December 10, 2014
Inside the high-stakes drama behind Obama’s China climate talks
Aweek after Democrats took a drubbing in the midterm elections, as pundits were suggesting President Obama should start packing up the Oval Office, he stood beside Chinese President Xi Jinping in the Great Hall of the People in Beijing and announced a historic climate deal that may be one of the most significant accomplishments of his presidency. In the works for nearly a year, the agreement unfolded in a series of secret meetings in the United States and China and was carried out with the brinkmanship and bravado of a Vegas poker game.
The agreement comes at a time when awareness of the risks of climate change has never been higher, thanks to the sobering accretion of extreme weather events around the world. But the prospects for significant action to reduce carbon pollution have never been lower. Which is why virtually everyone in the climate world was stunned when the agreement was announced on November 12th.
Negotiations started in February when Todd Stern, the State Department’s lead climate negotiator, put in an exploratory phone call to his counterpart in the Chinese government, Xie Zhenhua. Stern was in Seoul, South Korea, and would soon be joining his boss, Secretary of State John Kerry, in Beijing for a series of high-level meetings with the Chinese leadership, including Xi Jinping. Kerry, long a forceful advocate for action on climate change, simply wanted Stern to see if there was any possibility the upcoming talks might yield a joint public statement on the issue. Beyond that, the State Department team sensed that the Chinese were looking for areas of common ground to help improve relations. White House counselor John Podesta, President Obama’s de facto point person on climate, agreed that it was an idea worth pursuing.
Stern knew that Xie, with whom he has shared many dinners at climate conferences all over the world, was a straight shooter whose goal, like his own, was to actually make progress on solving the climate crisis. “I made the case that if the deal were done well, and it had enough ambition, it could help to build momentum for Paris next year,” recalls Stern. “Xie was interested. But there were obviously a lot of issues to work out. So we proceeded cautiously.”
Obama arrived in the White House in 2009 determined to take on climate change. In his first term in office, he instituted tough new automotive fuel efficiency standards and pushed through $90 billion for clean energy in the stimulus bill. But after legislation to limit CO2 pollution failed to pass in the Senate in 2010, climate change seemed to slide down the list of issues that engaged the president. That changed after his re-election, when he ordered the Environmental Protection Agency to write new rules to govern carbon emissions from power plants and brought in Podesta. Early this past summer, those plans took shape when the EPA finally announced its plan to crack down on carbon pollution from existing power plants.
But Podesta understood that no matter what the U.S. did, it wouldn’t matter without larger global cooperation. The last major round of international climate negotiations in Copenhagen in 2009 had been a festival of conspiracy and betrayal, ending with an 11th-hour, closed-door confrontation between rich and poor nations that only deepened the cynicism among many that the world would ever strike an agreement to cut carbon pollution. A year from now, the world is set to meet in Paris for another summit. Would this next meeting be any different? Probably not, concluded Podesta and the State Department’s climate negotiators, unless they could get China to the table.
It was not just because China was the world’s biggest polluter (an honor the U.S. had held until about 2006), but the Chinese also hold tremendous sway over developing nations of the world. Get China to take action, and chances were good that India, Brazil, South Korea, Mexico, Indonesia and other increasingly prosperous nations would come along too.
But moving climate to the top of the agenda, Podesta realized, would be difficult. “In China, the politics of climate change are different than in the U.S.,” says Li Shuo, a Greenpeace activist in Beijing. “No one in China denies climate change is a problem. But we have more immediate problems – like air and water pollution, most of which come from our dependence on coal.” According to one study, air pollution contributed to the premature death of 1.2 million people in China in 2010. “China today is a lot like America was in the 1960s and Seventies – the rivers are on fire, the sky polluted, and the rising middle class is not going to put up with it anymore,” says Jigar Shah, a solar-industry pioneer. For U.S. negotiators, it was important to convince the Chinese that cutting carbon pollution would not only clean up the air but also lead to more political stability for the regime. “They will have a social revolt on their hands if they don’t come up with a way of dealing with this,” U.S. Ambassador Max Baucus told me bluntly when I was in Beijing this past summer.
But for the U.S., nothing with China comes easy. “The relationship between China and the U.S. has been on a downhill slide,” says author Orville Schell, who has been writing about China since the 1970s and now heads the Center on U.S.-China Relations at the Asia Society in New York. The Chinese fear the U.S. has a long-term strategy to contain China, while the U.S. fears China’s increasing strength means trouble for American interests in Asia and beyond.
