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China's unilateral commitment to carbon neutrality by 2060 surprised the West. If President Xi Jinping's words can be taken at face value, the country, which emits more carbon dioxide than the United States, Europe and Japan combined, will embark on a radical decarbonization program. Climate policy on a global level is thus shifting into a new gear.

There were undoubtedly tactical motives behind the timing of Xi's announcement. To imagine that China's strategy is a propaganda diversion or concession to Western diplomacy – a liberal return for the dictatorship of Xi – is both overestimating the leverage of the West and underestimating the climate problem. Precisely because the Communist Party regime wants to shape the next century, its leader takes climate change seriously. According to the regime's calculations, the floods of the Yangtze, like the protesters against the rights in Hong Kong, are a threat to the takeover. The future of Beijing's authoritarian China dream looks far more uncertain in a world of spiraling global warming.

Xi's move may upset Western prejudices, but by the beginning of this century it was clear that China would have the ultimate voice on the future of the global climate. A quarter of a century before it is expected to overtake the United States in terms of GDP, China has outperformed it in terms of carbon emissions. China dominates all highly polluting industries worldwide – coal, steel, aluminum, cement. In the past, this could have been traced back to offshored production in the west. Today, China consumes most of its heavy industrial production at home. With its commitment to decarbonization that dwarfs any plausible future move by the EU or the United States, Xi has simply made it clear where the real decision lies.

Indeed, it is primarily a backward and increasingly anachronistic perspective to locate China's strategy primarily in terms of East-West relations. With each passing year, the EU and the United States are becoming less important in the climate change equation. In 2018, the United States and Europe together generated 8.9 gigatons of carbon emissions, no more than a quarter of total global emissions. China alone outweighed that with total emissions on a production basis of 10.1 gigatons. If you add all three – China, the United States, and the EU – you have just over half the global total. The rest, 17.9 gigatons, twice as much as the US and the EU, go to India and the rest of the world. While emissions from the Big Three are stagnating – falling numbers in the US and the EU offset an increase in China – the trend in the rest of the world is strongly upwards. As more countries enter the energy-intensive, middle-income growth phase as they urbanize, build power plants, and their better-off citizens buy cars and air conditioning, overall carbon emissions are increasing. It is the environment that comes with the rise of the global middle class.

We are now well beyond the point at which global stabilization can be achieved through an agreement between the G3. What both Western and Chinese climate policy need is a stabilization pact in which not only India but also other large emerging countries such as Brazil and Indonesia, future population giants such as Pakistan and Nigeria, and the large coal, oil and gas producers such as Australia participate are. Canada, Russia and the Gulf States. These debates have been taking place in global climate negotiations for years. But the announcement from China changes the game for all players.

Activists hold up a giant banner calling for climate justice during a demonstration near the Arc de Triomphe in Paris on December 12, 2015. A Convention of 195 Nations to Curb Emissions and Slow Climate Change was to be unveiled at the United Nations COP21 Conference on Global Warming. ALAIN JOCARD / AFP via Getty Images

US climate policy narratives tend to focus on the global Paris deal in 2015, when virtually every country on earth agreed for the first time to take steps to combat global warming. But Paris was deceiving. It set a temperature target of 2 degrees and strived not to exceed 1.5 degrees while leaving each nation to commit to whatever it could manage. It defused the explosive issue of the fair allocation of the remaining carbon budget by ignoring it. The result was a package of commitments, the modeling of which proved completely inadequate to meet the temperature targets.

Global emissions have continued to rise. The overall energy mix has hardly changed. Economic growth wipes out all energy efficiency gains. Trump's withdrawal from Paris exacerbated an already disastrous situation and opened the door for Brazilians, Australians, Russians and Saudis to relapse. It was this deeply alarming situation that sparked the grassroots political mobilization for climate action that has been so remarkable in recent years. At the beginning of the year, the question arose whether America's exit from Paris would be offset by new commitments by the EU and China.

