifer Morgan in an article featured on the new ‘Changing Climates’ forum hosted by chinadialogue.

Rising to the challenge of interdependency

There is no more powerful dynamic at work in the world today than the economic transformation of China. No other country in world history has managed to achieve economic growth of 8% to 10% for nearly two decades. No other country has transformed itself – in just 13 years – from being a major oil exporter to being the world’s second-largest oil importer, expected to overtake the US by 2030. But with China’s unprecedented economic expansion comes the risk of significant consequences to the climate. People have come to fear China not only because of its growing economic might, but also because of the greenhouse-gas emissions that go with it.

Europe and China face mutual and interlinked challenges. Both worry about energy security, especially rising dependence on imported oil and gas; both worry about the economic impacts of climate change; and both want to achieve climate stability without undermining energy security. Europe has learned the hard way that taking a path of “soft” power – of cooperation – is a better route than engaging in the “hard” power needed to compete for scare resources. Today, China is experimenting with both, and its decision to adopt one path or the other will have a resounding impact on the planet. The hard approach would likely lead to increased conflicts over natural resources, the softer path to massive efficiency improvements and the development of renewable energy sources at home. The world’s largest single market and its fastest growing economy need to work together to ensure China takes the path of soft power.

The fact is that Europe cannot respond to the threat posed by climate change on its own. We live in an interdependent world, and Europe must build an engagement with China, one in which China has an equal interest.

Choices made in China matter deeply. A stable and growing China will provide higher returns on European investments and trade, which will be critical in securing pensions for Europe’s ageing population. China’s decisions about its infrastructure needs will determine, to a large extent, what will be achievable globally in the way of stabilising, and eventually, reducing emissions. China currently emits about 14% of the world’s greenhouse gases and is expected to contribute about 17% by 2020. The country is deploying capital so quickly that it offers the quickest route to bringing new, clean energy technologies to maturity. By working together, Europe and China could substantially bring down the cost of low-carbon technologies and make them available to other, less industrialised countries around the world.

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.

If China and the EU can find a way to forge bilateral technology cooperation it would provide a basis for the technology element of a climate regime after the Kyoto Protocol expires in 2012. For example, there is everything to be gained from Europe and China working together to create a new, carbon neutral global standard for coal-fuelled electricity. We know that the technologies to do this are within reach; what matters is that Europe and China work together to push forward their implementation – and the first steps have already been taken. China and Europe agreed in 2005 to cooperate on the development and practical demonstration of carbon capture and storage, a technology that is essential to make coal climate-friendly. A consortium has since been built to deliver phase one of this project, though the building of the plant itself is uncertain. Europe has stated that it plans to build 10 to 12 pilot projects. At least three of those should be in China, with an agreement on how to share the costs of building and the running of the plant.

The interdependencies and potential for cooperation go beyond the energy sector. There is much at stake for both Europe and China when it comes to climate security. Recent assessments by the Chinese government and by the European Commission indicate that unless emissions trends change greatly, both will experience destabilising impacts in the agricultural, water, extreme events and ecosystem services sectors. As Europe revises its Common Agricultural Policy and its overall EU budget, it should do so with China’s need for a stable food supply in mind. As China builds massive new housing, it should ensure that those buildings are resilient to more intense extreme weather events and have low or zero carbon emissions.

Tackling energy and climate security requires a new institutional framework that can deliver in a comprehensive and rational form. Developing inter-ministerial decision-making bodies that assess both the risks and opportunities will be key. However, ensuring implementation on the local and regional level will be a challenge for both China and the EU. Various governance structures will need to be strengthened, and in some cases newly developed, to deliver intelligent infrastructure, efficient transport systems, low-energy requirement buildings, clean coal, renewable energy, energy efficiency, demand-side management, and changes in consumer behaviour. By working together, Europe and China could increase the confidence of companies and investors in long-term market opportunities in these areas. For instance, Germany could set an example by using Chinese observers and advisors to help fulfill its efficiency and renewable energy goals.

The age of genuine global interdependence has arrived; it must be embraced and made to work. China is known for its pragmatism and ambition, Europe for its innovation and quality of life. Focused around the common goals of energy and climate security, such an alliance would be a powerful actor in ensuring a safer future for all.

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