On top of the rising superpower tensions, climate negotiations are made more difficult by the fact that China is a developing nation. It may be the world’s number-one polluter by volume, but its per-capita emissions are far lower than ours. The Chinese argue (with some justification) that global warming is a problem that has been largely caused by 200 years of fossil-fuel burning, mostly in the U.S. and Europe, and so it is the West that bears most of the responsibility for fixing it. Which meant that if U.S. negotiators were going to entice China into making a commitment to cut carbon emissions, the U.S. needed to jump first. But Obama’s hands were tied. The U.S. Congress was not going to pass global warming legislation, so the only option was executive action. Everything depended on the EPA rules on power-plant pollution, which were still in the works, and dependent on withstanding court challenges – not at all a sure thing.
“A CANDIDATE WHO DENIES THE REALITY OF CLIMATE CHANGE,” SAYS PODESTA, “WILL HAVE A HARD TIME GETTING ELECTED PRESIDENT.”
Still, after some discussion between the White House and the State Department, Obama gave them the go-ahead to pursue a deal. After Stern made the phone call to Xie in February, Kerry broached the idea with many key figures in the Chinese leadership, including President Xi, on his swing through Asia a few days later. The response: “ ’Oh, this is interesting,’ but they were not eager to pursue it,” Podesta says. It became clear it would take presidential muscle to get any kind of a deal moving. In mid-March, Obama sent a private letter to President Xi that brought up a range of subjects, from the nuclearization of North Korea to territorial disputes in the South China Sea, but which also pushed for a climate agreement between the two nations. The gist of the letter, according to Podesta, was that “ ’this could be meaningful, if we both make serious post-2020 contributions.’ ”
Soon after Xi, whom Schell describes as “a ruthless utilitarian,” ascended to the role of China’s president in 2013, he had traveled to Rancho Mirage, California, to meet with Obama for two days of informal talks, where, among other things, they struck a deal to limit emissions of hydrofluorocarbons, a climate-eating gas. Schell describes their relationship as wary, but pragmatic. “There is no warmth between them,” he says. “There is a lack of trust, a paranoid attitude toward each other. But also an awareness that they have to work together.”
Obama’s hand was strengthened in early June, when the EPA formally announced the Clean Power Plan, which would cut carbon from power plants by 30 percent by 2030. The result of a 2013 executive action in which Obama instructed the agency to come up with new regulations on power-plant emissions, the plan was well constructed and would likely hold up in court. It was an important sign of the seriousness of the administration’s effort, and it gave U.S. negotiators leverage to say to the Chinese, “Hey, we mean business.”
A few weeks later, a swarm of U.S. diplomats, including Kerry, Podesta and Stern, flew to Beijing for the Strategic and Economic Dialogue, a high-level diplomatic meeting between the United States and China. I accompanied the U.S. delegation on this trip. There was a lot of talk about what kind of commitment the Chinese might make in Paris and about what the U.S. could do to strengthen that commitment, but no indication, on or off the record, that a secret deal was in the works. But clearly, talks were serious. The day before the official meeting, Podesta and Stern, as well as U.S. Energy Secretary Ernest Moniz, spent a full day at the Diaoyutai State Guest House with their Chinese counterparts, going over economic modeling results and various technological options, trying to get a sense of what the costs of various levels of carbon reductions would be.
In addition, Stern and Podesta had one-on-one meetings with Xie Zhenhau and Vice Premier Zhang Gaoli (“the man with the portfolio,” Podesta says). “They told us we might be able to put a deal together, but not until 2015,” Podesta recalls. “But Todd and I both thought there was potential to do something earlier.” U.S. negotiators knew that the sooner the deal could be announced, the more leverage they would have to shape the outcome of the Paris negotiations.
But the complexity of these negotiations is hard to overestimate. For one thing, CO2 pollution is on some level a proxy for economic development, so agreeing to cut carbon emissions is tantamount to calling for limits on economic growth – a tall order on its own, but even more difficult in an atmosphere of deepening distrust. “It is very hard for either side to believe what the other is saying,” says Li Shuo. “There are many cultural barriers, and a long history of suspicion on both sides.”
On the final day of the conference, I took a walk around the grounds of the Diaoyutai State Guest House with Stern. He seemed tense, unsure any deal could be worked out, and not even clear what kind of goal the Chinese might be willing to commit to: “Will it be a carbon cap? A coal cap? A renewable-energy quota? We are not sure.”
The U.S. negotiators left China in a somber mood. During the first week of September, Obama sent President Xi a second letter. “It was a focused two-page letter on what could be delivered during the November APEC visit to Beijing, and it emphasized the climate joint announcement,” Podesta told me. But if Xi was serious about pursuing this deal, he didn’t show it by appearing at the U.N. Climate Summit in New York later that month. It was interpreted by some outsiders as a signal that the Chinese were not gearing up to make a serious commitment in Paris next year. Instead Xi sent Vice Premier Zhang Gaoli, who asked to meet with Obama in New York, which, Podesta said, was “unusual.”
