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A U.S.-China agreement on climate change—essential for securing a post-Kyoto agreement—is achievable by this fall, according to testimony before the Senate Foreign Relations Committee by William Chandler, director of Carnegie’s Energy and Climate Program. No global agreement can prevent the catastrophic effects of climate change without cooperation from the world’s two largest emitters.

Chandler, lead U.S. facilitator of the U.S.-China Track II climate dialogue, credited this momentum to the new climate leadership in the United States, China’s recognition of the serious threat that climate change represents for its future, and the efforts of specialists and leaders in both countries. As U.S. climate envoy Todd Stern prepares to travel to China next week with White House science adviser John Holdren and assistant energy secretary David Sandalow to boost U.S.-China cooperation on global warming, Chandler discussed the most productive areas for U.S.-China climate cooperation and the general outlines of a potential agreement.

Key points:

• The United States’ top priority ahead of the December Copenhagen summit should be enacting cap-and-trade legislation to control greenhouse gas emissions. The Waxman-Markey bill has made a strong impression in China, showing the United States is serious about climate change.
   
• China’s energy efficiency effort—including shutting down many inefficient factories and power plants—is without precedent in the world.
   
• China is not likely to agree to a binding cap on emissions in the next few years but they are nonetheless willing to take serious action to curb their emissions growth.
   
• China should focus on removing barriers to investment in energy efficiency and clean energy by easing foreign exchange restrictions, providing tax breaks for clean energy companies, and making it easier for banks to lend to clean energy projects.
   
• State-to-province cooperation between China and the United States is a promising avenue to share expertise and accelerate development of energy-efficient technologies.

Chandler concludes:

“U.S.-China collaboration should not be envisaged as a threat to the climate leadership of any nation, or to global cooperation. It should not challenge existing or planned emissions cap-and-trade systems. Rather, it would be, and should be considered, an act of mutual self-preservation, helping both the United States and China to avert climate disaster and the eventual sanction of other countries if they do not act, and laying the basis for successful global action.”
 

Mr. Chairman, members of the Committee, thank you for this opportunity to appear before you today. I would like to submit my written statement for the record.
 
The United States has a historic opportunity to reach an agreement with China to address climate change. If we do so, we can protect the global environment; however, if we fail, we will almost certainly suffer grave damage to our coastal cities, food, water, and energy supplies, and the majesty of our parks and wild lands. U.S.–China climate cooperation, in contrast, will create American businesses and American jobs.

This historic opportunity for U.S.–China climate cooperation is the result of newly energized leadership in the United States, China’s own recognition of the serious threat climate change represents for its future, and the hard work of specialists and leaders in both countries to make climate change cooperation a reality.

During the past two years, American and Chinese experts convened a “Track II” high-level dialogue among political leaders and scientific experts from each country to identify the most promising areas for bilateral cooperation between the United States and China. Those of us who helped organize these sessions are grateful to this committee for supporting that effort. Former Senator Biden and Senator Lugar both generously provided staff time and support to make the dialogue possible. The Chinese delegation reciprocated at the highest levels and was led by Minister Xie Zhen Hua, who is China’s chief global climate negotiator.

Minister Xie and our team members agreed on three key priorities for cooperation:

1. Rapid deployment of existing energy efficiency technologies to obtain “quick wins” in  reducing emissions;
2. Joint development of low-carbon cars and coal-fired power plants;
3. Collaboration to reach a global climate deal in which both the United States and China can participate.

China clearly needs and wants to work with the United States in these areas. Analysts at the Energy Research Institute, a leading Chinese think tank, suggest that China could cut its current emissions growth rate by half through 2020, and from that level reduce absolute emissions by one-third by 2050. This scenario would put within reach a global goal of stabilizing atmospheric concentration of carbon dioxide below 500 ppm. Such a commitment would represent a profound shift in China’s position, and could be pivotal in reducing the worst risks of climate change.

Cooperation in science and technology will be vital for China to reach such an ambitious goal―but it will not be enough. China also needs the benefit of our experience in using market mechanisms to achieve environmental goals. We can help them focus on the policy changes that matter most:

• Encouraging investment in more efficient industry and buildings;
• Providing tax holidays and easing foreign exchange restrictions on clean energy companies and services; and
• Making it easier for Chinese banks to do risk-based lending for clean energy projects.

These changes would help remove barriers that frustrate American clean energy companies trying to do business in China.

Mr. Chairman, we cannot afford to let this opportunity slip from our grasp. Our own top priority should be to enact cap-and-trade legislation to control greenhouse gas emissions. Draft legislation in the House of Representatives has already made a strong impression on China, indicating to them that we are serious about climate change.

We should recognize the strenuous efforts China has already made to reduce emissions growth. China’s energy efficiency effort—including shutting down many inefficient factories and power plants—is without precedent in the world.

We can ask China to take further action—not necessarily to cap emissions, but to set an ambitious emissions target, and to implement enforceable policies to achieve the goal. For example, we could ask the Chinese government to require stronger standards on industrial energy use, automobile fuel economy, and reforestation. In return, we could offer China the opportunity to participate in an international “offsets” program, and we could minimize or avoid trade-related conflicts on the embodied energy in imports—which is to say the emissions generated by Chinese manufacturing.

The Chinese people are very practical, and if we make it in their interest to cooperate with us, they will do so. We can do that in two ways. First, we have to show leadership. If the United States acts as if what we do is important and necessary, if we make our own policy stand on its own two feet and not be held hostage to what other countries do, then we can lead. If we lead, then the rhetoric of the developing countries loses its power. Then we can work with China to help its leaders take actions that they know themselves is in their best interest. They accept the science and the threat of climate change. I believe they will work with us.