Seeking Greater U.S.-China Clean Energy Cooperation

Scholar Spotlight on Terry Cooke, Centerpoint, Summer 2010

Jul 14, 2010
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The United States and China together account for nearly half the world's carbon dioxide emissions, yet their efforts to forge a balanced policy partnership to address the global challenge have been uneven. In part, this reflects systemic differences in approach, toward developing and funding cleaner energy technologies, said Merritt "Terry" Cooke, a public policy scholar with the Wilson Center's Kissinger Institute on China and the United States.

As big actors on the environmental and economic stage, "the United States and China both need to get in sync to tackle environmental problems," he said. "That will require keener appreciation of what each system can, and cannot, produce through bilateral cooperation."

The different approaches to developing cleaner energy stem from how policy, technology, and investment "fit together" differently in the two societies. In the United States, developing new technology requires robust private-sector investment, Cooke said, but in the absence of a comprehensive regulatory framework, investment incentives, and a clear direction for where the market is heading, investors are wary. He said, "In the United States, we're not currently hitting on all cylinders in developing cleaner energy technologies."

By contrast, China currently is out-investing the United States on clean-energy technologies by 2 to 1 in absolute dollars. Since the Chinese economy is a third the size of the U.S. economy, the proportional ratio of investment is really 6 to 1. This discrepancy could give rise to fears in the United States of slippage in industrial competitiveness and calls for protectionism, said Cooke. It could also spur a productive unleashing of innovation in both countries, as well as co-development of intellectual property and two-way technology transfer.

The key to a positive response in addressing the global problem is to forge a realistic partnership with China, he said. For that to happen, "it's incumbent upon us to understand the similarities and differences of the Chinese and U.S. systems."

China can marshal resources at a speed and scale that differ fundamentally from the U.S. context. At the helm of a command economy based on Five-Year Development Plans, the Chinese government has the political will and the financial clout to move ahead on developing clean energy technologies more quickly, even with limited market validation.

Yet "the urgency with which China is pursuing clean energy development itself reveals certain tectonic fault lines in its system's ability to sustain growth," Cooke said. One such rift is a changing set of expectations among factory wage-earners who have been the backbone of China's wealth creation.

Moreover, in China, the fundamental interest is energy security rather than the environment. "Gaining control of [the energy market] is vital to Beijing's game plan; the Chinese are going full-speed ahead on every energy technology one can develop." But as China forges ahead investing in renewable energy, it is not yet reducing coal production. In fact, China is increasing coal consumption to fuel its growing economy with an eye toward one day reducing its dependence.

Despite political and economic differences, a climate of cooperation on environmental issues may be emerging, though China is still testing the waters of a relatively new U.S. administration, said Cooke. "Both countries owe it to their people, and to the world community, to cooperate in a realistic, balanced, and sustainable way on this issue."

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