At that meeting, Zhang told Obama that Xi had decided to do the deal – and that he wanted to announce it in Beijing around the time of the APEC summit. But many details were still unresolved – including the all-important question of how strong the targets would be. For an agreement to have any meaning, the U.S. and the Chinese had to commit to carbon reductions that were both significant and credible.
During the last week of October, Podesta and Stern traveled to Beijing to meet with Xie Zhenhau and others at the National Development and Reform Commission. It was there that the Chinese finally put numbers on the table. The key figure was their pledge to cap carbon emissions by 2030. While carbon restrictions that don’t go into effect for 16 years in the future may not sound significant, for a country as big and fast-growing as China, such a promise translates into huge reductions over time. (Climate scientist Raymond Pierrehumbert estimates that the cap, if extended out to 2060, would reduce China’s carbon pollution by 790 gigatons over business as usual.) U.S. negotiators were not overjoyed by China’s offer. “We wanted sooner than 2030, but they told us that 2030 had been cleared by the Standing Committee [i.e., the leaders of China’s Communist Party],” Podesta says.
For the U.S. team, the carbon-reduction targets that they put on the table were a mix of technical capacity and political aspiration. They had to be deep enough to be meaningful, but they also had to be politically plausible, given the fact that there is no chance of anything moving through Congress in the next two years and the unpredictability of the 2016 presidential election. The number they came up with, 26 to 28 percent by 2025, represents the greenhouse-gas reductions proposed under existing U.S. law, plus possible further reductions based on executive actions the president may take during the rest of his term. “It’s a serious commitment,” says Stern, essentially requiring the United States to double its rate of carbon reductions in the next decade. Twenty-eight percent, says Stern, puts the U.S. on a straight-line path to 80 percent reductions – from 1990 levels – by 2050, a broadly shared goal within the international climate community.
Still, these targets – which were voluntary, after all – were nowhere near enough to put the world on track to limit warming to 2 degrees Celsius (about 3.6 degrees Fahrenheit), which is the level scientists have identified as the threshold for dangerous climate change. But negotiators on both sides knew the deal could be nonetheless deeply significant, for it could shift the political calculus of international climate negotiation and virtually assure some kind of success in Paris next year, when an agreement to replace the 1997 Kyoto Protocol is supposed to be finalized.
“The question was, once we settled on the targets, was this deal significant enough for an announcement from the presidents of both countries?” says Podesta. Stern and Podesta weren’t sure. By China refusing to cap CO2 emissions until 2030, the U.S. team knew it would be open to the charge that we were giving China license to increase its carbon pollution for 16 years, while making costly promises to double our own reductions in the same period. But they saw a solution: The Chinese had mentioned they’d set an internal goal of generating 20 percent of their nation’s power from nonfossil fuel sources by 2030. (To meet the goal, the Chinese will essentially have to build the equivalent of the entire U.S. electrical system in the next 16 years – and do it with wind, solar and nukes.) U.S. negotiators pushed the Chinese to make this goal part of the agreement. But the Chinese were hesitant to go public with it. In addition, they wanted language in the agreement about different obligations between the developed and the developing world that the U.S. team couldn’t live with. For the second time in just a few months, Podesta and Stern left Beijing not sure they’d be able to make a deal at all.
In the next few days, there was a flurry of e-mail and phone exchanges. The APEC summit in Beijing was just a week away, and the Chinese clearly wanted to have something big to announce. But as Obama flew to Beijing, there was still no deal. Podesta told the president they were close to an agreement, but they were still juggling the language. The deal had to be “something we could feel good about,” says Podesta. “Otherwise, we could still walk away.”
The day before the summit began, Podesta and Stern hammered out the last details. The Chinese agreed to go public with the 20 percent renewable goal, as well as agreed to language that they would work to hit the 2030 CO2 cap earlier and to make clear that these reductions were made in the context of a long-term deep decarbonization effort (a point that Podesta says was “very important” to the president). In return, Chinese negotiators made sure the distinction between the obligations of the developed and the developing world was not lost in the agreement.
The next evening, Obama and Xi met privately to discuss the agreement. “It was important to both Obama and Xi to have real understanding where they were going with this, and to agree to keep talking throughout the year as we head toward Paris,” says Podesta, who briefed Obama beforehand. “The thing everyone wants to avoid is a last-minute Perils-of-Pauline situation like we had in Copenhagen.”
