Geopolitics of Technology in East Asia

This commentary was first published in The Hill.

The future sustainability of the Earth cannot do without the coordinated actions of its two largest carbon polluters — the United States and China.

The most recent highlight in that realm is the U.S.-China Joint Glasgow Declaration on Enhancing Climate Action in the 2020s at the UN climate change conference COP26 in November 2021. The joint statement, which came during a turbulent time in U.S.-China relations, was both surprising and valued. The declaration reaffirms both nations’ commitment to “tackling [climate change] through their respective accelerated actions in the critical decade of the 2020s, as well as through cooperation in multilateral processes.”

The declaration also calls for “concrete actions in the 2020s to reduce emissions aimed at keeping the Paris Agreement-aligned temperature limit within reach,” including in the areas of methane reduction, decarbonization and forest protection. 

While the declaration represents a promising step forward and offers reassurances about new momentum for sustained future cooperation, it offers few details regarding concrete plans, nor the opportunities and challenges to enact and implement those plans.

Last fall, we at Stanford University partnered with Peking University to convene a series of discussions on a broad range of themes around U.S.-China collaboration on climate change, such as global sustainable finance, corporate climate pledges, as well as opportunities and challenges for the acceleration of decarbonization in both countries in general — both nationally and by sector — with particular emphasis on power, transportation and industry. The outcomes and insights were synthesized in a report on how to accelerate decarbonization in China and the United States, in which we highlight two urgent recommendations to facilitate constructive cooperation between both nations as they tackle growing environmental challenges.

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First, we need open-science research and development (R&D) collaboration.

Second, we need to be explicitly cognizant of political and institutional constraints.

This is necessary in order to translate promises into progress while protecting social benefits and their equitable distribution amid the green energy transition. As noted in both the joint declaration and our report, bilateral dialogues so far remain very high-level. We need future discussions and workshops at the sectoral and local levels to develop concrete plans. In enacting and implementing concrete plans, political and institutional constraints can pose real obstacles, as demonstrated by China’s past and ongoing efforts to control air pollution.

Hence, strong support from both national and local governments will be critical. As a first step, we need to gain a good understanding of who the relevant actors are in both policymaking and implementation and the incentives they face.

In this period of transition when there are still regional mismatches between energy supply and demand, it is too easy to let short-term needs push climate mitigation goals to the bottom of the barrel to address regional energy shortages. In both countries policymakers and those charged with implementation face multiple and sometimes conflicting goals. The prioritization of goals is shaped by incentive structures. Fostering incentive structures conducive to decarbonization is particularly important during the transitional period when consensus around goals and priorities is less clear. 

Furthermore, it is time to standardize standards. A recurring theme across our discussions is the need for shared, clearly specified regulatory frameworks and standards across both nations. Harmonizing standards will expedite trade, validation, accounting, climate pledges and environmental, social and corporate governance (ESG) evaluation.

Only if there is standardization can organizations be required to follow unified disclosure practices for making available important information like the amount of carbon emitted. We need to make and implement more legislation to encourage a faster pace of decarbonization, and having unified terminology and standards is conducive to both effective carbon legislation and policy implementation. Common terminology and standards will provide a basis for carbon legislation. Having clearly stipulated standards and procedures can also make implementation easier and more straightforward. 

Last but not least, we are hopeful about the future of U.S.-China cooperation on climate change and believe that universities can play a significant role in the global energy transition. Universities are often the birthplaces of innovative technology, training grounds for talent from across the globe, as well as conveners of bilateral and multilateral dialogues. We hope the governments on both sides of the Pacific will work together to hammer out the needed details to build the momentum and make a real impact in the fight against global climate change. 

Shiran Victoria Shen is the W. Glenn Campbell and Rita Ricardo-Campbell national fellow at Stanford University’s  Hoover Institution, as well as an assistant professor of environmental politics at the University of Virginia. 

Jean C. Oi is the William Haas professor of Chinese politics, senior fellow at the Freeman Spogli Institute of International Studies, as well as the director of Stanford University’s China Program. She is also the Lee Shau Kee director of the Stanford Center at Peking University. 

Yi Cui is the director of Stanford University’s Precourt Institute for Energy, as well as professor of materials science and engineering. He is a senior fellow at the Woods Institute for the Environment, and professor, by courtesy, of Chemistry, Stanford University. 

Liang Min is managing director of the Bits & Watts Initiative of the Precourt Institute for Energy at Stanford University. 

What were some of the challenges of this particular project, and what excited you about this work?

Lucas: The challenge with this work was to demonstrate two critical components of our theory of change: 1) that the energy DPV and energy efficiency investments were sufficient to offset the initial cost of the loan within a reasonable time period for MiPyMEs and 2) that we could successfully de-risk lending to applicants with minimal or no credit history through this alternative credit mechanism.