Xi's announcement went further than expected. China's refusal to commit to a definitive emissions path defined the Paris fudge in 2015. If the greatest chunk of the future refused to be captured, there was no way to even define the equation to be solved. Beijing has now made its claim. It has given up once and for all the line that was separated from the advanced economies in previous climate negotiations. This will make it harder for Europe to withdraw and it will put significant pressure on both India and the United States. But it also marks the end point for the strategy of superpower negotiations that laid the foundation for Paris. Now we finally have to deal with multipolarity.

When climate policy as we know it began, the world was a different place. In the 1980s, European and American scientists were talking about climate as a global problem, but it was a globe envisioned and analyzed from the west. The economies of China and India accounted for a few percentage points of global GDP. The West and the Soviet Union dominated the emissions balance.

Then, in the 1990s, what was once reserved for the elite of Western scientists exploded into the harsh politics of modern global climate negotiations. The annual meeting of the 197 parties to the United States Framework Convention on Climate Change – known as the Conferences of the Parties (COPs) – is a United States General Assembly-style meeting, and they are as awkward and complex as this suggests. As the 1997 Kyoto Protocol shows, the fundamental conflict was between the major emerging economies led by China and India, which insisted that the climate problem should be resolved by the developed world, and the United States, which refused to join a deal without China. This was the root cause of US opposition to the Kyoto Protocol. Of course, there was also the anti-science stance that some in the GOP took. There were fossil fuel interests, spearheaded by Exxon, who supported the denial. Ultimately, the objection to the Kyoto Protocol, which both sides of Congress shared practically unanimously, was geo-economic. Regardless of the history of emissions, China was a future climate superpower, and the United States would not ratify an agreement that it did not also bind.

It was the interpretation of the climate problem in terms of climate justice on the part of China and India and geo-economics on the part of the United States that ultimately required a superpower agreement. First, it was the Europeans who brought India and China to the table by unilaterally committing to a second round of Kyoto cuts. Then the Obama administration brokered bilateral negotiations with China and India. It was these superpower agreements that set the stage for the General Climatic Assembly in Paris in December 2015.

China has now doubled the Paris framework. For the first time since the beginning of the climate negotiations in the early 1990s, the largest emitter has committed to decarbonisation. But as important as that is, it will not be enough on its own. What Beijing and everyone else who is now concerned with climate stabilization need now is not just a parallel commitment by the United States, but binding commitments from the rest of the world to deep decarbonization. And for that we need a suitable tent.

On September 3, 1990, a man looks at the exhaust chimneys and pipes of the Ras Tanura oil refinery in Saudi Arabia. Jacques Langevin / Sygma / Sygma via Getty Images

An aerial photo shows a general view of high-rise buildings during the heavy pollution in Songdo, west of Seoul, on November 6, 2018. ED JONES / AFP via Getty Images

When it comes to driving decarbonization, the relevant group of countries is large and heterogeneous. It includes both large energy consumers and large energy producers. Decarbonization can be an overall net benefit. But the compromises in distribution are painful. And some states may feel like net losers. No other emerging market has China's resources to offset the sectoral costs of the energy transition. No other state, rich or poor, can match the Chinese regime's authoritarian ability to stifle dissent among the domestic losers of transition. Middle-income energy producers are desperate to keep their oil and gas exports going. Many middle and low income economies will be vulnerable to cheap, unconditional energy supply. Across the world, hundreds of billions of dollars in energy subsidies remain an important part of social trade, especially for the emerging middle class. Hundreds of millions of people around the world still have no access to electricity. If it is difficult for rich countries to envision transition, it is even more difficult for those who are still at an early stage of industrialization.

There are several hundred large and profitable companies whose entire business model is being changed by rapid and deep decarbonization. Western oil companies like Exxon top that list. Of the ten companies that have increased their carbon emissions most dramatically in the past five years, four were Indian, two Chinese, the rest Australian, Russian and Korean. LafargeHolcim from Switzerland, the world's cement supplier, took second place. Energy is a business for state capitalists. Twelve of the 20 largest corporate carbon emitters are state-owned. The national oil companies Iran, Iraq, Mexico, Algeria and Venezuela are not just companies. They are pillars of their economies and public finances.

