Climate Change: The New Asian Drama

When the Swedish economist and sociologist Gunnar Myrdal wrote his magisterial three volume study of postwar economic and political development in Asia, he questioned whether the conditions in Asia would ever be conducive to the kind of runaway economic growth necessary to lift hundreds of millions of people across the region out of poverty. He believed that the widespread dependence on land- and labor-intensive agriculture, as well as ethnic and patrimonial politics, would keep Asian states lagging. However, with the advent of the most recent wave of globalization and economic liberalization, Asia has transcended a lot of those challenges, seeing phenomenal economic growth and widespread poverty alleviation.

That growth, however, has come with a cost. The very mechanism for reaching those growth goals, fossil fuel-driven industrialization and urbanization, is contributing daily to the expanding challenge of global climate change, the brunt of which will be borne in Asia. In much the same way that decolonization was the context for an important evolution in Asia’s political and economic growth trajectory 70 years ago, decarbonization will similarly bring about fundamental changes in the future heart of the global economy. If mismanaged, it could lead to decades of eroding living standards, resource scarcity, and natural disasters, which will be costly both financially and in human terms. A combination of those stressors, in the right political and social mix, could to lead to unrest, and, potentially, conflict. If we are truly entering the Anthropocene, as many scientists wish to call this new era marked by unprecedented human interference in natural systems, the future will be won or lost in Asia.

The next front in that battle opens this month, when delegations of diplomats, scientists, and activists will descend on Bonn, Germany for the next Conference of the Parties (COP) of the United Nations Framework Convention on Climate Change (UNFCCC), the annual summit whose job it is to slow what has often seemed like an inexorable march to devastation on an unfathomable scale. While the meeting is taking place in Germany, the formal host is Fiji, a small developing Asia-Pacific island state whose political leadership has spoken of climate change as an existential threat in the most literal sense of the phrase.

Two years after the landmark Paris Agreement, those negotiators face a stark political reality: a presidential administration in the United States that, by many indications, is skeptical of the benefits of coordinated international action on climate change. Anger at the United States now stands in contrast to the relief and elation that followed the December 2015 accord. As the first truly universal agreement, it promised flexibility and self-directed mandates but also measures for strengthening national commitments in the future. It was not a strong agreement at the outset, but one designed to continue to concentrate international action toward a common goal. The Obama administration had spent time as well as political and diplomatic capital bringing leadership in China and India – countries which had not historically been eager to commit themselves to an international regime on emissions limits – to take a larger role.

With the election of Donald Trump, that entire trajectory has changed. Trump announced in June that the United States would pull out of the Paris Agreement as soon as it was able to in 2019, a decision that would go into full legal effect the day after Election Day 2020. His administration also backed out of several initiatives that had formed the core of the U.S. Nationally Determined Contribution (NDC), the formal plan all parties were required to submit as part of the bureaucratic run-up to the Paris conference. The Obama administration's NDC included a variety of comprehensive measures across economic sectors: the Clean Power Plan, designed to phase out the use of coal-fired power plants; fuel economy standards for the U.S. passenger vehicle fleet; and usage of the Clean Air Act to reduce methane emissions from U.S. oil and gas production. Cumulatively, these measures would have led to a 26 to 28 percent reduction in greenhouse gas emissions from 2005 levels by 2025.

The stepping back from aggressive climate change leadership at the federal level, which has been matched by a persistent questioning of the underlying science (and, indeed, the proposed defunding of such scientific efforts) occasioned a great deal of despair. These feelings are made more intense as the steady march of disengagement has been matched by a series of natural disasters, which raised public consciousness of the role that climate change may be playing in increasingly erratic weather patterns. The human costs of Mother Nature’s wrath dominated global headline in the past few months. Hurricane activity in the United States, which many scientists have suggested is more intense because of ocean warming, devastated large swathes of Texas, Florida, and Puerto Rico along with several Caribbean states in August and September of this year. In Asia, stronger than average monsoon rains drenched South Asia, killing 1,000 people and shutting down some of the subcontinent’s largest cities.

As the international community gears up to implement the next generation of international climate change governance, it faces an inflection point for the global climate change and clean energy effort. As economic realities in what has traditionally been referred to as the “developed world” (Europe and the United States) shift, Asia is emerging as the make-or-break region for solving climate change. It is thus essential to understand how China, India, and the United States relate to one another across a variety of important issue areas in climate mitigation and adaptation, and the changing geopolitics of energy.

The timing is particularly critical now. Even the most optimistic assessments of the planet’s remaining carbon budget suggest that we only have about 40 years to hit net-zero emissions in order to have decent odds of reaching the goals outlined at Paris. Decisions made over the next five years in Beijing, New Delhi, and Washington, DC will determine whether our path toward a viable future is assured. All three states are interlinked across issues of geopolitics and economics: one an established power which has historically seen the full extent of the Pacific as its backyard; two rising powers who want to reorient the perspective of global politics and economics to serve their national ambitions.

