The world’s two most powerful countries, the United States and China, are meeting this week in Washington to talk about climate change. And also their relationship issues.
In an ideal world, where the clean energy transition was the top priority, they would be on friendlier terms. Maybe affordable Chinese-made electric vehicles would be widely sold in America, instead of being viewed as an economic threat. Or there would be less need to dig a lithium mine at an environmentally sensitive site in Nevada, because lithium, which is essential for batteries, could be bought worry-free from China, which controls the world’s supply.
Instead, in the not-ideal real world, the United States is balancing two competing goals. The Biden administration wants to cut planet-warming emissions by encouraging people to buy things like EVs and solar panels, but it also wants people to buy American, not Chinese. Its concern is that Chinese dominance of the global market for these essential technologies would harm the U.S. economy and national security.
Those competing goals will be at the center of talks on Wednesday and Thursday as the Biden Administration’s top climate envoy, John Podesta, meets for the first time with his counterpart from Beijing, Liu Zhenmin, in Washington.
Trade tensions are likely to loom over their meetings.
The flood of Chinese exports, particularly in solar panels and other green-energy technology, has become a real sore spot for the Biden administration as it tries to spur the same industries on American soil. Mr. Podesta has sharply criticized China for having “distorted the global market for clean energy products like solar, batteries and critical minerals.”
Not only that, he has set up a task force to explore how to limit imports from countries that have high carbon footprints, a practice that he called “carbon dumping.” That was considered a veiled reference to China.
It remains unclear whether the Biden administration would impose a fee on products imported from high-emissions countries. The idea has been embraced by a handful of influential Republican lawmakers as a way to protect American manufacturers from Chinese competition.
China, for its part, has complained to the World Trade Organization about U.S. green subsidies. Mr. Podesta has called that complaint “beyond ironic” since the Chinese government has invested heavily in its own manufacturing sector.
Mr. Liu has said that, without Chinese technology, clean energy costs would rise, and that would slow down the global pivot away from the burning of fossil fuels, the main producer of the greenhouse gas emissions that are warming the planet. “We need to maintain low costs, otherwise nobody is going to be able to afford the energy transition,” he told Bloomberg recently.
Both men are new to their current jobs, but hardly novices. Mr. Podesta was in charge of the climate-law rollout before he took on the global role, following the retirement of John F. Kerry. Mr. Liu is a longtime diplomat who served as a United Nations official before becoming President Xi Jinping’s top climate envoy.
The United States isn’t alone in warning against the flood of Chinese green goods.
The European Union is investigating whether Chinese-made electric vehicles have benefited from unfair subsidies, and Mr. Xi got an earful on a visit to Paris this week when the European Commission president, Ursula von der Leyen, said at a news conference on Monday that Europe “cannot absorb massive overproduction of Chinese industrial goods flooding its market.”
China dominates the production of solar panels, wind turbines, batteries and electric cars and buses, and also processes most of the minerals that go into clean energy technologies. And Chinese companies have found workarounds to trade barriers in the West, including by sending products through indirect routes that avoid tariffs on goods that come directly from China.
That presents an acute dilemma for the Biden administration. It has staked its global reputation on an ambitious climate agenda, aiming to halve greenhouse gas emissions by 2030, compared with 2005 levels. It’s also trying to build, practically from scratch, a domestic renewable energy industry.
Competing with China on low-carbon manufacturing at this point is a losing battle, said Li Shuo, who heads the China climate hub at the Asia Society Policy Institute in Washington. “It is hard to see how the U.S. will build a whole solar supply chain in time to respond to climate change, or how solar products made in the U.S. could ever be cost-competitive,” he said. It is not “the fight the U.S. should pick, nor one that it can win.”
This new great power rivalry presents two risks for the United States. Shunning a rival’s factories too much can raise costs and slow down the clean energy transition. But relying too much on a rival country’s factories raises national security concerns and can jeopardize American industries and jobs.
For instance, a flood of cheap Chinese cars would threaten the U.S. auto industry and a large, unionized and politically influential base of autoworkers. (President Biden wooed them openly by walking their picket line during a recent strike.)
Beyond trade, Beijing and Washington are at odds over many things, including the status of Taiwan, the Russian invasion of Ukraine, and, not least, fundamental differences over the value of democracy.
“In a world free from geopolitics, if China wanted to supply the world with cheap and plentiful clean energy inputs, from solar panels to critical minerals, it would benefit us all by enabling the fastest energy transition possible,” said Meghan O’Sullivan, who directs the Geopolitics of Energy Project at the Harvard Kennedy School. “But in the real world, the security imperative not to be overly dependent on China is leading countries, from the United States to India, to duplicate supply chains in solar and critical minerals, which can slow down the energy transition and make it more expensive.”
The outcry against Chinese exports comes at a time when politicians in this country face a challenge that’s foreign to politicians in China: elections.
In his re-election bid, Mr. Biden has highlighted his administration’s renewable energy investments. He has made it a point to visit new factories supported by government incentives, a clear effort to signal to voters his efforts to revive American manufacturing.
Clean energy investments have surged since the passage of the Inflation Reduction Act in 2022. It began to unlock $370 billion in incentives to speed the nation’s transition away from fossil fuels, with expanded tax breaks for battery production and solar-panel manufacturing. That, along with the Chips and Science Act, which set aside $39 billion in incentives for chip producers to invest in the United States, was aimed squarely at reducing dependence on China while bolstering U.S. manufacturing.
An analysis published on Tuesday by the private research group E2 found that 300 renewable energy projects had been announced since the passage of the Inflation Reduction Act. More than half were in Republican-controlled states.
Lisa Friedman contributed reporting.
Source Agencies
