Obama Needs China to Help Him Run Great Green Race: Eric Pooley

It was a happy accident that Barack Obama found himself in Beijing on the day the U.S. Senate kicked climate change legislation into the spring. Obama needs Chinese President Hu Jintao’s help to break the U.S. stalemate over global warming. And until Washington acts, there’s scant chance for a binding international agreement to reduce greenhouse gases.

Obama is reluctant to commit the U.S. to emission targets at the United Nations climate talks in Copenhagen next month because he doesn’t want to get ahead of Congress. (The Clinton administration got too far in front with the Kyoto Protocol, and the Senate never ratified it.) Obama hasn’t been able to get a climate bill through the Senate in part because Americans believe, with some justification, that more manufacturing jobs will move to China if the U.S. caps greenhouse gas emissions and China doesn’t.

China won’t commit to binding reductions, and as a developing country, it isn’t required to by the UN climate change process. Yet it wants the U.S. to slash greenhouse gas emissions by 40 percent in 10 years, an unrealistic demand. The Chinese argue that since the U.S. had a 100-year head start on getting rich by sending carbon into the skies, it’s only fair for America to begin reducing first. Obama agrees with that, but may not be able to convince the Senate to get started unless Hu gives him something more to work with.

Photographer: Nelson Ching/Bloomberg

U.S. President Barack Obama, left, shakes hands with Hu Jintao, China's president, after issuing a joint press statement in Beijing, Nov. 17, 2009. Close

U.S. President Barack Obama, left, shakes hands with Hu Jintao, China's president,... Read More

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Photographer: Nelson Ching/Bloomberg

U.S. President Barack Obama, left, shakes hands with Hu Jintao, China's president, after issuing a joint press statement in Beijing, Nov. 17, 2009.

Next Stop, Copenhagen

In Beijing, Hu and Obama signaled that help might be coming. Their joint declaration suggested that the U.S. would put a number on the table in Copenhagen if China offered a real proposal of its own. “An agreed outcome at Copenhagen,” it said, should include “emission reduction targets of developed countries and nationally appropriate mitigation actions of developing countries.”

This doesn’t mean China will agree to binding cuts in Copenhagen. It won’t. But if it takes the first step down that path -- by pledging to make reductions and to measure, verify and report the results -- it would go a long way toward calming American concerns. The U.S. will only go first if it knows that China is following it down the same road.

There will still be those who say China just wants to steal rust-belt jobs. But America faces a much bigger threat: it is losing the clean energy race to Green China.

America Dawdles

The People’s Republic is spending $9 billion monthly on clean-energy projects and is on its way to becoming the No. 1 producer of wind turbines and solar photovoltaic panels. It is building a new generation of nuclear power plants and ambitious carbon capture and storage projects -- technology the world needs in order to keep burning coal -- while America dawdles.

Meanwhile, a planned $1.5 billion wind farm in Texas would use 240 Chinese-made wind turbines, creating 300 jobs in America, most of them temporary, and 2,000 in China, according to U.S. Renewable Energy Group, the private-equity firm involved in the project. That’s not what Obama meant by stimulating green jobs.

China can move so rapidly on large-scale energy projects because autocracy has its advantages. It is a command-and- control regime. There is no Chinese character for NIMBY.

In the U.S., government can’t build new industries by decree. That’s why America needs a carbon market. The best way for it to compete with China in the Great Energy Race is by putting a mandatory, shrinking cap on emissions. Pricing carbon will unleash billions of investment dollars that are now sitting on the sidelines. When that happens, the American marketplace will give Chinese technocrats a run for their money.

Wasting Time

America has a stark choice: It can keep wasting time on misguided arguments from climate skeptics and wild claims about the cost of cap and trade while China pulls further ahead. Or it can pass climate legislation and get to work.

Hu and Obama both know that the U.S. is never going to overtake China as the top wind or solar producer, because the U.S. can’t match China’s cost advantages. Yet both nations stand to benefit from the Great Energy Race. The U.S. and China will both produce turbines and photovoltaic cells, though China will produce more of them. (In 2005 the U.S. imported 70 percent of the parts needed to build wind turbines, but now it imports only 50 percent.)

Both countries will be making next-gen batteries and electric cars and LED lighting. Both will have armies of workers weatherizing houses and installing smart meters. Both will have concentrated-solar farms in their deserts, wind farms on their plains and a high-voltage grid to carry power to cities. This race will benefit both countries, but to jump-start it, Obama needs Hu’s help.

(Eric Pooley, a former managing editor of Fortune magazine who is writing a book about the politics of global warming, is a Bloomberg News columnist. The opinions expressed are his own.)

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To contact the writer of this column: Eric Pooley at epooley2@bloomberg.net

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