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Is the US-China Climate Change Deal a Game-Changer? An Interview with MIT's Valerie Karplus

Full Spectrum: Energy Analysis and Commentary with Jesse Jenkins

Even before world leaders descended on Lima, Peru this week for United Nations-sponsored climate negotiations, climate diplomacy made global headlines with the joint announcement of a partnership between the world’s two largest carbon emitters: the United States and China.

The joint pledge to cut greenhouse gas emissions and collaborate on clean energy technology development has been hailed as a potential sea change in the tone and substance of international climate mitigation efforts. 

Professor Valerie KarplusTo dig in to the details of this U.S.-China climate partnership, I caught up this week with Valerie Karplus, an assistant professor at the Massachusetts Institute of Technology’s Sloan School of Management and Director of the Tsinghua-MIT China Energy Program.

An expert on both American and Chinese energy and climate policy, Prof. Karplus and I explored what the climate deal means for domestic energy policy in each nation, chatted about the major drivers of emissions growth in China, and considered implications of the new emissions pledges for international climate negotiations. Read on for our interview…

Jesse Jenkins: Professor Karplus, thanks for speaking with me. To start off, please walk us through the high level takeaways of the recently announced U.S.-China bilateral climate change deal? 

Valerie Karplus: The U.S.-China climate deal is first and foremost a major breakthrough in global climate change negotiations. It formalizes commitments on both sides that will be important to reducing emissions over the longer term: China has pledged to reverse its rising emissions trajectory by 2030 at latest and increase its non-fossil energy share to 20%, while the U.S. has committed to reducing emissions by 26-28% below 2005 levels by 2025.

The deal also includes a renewed commitment to engage in joint research and development on building energy efficiency, alternative fuel vehicles, clean coal, and a newly added focus on the energy-water nexus.

This deal also breaks the cycle of each nation waiting for the other to act first, and it invites other nations—especially developing nations that previously viewed commitments as premature or unfair—to declare contributions to the global effort.

Do the emissions reduction pledges announced as part of this deal amount to a step change in climate policy for either nation, or do the pledges essentially amount to a codification of business as usual plans in China and the United States? How will the deal affect domestic policies in each country?

Any pledge to reduce emissions at the global level is only as strong as the domestic incentives to implement it. We also need to be very careful when defining “business-as-usual.”

On many fronts, the pledge by both countries represents substantial additional effort to reduce emissions below future trajectories extrapolated on the basis of the 2000-2010 time period.

China has strong domestic incentives to follow through on its pledge. Air quality and environmental degradation more broadly is undermining economic growth and public confidence in China, and measures that clean up the air will offer substantial carbon reduction benefits in the near term. China is also planning to introduce an emissions trading system for carbon on a national scale starting in 2016. The goal of this system is to incentivize reductions in carbon dioxide—including efforts to improve energy efficiency—in a cost-effective manner. It also provides an opportunity for China’s leaders to centralize the governance of its energy system, in ways that leaders expect will improve coordination and technology deployment.

While China had laid the groundwork for these actions prior to the deal, the level of effort required is substantial. According to analysis carried out jointly by MIT and Tsinghua University, implementing the plan will require a carbon price that rises to $30/ton in 2030, alongside accelerated nuclear and renewable energy deployment efforts.

Energy demand and primary energy supply in China: three scenarios
China energy demand and primary energy supply under three scenarios. 
Source: Zhang & Karplus et al., 2014 (MIT).

On the U.S. side, the level of effort is also substantial. The main difference compared to the Chinese pledge is that mechanisms needed to implement the pledge do not yet exist, and offers an opportunity for a hard look at what new or strengthened instruments will be needed to support the U.S. goal. Implementing the U.S. pledge is likely to be more difficult for political, not technical, reasons.

What’s the backstory on this partnership? The U.S. and China have long been at odds over emissions pledges in the UN Framework Convention on Climate Change (UNFCCC) process. How did they arrive at this bilateral deal?

