The Biden administration has sold its key policies on climate change with a singular premise — that the U.S. needs to “outcompete China.” This has sparked long overdue investments at home, but zero-sum competition — where each side measures success by their position relative to the other — holds potentially disastrous consequences for the climate.
The planned resumption of dialogues on climate between the two countries following the first in-person meeting between Presidents Biden and Xi this week is a positive sign. And with both sides eliciting an open embrace of industrial policy, leaders in Washington may find elusive common ground with Beijing to move forward on climate issues.
A new model for U.S.-China engagement on climate should look to facilitate a more enlightened form of competition in low-carbon technologies. Both sides’ priority should be to minimize the material harm caused by tariffs and other bilateral tensions on emissions reduction efforts currently underway around the world. Addressing the climate crisis is inseparable from technological development and trade, both of which require constructive economic ties between the world’s two largest economies and research superpowers.
In his signature legislative achievement, President Biden signed into law this year the Inflation Reduction Act (IRA), which includes at least $369 billion in new climate and energy spending. The bill will make long overdue investments in infrastructure, manufacturing, and education, adopting direct incentives for manufacturing and long-term policy certainty. These targeted industrial supports — reminiscent of China’s clean tech success — will be more effective at delivering economic and jobs benefits than trade quotas and tariffs on well-established supply chains.
In the U.S., government actions to kickstart domestic clean energy in recent years have largely attempted to establish a bulwark against China by trying to roll back decades of globalization.
But years of hardening positions in both global economic superpowers could still hinder real progress. The Biden administration insists that climate change should be treated separately, compartmentalized from other issues in the Sino-U.S. relationship. Meanwhile, Chinese Foreign Minister Wang Yi said last summer that climate change cannot be an “oasis” surrounded by the desert of a deteriorating relationship.
In the U.S., government actions to kickstart domestic clean energy in recent years have largely attempted to establish a bulwark against China by trying to roll back decades of globalization.
The result: Solar panels in the U.S. sell for 54 percent more than the global average, in part due to tariffs in place since 2012 on Chinese suppliers and later on other countries where Chinese firms operate. Retaliatory tariffs by China in turn decimated U.S. polysilicon production — the key ingredient for solar panels. The consequent exclusion of U.S. firms from the global supply chain has led directly to the concentration of production in the contested Xinjiang region, where China faces serious allegations of using forced labor.
Against the backdrop of partial trade protection, the fastest growing segment in the U.S. solar industry prior to the IRA has been importing solar cells for final assembly into panels. Yet this supply chain is fragile. Facing the possibility that the Commerce Department could levy more solar tariffs of up to 200 percent, the solar industry faltered last May, putting 100,000 jobs suddenly at risk, according to the industry’s leading association. The Biden Administration eventually placed a two-year pause on new tariffs, which helped restart solar projects, but will not be enough time to bring about a full onshoring of the solar industry.
Bilateral efforts to decouple are also hurting climate efforts in scientific research and development. Universities — like firms — compete internationally to attract talent and foster collaborations, but this marketplace is being eroded by mistrust and misguided restrictions.
In China, ambiguous and far-reaching data security regulations are creating a chilling effect on the sharing of even non-sensitive data by researchers. In the U.S., President Biden has continued his predecessor’s policies of denying up to a quarter of Chinese STEM graduate student visas and questioning U.S. scientists engaged in international collaborations. Foreclosing such exchanges will hinder the development and deployment of future clean energy technologies — making both countries worse off.
Continuing the current course risks fostering a winner-take-all mentality, foreclosing the type of competition — and yes, cooperation — that is the best and possibly last chance for the U.S. and China to back the world away from the climate abyss.
In a recent paper in Nature, we calculate what is at stake. A globalized, open supply chain – with free flows of capital, talent, and innovations – has saved U.S. consumers $24 billion on solar panels since 2008 compared to going it alone.
In another paper in Science, we address the increasingly bipartisan distrust of close integration with China in clean technology research and supply chains. The increased decarbonization costs of decoupling, which make deployment at the scale needed to address climate change more difficult, should be weighed against the benefits. We found security risks are relatively muted and manageable through selective policy responses. Where economic risks are high due to the potential for disruptions, a supply chain diversification strategy — not wholesale onshoring — can achieve the same risk mitigation aims.
China has long been blamed for breaking international trade rules. However, the Biden administration has a unique opportunity to reset the climate relationship by laying out the terms for healthy competition in clean energy — an “affirmative vision” for a world order that includes China. Bringing China to the table to establish mutual rules of the game requires leverage and the credible prospect for more stable relations — both of which are present in the ongoing trade war. Furthermore, the incentives built into the IRA will achieve a new balance of domestic and imported clean tech components, providing good cover for ratcheting down trade measures. A good faith effort to explore rules for clean energy competition could also prove a bellwether for the limits of negotiation in the fractious relationship.
With U.S.-China geopolitical competition taking center stage at the climate conference recently concluded in Egypt, the stakes are high for vulnerable countries to address climate impacts and secure support for the needed low-carbon transition. Continuing the current course risks fostering a winner-take-all mentality, foreclosing the type of competition — and yes, cooperation — that is the best and possibly last chance for the U.S. and China to back the world away from the climate abyss.
Michael Davidson is an assistant professor with a joint appointment at UC San Diego’s School of Global Policy and Strategy and the Department of Mechanical and Aerospace Engineering at the Jacobs School of Engineering.