One concern must be that unruly coalitions develop whose projects for energy autonomy and economic development thwart the general decarbonization push. Even within the EU, Poland, with its heavy dependence on coal, has refused to accept the otherwise unanimous commitment to net zero by 2050. In July of this year, it used its bargaining power to break the carbon credentials of the European corona recovery pact. Repeated at the global level, that is a worrying prospect. The increasingly hectic struggle for influence over the gas fields of the eastern Mediterranean is a case in point. Turkey has a rapidly growing energy demand. She wants new gas sources to reduce her alarming reliance on gas imports from Russia.

When large global assemblies are unmanageable and superpower stores are too tight, a more manageable grouping is needed within which to broker decarbonization. The G20 is an obvious framework. Its history runs parallel to the climate policy and reflects the same struggle to find a suitable framework to coordinate and legitimize governance in a multipolar world of the 21st century.

The origins of the G20 lie in the controversy caused by the Latin American debt crisis and the Asian financial crisis of the 1990s. The International Monetary Fund (IMF), which led the crisis management efforts, was dominated by its American and European shareholders. In the post-colonial world after the Cold War, their persistent methods were viewed as an increasingly unacceptable encroachment on sovereignty. The G20 was amalgamated in 1999 to provide a broader political base for managing the global economy. The story assumes that at that time the USA. Finance Minister Larry Summers commissioned his deputy Timothy Geithner, together with his German counterpart Caio Koch-Weser, to draw up a list of candidate countries. You went through a table of population and GDP, picking France and South Africa, Nigeria and Spain. The result was a grouping dominated by the G-8 and the so-called BRICS (Brazil, Russia, India, China and South Africa), with newcomers like Saudi Arabia, Indonesia, Argentina and Mexico coming out on top and Turkey.

It was originally a meeting of finance ministers. When the banking crisis broke out in the North Atlantic in 2008, it was expanded into a forum for heads of government. Of course, such selective groupings have their own legitimacy problems. The G20 was denounced as a return to the “concert of powers” ​​of the 19th century. But that was exactly what it was all about. The notion of sovereignty, treating states with thousands of populations as equivalent to China or India, may satisfy international lawyers, but it contradicts actual differences in capacity and power. The reason the G20 may not be suitable for the next phase of climate policy is not that it excludes small countries, but that it does not include the right big ones. Russia, Saudi Arabia, Brazil, Indonesia, South Korea and Turkey are of crucial importance for climate policy. But how can large states like Bangladesh, Pakistan, Ethiopia, Egypt, Nigeria and Iran be excluded? A suitable forum for tough negotiations to deal with the impending climate catastrophe must be a G40 rather than a G20.

However, the notion of a forum is one thing. The next question is: what forces could actually force an agreement? What influence could China and the EU have in accelerating the process if they lead the decarbonization push?

Workers install solar heaters on the roof of a suburban home in Rizhao, Shandong Province, China on December 21, 2009. Feature China / Barcroft Media / Getty Images

Smoke rises from stacks as a Chinese woman walks past a coal-fired power station in Shanxi, China, on November 26, 2015. Kevin Frayer / Getty Images

If history tells us anything, it is that distant great powers can only have a limited influence. Informal empire isn't as easy as it looks. The actual impact depends on the alignment with the interests of powerful local actors and involves high investments and considerable risk. That is exactly what China started with the extensive One Belt One Road initiative. Until last year, 126 countries were involved in the BRI. At the time, these countries made up two-thirds of the world's population, 23 percent of global GDP, and about 28 percent of global carbon emissions. They are also home to 75 percent of the world's known fossil fuel reserves. If they continue the path of carbon-intensive growth modeled by China while the rest of the world continues to decarbonise, the result by 2050 would be that China's One Belt One Road customers would be responsible for 66 percent of global emissions. The billowing smoke from their power plants alone would be enough to put the world in a 3-degree warming scenario.

