China Turns Negotiating Tables on U.S. at Stalled Cancun Climate Meeting

The U.S. pressed China to do more at climate-change talks in Copenhagen last year. Now, as the U.S. falls short of its own goals, China may have gained more credibility in renewed negotiations by moving to clean up its energy industry.

“It used to be thought that China wouldn’t act until the U.S. took leadership,” Mark Fulton, a managing director at Deutsche Bank Climate Change Advisors in New York, said in an interview. “But unless I’ve missed something, China has already taken substantial action.”

The U.S. and China, the two biggest greenhouse-gas polluters, are in Cancun, Mexico, for the latest round of United Nations-led talks aimed at curtailing global warming. Envoys from 190 nations are seeking ways to show progress after last year’s failure to craft a new, legally binding accord.

Since then, U.S. President Barack Obama’s effort to win legislation that would cap carbon dioxide emissions died in Congress. China moved in the opposite direction, making pollution cuts and energy efficiency the law and considering a CO2-trading system.

China attracted $34.5 billion in renewable-energy investments last year, almost double the U.S. figure of $18.6 billion, according to Bloomberg New Energy Finance.

‘Deploy Faster’

“The Chinese are important to work with because they are going to deploy faster, scale faster than we are in the U.S.,” Jim Rogers, chief executive officer of Charlotte, North Carolina-based Duke Energy Corp., said in a Nov. 30 interview in Cancun.

China’s incentives for clean-energy development have been so abundant that the Obama administration has threatened to file a complaint with the World Trade Organization branding the aid a violation of global trade rules.

“China is in a stronger negotiating position now than they were in Copenhagen because the perception is the U.S. doesn’t have its domestic act together,” Alden Meyer, head of policy in Washington at the Union of Concerned Scientists, said in an interview. “The Chinese public believes they are doing a lot more on the ground than the U.S., and they don’t think China should have to make any concessions.”

Christiana Figueres, the UN diplomat leading this year’s talks, last month praised China’s initiative to spur wind and solar power and to cap emissions from industry, saying the nation has “outperformed.”

Cap-and-Trade

China said it is studying a cap-and-trade system that would reduce emissions and establish a market in pollution allowances. The most populous country, with 1.3 billion people, is also considering a tax on carbon, Zhang Junkuo, head of development strategy at the State Council’s development research center, told reporters Nov. 18 in Beijing.

Obama, who won House passage of a cap-and-trade measure last year only to see it stall in the Senate, said after Republican gains in last month’s elections that a carbon market “was just one way of skinning the cat.” He said he doubts such a measure can win passage until 2013 at the earliest. The Environmental Protection Agency is seeking to impose its own CO2 limits on power plants and factories.

“The U.S. is a wounded elephant,” Pa Ousman Jarju, Gambia’s climate envoy, said in an interview on Dec. 1. “The elephant had been moving very slowly, but now it’s limping. We have to be realistic. We know there’s nothing they can push here because of their domestic circumstances.”

Coal Dependence

While environmentalists praise China’s decision to embrace wind and solar energy, they also point out that the country’s growing energy needs are being met mainly from the most polluting sources of energy.

“China is still facing huge challenges coming from both its heavy reliance on coal and reluctance from local governments to change,” Ailun Yang, head of Greenpeace China’s climate and energy campaign in Beijing, said in an interview. “To become a responsible global climate citizen, China must have more ambitious and concrete plans on how to move away from coal.”

Without a new treaty in sight, negotiators in Cancun are seeking step-by-step progress on topics such as deforestation, a $100 billion fund to help vulnerable companies deal with climate change, emissions reductions and an international system to monitor, report and verify countries’ actions.

Rising Tensions

U.S.-China tensions over global warming escalated in the weeks before the Cancun gathering, which began Nov. 29 and is scheduled to finish Dec. 10.

In October, Todd Stern, the lead U.S. negotiator, accused China of reneging on commitments it made in the Copenhagen accord, a non-binding political pact reached in Denmark last year after treaty talks collapsed. Su Wei, his Chinese counterpart, called the U.S. a pig that primps in the mirror in spite of an ugly countenance.

Both sides are talking of conciliation now that they are in Cancun.

“Of course, we have different views and different positions, but in general both countries would very much like to promote the process forward for a successful outcome,” Su told reporters on Dec. 1.

Success in Mexico depends on both nations, U.S. negotiator Jonathan Pershing said on Nov. 29.

“We are the first and second largest emitters, and we are the first and second largest economies,” Pershing said. “We will work very hard going forward to find common ground, which I very much think we can achieve.”

Korean View

South Korea’s ambassador for climate change, Shin Yeon- Sung, said he’s not concerned about the Obama administration’s commitment to fight climate change.

“We should not interpret the U.S. domestic situation as meaning they’re not going to do anything,” he said today in an interview in Cancun. “They will make a contribution, I don’t have any doubt about it.”

The U.S. is pushing in Cancun for nations to embrace the Copenhagen accord, which calls for rich and fast-growing economies to cut emissions by 2020. It also envisions a system to measure and verify emission cuts and proposes a $100 billion fund to channel climate aid to developing nations. The U.S. wants that to be the foundation of a new treaty.

China instead wants to stick with the model set by the existing 1997 Kyoto Protocol, which requires only developed countries to reduce greenhouse-gas pollution, which is blamed for damaging the atmosphere. The U.S., which never ratified Kyoto, says this is unacceptable and it won’t sign a treaty unless the document binds all major emitters, including developing nations such as China and India.

Japan’s Objection

Japan says it makes no sense to extend the Kyoto agreement without the two biggest polluting nations subject to its terms.

“Without the active participation of the two biggest emitters, namely China and the United States, it’s not a global effort,” Kuni Shimada, special adviser to Japanese environment minister Ryu Matsumoto, said in an interview.

The same dilemma applies to negotiations for a new treaty.

“Most major economies, the U.S. and China in particular, aren’t in a position to set national policy at the international negotiating table,” Trevor Houser, a U.S. climate negotiator at the Copenhagen summit who is now a visiting fellow at the Peterson Institute for International Economics in New York, said in an interview. “Going into Cancun, the top-down treaty approach is clearly on the ropes.”

To contact the reporters on this story: Kim Chipman in Cancun, Mexico, at kchipman@bloomberg.net; or Alex Morales in Cancun, Mexico, at amorales2@bloomberg.net.

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net;

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