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The US and China have reached a deal on greenhouse emissions. It has its detractors, but some see it as a potential catalyst for a global change of direction
The recent US-China agreement outlining national targets to tackle greenhouse gas emissions may offer grounds for optimism over next year’s international climate change negotiations in Paris, and may ultimately alter the state of the clean energy industry. In the announcement, the US set a goal to reduce net greenhouse gas emissions by 26-28% below 2005 levels by 2025, while China has, for the first time, expressed its intent to reach peak CO2 emissions by 2030 and concurrently increase its non-fossil fuel share of all energy to 20%.
Together, the US and China account for roughly 40% of the world’s GHG emissions. To reach its target, China will need to invest in an additional 800-1,000 gigawatts of clean energy by 2030. To provide a sense of scale, that is more than all of China’s current coal-fired power plants and nearly equals America’s total electricity generation capacity.
The US target builds on the Obama administration’s 2009 pledge to cut emissions 17% below 2005 levels by 2020, and the EPA’s proposed Clean Power Plan to lower emissions from existing fossil fuel plants to meet state-specific standards starting in 2020. According to the EPA, the Plan has the power to reduce emissions 30% below 2005 levels by 2030 and “deliver $55-93bn in net benefits from improved public health and reduced carbon pollution”.
Other joint commitments include renewed funding for the US-China Clean Energy Research Center (CERC) to support R&D for clean vehicles, building efficiency, advanced coal technologies with carbon capture, use and sequestration (CCUS), and the launch of a new Climate-Smart/Low-Carbon Cities initiative to address the pivotal role cities play in reducing global GHG emissions.
Of course the deal has come with its fair share of naysayers, beginning with the new Republican-controlled US Congress. “Our economy can’t take the president’s ideological war on coal that will increase the squeeze on middle-class families and struggling miners,” says US Senate Republican leader Mitch McConnell. “This unrealistic plan, that the president would dump on his successor, would ensure higher utility rates and far fewer jobs.” Other dissenters point to the non-binding nature of the commitment, the absence of benchmarks and enforcement mechanisms, and what’s perceived to be a hall pass for China to avoid implementing carbon cutting measures for the next 16 years.
Still, there is a large community that believes the deal is a critical step in the right direction, and will spur other countries to reduce their carbon emissions and invest in green business. “It effectively neutralises a main argument by those in America who oppose taking action on climate: namely, that the US shouldn’t act without other action by India and China,” says Richard Eidlin, Vice-President of Policy at the American Sustainable Business Council.
Not only does the deal accelerate “price pressure” on fossil-fuel-reliant businesses to develop clean energy strategies, Eidlin says, but it also sends a strong positive signal to the market for clean energy innovation and increased investment in new technology. “Contrary to assertions from some, the targets will create many more new jobs than would be lost and will lead to greater price competition, even lowering energy costs to consumers,” Eidlin says.
Groups such as the We Mean Business Coalition, whose members include BSR, The B Team, Ceres, and The Prince of Wales’s Corporate Leaders Group, point to the demonstrated profitability of clean energy investments. The Coalition says: “Businesses understand the scale and opportunity of ambitious low-carbon policies: in fact, leading companies that have set targets aligned with the science and publicly disclosed their performance are seeing an internal rate of return (IRR) of 27% on low carbon investments with some reporting an IRR as high as 81 percent.”
The US-China deal is certainly only the beginning of a long, bumpy and ambitious road to keeping the lid on global warming.China clean energy emissions reduction GHG greenhouse gas emissions US