As the economic balance of power has shifted over the past three decades to Asia, so too have calculations about future energy trends. Most international energy analysts have, since 2000, focused intently on supply and demand signals coming out of Asia. The United States Energy Information Administration’s (EIA) 2017 International Energy Outlook projects non-Organization for Economic Cooperation and Development (OECD) Asian countries will account for over half of the global increase in energy consumption through 2040.  The International Energy Agency’s (IEA) 2016 Outlook was similarly bullish on electricity consumption. Over the next quarter of century, China will be ranked first in final electricity consumption, followed by India, the United States, and the European Union.

While the future market for energy consumption is enormous, so are the anticipated climate change impacts. According to the Asian Development Bank (ADB), even if countries meet their Paris commitments with 100 percent compliance, the Asia-Pacific region would face significant challenges from sea-level rise, public health hazards, and lost productivity in the agricultural sector; under more aggressive emissions scenarios, the ability of the region to fund necessary adaptation measures “are drastically reduced.” More and more national income will be earmarked for disaster relief and recovery, as well as the fallout from resource shortages. Put succinctly, “climate change poses significant challenges to human security in Asia in the coming decades.”

While discussion about energy and climate change in Asia can be applicable to every nation in the region, the preponderance of impact from both future opportunities and risk on energy and climate change in Asia comes from China and India. The world’s two most populous states, which see a future with themselves as models of development for much of the rest of the world, are essential to the globe’s ability to walk back from the brink of environmental catastrophe.

When Trump announced that he was withdrawing the United States from the Paris Agreement in June of this year, international condemnation arrived quickly and disappointment with the U.S. decision has lingered. The Chinese government was among the most vocal in expressing disagreement with Trump’s course of action. Xie Zhenhua, China’s climate change envoy, who had participated in the Paris negotiations, told reporters not long after the June announcement that he was “deeply disappointed” in the move, while other Chinese officials went on the record to say the U.S. withdrawal would not change their own commitments to the accord. At the 19th Chinese Communist Party Congress, which opened on October 18, Chinese President Xi Jinping said China had “taken a driving seat in international cooperation to respond to climate change.”

Such statements certainly brought China a soft power victory. After years of being told they needed to act as a "responsible stakeholder" in a rules-based international order, the rules had switched, at least on this issue. These soft power gains – the geopolitical pull from being seen as better than the United States on a vital threat to the international community – could continue to add to the Chinese government’s credibility, especially if the United States maintains an aloof posture toward its own commitments for the next several years.

China’s actions on climate change are taking place against a backdrop of the shifting geopolitics of energy.  China and most of Asia are still major oil importers, but are also making geostrategic decisions about natural gas, as well as thinking through economic competitiveness calculations for investments in renewables, electric vehicles, and nuclear energy.

Two documents can guide outsiders in beginning to understand China’s approach. Its NDC, submitted in advance of the Paris climate change summit, locked in the promises made in the U.S.-China climate deal settled by Barack Obama and Xi Jinping in 2014. China promised to peak its carbon dioxide emissions around 2030 (“and mak[e] best efforts to peak early”) and increase the percentage of non-fossil fuels in primary energy consumption to 20 percent. It outlined a variety of local, regional, and national-level policy frameworks for achieving that goal, including a nationwide carbon emission trading system, which had been piloted in several Chinese cities. In parallel, China’s most recent Five Year Plan devoted an entire section to ecosystems and the environment, with a statement of purpose fashioned in bureaucratic language at once direct but also all-encompassing:

We will stay aware of the need for the economical, efficient, and circular use of resources, bring about a fundamental change in the way resources are utilized, and strengthen conservation management throughout the entire process of resource use, thus significantly raising resource utilization efficiency. 

One important consideration that dominates how successful China could potentially be on climate change is the country's future coal trajectory. In 2016, coal comprised 62 percent of China’s primary energy mix; while a two percentage point decline from the previous year, it is still emblematic of the large role it still plays in China’s economy. The EIA projects that the share of China’s future energy mix devoted to coal-fired power generation will remain flat. Zeroing out coal as a key component of future electricity generation growth is no mean feat, even if the impacts of burning that coal will linger for decades.

The top line positive trends on clean energy are by now well-known among observers of the region. Thanks to China’s track record in the 1990s-2000s as a hub for low-cost manufacturing, they are producing the components for a low-carbon economy at an astounding pace. In 2016, according to the International Energy Agency, new solar photovoltaic (PV) capacity increased 50 percent, with China alone accounting for nearly half of the new installations. In 2015, China became home of the world’s largest wind turbine manufacturer, and was ranked number one in consultancy EY’s Renewable Energy Country Attractiveness Index, a strong endorsement of both China’s past performance and future policy trajectory. The Chinese have also signaled that they are betting big on the future electric vehicle market, saying that they would, like the United Kingdom and France, phase out fossil fuel-powered automobiles.

