Coming clean

Sino-EU green cooperation and competition have put forth some new patterns but China has come up with coping strategies

China and the European Union have been cooperating in the field of clean energy for more than 30 years. Facing the challenge of achieving carbon neutrality, the cooperation has displayed some new patterns.

In March, the European Commission published two new acts: the Net-Zero Industry Act and the European Critical Raw Materials Act. The aim was to boost the EU's green economy and prevent the EU from deep reliance on other countries. In April, the European Parliament approved the legislation for the implementation of its Carbon Border Adjustment Mechanism, which is designed to reduce the effects of carbon leakage resulting from global trade in emissions-intensive goods, as part of the EU's "Fit for 55" package, which aims to align EU legislation with its objective of reducing net greenhouse gas emissions by at least 55 percent by 2030.

The recent actions of the EU have once again put the competition between the EU and China in the spotlight. Recently, China and the EU have been engaged in an increasingly sharp struggle for market share, material resources, and structural leadership. However, even though the increasing competition between China and the EU is genuine, it is in their interests to keep cooperating and coordinating with each other on clean energy. To make Europe the first climate-neutral continent in the world, the EU released the European Green Deal in 2019 and wrote the goals set out in the Green Deal into the European Climate Law. China released its carbon neutrality goal for 2060 one year later in 2020. In the same year, it published its 1+N policy framework, consisting of a guiding policy and various supporting policies, to ensure the achievement of carbon peaking and carbon neutrality.

With both sides setting goals to realize carbon neutrality, China and the EU have rising demands for bilateral cooperation to achieve green growth. Recently, China and the EU increased the strategic importance of their partnership on climate change. On Sept 14,2020, the China-EU High-Level Environment and Climate Dialogue was initiated to forge green and digital partnerships. The mechanism provided another important institutionalized platform for China and the EU to strengthen communications and foster cooperation on climate change and clean energy.

Meanwhile, the interdependence of China and the EU in green trade has been increasing, which is also paving the way for their strengthened bilateral cooperation. There is an upward trend in the trade of products related to green energy between China and the EU, and the EU has become China's largest trading partner for exports of green products. According to statistics from Eurostat, in 2021, the EU imported solar panels (89 percent) worth 8.72 billion euros ($9.57 billion) and wind turbines (64 percent) worth 384 million euros from China, making China its largest import source of green energy products.

In addition, their complementarity in green industries highlighted by the energy crisis has built the base for strengthened Sino-EU cooperation. With its leading manufacturing ability for wind turbines and solar panels, China is the EU's largest source of extra-EU imports of wind turbines and solar panels and an important supplier of critical raw materials. In response to the global energy market disruption caused by the Ukraine conflict, the EU launched its REPowerEU Plan to make Europe independent from Russian fossil fuels well before 2030, setting out ambitious goals for its clean energy industry. To achieve those goals, the EU needs to strengthen cooperation with China.

To further strengthen cooperation between the EU and China, the two sides should continue promoting policy coordination, try to construct a practical and inclusive clean energy partnership network, and deepen cooperation on new agendas in multilateral climate governance.

First, scaling up global clean energy development to boost economic recovery and achieve climate neutrality goals requires clear international standards on green trade, green finance and digital technology. A closer alignment of standards in those areas between China and the EU would provide a basis for the establishment of just global green economy standards.

Second, the existing China-EU climate energy partnership is expected to be further improved and expanded. While more interest conflicts in green infrastructure have emerged in recent years, there is great potential for China and the EU to expand their cooperation network by aligning their financial investment and technical support in third countries.

Third, besides bilateral policy coordination, Beijing can also pursue more coordinated action with the EU on new agendas within multilateral governance frameworks. For example, in the area of sustainable finance, China and the EU have initiated a working group on taxonomies under the International Platform on Sustainable Finance. In November 2021, with joint efforts from China and the EU, the IPSF Taxonomy Working Group published the first version of the Common Ground Taxonomy report, which provided a common classification tool for the global sustainable finance market.

Li Xinlei is a research fellow from the Research Institute of Contemporary Socialism and a professor with the School of Political Science and Public Administration at Shandong University. Hao Junyi is a PhD student in the School of Government and International Affairs at Durham University. The authors contributed this article to China Watch, a think tank powered by China Daily.

Contact the editor at editor@chinawatch.cn.