China and the United States—as the two largest greenhouse gas emitters—must lead on climate action. The two sides can accelerate action both in cooperation and competition.
Key assessments and recommendations
- The world will not avert catastrophic climate change unless China—the world’s largest emitter—accelerates its low-carbon energy transition and increases the ambition of its decarbonization goals. The United States—with its international political heft, technical expertise and bilateral climate history with China—needs to engage China with diplomatic, economic, and cooperation levers.
- We have work to do at home. The Inflation Reduction Act (IRA) has shown that bold, “moonshot” investments in clean energy and the American workforce improve the lives of U.S. workers, position the United States to compete globally, particularly with China, and cut emissions. Transformational climate action at home strengthens our diplomatic influence to press for strong action by others, including China. Congress should back a follow-on “clean industry” moonshot, which would check all those boxes.
- U.S. policymakers will have to assess on case-by-case bases the benefits and risks of products from China in the U.S. energy transition, recognizing China’s lead position in clean energy technology and manufacturing. While a full decoupling is infeasible, the interests of American workers have to be a central consideration in the U.S. clean energy strategy.
- U.S.-China competition need not be zero-sum. It can be a positive force if we are in a “race to the top” to meet the rest of the world’s clean energy transformation needs.
Context: China’s performance on climate action
To avoid the most dangerous climate change impacts, the world must cut carbon dioxide emissions by about 45 percent by 2030 and reach net zero around 2050. China is central to any solution, as it is the largest CO2emitter and the global leader in clean energy technology and manufacturing. Beijing is ramping up investment to try to meet its goals to peak carbon emissions by 2030 and be carbon neutral by 2060. The United States needs to continue to engage China to press it to increase the ambition of these goals.
China installed more wind and solar capacity in 2023 than any other country, dominates manufacturing and global supply chains for most key low-carbon technologies (including solar, wind, batteries), and controls most of the world’s minerals refining capacity for those technologies. On the other hand, China continues to build coal plants, which increases emissions; stymies progress toward the Paris Agreement goals; and undermines global resolve to accelerate decarbonization.
The role of Congress
There are a number of actions Congress should take to catalyze a race to the top with China and protect American workers. First, Congress should authorize funding to implement the 2023 Sunnylands Statement,which lays out key areas for emissions reduction in the 2020s. Second, it should fund U.S. international climate finance at the level in the president’s budget request to help curb global emissions by hastening a clean energy economic transition in developing nations; to contribute to a race-to-the-top competition with China; and to reinforce U.S. global climate policy and economic leadership. Finally, members of Congress should visit China to press officials on climate action and to understand China’s climate and energy policies.
Americans expect Washington to act forthrightly to combat the climate crisis. More than half of Americans—and nearly 80 percent of Democrats—see climate change as a major threat, and even larger numbers support prioritizing and incentivizing clean energy.
The case for U.S.-China climate engagement
The world looks to the United States and China to lead on global climate action, one of a few areas of recent bilateral policy cooperation. We need to engage. China is simply too important a player to ignore, given its emissions and manufacturing profile, its active and complicated role in climate diplomacy, and its energy and infrastructure financing.
We know engagement works. U.S.-China agreements leading up to the Paris Agreement and at the 2021 Glasgow climate meeting spurred global action. External pressure can also work. President Xi Jinping announced in 2021 that China would stop building new coal-fired power plants abroad. Xi’s declaration followed Japan and South Korea taking similar earlier actions and after diplomacy from the Biden administration and the European Union.
The United States is more effective in pressing for increased action by China (and others) when we demonstrate ambitious action at home, such as the clean energy transformation that the IRA is driving. Washington should bring to bear the weight of our political influence, technical expertise, and history of bilateral climate engagement to press China for faster progress. Most urgently, Beijing needs to increase the ambition of its emissions reduction goals. Worryingly, in addition to the build-out of coal facilities already underway, a softened Chinese economy may incentivize officials to turn to quick-fix fossil energy investments to boost short term growth.
Similarly, the United States in recent years has put methane emissions on Beijing’s agenda, and it must continue to press China for quantifiable reduction targets. We also need to push China to act in hard-to-abate sectors where we lead either technologically, such as steelmaking, or in innovative policy mechanisms, such as green procurement.
U.S. competitiveness in the low-carbon economy
Competition will also be a part of the U.S.-China climate agenda. China has implemented strategic policies and invested decades and tens of billions of dollars to become the dominant player in solar panels, wind turbines, batteries, and critical minerals over the past two decades. China now leads the United States as a driver of the global energy transition, exporting and building clean energy technologies abroad, in part due to unfair production subsidies. The historic lack of consistent U.S. federal climate policy has also contributed to China pulling ahead in low-cost clean technology manufacturing as well as influence gained in implementing energy and infrastructure projects in developing countries.
However, the United States can still become a global leader in clean energy technology manufacturing, especially the next generation of advanced renewable energy and energy storage technologies. But that will require major investment in addition to the historic gains brought about by the IRA. The IRA’s success shows that the Biden administration’s approach to worker-centric investment in a manufacturing renaissance works.
Congress should build on this success and launch a follow-on “clean industry” moonshot to position the United States to lead in developing and deploying technologies in industrial decarbonization (such as hydrogen, green steel, etc.) and advanced solar and batteries. These are the next technologies where we can compete globally.
But China’s dominance of clean energy technologies and supply chains means that, until the United States bolsters its own capacity, it will need to weigh the trade-offs (economic competitiveness, cost to consumers, impact on pace of energy transition, national security risks) of U.S. market entry of Chinese products and technologies. For example, it is in the U.S. interest to permit U.S. companies to license advanced technology from China as long as U.S. companies build the product, and it does not compromise data security, critical infrastructure, or other national security concerns. In other cases, policymakers may conclude that economic costs require us to consider tariffs or other trade-based measures—for example, for U.S. market access for highly subsidized Chinese electric vehicles.
Using aid and markets to propel the global energy transition
Smart U.S. climate policy can make smart development policy. For example, the United States should boost resources to the Partnership for Global Infrastructure Investment (PGI), which seeks to mobilize $200 billion for infrastructure investment in low- and middle-income countries by 2027. PGI can be an important low-carbon development alternative to China’s Belt and Road Initiative (BRI). But this competition need not be zero-sum. The developing world needs 2 trillion dollars annually through 2050 in clean energy investment to achieve net-zero emissions. Harnessing U.S.-China competition to meet that need would be good for U.S. workers, U.S. partners abroad, and the planet.
There is also the question of the role of market mechanisms to reduce emissions. The United States and the European Union are negotiating the Global Arrangement on Sustainable Steel and Aluminum (GASSA),which aims to encourage a “race to the top” through agreements that reward stronger carbon standards and worker protections among adherents and excludes those outside the arrangement. The PROVE IT Act offers an important path for the United States to lead global efforts to improve data collection on carbon-intensive traded goods (many of which come from China).