U.S.-China energy partnerships get White House nod in major emissions deal

As part of a major U.S.-China agreement to cut greenhouse gas emissions, President Obama and Chinese President Xi Jinping also decided to keep plugging away at an energy research partnership viewed as a bright spot in the nations' relations.

The two countries renewed the U.S.-China Clean Energy Research Center (CERC), an effort at collaborating on advanced technology and applying new intellectual property protections to public-private partnerships.

CERC had been a signature program rolled out during Obama's first visit to China in late 2009 and was set to expire next year. The White House on Tuesday said the countries extended the program through 2020.

"Energy cooperation is already a major bright spot in the relationship between the two counties," Kelly Gallagher, a senior White House adviser on climate and energy policy, said at a Brookings Institution event this month.

Gallagher said joint programs aim to drive down the cost curve of energy technologies. "It's had a great run in its first five years," she said, referring to the U.S.-China CERC program. "In part because of the unique and important IP model embedded in that center."


Intellectual property, or IP rights, had been among the chief sticking points to getting a string of public-private partnerships associated with the program off the ground. In 2011, two years after CERC's inception, the Department of Energy under former Secretary Steven Chu was able to negotiate a patent-protection agreement that greased the wheels for collaboration on advanced coal with carbon capture technology, electric vehicles and building efficiency.

For decades, U.S. companies have been reluctant to enter into commercial contracts with Chinese companies out of fear that confidential information would be stolen. This agreement sought to nip that in the bud by setting up a government-sanctioned process for negotiating licenses so both countries benefit from jointly funded energy technology projects.

Under the latest deal announced by the White House, the United States and China will renew funding for coal, electric vehicle and efficiency projects and launch a new track on the nexus of energy and water.

Under the CERC banner, the White House said the United States and China will launch a "major carbon capture and storage project in China." They'll ask for funding from other countries and private companies.

Gallagher, in her comments, pointed out that the U.S.-China CERC has focused almost exclusively on research and development. Joint commercial-scale demonstrations of new technology is the next step, she said, opening the door for upfront cost sharing in the hope of scaling up and pushing costs down.

Most of the focus yesterday was on what environmental groups that have kept close tabs on U.S.-China climate talks described as a historic breakthrough. The Obama administration agreed to cut emissions at least 26 percent below 2005 levels by 2025. In exchange, China will start ratcheting down rising emissions by 2030 and increase its share of nonfossil energy to 20 percent during that period.

While U.S. targets for cutting emissions was negotiated largely in secret -- with one of Obama's top aides, John Podesta, shuttling to and from Beijing in recent months -- there have been murmurs about the timing being ripe. The Asia-Pacific Economic Cooperation forum in Beijing this week served as a high-profile backdrop for an agreement that could act as a catalyst for global action at U.N. climate negotiations in Lima, Peru, next month and in Paris in December 2015.

Joanna Lewis, an associate professor at Georgetown University who has tracked U.S.-China bilateral energy talks, said before the Beijing agreement that the current U.S.-China relationship is a lot different than in 2009, as the two countries sped toward rancorous climate negotiations and a final Copenhagen Accord. "I've had a lot of conversations," she said. "There's more agreement than disagreement."

Jennifer Morgan, global climate director at the World Resources Institute, said in a Nov. 6 conference call with environmental groups that successful high-level talks between the United States and China should translate into influence during broader U.N. negotiations. "It's easy for some countries to hide behind others," she said.

Critics of the deal said Republicans in Congress who say it's too much for the U.S. economy to take will never go for it. They said any new legislation required to meet the emissions targets -- something the White House says will not be necessary -- is dead on arrival on Capitol Hill.

Where will emissions cuts come from?

Together, the two countries account for more than 40 percent of global carbon emissions contributing to climate change. China has the largest total emissions because of its incredible pace of industrial growth during the past two decades, but the United States still emits more per person and is the world's leading industrialized economy.

Still, the United Sttaes and China have both made progress on transitioning their economies toward cleaner sources of energy. In the United States, electric power is shifting toward natural gas and integrating more renewables; and in China, there is increasing recognition that coal as a main source of power generation and industrial growth will have to peak soon if there's any hope of addressing choking air pollution and carbon emissions.

The energy challenge is notably big. Yesterday, as U.S.-China watchers hailed the climate agreement, the Paris-based International Energy Agency released a "World Energy Outlook" projecting world energy demand will be 37 percent higher in 2040. Efficiency measures in the United States and China play a "vital role" in keeping that in check, IEA said, and coal and oil could plateau in the next 25 years (see related story).

In the United States, investment banks were making back-of-the-envelope calculations about where emissions cuts would come from.

Analysts at FBR Capital Markets said a 26 percent carbon emissions reduction from 2005 levels is an 18 percent reduction from 2012. Some of this will fall on the success or failure of a pending EPA proposal to cut power sector emissions.

"But if it were implemented as smoothly as proposed, the president's proposed Clean Power Plan for the electric sector is only expected to achieve about a 28 percent reduction from 2005 by 2025," said the FBR note by senior policy analyst Benjamin Salisbury.

"Only about one-third of economy-wide emissions come from the power sector," he noted.

U.S. transportation sector emissions are on course for a 15 percent decline by 2025 because of fuel-efficiency standards already in place.

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