Time to implement the US-China climate accord

In the global climate fight, 2015 could be the year for innovation, collaboration and partnership. We have already see this in operation with the energy and climate language associated with the nuclear trade and verification elements of President Barack Obama’s diplomatic trip to India, which drew to a close this week.

As he charts a path this year, let’s not forget that Obama legitimately helped rewrite the energy and environmental playing field in 2014. The United States Environmental Protection Agency’s Clean Power Plan, introduced last year, requires power plant emissions nationwide to be cut by 30 percent by 2030, compared with 2005 levels. This in itself is important, and it helped open the door to a timely international dialogue.

While most nations were finalizing their announcements for the 20th Climate Conference of the Parties (COP) held in Lima in December, the U. S. and China were changing the rules of the conversation. At the 2014 Asia-Pacific Economic Cooperation summit, the two countries eschewed the traditional divide between so-called developed and developing nations and instead sought common climate ground, setting the stage for both to change course and define the necessary paths to reduce their climate impact.

While teams in the U.S. and China are furiously at work planning and implementing these climate advances, the global message is clear: The energy superpowers are moving ahead on meaningful climate strategies. How such deployment will happen — the U. S. committed to a reduction in emissions by 2025, and China agreed to halt growth in its emissions by 2030 — is the critically important means to the accord’s end.

The recipe of energy efficiency improvements and deployments of clean energy technology required to meet these targets will be different for each country. In North America, natural gas has seen a revolution in investment and production, yet its climate benefit or harm is unclear and likely largely depends on how it is used. It remains to be seen whether gas will be a short-term vehicle to usher in greater attention to energy efficiency and deployment of renewable energy.

For its part, China — which has seen significant recent slowing in coal demand and is the world’s largest producer of solar panels, wind turbines and batteries for electric vehicles — has made it clear that to maintain its economic growth past 2030, a wave of low-polluting technologies is needed immediately and in huge amounts after 2030.

Despite their differences, the U.S. and China have common ground. Both are committed to reducing their coal use and happen to be blessed with significant solar and wind energy resources. In a recent study published in Energy Policy, my student Cheng Zheng and I argue that the growth in solar energy manufacturing in China and the growth of solar energy in the U.S. complement and reinforce each other. Many have noted that the U.S. market is large, as is Chinese solar module production. But now, as a part of emission reduction plans and efforts to build the clean energy sector, each nation has the motivation to become more diversified: U.S. manufacturing is growing, and Chinese domestic demand is growing.

Similarly, because the vast solar and wind energy resources of each nation are far from population centers, both nations must prioritize innovations in energy transmission, smart grids and energy storage. Expect them to make parallel or even joint announcements in these areas in the lead-up to the climate conference in Paris in December.

The next step for the U. S. and China is to put at least a minimum price on our social, economic and climate impact and to use this carbon accounting as an added motivation to accelerate the transition to a low-carbon future.

Thankfully, carbon markets already exist in both countries at the regional level, in California and the New England and Mid-Atlantic states as well as in five Chinese provinces. We critically need the clarity that this pricing tool — in the form of cap-and-trade markets, a carbon tax or another pricing mechanism — will bring.

Carbon prices have started modestly, at only a few dollars per ton of emissions. Next these markets must be expanded in scope and in price. In my theoretical modeling work across many nations, including the U.S. and China, I see a global trend toward dramatically cleaner energy systems after the price rises to $20 to 30 per ton of emissions. Well before then, however, we should see significant progress on economywide decarbonization.

Not all revolutions succeed, of course, and there is a huge amount of work to be done. But particularly in the U.S. and China, 2014 has been a year upon which state-of-the-nation addresses have much to build.