Beijing has promised in the past to “green” the One Belt One Road. However, in his historic address to the United States General Assembly, Xi did not mention China's overseas projects. It will be a crucial test of whether Beijing's commitment to carbon neutrality applies to One Belt One Road. This may face opposition from China's heavy industry lobby, but Beijing has great leverage in the form of its development banks. The China Development Bank alone is expected to provide US $ 40 to 45 billion annually for BRI projects.

A green One Belt One Road would be an even more dramatic proposition than the original coal-based version. According to a series of estimates, US $ 11.8 trillion would have to be invested by 2030 to adjust all 126 members of the program to a 2-degree scenario while achieving economic and industrial development. That is gigantic, but after the COVID shock it may no longer be entirely unimaginable. The cumulative global budget response to this year's pandemic is estimated at $ 7 trillion.

But while China is in the habit of projecting trillions of dollars in external funding, that figure is likely to cause a sticker shock for the West. When Germany launched the idea of ​​a Marshall Plan for Africa a few years ago, it immediately came to the conclusion that the $ 600 billion per year that is required to achieve the United States' sustainable development goals , cannot come from public funds. Berlin sincerely hoped that the African states' own resources and private capital would do the trick instead of interfering with the local infrastructure.

If this is really the best the West can do, how can the incentives for the investment needed be created? Regulations such as import bans for vehicles with internal combustion engines are essential. A uniform global carbon price would be just as important to limit global trade. It starts with regional CO2 price systems, but has to go beyond these to CO2 border taxes. This is vital not only as a national measure, but also to curb the strategies of multinational corporations who might otherwise outsource high-carbon manufacturing to emerging economies.

The EU raised the risk of carbon taxes with China this summer. It might have helped influence Xi to make his announcement. Because of its market size, the EU is a regulatory superpower. The United States could be too. However, the most dynamic axis of world trade is increasingly not the West, but rather between large and rapidly growing emerging countries. China is developing a carbon pricing mechanism. As a huge market for imports from lower-cost emerging economies, China may want to introduce carbon marginal taxes. If adopted by the EU, US and China, carbon taxes would put enormous pressure on energy decisions around the world. Exporting countries that use solar and wind power instead of coal, oil and gas would be of great benefit. Money would surely follow.

A narrow focus on prices and short-term profit margins could underestimate the forces at work. There are signs that, as with the communist regime in Beijing, “big money” is taking a strategic view in the West. In the week leading up to Xi's speech at the United Nations, Climate Action 100 Plus, a lobbying group that represents global investors with total assets of $ 47 trillion, announced that it would judge 161 of the largest companies, collectively for up to 80 percent are responsible for global industrial greenhouse gases due to their progress towards net zero carbon emissions.

As with Xi's speech, there was undoubtedly an element of greenwashing in this statement. But it can also be seen as an acknowledgment from giant asset managers like BlackRock and Pimco that the stability of capital accumulation in the long run depends on maintaining a stable environmental environment. For western capital, as for the regimes of Xi, these risks are both political and physical. In the event of future climate crises, companies that may recklessly jeopardize climate stability are at risk of suddenly losing their operating license. The airlines' experience in 2020 has shown how suddenly society's reaction to a future environmental crisis could endanger an entire industry.

Protesters march from the U.S. Capitol to the White House for the People's Climate Movement to protest President Donald Trump's environmental policies on April 29, 2017 in Washington. Astrid Riecken / Getty Images

Young people take part in a demonstration calling for action against climate change in New Delhi on November 29, 2019.
MONEY SHARMA / AFP via Getty Images

It is therefore tempting to hope that the world has achieved critical mass with China and the EU's climate protection commitments. Technological change, regulatory leadership, pricing incentives, and investor pressure will drive decarbonization. But to count on these powers only is naive.