In many areas, U.S. and Chinese positions differ widely, despite overarching commitments to strengthen the bilateral relationship. In the search for areas to advance cooperation, climate change stands out as a bright spot.

China’s policy orientation has changed, too. Over the past several years, air quality has emerged as a threat to social stability, as ever-wealthier citizens refuse to live in polluted cities. Mid-level bureaucrats with the power to shape policy agendas have stronger incentives to act on environmental concerns than ever before.

When President Xi Jingping came into office in 2012, he signaled a tolerance for slower growth in line with broader efforts to develop an “ecological civilization.” As the likely impact of new measures to address air quality and energy management domestically on CO2 emissions became clear, they lent greater confidence to a Chinese climate pledge on the global stage. As China is now the world’s number one greenhouse gas emitter, many in the country are eager to see China lead efforts to address the climate problem.

On the U.S. side, the opportunity to break the cycle of “we won’t move before China does” overcomes a longstanding objection to U.S. action while stepping up domestic pressure to move to cleaner sources of energy. So the climate deal is the product of converging interests on both sides.

China has committed to stop the growth of its emissions by 2030, achieving a “peak” in emissions by that date. But they haven’t yet specified what level annual emissions will peak at—or what trajectory they’ll be on after that. Given China’s rapid emissions growth recently, what level they halt emissions at could vary quite a lot. Walk us through what might determine what level China’s emissions peak at and what the implications might be for global climate mitigation efforts?

Key factors that determine when China’s emissions will peak include: future economic growth, changes in the structure of China’s economy, and the extent to which the economy continues to rely on coal.

In our MIT-Tsinghua China Energy Outlook, we find that newly announced air quality and climate policy measures—if implemented fully—would result in a peak in CO2 emissions in China at around 10 billion metric tons in 2030. This is about 20% above China’s current CO2 emissions levels. However, more important than the peak is the rate and extent of CO2 emissions reductions after the peak is reached, which will depend on the rate of improvements in underlying energy efficiency as well as alternative energy deployment.

China CO2 emissions trajectories under three scenarios
China CO2 emissions under three scenarios. 
Source: Zhang & Karplus et al., 2014 (MIT).

The implications of the agreement for global climate change mitigation efforts are potentially game changing, if the U.S.-China commitment prompts other large (and future large) emitters to develop commitments to be codified in a post-2020 climate agreement in Paris in 2015. To realize this outcome, it is essential that future commitments be developed at the current talks in Lima or shortly thereafter. It is important that this deal be seen not as a China-U.S. initiative but as part of a broader global effort that reflects the redoubled yet tailored domestic actions of emitters large and small.

Will the U.S.-China partnership change the tenor or substance of negotiations at the UNFCCC COP20 negotiations, now underway in Lima, Peru? Do you think the partnership will lead to greater ambition for other nations or a stronger deal at Lima or Paris in 2015? Or has the UNFCCC become a sideshow, with bilateral or multilateral negotiations between major emitters driving the show, and the UN process simply codifying these commitments on a global stage?

The U.S.-China announcement raises expectations for the Lima talks this week, and it invites all parties to move past the historical developed-developing country distinction when it comes to defining emissions reduction pledges. The agreement further has the potential to set a clear precedent for using existing domestic commitments and objectives to shape pledges tailored to each country’s individual situation. This flexibility is likely to be critical given differences in national circumstances.

A desirable outcome from the Lima talks would be clear agreement on the nature—and if possible, preliminary text—of each country’s nationally-determined contribution (NDC) to global mitigation efforts. A sober look at the reductions achieved by the sum of national efforts will allow careful assessment of how close—or how far—we are as a planet to reaching acceptable levels of greenhouse gas emissions. The UNFCCC will have a critical role to play in coordinating and standardizing procedures for evaluating progress toward these commitments, as well as providing the accounting and accountability needed to inspire more aggressive commitments over time.

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