How to Add Gas to U.S.-China Climate Cooperation

Last week, Chinese President Xi Jinping committed to reducing his country’s coal consumption beginning in 2026. That is later than many climate change activists had hoped, but it will still be a challenge for the world’s largest coal consumer. One thing that might help—while also smoothing over relations with Uncle Sam—would be more cooperation on natural gas development and trade.

China has been making steady if slow progress on reducing coal as a percentage of its energy mix: 56.8% of energy consumed in China came from coal last year, down from 69.2% in 2010. Despite an enormous renewable power investment binge in 2020, unleashed as part of the nation’s stimulus efforts, thermal coal power has also proved stubbornly resilient. In March, Chinese thermal power output rose 25.7% from a year earlier, outpacing overall power output growth by close to 10 percentage points.

Beijing’s policies on new coal power plants have also been highly mercurial in recent years. In early 2021, China had 247 gigawatts of coal power capacity under development according to the Center for Research on Energy and Clean Air. That is 21% above end-2019 levels and about six times the size of Germany’s entire coal fleet.

Meanwhile the U.S., which is an increasingly significant natural gas exporter to Asia, is locked in a battle for market share with Qatar, Australia and others. Future U.S. export terminals would be more likely to become a reality with Chinese help—particularly since Qatar’s aggressive expansion plans are adding uncertainty to the calculus of American investors. Before Sino-U.S. relations nosedived in 2018, Sinopec was considering helping build the mooted Alaska LNG export terminal and pipeline project. And while China is buying plenty of American energy already this year, as of February it was still behind the levels needed to satisfy the phase one trade agreement negotiated by former President Donald Trump, according to research from the Peterson Institute for International Economics.

Climate cooperation between the U.S. and China is important not only to guard against worst-case environmental scenarios in the decades ahead, but also to help put some guardrails back on a relationship that is threatening to spiral out of control. Both the U.S. and China want to become leaders in the renewable energy market, but on gas there is a clearer—and rare, these days—alignment of interests.

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