July 1, 2021
While the Biden administration was pleased that a number of important announcements were made at the Leaders’ Climate Summit in April, the fact that China did not make any new major commitments was a disappointment to the President and his closest advisers, who felt they had made significant progress separating climate from other contentious issues through personal diplomacy by high ranking officials. Still, the Biden administration sees its approach as already producing results with China. China and the United States issued a statement to cooperate on clean energy and other climate action; China has accepted the Kigali Amendment which calls for the phasing down of hydrofluorocarbons; China has strengthened efforts to limit its coal use; and, crucially, China has accepted the United States insistence that the countries separate climate from other contentious bilateral issues.
Nevertheless, the United States is aiming for more action from Beijing this year. As China’s carbon emissions grew by its largest amount in more than a decade during the first quarter of this year and China’s existing long-term economic plans require a continuation of carbon-intensive activities, convincing China to show more ambition on climate change is a huge priority for the Biden administration. For the United States and its G7 allies, persuading China to announce new commitments before or during COP26 will be the most important geopolitical development on climate change this year. There are two schools of thought on how much progress the United States can make with China this year. The Biden administration believes it has the potential to persuade China to make various substantial commitments this year. Meanwhile, independent international and climate experts argue that the United States can make incremental progress in convincing China to take steps in certain areas such as international coal finance, but getting grander action such as acceleration of China’s carbon neutrality pledge or the implementation of a GHG emissions cap will be more difficult, and perhaps unlikely. We look at the challenges and opportunities for U.S. climate diplomacy with Beijing.
From the U.S. perspective, the administration sees a number of historical examples, recent trends, and shifts in the Washington-Beijing relationship that point to the United States getting China on board with climate commitments that are aligned with G7 countries. There are five key factors that could be instrumental in negotiations with China:
Climate negotiations between the two countries through the run-up to COP26 will provide a number of opportunities for the Biden administration to take advantage of recent momentum to convince China to adopt more robust commitments. While the administration is confident and optimistic, independent experts are more skeptical, suggesting that U.S. diplomacy will bring about mixed results.
Independent climate experts told Climate Advisers that coal finance is one area in which the United States has the best opportunity to influence China to make an important pledge. South Korea’s announcement at the Leaders’ Climate Summit that it would not finance any new coal projects overseas was a major development in this area, which the United States can use to influence other Asian countries, including China. Moreover, the newly announced G7 commitment that countries will end new government financing for coal plants abroad that do not have carbon capture and storage by the end of 2021 helps to further isolate China in its financial support for overseas coal projects, bringing about even more international pressure on Beijing.
Getting a commitment on coal finance from China would represent a big victory for the Biden administration and its allies in the G7. The G7’s communiqué at the end of May that called for the end of financing international coal projects was aimed particularly at China. Without the pledge to halt financing coal, any climate commitment coming from Beijing would be seen in the United States and internationally as insubstantial and fragile. “We’ve got five more months left to get them to embrace something we hope you will view as legitimate. … We’re not there yet,” Special Envoy Kerry said.
A commitment on coal financing would be highly touted by the administration and the international community, as it would send a clear signal that Beijing will take even more steps on coal internationally in the future and that it is open to greening its Belt and Road Initiative. Although it would be a major announcement, climate experts and NGOs note that a pledge would likely only include new projects. China already has a large coal footprint worldwide: It finances approximately 70 percent of the world’s coal plants, and the country’s Belt and Road Initiative has relied heavily on energy produced using fossil fuels, particularly coal. These projects would likely remain in place and delay a path toward deep decarbonization, diluting any commitment from China.
Independent experts also note that U.S. diplomacy could influence China to agree to further limit the share of coal in its energy mix. China appears willing to slow its domestic coal use. In just the past five years, China has cut coal’s role in its energy market from 64 percent to 57 percent, in line with President Xi’s goal for carbon emissions to peak by 2030. It is possible that China, which plans to put forward its five-year energy and electricity plan later in 2021, could agree to reduce coal’s share in the energy sector to below 50 percent by 2025, one China expert at a U.S. NGO told Climate Advisers. Alternatively, Beijing could also take on more ambitious sectoral commitments, such as targeting greater increases in the share of non-fossil fuel sources or electric vehicles in its economy.
But a commitment to accelerate the decline of the share of coal does not mean total coal consumption will fall. In fact, in the past five years, as the percentage of coal fell, the country added a large number of coal-fired power plants and overall demand rose. In 2018-19, China increased its coal-fired capacity by 61 GW, while 21 GW were commissioned during the first eight months of 2020. Meanwhile, more than another 100 GW are being developed. “Even though China is reducing its reliance, coal will continue to be the cornerstone of its electricity supply in the coming decades,” the International Energy Agency said.
If the Biden administration can move China to reduce coal’s share in the economy, both sides would undoubtedly tout the action as a positive development and register as a climate diplomacy victory since it would represent a step toward reaching long-term climate goals. But critics would highlight the fact that coal’s phaseout in China needs to occur at a quicker pace in order to cap warming at 1.5 degrees. Conservatives in the United States would also use China’s coal plans as a means to criticize Biden’s overall climate plans, suggesting that they would undermine the U.S.’ economic competitiveness with China.
The biggest success for the Biden administration in its negotiations with Beijing would be convincing China to accelerate its target date for carbon neutrality. Of the nearly 60 countries that have communicated some type of a net-zero commitment, more than half, including the United States, have set 2050 or earlier as their target dates. U.S. experts on climate and international diplomacy argue that while the Biden administration will try to negotiate a quicker timetable to align China with other major economies, Beijing probably will not budge from its existing goal of achieving net-zero by 2060. Although China has increased its attention to climate change and emissions reductions in recent years, it still prioritizes economic expansion driven by growing industrial production and real estate. Despite U.S. pressure, “China won’t commit to anything that would affect long-term economic growth,” one China expert told Climate Intel.
