As the EU-China summit opens in Brussels today (29 June), new research points to a “delivery gap” on clean energy, which is making the EU level less relevant to Beijing than individual member states, or the US.
China’s clean energy reforms “have exceeded all expectations” in recent years, driven by supply security concerns, growing air pollution problems and climate change, according to a new research paper by E3G, a consultancy, and the UK-based Chatham House think tank.
But the European Union is sliding down Beijing’s strategic priority list, although cooperation has grown in areas such as urbanisation and energy security since the last EU-China summit in 2012, the paper argues.
The research paper, which analyses EU-China relations on low-carbon development, is being released as the two sides celebrate 40 years of diplomatic relations at a bilateral summit taking place in Brussels today (29 June).
It comes at a key moment for clean energy development, with a UN climate change meeting in Paris later this year aiming to agree on a successor to the Kyoto Protocol.
Europe and China have many common interests on energy, said Nick Mabey from E3G, citing import dependency as a common challenge.
But these have not resulted in common positions being adopted on energy policy, he told a small group of policymakers at a breakfast briefing in Brussels last week, where the study was being presented ahead of publication.
This is a huge missed opportunity, the report argues, saying the EU-China economic relationship has the potential to become “the de facto engine of global clean energy transformation”.
“China and the EU have so many areas of mutual interest, yet talk so little about,” Mabey said at the event, which EURACTIV attended.
Beijing ‘not big’ on EU strategic issues
According to the research paper, the EU could address this by picking a smaller number of areas on energy cooperation to ensure it delivers better.
“There is so much proliferation of initiatives and so little capacity to deliver them, particularly in Brussels – it doesn’t add up in terms of politics,” Mabey said, pointing to a “perception of under-delivery by the EU” which is exacerbated by uncoordinated national initiatives.
By contrast, Mabey said Chinese officials now tend to see the US relationship on energy and climate change as more important “because they get more high-level engagement and feel things are delivered on”. Its political relationships now focus more on bilateral ties with Berlin and London and on stronger economic integration with eastern and southern Europe, than Brussels, the report noted.
“To be brutally frank, the EU has slipped down the Chinese geopolitical agenda,” Mabey said, explaining it was hard to find people in Beijing who are “big on EU strategic issues”.
“So Europe is still incredibly important in shaping China’s economy but Europe has become less important in shaping big politics in China – and that’s just the reality.”
This critical view was tempered by a senior climate change official from the European Commission who spoke at the event under Chatham House rules.
“There are limitations to what we can do from Brussels,” admitted the official who reminded the participants about the EU’s unique governance structure involving both the European Commission and the member states in the bloc’s relations with foreign countries. The comparison with the US is therefore not entirely fair, the official stressed.
Where the EU can make a difference, he pointed out, is on regulatory cooperation with the Chinese. “They are looking at what can be offered from the EU side in a very meticulous manner,” the official said, citing urbanisation and the emissions trading scheme for greenhouse gases as examples.
Smart cities, electro-mobility and green finance
The E3G study was not only gloom and doom, citing areas where the EU and China do have a joint interest to deepen their energy cooperation – mainly on “smart” energy demand management technologies and electro-mobility.
“That could be the next big revolution,” Mabey said, adding these two areas “will shape the next decade of decarbonisation,” offering new opportunities for European companies. Some of these bilateral cooperation areas will be explored in Brussels at a Business Summit and an Urbanisation Forum taking place on the summit sidelines.
However, unlocking European investments in China would require Beijing to lift restrictions on public procurement, a longstanding issue which has blocked China from receiving market economy status.
“It would be great if China spontaneously opened up most of its own urban systems for liberalisation, because they could get the most efficient European technology,” Mabey said. “And the people in Beijing know that.”
“But again, there is an issue of prioritisation and whether Europe asks for it,” he said, explaining that Europe had other demands – on finance, pharmaceuticals or copyright – which he said “may trump” the green technology area.
Another key area Mabey cited is green finance, where he said China has clearly taken the lead over Europe. The EU’s proposed Capital Markets Union, he noted, “is striking for its lack of focus on sustainability”, whereas the Chinese have “a whole process for greening their financial reform,” he said, offering “a huge opportunity to better direct savings to lower-risk, lower-carbon investments”.
The last EU-China summit opened discussions at a technical level to “start as soon as possible” negotiations for a bilateral investment agreement.
But the summit was overshadowed by a long list of disagreements, including a trade dispute over Chinese subsidies to industry and Europe's refusal to grant China market economy status.
Tired of seeing European companies blocked from Chinese public tenders, Brussels has launched a ‘reciprocity’ action which could allow individual EU countries to bar bids from countries that refuse to open up their public procurement markets, including China. Beijing is well aware that the public procurement issue stands in the way of the country getting its market economy status.
On the EU side, European Council President Herman Van Rompuy tried to downplay the current perception that Europe is bankrupt and inefficient and the eurozone is not able to solve is sovereign debt crisis.
>> Read: EU, China leaders agree to disagree
- 29 June: EU-China summit in Brussels