In China, response to the deal was straightforward: President Xi had not only pledged to clean the air and reduce carbon pollution, he had proved his diplomatic chops by striking a deal with the most powerful nation on Earth. “Xi was like a hedge-fund manager who just acquired a trophy wife,” one experienced Chinese observer notes. “It’s an affectation of being a great power.” In the developing world, there was criticism of the low ambition of the carbon-reduction targets. “These commitments are nowhere near the kinds of reductions we need to limit warming to 1.5 degrees Celsius or even 2 degrees Celsius,” one South American activist told me.
But more practical-minded observers saw the announcement as a major breakthrough. “In one move, Obama and Xi broke the logjam of climate politics,” says Jairam Ramesh, a member of Indian Parliament and a longtime climate negotiator. “Until now, China has insisted that the U.S. and the EU are largely responsible for climate change. But this raises the bar for other nations.”
The deal also has huge economic implications both for fossil-fuel industries that dominated the 20th century (i.e., the losers) and the alternative-energy entrepreneurs poised to grab a much bigger piece of the world’s energy mix (i.e., the winners). “There is no question where the world is headed,” says Podesta. “Instead of thinking of the U.S. and China as two captains on two different teams, it’s a sign to everyone that we are both pulling in the same direction.” For tech investors, this kind of high-level alignment has a powerful impact on strategic decisions about where to put their money. It will particularly benefit clean-tech companies that can help the Chinese figure out ways to integrate massive amounts of renewable energy into their grid. “This is not some bullshit deal between [former U.S. Secretary of Energy] Steven Chu and Tsinghua University,” says Shah. “This is the U.S. government saying to American companies, ‘Go ahead, set up shop in China – we’ve got your back.’ ”
Finally, the agreement eviscerates one of the favorite talking points of climate deniers. “Their argument has always been we can’t do anything to cut emissions because China is not doing anything,” says Democratic Sen. Sheldon Whitehouse of Rhode Island. “Well, now China is doing something pretty significant, while Republicans are still huddled in the dark castle of denial.”
Of course, in the U.S., it took conservatives 30 seconds to begin hammering the deal as an economic suicide pact, arguing that the U.S. had committed to deep carbon reductions over the next decade, while the Chinese agreed to basically do nothing until 2030. In a column titled “The Climate Pact Swindle,” Fox News regular Charles Krauthammer called the agreement “the most one-sided deal since Manhattan sold for $24 in 1626.” Among other things, Krauthammer’s argument ignores China’s commitment to 20 percent nonfossil fuel power by 2030. As Sen. Whitehouse told me, “The idea that China has committed to doing nothing for the next 16 years is only true if you believe that Chinese leaders are going to wake up on New Year’s Eve in 2029 and suddenly build 1,000 gigawatts of clean energy in one night.”
The more substantial question is whether China and the U.S. can follow through on their commitments. Ironically, the Chinese may have more credibility than the U.S. “ ’Face’ is very important to the Chinese,” says Schell. “When they commit to something publicly, they do it.” Podesta agrees: “The Standing Committee has approved this commitment. The People’s Congress will approve it. It will be imbedded in Chinese law. That is significant.”
The U.S. commitment, on the other hand, stands on shakier political ground. As David Victor, professor of International Relations at the University of California, San Diego, and author for the Intergovernmental Panel on Climate Change, puts it, “It’s not clear yet if it is an Obama climate agreement or a U.S. climate agreement.” In the Senate, Mitch McConnell has already said that he will use his new powers as majority leader in 2015 to launch a full-scale attack on the EPA rules on power-plant pollution – if that attack is successful, it would be all but impossible for the U.S. to meet its
Podesta, who will leave the administration in early 2015 and will likely play a senior role in Hillary Clinton’s not-yet-announced presidential campaign, relishes the fight. “They can investigate us, harass us, try to defund us,” warns Podesta. “But the president won’t flinch on this. This is our line in the sand.”
The fact that implementation of the EPA rules is likely to come in the middle of the 2016 election campaign is just another part of the White House political strategy. “What will become more apparent is that a candidate who denies the reality of climate change will have a hard time getting elected president,” Podesta says. “The candidate who says, ‘Hey, we’ve got a problem, I think we can work to solve it’ is going to win. I don’t think you ever go wrong playing for higher ground.”
However this plays out in the U.S., it is an indisputable fact that this deal has changed the odds for a new global climate agreement in Paris in 2015. Big questions remain about how much cash the West will pony up to help the developing world finance clean-energy projects and adapt to climate change, but that can be resolved. “This is a sea change in how we think about solving the problem,” says Mohamed Adow, Christian Aid’s senior climate-change adviser in London. “We will get a deal in Paris now, I’m certain of it. Will it be enough? No. But it will lay the foundation for the future. And it will say to the world, for the first time, ‘We are serious about this.’ ”