2018 will see an important policy experiment in China, as it adopts a nationwide cap-and-trade program. In conjunction with its regulations and investment decisions, it promises, on paper, to use market incentives to push down on emissions over time. While the new program would only cover a fraction of the country’s total emissions, and it is not clear how a centrally planned economy would adapt to use what is meant to be a transparent market mechanism, China’s success would be a model for other countries to adopt or expand their own nascent programs. Certainly it would be a powerful statement that while China will have an interlocking set of national policies, the United States will not.

Analysis that focuses on China’s advancement on low-carbon energy should not obscure several challenges ahead, the expansion of a cap-and-trade program being only one among them. The Climate Action Tracker, a database of analysis on member states’ climate change plans, rated China’s NDC as inconsistent with the overarching goal of the Paris Agreement because, while it was apparent that Beijing was well on its way to peaking carbon dioxide emissions, it was not doing enough to reduce greenhouse gas emissions across the board. While China’s clarity on goals for their economic planning can send clear signals of intent, Beijing has a long road of difficult decisions around implementation ahead of itself. Analysts have already flagged potential implementation issues with the deployment of cap-and-trade.

An additional area of concern is the geopolitical leverage China may accrue as its economic and political outlook incorporates a green development model alongside its other core interests. That outlook may, at first glance, seem counterintuitive since the geopolitics of energy has always been preponderantly focused on access to hydrocarbons. China’s overwhelming market share in future energy technologies is a source of downside risk on its own. In 2010, when China and Japan found themselves in a dispute over the Senkaku/Diaoyu Islands, China retaliated by cutting off trade in raw materials for high technology components, which China has the preponderant production capacity to produce.

Many environmental activists have also questioned the transparency and accountability of China’s international funding: for example, many of the energy investments of its Belt and Road Initiative in Pakistan are coal-fired power plants. Nor is China insulated from the security implications of climate change. Beijing shares with many of its neighbors important transboundary water connections. Among the factors driving tensions in the South China Sea is a dispute over access to resources.

Next to China, the developments in India have been the most critical in the lead-up to the 2015 Paris Agreement. As with China, the Obama administration spent diplomatic capital to court India, a nation that had long resisted specific commitments, to sign onto a more aggressive framework under the Paris Agreement. As developing states, neither India nor China were required under the Kyoto Protocol to commit to emissions cuts, a carve-out that was a source of vociferous criticism within the United States in 1998.

With China’s calculus changing on that perspective in the last several years, India’s approach to international negotiations had to change as well. Certainly, the pressure of a landmark U.S.-China understanding on the importance of aggressive climate change would have left New Delhi on an island if it remained resistant to making significant moves on its own account. Yet is also crucial to understand that local impacts, especially concerns about smog and indoor air pollution, have also driven the political apparatus in India to take sustainable development more seriously. Thus, while India’s NDC maintained a lot of conditional language, it was still a remarkable departure from past attitudes, and reflected both political decisions as well as new economic realities. That NDC, alongside with India’s draft energy plan, highlights the scale of the present challenge as well as a lot of what New Delhi is doing right.

India has, for the past decade, been capitalizing on its large solar power potential. Its Paris commitments enshrined a 100GW target for solar power installations by 2022. The fact that the International Solar Alliance, an intergovernmental coordinating body that grew out of the Paris COP, is headquartered in India is a testament to its leading role in deployment, as well as the critical necessity of keeping it active in global climate change governance in general.

India’s challenges match China’s in many respects.  The future trajectory of coal use will similarly be crucial to whether India’s path can help the international community avoid runaway levels of temperature rise. Given the domestic abundance of coal, its usage in India’s energy mix will likely have a strong floor even with the aggressive deployment of solar power.

Similar difficulties have arisen with whether India can meet the pace of deployment necessary for the targets India has set for itself. India is also seeing its climate priorities running headlong into its economic development priorities. It wants to deploy solar power, but also help Indian manufacturers with policy options like domestic content requirements, which dictate that projects source domestic components. The rules, while certainly a boon to Indian companies that manufacture panels, have run afoul of World Trade Organization rules, and have pitted India and the United States against each other in tit-for-tat complaints about the extent of government support for renewable energy industries.

As with China, climate change also carries significant geopolitical risk for India. The wider South Asian region is critically dependent on three sources of fresh water for drinking, agriculture, and as an input to electricity generation. While the Indus Water Treaty (IWT) framework has survived decades of India-Pakistan tension, the constraints of a world with two degree or greater temperature rise would be an unprecedented stressor.

