With all the hostility between the United States and China, one area of common ground is a commitment to clean coal and moving away from inefficient energy sources like solar and wind power.
Eight months into the Trump presidency, the administration’s China policy is still incoherent. When it comes to energy, however, there are surprising signs that the two sides are searching for common ground.
When it comes to energy, however, there are surprising signs that the two sides are searching for common ground.
This November, Washington and Beijing will hold a joint clean coal meeting in West Virginia to compare best practices on carbon capture and similar technologies that both governments have been funding. The meeting comes in the context of major shifts in energy policy in the US and China, marked by a more pragmatic approach to questions about how to meet base load power needs affordably, efficiently, and cleanly.
As the upcoming meeting signals, both parties have decided investment in clean coal technologies, as well as in renewables, will be a viable way to meet these requirements. And the unexpected meeting of the minds on such contentious energy policy issues has major implications for what will constitute future power projects not only domestically, but also through funding channels like the World Bank.
On the U.S. side, Washington has made a concerted shift away from Obama-era subsidies for renewable energy sources like solar, wind, and hydropower and prioritized the clean, efficient use for fossil fuels in conjunction with green energy sources. In line with this shift, the Department of Energy has been examining the robustness of the national electric grid and the potential dangers of overreliance on intermittent sources of energy like wind farms.
Several weeks ago, the department warned that subsidies and regulations favoring renewable energy and natural gas were speeding up the closure of coal and nuclear plants, threatening to put the resilience of the power grid at risk. They recently proposed a new rule that would revamp the way regional power markets price electricity, potentially giving a boost to coal and nuclear installations. Key to this shift will be the administration’s parallel support for clean coal technology, which they hope to leverage both domestically and export abroad.
When it comes to implications for global energy policy, however, Washington’s most widely discussed step has been its new directive for the World Bank and other multilateral development banks.
In a direct rebuttal to the Bank’s 2013 decision to severely restrict financing for coal-fired plants, the Treasury Department announced that the US would urge the development powerhouse to help countries access and use fossil fuels “more cleanly and efficiently,” as well as leverage renewables and other green energy sources.
Earlier this year, China made headlines with the announcement that it would spend more than $360 billion through 2020 on renewable energy sources like wind and solar. The news came after a year in which Beijing boosted its overseas investment in renewable energy by 60 percent to attain a record $32 billion, including 11 new foreign investment agreements worth more than $1 billion each. Media coverage has framed all of these developments in the context of America’s alleged backtracking on clean energy.
The truth is more complicated.
Under the radar, Beijing has continued to provide funding for coal installations abroad, not only across its sphere of influence but also in Europe. According to a new tally, Chinese companies are building or intending to build over 700 new coal plants domestically and abroad, from Indonesia to Pakistan to Turkey. One Chinese energy conglomerate is even discussing a $1.2 billion investment in a coal power scheme in Bosnia, one of the largest energy projects in Balkans.
Unfortunately, unlike China’s new domestic coal installations like the Waigaoqiao No 3 plant – which uses highly efficient ultra-supercritical boilers – not all of these new coal projects leverage the newest technologies. Even so, for countries like Pakistan that rely on highly polluting sources like kerosene, they’re a definite improvement.
As for the AIIB, despite its initial investments, the bank, in fact, has a far more flexible policy than the World Bank when it comes to coal plant financing, has already signaled that it is open to funding coal power plants in India and Indonesia.
The fact that both the U.S. and China acknowledge that fossil fuels will continue accounting for the majority of energy generation through 2040 – will not please everyone. However, these pragmatic efforts to collaborate on clean coal technologies should be cause for optimism at a time when no government has yet solved the question of how to keep up with rapidly growing demand for energy while threading the needle between emissions and affordability.
For too long, in fact, world powers have clashed over this critical question. The debate has only resulted in a stalemate between those who advocate cutting out fossil fuels completely and those who call for a more measured approach – with power-hungry countries in Africa and Asia caught in the middle and still failing to provide electricity for hundreds of millions of people. Though the West Virginia meetings will be bilateral, the impact of closer Sino-American cooperation could extend to many other energy markets as well.
With all the conflict on other issues between the United States and China, hopefully, one area of cooperation would be to support clean coal technologies while getting away from inefficient and unreliable energy sources like wind and solar.
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