October 3, 2014, by editor
China–EU energy cooperation in the era of climate change
Written by Ka-ho Yu.
China’s transformation into the world’s largest energy consumer and biggest greenhouse gas emitter has already placed it on international energy policy and climate strategy agendas in terms of meeting global energy demands, reducing greenhouse gas emissions and transiting to a low-carbon economy. This boosts the cooperation between China and the West, particularly the EU, regarding advanced technologies and green energy. In light of the upcoming 2015 UN Climate Change Conference, China and the EU are expected to mutually assist and support each other in environmental and climate strategies which further call for clean energy cooperation between the two powers.
Advanced energy technologies are critical to China’s attempt to reduce greenhouse gas emissions and transition to a low-carbon economy given that coal is currently the dominant component of the Chinese energy mix. Yet, due to the lack of advanced technology in green energy and energy efficiency, China needs a partner that has mastered relevant technologies and, more importantly, is willing to cooperate with a rising power. The EU is understood to be a capable partner to help China.
The EU, as China’s largest trading partner, would naturally consider the country to be a mutually beneficial partner in energy and climate changes, and vice-versa. Their future cooperation on energy and environmental issues can be viewed through the broader picture of the EU–China relationship. Its development has undergone three phases: 1) exploration and construction of their partnership, 2) deepening and maturing of bilateral ties, and 3) managing their relationship, particularly in the context of cooperation and competition. Trade has remained a key platform for the interaction of the two powers as well as the exchange of energy-related technology during these phases.
Since the 1990s, the EU has seen China as a rising power, and an unprecedented series of summits between China and some of its key world partners over have demonstrated China’s wish to be recognized as a world power. Due to increasing interdependence between economies, the EU and China have become each other’s major trading partner. In 2011, while China was the EU’s largest source of imports, it was also the EU’s major export market. In the face of climate change, high global energy consumption, volatility of international oil prices and environmental degradation the two powers have come closer together. In May 2012, China and the EU signed an agreement for energy “partnership” emphasizing practical cooperation on climate change including enhancing the use of clean and sustainable energy, improving energy efficiency and promoting climate-friendly technologies transfer. This called for further deepening of cooperation in the clean energy field.
The China–EU energy cooperation is not limited to traditional security of resources and prices but extends to broader energy security concepts including governance, diversification of supplies, improvement of efficiency and conservation and research innovations. Most importantly, the EU–China energy partnership does not only promote positive EU–China relations but also better global energy governance, which is beneficial to their climate strategy.
As the clean energy initiative progresses with official blessing, the future climate strategy between China and the EU is expected to rely on the established cooperation mechanism involving bilateral and multilateral approaches. The China–EU Energy Conference, China–Europe High Level Energy Working Group, China–Europe Energy Dialogue and the EU-China Summit are the main official channels facilitating China–Europe’s clean energy cooperation.
Since the 1980s when China and the EU started energy cooperation, through official energy dialogues, the two sides have achieved concrete cooperative action in clean energy, ranging from the large comprehensive cooperation projects of energy and environment with the investment of hundreds of millions, to small pieces of solar equipment. In sum, clean energy cooperation between China and the EU, particularly in the field of clean energy, is mainly carried out in three categories: personnel exchange and training, technology transfer and joint R&D, and financial investment in the energy industry. From 1990 to 2010, there were over 100 joint events in the energy field with a quarter of them dedicated to energy efficiency.
In light of the upcoming Climate Change Conference, China and the EU have to further deepen their cooperation and are expected to deal with various challenges. First, the European companies that own advanced technologies, especially core ones in new energy, are not always willing to transfer their technologies to China as they fear the weak intellectual property rights (IPR) regulation and protection for foreign companies in China. Second, trade friction in China and the EU’s clean energy cooperation are essentially due to the interest competition of both sides, both economic and strategic. The EU sides tended to suspect China’s long-term strategic intentions and see Chinese enterprises as competitors. The solar panel trade dispute served as an example. Third, with the development of China’s clean energy industry and its growing export of relevant products to Europe, trade friction and conflict between China and Europe is likely to become a frequent issue. Fourth, although China and Europe have achieved a variety of official agreements in clean energy cooperation, interaction between the public and the business circles is less active. Fifth, most of the China–EU energy cooperation is project-based and will be terminated when the mandates expires. Such low continuity distracts the coordination between Chinese and European sides which were already distinct in ideological mindsets and management cultures. While these obstacles exist, it is crucial that the two sides continue to develop their relationship in this area.
Ka-ho YU is a researcher at the CBNI Energy Research Center and research fellow at King’s College London, EUCERS