What are the prospects of an EU–China climate deal?

The last EU–China Summit in June did not end in the typical way – with a joint declaration and the renewal of the extensive agenda for cooperation – but instead with two press debriefs with markedly different emphases. The meeting embodied the new tripartite European approach to China as a negotiating partner, an economic competitor and a systemic rival; while the debrief on the Chinese side emphasised the potential for cooperation. 

Following growing public scrutiny on EU–China relations, the European public is wary of cooperation unless it clearly benefits European core interests. This applies to ongoing trade negotiations and across areas of international cooperation, including climate change.

Despite ongoing tensions, both the EU and China are clear that staying in dialogue is essential. As current EU president, Germany remains keen on a meeting between China’s president, Xi Jinping, and the 27 EU heads of government later in the year. Furthermore, China’s foreign minister stressed the need to cooperate with the EU on multilateralism during his recent five-country European tour. The challenge to cooperation remains however, with Brussels no longer thinking Beijing shares the same approach to multilateralism.

Is climate the key to successful multilateralism?

Although trade will be the focus of the EU–China leaders’ call on 14 September, it would be a mistake to think climate is off the summit’s agenda or unimportant in the broader relationship.

European leaders have committed to climate neutrality by 2050 through the European Green Deal, the EU’s long-term economic growth strategy. The European Green Deal requires the EU to work with its partners, including China, to build resilient supply chains of low-carbon technologies and develop standards for sustainable products. As such, climate will increasingly be a core interest for EU foreign trade policy.

For China, climate cooperation strengthens its credibility as a responsible player on the world stage at a time when Europeans view China with increasing scepticism.

Actions not words: re-building credibility

Whether the EU approaches China as a negotiating partner or a systemic rival in global climate governance will largely depend on what China brings to the negotiation table. There is a lot riding on how these proposals align with European core interests. Here are three key areas the EU will be looking at:

1. Strong and credible climate targets

The EU has set a 2050 climate-neutral target and European leaders are committed to increasing their international climate target by the end of 2020. Final decisions are likely to take place towards the end of the year, ahead of the fifth anniversary of the Paris Agreement on 12 December.

European Commission president, Ursula von der Leyen laid out three benchmarks for credible Chinese climate action at the June summit. At a minimum China must:

• live up to commitments under the Paris Agreement,
• commit to climate neutrality, and
• give decarbonisation a central role in its next five-year plan.

Unspoken, but not forgotten in the European debate is growing concern over China’s reawakening coal habit. If China completes all the coal power plants it is currently building and plans to build, the lifetime emissions from these projects would be equal to nearly seven times the EU’s annual emissions. The EU will be keeping a close eye on what Beijing prioritises in its next five-year plan, as it could shape the global emissions trajectory for decades to come. 

2. Debt relief to enable a global green recovery

Approaches to debt settlement in 2021 will define whether countries have the fiscal space to invest in resilient and green recoveries. Among 72 low-income countries, China’s debt represents 20% of their total public external debt.

China’s commitments to a multilateral approach on debt relief and fiscal support is crucial in enabling developing countries to build back better after the Covid-19 crisis. Beijing’s participation in the G20 Debt Suspension Initiative is a welcome sign. However, there is currently no agreement ensuring coherent action by the private sector and public donors like China on debt. Moving forward, the EU will be counting on China to support a dialogue on extending and broadening debt relief mechanisms, including with the Italian G20 presidency in 2021.

3. Further alignment on climate and sustainability standards

The EU will be looking to China for greater alignment on sustainable product standards. This could include working together on harmonising the taxonomy on sustainable finance to drive extra public and private finance into climate-friendly investment. The two countries could also work more closely together on setting standards on deforestation-free supply chains, addressing both climate and biodiversity concerns.

The elephant in the room

While Europe busily weighs these three elements, a complex US–EU relationship should not go unnoticed. The EU is increasingly in dialogue with US counterparts on matters of China policy. However, the majority of European citizens supports a pro-active European agenda rather than choosing sides in the US–China rivalry.

While the outcome of November’s US election will have a big impact on the future relationship, the EU is gearing up for a foreign policy that secures its “open strategic autonomy” while navigating the landmines of great power rivalries.

In the meantime, the ball is in China’s court.