Obama and Hu's New Clean Energy Agreements: On the Path to a Low-Carbon Future

Today, during President Obama's first full day here in Beijing, he and President Hu Jintao announced a package of clean energy partnership initiatives between the United States and China that adds substance to the structure of the US-China MOU on climate, energy and environment announced last July. (Factsheets here) These initiatives call for cooperation on, among other things, a US-China Clean Energy Research Center, energy efficiency, renewables, electric vehicles, and carbon capture and storage, and mark a deepening of the commitment by both countries to work together to develop the technological solutions necessary to address climate change.  It's significant that both nations have elevated these cooperative efforts to the very highest levels of government. 

The initiatives announced today cover the following areas: 

•      U.S.-China Clean Energy Research Center.  The governments announced that the U.S.-China Clean Energy Research Center, initially announced last July, will now be supported by public and private funding of at least $150 million, split evenly between the two countries over five years. This is a ten-fold increase over the $15 million announced for the CERC last July and represents a serious commitment to the research center by both nations. Initial research priorities will cover building efficiency, carbon capture and storage, and clean vehicles. A welcome part of this announcement is the concurrent release by the Department of Energy of a Request for Information soliciting public input on the structure and design of U.S. portions of the Center.

•     U.S.-China Electric Vehicles Initiative.  Top leaders in both countries recognize that electric vehicles will help the U.S. and China reduce oil dependence, cut greenhouse gas emissions and promote economic growth. The introduction of EVs and plug-in hybrids makes sense in China since it is making steady progress in cleaning up its grid through major investment in renewables. A study NRDC conducted with EPRI shows that plug-in hybrids deliver significant greenhouse gas benefits when charged by a grid that gets cleaner over time. The Electric Vehicles Initiative aims to accelerate EV development through joint product and testing standards, development of a multi-year roadmap that will identify R&D needs and barriers to widespread use of EVs, city-to-city EV demonstrations and efforts to promote public awareness and engagement.

•      U.S. China Energy Efficiency Action Plan.  Under this plan, the U.S. and China will work together to improve energy efficiency in buildings, industry, and consumer appliances through developing building efficiency codes and building energy rating and labeling systems,  benchmarking industrial energy efficiency, training building inspectors and energy efficiency auditors for industrial facilities, harmonizing testing procedures and performance metrics for energy efficient consumer products, exchanging best practices in energy efficient labeling systems, and demonstrating energy efficiency and design practices. There will also be an annual U.S.-China Energy Efficiency Forum and a Mayors Sustainable Cities Program where local officials from the two countries visit each other's cities to share experiences and best practices in sustainable urban development and planning.

•      U.S. China Renewable Energy Partnership.  Under the Renewable Energy Partnership, the two countries will develop and implement policies to advance renewable energy deployment in both countries through renewable energy road-mapping, regional deployment solutions, advanced renewable energy technology research and development, and public-private engagement. An Advanced Grid Working Group will bring together U.S. and Chinese policymakers, regulators, industry leaders, and civil society to develop strategies for grid modernization.  A U.S.-China Renewable Energy Forum will be held annually to develop work around these issues. As the official factsheet notes, "given the combined market size of the U.S. and China, accelerated deployment of renewable energy in the two countries can significantly reduce the cost of these technologies globally". This important initiative highlights cooperation as the way to scale-up the market in both China and the U.S.