Similarly, climate experts say that the United States is unlikely to convince China to make a pledge on a specific domestic GHG emissions target. The Chinese government would have a difficult time determining at what level to limit emissions. China is currently on track to see peak emissions before 2030, but there is a lot of uncertainty amid the pace of economic growth and how quickly non-fossil fuel sources are integrated into the energy mix. China could easily see GHG emissions blow through any announced cap due to higher-than-expected economic growth combined with slower-than-expected penetration of non-fossil fuel energy.
One area of leverage the United States may have is through a carbon border adjustment fee. While the U.S. Congress has been increasingly polarized in recent years, lawmakers are mostly united on their desire to pressure Beijing on various matters. Against this backdrop, there has been more talk on Capitol Hill to implement a carbon border adjustment fee as a way to challenge China. A number of Republican Senators are currently in the midst of exploring a proposal on one. Similarly, the Biden administration has also suggested that it would be interested in implementing a carbon border adjustment fee. Such a strategy would be expected to benefit U.S. manufacturing and place pressure on China to follow through on its climate pledges or even take more ambitious measures. But this leverage is thin, given that lawmakers of both parties and the Biden administration may not move forward with a carbon border adjustment fee due to the assumption that it would be perceived as a tax on consumers. Furthermore, it is unclear whether a carbon border adjustment fee would change Beijing’s behavior and get Chinese leaders to accelerate climate action. In fact, it could backfire as China may simply threaten retaliatory measures that would force Washington to back down or further escalate tensions.
Since the Biden administration took office in January, climate discussions have not been shaken by tense issues between the two countries, such as tariffs, intellectual property rights, Taiwan, Hong Kong, and human rights. This could change, however. One major issue that could disrupt the Washington-Beijing relationship is human rights, particularly regarding forced labor in Xinjiang, where 45 percent of the world’s polysilicon for solar is produced. China has said that it would cooperate with the United States on climate as long as it does not interfere in China’s internal affairs. Given the outsized role of this region in the global solar market, it would be difficult for the United States to restrict trade from Xinjiang, but it has become increasingly likely that the Biden administration will put certain measures in place.
Action by the United States over treatment of Uyghurs could undermine both bilateral climate discussions and the U.S.’ own domestic climate goals. Special Envoy Kerry will want to keep other issues out of climate negotiations and focus squarely on cooperation on reducing emissions, but China could take retaliatory measures on any action from the United States on the issue of forced labor in Xinjiang. The United States has several options to pressure China on human rights and labor practices. For instance, the Customs and Border Protection, which has already halted imports of cotton and tomatoes from Xinjiang, could extend the ban to include polysilicon if it is linked to forced labor. In Congress, meanwhile, a bill called the Uyghur Forced Labor Prevention Act, if passed, would stop imports from Xinjiang. Also, actors in the solar industry could stop buying from China. Human rights have become a sensitive issue throughout the U.S. solar industry, which does not want to be associated with forced labor, prompting moves that would cause ripple effects throughout the global market. “Forced labor will not be tolerated in our industry. Given reports of labor abuses in Xinjiang and the inability to conduct independent audits there, solar companies should immediately move their supply chains out of the region,” wrote the Solar Energy Industries Association. With President Biden’s executive order for a review of American supply chains (issued in late February), more details on the U.S. reliance on solar supplies from Xinjiang could further complicate the administration’s approach to U.S.-China relations.
Any ban would tighten the U.S. solar supply chain and in fact hurt both countries economically. One company that produces polysilicon, Daqo New Energy Corp., was so concerned about a backlash that it has invited outsiders to inspect the working conditions of facilities in Xinjiang so it can receive an exemption if the Biden administration puts restrictions on imports. Given that China dominates the global market for PV cells and modules, a U.S.-led boycott would undermine China’s sales. Import restrictions or tariffs would raise the cost of solar — perhaps significantly — and likely hurt its growth in the United States as it becomes more expensive for consumers. This complicates the administration’s goal of becoming carbon neutral in the electricity sector by 2035, particularly if the issue is not resolved quickly and shortages due to a ban persists. While state renewable energy targets and federal incentives for solar have been important in driving solar penetration, market forces have been just as significant. That dynamic could soon be in peril as growing tensions between the United States and China may limit production and raise prices.
As cooperation between the United States and China on climate has increased in a relatively short period of time, the Biden administration believes that more ambition from the United States and its allies will prompt China to move, and the fact that the two countries have separated climate from other contentious issues bodes well for negotiations this year. Moreover, China softening its aggressive “wolf warrior” diplomacy in favor of developing a more moderate approach to bolster its international image, engagement, and relationships may also lead to openings in U.S.-China diplomacy. However, independent experts emphasize that there are limits to what actions Washington can convince Beijing to take on, as China, despite saying that climate change is an existential problem, still prioritizes economic growth. Still, the best path forward for the Biden administration may be to try to elevate voices inside China that are vocal on climate and are willing to advocate for greater ambition. It is very politically challenging for the administration to get China to make any commitments on U.S. terms. If China were seen as giving into U.S. demands, there would be domestic backlash. Still, the Biden administration will push for deep decarbonization, and could see its goals with China realized, but may only see incremental progress, with international coal finance possibly the biggest victory.