Carbon markets and green investment flows on agenda for economic superpowers ahead of Paris climate summit
Federica Mogherini, EU foreign policy chief with Wang Yi, China’s Minister of Foreign Affairs (Pic: European External Action Service)
By Ed King
The EU and China are in the advanced stages of planning a joint climate change deal, due out later in the summer.
RTCC understands officials have been in discussions in the past few months on a package of climate-related agreements, including cooperation on carbon markets and green technologies.
Federica Mogherini and Yang Jiechi, foreign policy chiefs in Brussels in Beijing, met this week for a planned summit touching security, economic growth and global warming.
Speaking to reporters, Mogherini said the EU “appreciates” the role China has played in work towards a global climate pact, due to be signed off in Paris this December.
European member states and China had a “common responsibility” to ensure the summit was a success, she added, indicating more information could emerge at an EU-China summit in June.
“I am… sure that at the summit we will be able to agree on a common approach which can contribute to the success of the negotiations in Paris,” she said.
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China is the world’s largest emitter of greenhouse gases, while EU member states are collectively the third largest bloc of polluters, behind the US and ahead of India.
Beijing and Brussels have significant trade links. China is the EU’s second largest trading partner after the US, and the region’s largest source of imports, estimated to be worth €1 billion a day.
Last November’s US-China climate accord raised hopes that the Paris deal can be a success. For the first time in its history the Chinese government agreed to target an emissions peak by 2030.
A similar bilateral deal with the EU is unlikely, but Brussels observers told RTCC there are a wide range of options the two sides can discuss.
“One obvious topic is a carbon price,” said former French development minister Pascal Canfin, now advising the World Resources Institute.
The EU has the world’s most mature emissions trading system and China plans to expand from seven regional trials to a nationwide market in 2016.
Together, Canfin said the EU and China could push for a coherent strategy to bring the world’s carbon markets under one roof, with a political commitment for a carbon price floor.
“Coming from two of the world’s three largest economies that would make a significant signal that we are moving into the direction that major economies will be covered by a carbon price.”
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Green finance, investment flows, green bonds and urban growth are other areas the two sides could make progress on, said Nick Mabey from the London-based E3G thinktank.
Chronic air pollution has raised the profile of climate change within China, forcing the government to close some inner-city and suburban coal plants and encourage industrial plans to become more efficient.
A long-discussed EU-China investment agreement could prioritise low carbon growth Mabey said, while the bilateral energy security dialogue could be pushed to a ministerial level, similar to the US-China relationship.
“If it’s just about the emissions trading scheme that’s deeply disappointing – it’s not the most important thing and no-one in China thinks emissions trading will drive radical change,” he said.
“International trade, investment and finance are the litmus test.”