EU-China Energy Cooperation: Speeding Up or Slowing Down?

by Jennifer Grosman Fernández

February 29, 2020

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Federica Mogherini, High Representative of the European Commission, shaking hands with Xi Jinping, President of the People’s Republic of China at Diaoyutai State Guest House for the 18th EU-China Summit in Beijing in July 12, 2016. (Image: European External Action Service, Flickr)

Picturing China’s energy use brings images of massive coal plants to mind. For years, the dominant narrative on China concentrated on the extraordinary pace of its industrial development, and immense demand for energy resources. In actuality, China’s energy intensity (units of energy per unit of GDP) is decreasing, but per-capita growth continues to increase and will overtake the European Union around 2035.

The European Union recently embraced climate neutrality as the new European growth strategy. This opens up an environmentally beneficial (and lucrative) opportunity for the European Union to strengthen energy cooperation with China. EU-China collaboration on energy research and market investments is not new. The Europe-China Clean Energy Centre (EC2) was launched in 2010 and a high-profile Energy Dialogue occurs on the sidelines of the annual EU-China Summit. Scope and ambition have ramped up in recent years as the EU has maneuvered to position the bloc as the global climate leader and has attempted to persuade China to bring more renewable energy on the grid.

Progress sped up last April when the EU and China committed to tackle climate change and promote clean energy. While less detailed than the 2018 joint statement on climate change, the 2019 EU-China joint statement stressed “the importance of showing resolve on the clean energy transition and of assuming greater leadership on the global environmental agenda”. The resulting EU-China Energy Cooperation Platform (ECECP) launched last year aims to develop energy systems and markets, expand renewable energy sources, promote energy efficiency and the role of innovative companies. As then European Commissioner for Energy and Climate Action, Miguel Arias Cañete, bluntly put it “[the agreement| commits the EU and China to further joint efforts towards the clean energy transition. Together, we are responsible for one third of final energy consumption worldwide. Without us, the global energy transition will not happen.” Indeed, messaging the strength of the EU-China partnership was a key priority of both sides at the UNFCC COP25 conference last December.

China and the EU have tussled over environmental issues in the past, with points of contention largely stemming from differing judgements on the balance between economic growth and environmental sustainability. However, evolving energy policy priorities on both sides have transformed their bilateral relationship into one significantly more centered on partnership. While the EU started with a strong emphasis on environmental stewardship and moved towards a focus on affordability and availability, China started with a strong emphasis on availability and has moved towards a greater emphasis on environmental stewardship. Chinese and EU perspectives have become more aligned over the past ten years, resulting in increased Chinese investments in renewable energy projects in Europe [1].

China has devoted significant resources to becoming a clean energy leader. China leads the world in deployment of solar power, with more than one-third of global solar capacity while in 2018, 45% of the solar power capacity added globally was in China. And pertinent for domestic European energy systems, China, as it has for the last ten years, leads the world in solar manufacturing. In 2018, roughly two-thirds of global solar module production was in China.

While China rightly boasts impressive current and planned renewable energy capacity, it’s overall energy system suffers from dismal levels of curtailment (when renewable energy is blocked from entering the grid) and low yields. The unintegrated, uncompetitive, provincially segregated energy systems are a significant drag on the potential of the Chinese renewable energy market but also a prime area for European expertise to reform. The EU China Energy Cooperation Platform calls for both partners to work towards a Chinese energy sector driven by lower carbon energy mix including more renewables; more widely integrated cross-provincial energy system; greater energy efficiency; and “reciprocity” in the form of genuine competition for all actors in the sector. The EU’s experience in integrating regions with varying levels of technology, applying innovative regulatory solutions, and cutting-edge tech know-how to push forward the Chinese energy system and boost economic benefit between the two partners.

EU-China energy and climate cooperation is an arena to flex European Commission President Ursula von der Leyen’s promise of a more assertive “geopolitical” commission. However, political momentum may start lagging behind technological advancements. German Chancellor Angela Merkel staked a significant portion of her EU presidency on the passage of a landmark investment deal (including the energy sector) slated for this September in Leipzig at an extraordinary EU-China Summit attended by all 28 heads of state. However, trade talks have stalled over industrial subsidies and forced technology transfers (both key for the energy sector). An added challenge is the speading coronavirus; negotiations planned to take place in Beijing in March will most likely be canceled limiting the likelihood of reaching final agreement on these complex areas.

Most recently, the coronavirus and resulting shutdowns have slowed factories and decreased accompanying pollution. But observers fear the Chinese government will relax emission protocols and reduction targets later this year to make up for lost economic growth (see the New York Times for a useful chart). An increase in domestic carbon emissions combined with China’s continuing backing of coal-fire plants as part of the Belt and Road Initiative muddies the future for sustained EU-China energy cooperation and larger joint EU-China climate action. As the United States has largely ceded the stage on global climate progress, it is crucial for the European Union and China to strengthen their partnership to reach a cleaner and productive energy future.

Jennifer Grosman Fernández is a graduate student in Georgetown University’s Master of Science in Foreign Service program, and focuses her studies on the intersection between climate change policy and gender equality. She currently serves on the board of the School of Foreign Service Energy Club.

[1] Amineh, Mehdi P. “Energy and Environment in China and the European Union: Introduction to the Special Issue.” African and Asian Studies 17, no. 1–2 (February 2018): 3–8. https://doi.org/10.1163/15692108-12341398.

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