The extent to which there are practical impacts to the perception that China and India’s action on climate change overshadows the United States as a leader on the issue will likely be a subject of debate within the analytical community for years to come. While it is self-evident that Trump's abandonment of Paris cannot help but create new space for other powers to lead, both India and China face severe internal challenges, limiting their ability to be consistent global leaders on this issue. As seen with the interactions at the United Nations General Assembly, other major powers have not given up on lobbying the Trump administration on the importance of staying within the agreement.

It is now an open question how the Trump administration plans to engage the international community with one foot in and one foot out of the UNFCCC process. Executive branch officials have, in bilateral and multilateral engagements, tried to make it clear that Trump is not anti-climate change per se; rather that the specifics of the Paris Agreement itself were problematic. Far from articulating an “America First” approach to climate change, however, the Trump administration has repeatedly muddied the waters on what re-engagement or potentially re-entry into the Paris Agreement means in practice.

That being said, it is by no means impossible for the United States try to salvage a role for itself in international climate change governance. The U.S. withdrawal cannot be formalized any earlier than November 2020, giving the Trump administration time to consider its options and provide its allies and partners with more clarity.  European officials have privately and publicly indicated that, while it would not be ideal or welcome by all of the other parties, there is nothing in the Paris Agreement that says the United States could not submit a new, weaker NDC.  The symbolism of having the United States within the agreement would be, based on this calculation, worth the potential backsliding on commitments this may encourage in others. One saving grace of the American perspective on climate change issues is that Trump does not have the last word on the totality of U.S. policy. U.S. states and cities have not hesitated to step into what they perceive as an empty policy space.

While Trump and other administration officials have faced a lot of pushback on the decision to withdraw from Paris, the COP in Bonn will be the first formal meeting of the UNFCCC under this new political and diplomatic environment. Bonn’s formal agenda is meant to iron out the implementation details for the Paris Agreement. Where Paris set the roadmap for where the international community is supposed go, Bonn (and the COPs to come) are meant to lay out the concrete steps for how to get there. Important questions that were papered over during the Paris COP – financing, monitoring/verification/review, and how to ratchet up ambition – all require proper and established frameworks to actually contribute to strong international climate change governance. The vexing irony of the Trump administration’s approach is that their objections to what is promised under Paris – namely that India and China’s commitments come on a later timeline than the United States – can be addressed by mechanisms within the agreement.

That the formal agenda will only mask deep disagreements between what the United States conceives as protecting its national interests and how the international community responds to those calculations is apparent from the rhetoric that has followed from the aftermath of Trump’s decision. The administration has done itself no favors in failing to clearly articulate how its objections to the weaknesses of Paris would be rectified by leaving the agreement, or trying to develop, on its own, some process for renegotiating the terms of its own engagement with the agreement. The outcomes generated, and the tenor of the meeting in general, will be strong indicators of whether the next three years will see an atmosphere of pragmatism or not.

Whatever happens at Bonn, the ferment of these political, economic, and strategic considerations will be in flux for years to come. There is no guarantee that the trends identified here will proceed in a predictable or linear fashion, as supply and demand trends shift across a variety of economic sectors. Additionally, and perhaps more importantly, political actors in Asia and elsewhere will need to react to shifting dynamics (like extreme weather, new technology, and political movements). Political and economic transitions of the kind necessary to arrest climate change are not uncommon in history, but very few took place in the time allotted. The question that needs to be constantly asked: how much longer do we have to really get this right?

These conclusions indicate a level of pessimism that is directly tied to the policy trajectory in the United States.  While China and India’s advances are critical, the United States is still the world’s largest economy, still has one of the best research and development bases in the world, and has a political framework that, while frayed from a particularly corrosive style of partisanship, can still support the world’s greatest entrepreneurs and new and innovative policy solutions. All of these factors indicate a special role for U.S. leadership in confronting this critical issue. In an alternative timeline, climate change success in the United States could set the example for the rest of the world, including India and China. A U.S. administration that made climate change a priority could use its considerable diplomatic and economic leverage to keep the international community on the right path in a way that no other country or group of countries could easily replicate.

That is not the case, however. Without a government that feels it can legitimately set the rules of the road for the wider economy, U.S. efforts will always fall short of an aggressive decarbonization timeline. Whether the actions the United States takes (or refrains from taking) on the international stage give space for other nations to backslide on their commitments remains to be seen. China and India, as well as the other major states in Asia, have staked out that they see their strategic and economic interests tied up in figuring out how to grow their respective economies within the framework of taking climate change seriously. The next decade will largely determine whether the calculations they have made in pursuit of those aims are the right ones.