The Biden climate plan is an important step toward achieving the goals of the Paris Agreement. The new president’s desire to achieve carbon neutrality by 2050 puts his country back in the race for climate leadership. However, this ambition risks coming up against the growing weight of Sino-American rivalry in the world. The relationship between the two countries will determine the pace of the energy transition.
Biden’s climate plan: the shadow of the Sino-American rivalry
Since the late 2000s, Washington and Beijing have been engaged in a race for global leadership. From the South China Sea to the Taiwan question, the points of tension are multiplying between the two countries. But if the military aspects are often mentioned, the rivalry has evolved into a commercial and technological conflict.
Since 2017, the U.S. has indeed been trying to limit the technological rise of the Chinese economy. Concerned about technology transfer, the Americans have decided to ban their companies from trading with certain Chinese firms. This is particularly the case for Huawei, which no longer has access to components from U.S. companies for 5G semiconductors.
A Sino-American rivalry on the climate plan
This technological conflict between the two countries may also extend to low-carbon technologies that are essential to the energy transition. Beijing relies heavily on these technologies to upgrade its industry and reduce pollution. Remember that China has just announced an ambitious plan to be carbon neutral by 2060.
At the same time, the Biden climate plan aims to make the United States the undisputed leader in these same technologies. The new president also aims to create nearly 10 million jobs in this area by 2050. In other words, the technological competition between China and the United States is likely to be fierce in the coming years in the energy sector.
Biden’s climate plan: the risk of Sino-American tensions
Nevertheless, this technological rivalry will seriously slow down the global energy transition. Indeed, the two countries represent the largest emitters of CO2 with about 40% of global emissions. Above all, Washington and Beijing need each other to drive down the cost of the energy transition.
In solar energy, China has benefited from its economies of scale to massively reduce production costs. The same applies to the wind energy sector, but also to lithium-ion batteries. By mastering the value chains, Beijing is allowing the world to benefit from a global decrease in the costs of the energy transition. On the contrary, Sino-American tensions are likely to impact value chains and thus drive up prices.
Mutual interdependence in terms of low-carbon technologies
This control of the costs of renewable energy is a prerequisite for the implementation of the Biden climate plan. In fact, renewables will not be able to become part of the U.S. energy mix if they are not competitive. This is why the Biden administration needs to work with China to reduce costs for American players.
Conversely, China needs a number of U.S. technologies in order to meet its environmental goals. Beijing is thus behind in the field of software for Smart Grids and carbon fibers. Without the spread of these U.S. technologies, China’s energy transition may be slowed for several years. This is why cooperation between the two powers is paramount to achieving the goals of the Paris Agreement.
Biden Climate Plan: The Narrow Path of Cooperation
However, this principle of energy cooperation between China and the United States risks coming up against American political issues. The first issue is the impact of a possible bilateral energy collaboration on employment. Taking advantage of their low costs, Chinese players could thus gain market share in the United States. Already, in the solar industry, the Chinese push had to force Barack Obama to apply tariffs to protect the American industry.
President Biden will therefore be faced with a dilemma. On the one hand, Chinese imports could make renewable energies more competitive with fossil fuels. On the other hand, these imports will likely mean significant job losses for the U.S. industry. As a result, it could delegitimize the Biden climate plan and its promises to create 10 million jobs.
The issue of technology transfer
In addition to employment, technology transfer is a serious obstacle to Sino-US energy cooperation. Faced with a bipartisan consensus against China in Congress, Biden is unlikely to agree to the Chinese demands. As we have seen, these technology transfers are essential to accelerate China’s energy transition.
Under these conditions, two scenarios seem possible. The first is to remain in the current status quo, which means no technological cooperation. This would favor Biden internally, but it would also slow down the energy transition in China and globally. The second option is an agreement on low-carbon technologies at the risk of a domestic weakening for Biden.
The Chinese climate equation therefore still has multiple unknowns for the new American administration. Representing 27% of global emissions, China cannot be absent from the US climate agenda. Yet this necessary cooperation between the two powers is subject to major obstacles in the United States and China. The challenge for Biden will be to find an acceptable compromise to ensure balanced energy cooperation with Beijing.