The fossil fuel systems that run our lives are not just anchored in technology and profit. Decarbonization, like building the economy with fossil fuels, will primarily raise issues of international power and geopolitics. There are people who hold on to the dream of the 1970s that renewable energies could ultimately usher in a new era of “soft”, decentralized energy and policies. But even if that unlikely vision remains a goal, getting there requires an act of power – dismantling the fossil fuel bastions. You won't just give in. As Jason Bordoff recently pointed out, decarbonization geopolitics will indeed be complex and non-linear. And this is where the United States comes in.

China and the EU are setting the decarbonization agenda. But none of them have America's geopolitical reach. Increasing political pressure from the US would make it easier to justify decarbonization in India, Latin America, Canada and Japan. A change in stance in the United States would also reverse Trump's climate-skeptical train that conservative governments in Australia and Brazil have been happy to join. This is one area where behind leading may not be an oxymoron.

The United States has a unique role to play in relation to fossil fuel manufacturers. The United States was the architect and anchor of the fossil fuel order of the 20th century. When American progressives lovingly refer to the Green New Deal and the achievements of the “arsenal of democracy” in World War II, we should not forget that these were triumphs of oil and coal industrialism. In the mid-century heyday of government activism and creative American statecraft, the Middle East oil empire – the hub of oil companies, the American national security apparatus, and local regimes – was first forged. America's Cold War alliances in both Western Europe and East Asia were built on this energy platform in the Middle East.

The 1973 crisis challenged this system. In the 1970s, the US government made itself the primary sponsor of the early science of climate change and renewable energy. But ultimately, as Victor McFarland has shown in his innovative new study Oil Powers, the United States chose the alliance with Saudi Arabia and the Carter Doctrine, which expressly expressed America's commitment to defend the West’s oil supplies. This set the course for decades of ever deeper and more militarized engagement in the Middle East.

In the face of the ruinously expensive wars in Iraq and Afghanistan, the large-scale commercial use of fracking seemed to offer the United States a trump card in both grand strategy and climate policy. But Obama’s new boast of energy independence was all too easily turned into a Trump energy dominance claim. Instead of getting out of the fossil fuel game, the United States has been drawn into a new iteration. As an alternative to Russian gas, the United States positioned itself as a supplier of LNG – renamed by the Trump administration as "Molecules of Freedom". As the recent oil price war has shown, the result of the fracking sector's overexpansion has not been dominance for the US, but new vulnerabilities in the US economy.

If now is the time when the United States is really going to move away from fossil fuels, it doesn't just have to include a new energy order at home. The United States must work with China and the EU to anchor a global framework that will hold much of the world's known fossil fuel reserves in the ground.

Of course, the fossil fuel phasing out geopolitics is not just an American problem. During the past half century, Europe built relations with the Soviet Union and then with Russia on the basis of an energy import policy. (The Nordstream 2 pipeline is the descendant of that story.) Japan and now China are the main customers of the Gulf States. The leading OPEC states have considerable reserves and are vigorously asserting their autonomy. Production costs in the Gulf are so low that countries like Saudi Arabia and Qatar can confidently expect to be among the world's last suppliers of fossil fuels. Fragile high-cost producers like Nigeria or Venezuela will feel the pinch first. But at some point the balance between supply and demand will shift, and if the minimum prices for carbon emissions work, price wars are no escape. Between 2040 and 2060, the century of the oil-powered world economy will come to an end.

This will be a revolutionary transformation, and the United States must carefully calibrate its intervention. There are, of course, many reasons to welcome the disempowerment of Russia and Saudi Arabia. Visions of regime change will be tempting. But we should be aware of the risks. Only confronting fossil fuel producers with a fait accompli and with no way out will create opposition and encourage beleaguered established businesses to gamble dangerous for salvation. Such a confrontational approach may appeal to those who want to see a green revolution rather than a green new deal.

However, if the timeline is as urgent as science suggests, then decarbonization is the absolute priority. To that end, we need to develop ramps and pathways to convert existing assets and assets into claims for a new, low-carbon world. The most pressing priority is to generalize interest in the climate stabilization project. At least that is what the West now has in common with Beijing.

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