•      21st Century Coal.  Obama and Hu pledged to promote cooperation on "cleaner uses of coal", including large-scale carbon capture and storage (CCS) demonstration projects.  As part of the U.S.-China Clean Energy Research Center, the countries are launching a program of technical cooperation to bring teams of scientists and engineers from both countries together to develop CCS technologies.  The two governments are also actively engaging industry, academia, and civil society in advancing alternative coal and CCS solutions. Although it's a start and details remain to be seen, the agreement at this stage seems to have missed the opportunity to capitalize fully on the low-hanging fruit CCS opportunities that abound in China (Executive Summary of our CCS report), and to build much needed cooperation on the field of geologic sequestration and the related science and engineering in particular. It is also unclear whether all initiatives under the agreement have geologic sequestration factored in from the outset. CCS is not an ideal approach to cutting carbon emissions; to quote my colleague Jingjing Qian, "avoiding CO2 emissions in the first place, like improving energy use efficiency and deploying low-impact renewable energy, is a better approach. But looking at the broad picture of the global warming trend and the need to stabilize atmospheric CO2 concentrations by the middle of this century, as well as looking into the detail of China's energy and economic development prospects, I recognize that CCS is likely one effective way of making deep CO2 emission reductions under certain conditions. At least given today's level of knowledge and technological ability, CCS appears to be one practical means to slash carbon emissions".

•    Shale Gas Initiative.   U.S. and Chinese leaders today also announced the formation of a Shale Gas Resource Initiative. While increasingly efficient use of natural gas can serve an important role in meeting energy needs while transitioning to a truly clean energy economy, efficiency and renewables must still be our priorities. Natural gas, while cleaner burning than coal, is still a major source of global warming pollution.  Furthermore, the environmental impacts of producing natural gas, including air and water pollution, toxic waste, and destruction of wildlife habitat, must not be ignored. Strong regulations are needed, including protection of sensitive areas and requiring the latest environmentally-friendly production techniques, to protect communities from the potential environmental degradation.

•     U.S. China Energy Cooperation Program. Over twenty-two companies (the names have not yet been announced) are founding members of this program that will leverage private sector resources for project development work in China across a broad array of clean energy projects. The collaborative projects will involve: "renewable energy, smart grid, clean transportation, green building, clean coal, combined heat and power, and energy efficiency". I've seen the value of public-private partnerships in my work with the China-U.S. Energy Efficiency Alliance, which leverages the financial and technical resources of a coalition of state government officials, utilities, companies, NGOs and other experts to help China design and implement large-scale energy efficiency incentive programs. 

As these announcements were made, I was attending the second annual U.S.-China Green Tech Summit in Beijing, a forum which brought together U.S. and Chinese companies and academics "to share and analyze world-class projects essential to cultivating energy sustainability, combating climate change, and promoting low-carbon economic growth". In attendance were companies such as Suntech, a Chinese solar PV company, one of the largest in the world, which announced yesterday that it is setting up its U.S. headquarters and creating jobs in Phoenix, Arizona; First Solar, a US thin-film solar company which has signed a deal to build the world's largest solar power plant in China (as I blogged about here); A123 systems, a Massachusetts company that makes advanced batteries for electric vehicles and recently received a $249 million matching grant from the Department of Energy to build an advanced battery manufacturing facility in Michigan; and Applied Materials, a Silicon Valley company which is the leading manufacturer of equipment to make PV panels and which last month established a $300 million solar R&D center in Xian, China because it the anticipates a booming domestic solar market  in China. 

What became clear to me while listening to these companies discuss their products and visions was the enormous economic opportunities for companies and countries that can develop the clean technologies to address climate change. The U.S. and China have a key role to play here and can benefit from clean tech cooperation both economically and environmentally - two areas in which we need a strong boost right now Today's announcements on US-China cooperation on clean energy provide tangible, concrete steps forward in developing the technologies we need to reduce emissions and establish a low-carbon world. Many of these technologies are already under development and ready to be scaled up dramatically given the right market signals and incentives. 

In addition to the seven initiatives outlined above, the U.S. and China reiterated their commitment to "working together and with other countries in the weeks ahead for a successful outcome at Copenhagen". My colleague Jake Schmidt further discussed the importance of the joint announcement in the context of global climate negotiations in his blog.  Although there is still much work to be done before we can declare success on an international climate agreement, these initiatives and the work of these and other clean tech companies are already leading us down the path to a low-carbon future.

About the Authors

Barbara Finamore

Senior Attorney and Asia Director, China program

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