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Climate Change Cooperation Is Historic Opportunity for Xi, Obama
  U.S., China

Thursday, September 17, 2015

As U.S. President Barack Obama and President Xi Jinping meet in Washington from September 22 to 28, the two leaders have a unique opportunity to make history by solidifying U.S.-China cooperation in combating global climate change. By working together to reduce carbon pollution, the presidents can lead the world's largest polluters to unleash a new era of sustainable economic growth, while creating a framework for long-term bilateral strategic cooperation.

No doubt, Obama and Xi will be engaged in intense discussions on the complicated U.S.-China relationship. Issues range from accusations of cyber spying to growing military assertiveness in the Asian-Pacific region. However, both will be keen to highlight the progress made since November's bilateral climate agreement. Xi committed China to cap its carbon pollution by 2030 and increase its use of zero-emission energy sources to 20 percent by 2030. Obama agreed to cut America's carbon pollution by 26 percent to 28 percent below 2005 levels by 2025. The two leaders are expected to promote new low-carbon commercial projects and technical exchanges at the summit.

This joint effort to reduce the threat of a warming climate can be momentous. First, it can rejuvenate U.S.-China commercial ties, which have become increasingly acrimonious with accusations of unfair trade practices and intellectual property theft. For China, cuts in carbon pollution will increase the country's economic efficiency – a fundamental element in Beijing's economic reforms as the Chinese consumes three times more energy per output of GDP than the United States. The Chinese effort will create new business opportunities for U.S. clean technologies, as China is the world's largest renewable energy investor, investing US$ 89.5 billion in 2014 alone, according to Bloomberg. While the Obama administration sanctioned Chinese solar panel manufacturers for alleged dumping that caused American job losses, a study by the Pew Charitable Trust found that American companies in the solar, wind and renewable smart technologies had a trade surplus in China of over US$ 1.6 billion. Demand for clean technologies will only increase as China needs to spend as much as US$ 6.6 trillion to meet its carbon pollution reduction commitments. Leading U.S. exporters are already jumping at this opportunity. Boeing, whose airplanes account for more than half of all commercial jetliners in China, celebrated in March its collaboration with Hainan Airlines and Sinopec in their joint execution of China's first biofuel-powered commercial flight.

Just as important, U.S. and Chinese companies can work together to make new clean technologies affordable by leveraging American technical innovation with Chinese manufacturing capacity. For example, American and Chinese firms together can reduce the costs of technologies that capture carbon pollution from coal-fired power plants. The outcome could help the coal industry in both countries meet their emission reduction targets. Such collaboration across a wide range of clean technologies could ignite a global green industrial revolution. Chinese companies can also serve as investors for the projects. The proposed Texas Clean Energy Project features a consortium of U.S. and Chinese companies backed by both governments that seeks to deploy the latest carbon-capture technology in a new 400 megawatt power plant with a total investment of US$ 2.5 billion.

Climate change cooperation will also reduce the risk of a confrontation. A decrease in China's demand for fossil fuels will alleviate Beijing's energy security concerns. This year, China surpassed the United States as the world's largest oil importer – over half of which came from the Middle East, where the United States continues to be entangled.

As important, climate change commercial cooperation can serve as the underpinnings of a win-win U.S.-China relationship that creates strategic trust. Through systematic efforts, Washington and Beijing will be incentivized and equipped to manage their trials and tribulations when strategic interests compete.

To institutionalize this collaboration, the United States and China must expand and deepen their exchanges between the climate change communities of both countries, such as the sharing of best practice among local governments. Washington and Beijing must strengthen bilateral political and financial support for joint clean energy commercial projects, such as economic incentives and fast-track approval, and the establishment of a portfolio of carbon reduction demonstration projects that can be commercially replicated and scaled globally. This effort no doubt will require political courage from both sides as each have their naysayers. Hopefully, Xi and Obama already know this because what is at stake is not just stability and peace between the two superpowers, but also for the world. (Caixin Online)

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