US-China climate cooperation can have huge economic and ecological benefits for the world

Although the US and China are both making significant strides towards carbon-free electricity generation, they could move even faster if they worked together
Beijing and Washington must not let their current political disagreements get in the way of pursuing common interests

Jiang LinandMichael O’Boyle

Published: 11:30am, 7 Sep 2022

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With provisions to cut US emissions by 40 per cent from 2005 levels by 2030, the Inflation Reduction Act has revived US global climate leadership. Since most of these reductions will come from a cleaner electricity sector – which is projected to be 70 to 85 per cent carbon-free by 2030 – the United States will be well positioned to collaborate on decarbonisation of the power sector, starting with China.

True, China has suspended its diplomatic engagement with the US, including on climate issues. And yet, the climate threat is not unlike the threat posed by nuclear proliferation during the Cold War.

The two countries have a shared interest in reducing their fossil fuel “arsenals”. By acting decisively this decade, both can deliver greater economic, health and security benefits for their own populations and the world.

Owing to its reliance on coal, which supplies two-thirds of its electricity, China now emits more greenhouse gases per year than any other country. Its electricity-related emissions alone roughly equal those for the entire US economy.

At the same time, China’s renewable-energy capacity is soaring. In 2020, it added three times more wind and solar capacity than the US did. In just the first half of 2022, it invested another US$100 billion in solar and wind.

Yet China could pivot to clean energy even faster, especially if it is willing to work with the US on cleaning up the electricity sector. New research shows China could reach 80 per cent carbon-free electricity as early as 2035 without increasing costs or sacrificing reliability.

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Though China is already on pace to exceed its goal of 1,200 gigawatts of wind and solar by 2030, it could add much more by leveraging its unparalleled renewable-resource endowment and world-leading clean tech supply chain.

Similarly, 11 separate studies show the US can reach President Joe Biden’s goal of 80 per cent carbon-free electricity by 2030 without increasing cost or degrading reliability, largely because new renewables are becoming cheaper than existing coal power. By adding more storage, preserving nuclear power sources and operating natural gas and hydropower more flexibly, the US can retire its coal plants and quadruple its low-cost renewable electricity by the end of the decade.

Similar market forces are at play in China, which is on track to increase its clean energy share from around 30 per cent today to 50 per cent by 2030. With even more effective policy support, China could cut generation and transmission costs as it cleans up its grid.

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China has already shown it can rapidly deploy clean energy infrastructure at scale. To achieve 80 per cent clean electricity by 2035, it would need to raise its pace of wind and solar development. If it can do that, it can push its solar and wind capacity to 3,000GW, which our research shows would add some 1.2 million clean energy jobs.

Reliability is a major concern for China and the US, but pitting renewables against supposedly more dependable fossil fuels is a false choice. In 2021, soon after Texas experienced its worst power outage in decades, China suffered a power crisis of its own.

Owing to coal shortages and perverse market incentives, China’s grid operators were forced to ration power to industrial customers. Because prices were set administratively, power producers received the wrong economic signal when electricity demand and fuel costs rose. The more they produced, the more money they lost.

Chinese imports of Russian oil and coal continue to rise in July

In both China and the US, boosting the share of renewable energy will also increase energy independence and reduce the risks associated with fossil fuels’ price volatility. Energy market shocks this year have driven up natural gas prices and caused acute economic pain in the US, which relies on gas for roughly 40 per cent of its electricity demand.

Similarly, China relies on coal, oil and natural gas imports, all of which have become more volatile since Russia’s invasion of Ukraine. However, power sector simulations show that with an 80 per cent carbon-free power system, the Chinese grid could serve demand reliably even during a 35-year nadir of wind and solar production.

Because the policies needed to drive carbon-free electricity generation in the US and China are not so different, the two countries could collaborate on energy market reforms, even if they are cooperating on little else.

Turbines that are part of Constellation Energy’s Criterion Wind Project are seen along the ridge of Backbone Mountain near Oakland, Maryland, on August 23. Photo: AFP

Coordination to accelerate the clean energy transition offers many mutual benefits. Beyond exchanging technology and know-how, China and the US could jointly commit to rapid decarbonisation with common but differentiated responsibilities, setting a US goal of 80 per cent clean electricity by 2030 and China following suit by 2035.

By pursuing common interests and opportunities, the US and China can lead the world in decarbonising their grids. Their leaders must not let political disagreements get in the way.

Jiang Lin is adjunct professor at the Department of Agricultural and Resources Economics at the University of California, Berkeley. Michael O’Boyle is director of electricity policy at Energy Innovation. Copyright: Project Syndicate