Pastor: It definitely took a while for us to land on the root cause of the energy access issue in the Peninsula, and we did a lot of technical scoping work early in the process, and those co-creation workshops where we got input and feedback from partners on the ground was critical for us to finally read that, “ah, ha” moment.

We eventually realized that the key issue was not a lack of technical options, but rather a lack of access to affordable finance to invest in these interventions. We also realized that most businesses are connected to the grid and as such, while some will benefit from distributed solar generation systems, this will not be the case in general. Instead, focusing on bringing awareness and introducing energy efficiency and conservation measures is key to helping more businesses lower their electricity bill burden. The cheapest megawatt, after all, the one you don’t use.

In the year you’ve been working with NREL, how has this project grown and changed? What’s are some of the victories? What areas are you still working to make better?

Pastor: When we started this project, we had no idea what it would turn out to be. It was a class project, a challenge that we had to come up with a solution for. I don’t think any of us thought we would get to actually implement our idea. But today MIPyMEs in the Yucatan are able to get a free energy audit and apply to MicroYuc Verde for an affordable line of credit that enables them to both reduce their energy consumption and grow their business.

Lucas: I also see the multi-stakeholder coalition we’ve built as a major team victory – working with local government leaders, researchers, and changemakers in this space is really encouraging.

Pastor: We are also working to scale up the program and develop energy audit training modules that other local institutions across Mexico will be able to use to offer free energy audits to businesses. Receiving the endorsement of the Governor of Yucatan was a great win for the program. And as Hallie mentions, the multi-stakeholder coalition we have built is a true victory, and something that makes me confident that the program will continue.

How do you hope to see this project continue to develop in the coming years?

Lucas: In the next phase of this project, NREL, IYEM, and ITSP are working to develop a robust technical training curriculum for university students to conduct energy efficiency audits for local businesses seeking to reduce their energy consumption. Student and university-led technoeconomic analysis will support data-driven decisions on investment and lending and will equip students with the advanced skill set they need to succeed in a clean energy futures workforce. These targeted training materials and analytical tools will be made publicly available when complete.

Pastor: I would love to see this project grow in its pilot phase to offer more audits and microloans to MIPyMEs in the Yucatan, and even go beyond Yucatan to other Peninsula states, as I truly think it can make a different.

And at a higher-level, I am really looking forward to seeing whether our theory of change is legitimate – if we can prove that SMEs can leverage affordable financing to access clean energy that would be consequential for broader energy transition efforts around the globe.

How did having the chance to work on a project like this as a Ford Dorsey Master’s in International Policy student impact your studies and how you think about your role and future in the world of policy and international development?

Pastor: Getting the chance to work on a project like this has definitely shaped the type of work and impact I want to have. I am currently working in the sustainable finance space, as I really believe that part of the key to achieving our climate goals lies with closing the mitigation and adaptation finance gap, and especially focusing on bringing financing solutions to those who are often left behind by the system.

Lucas: I’ve been prompted to reflect more about institutionalized and systemic barriers to energy equity, as well, and to think more critically about what inclusive clean energy transitions look like in practice. The next several decades are humanity’s most critical – as the entire world mobilizes to combat the climate crisis, global energy and economic structures will be fundamentally transformed. In this, we have an unparallel opportunity to choose – and create – a better, more inclusive, more sustainable, future.

What are each of you hoping to do next in your careers?

Pastor: I hope to keep growing my knowledge of climate finance and to keep working to make an impact and accelerate climate transition efforts around the world. It’s been so moving to see the passion and commitment everyone we have worked with has shown. The fact that some of the Yucatan participants would take two days out of their busy schedules to come together to discuss what could be done to solve this problem is very inspiring. And even since our initial investigations have ended, they have continued to show up for the project, and are very much driving it forward at this point. It is truly great to see them believe in our vision for a clean energy future

Lucas: I agree. I want to keep doing what I am doing now!

China and the United States are the two biggest carbon-emitting countries in the world. Decarbonization in these two countries will have material impacts on a global scale and is timelier than ever, according to a recent report from Stanford University’s Precourt Institute for Energy, Stanford Center at Peking University, APARC's China Program, and Peking University’s Institute of Energy.

The report is the product of a roundtable series, held in October 2021 that brought together leading American and Chinese current and former officials, and experts in the public and private sectors working on energy, climate, the environment, industry, transportation, and finance. The roundtables promoted discussion around how China and the United States can accelerate decarbonization and cooperate with one another to meet their carbon neutrality goals by mid-century.

The thematic areas of the roundtables included U.S.- China collaboration on climate change, global sustainable finance, corporate climate pledges, and the opportunities and challenges for the acceleration of decarbonization in both countries in general, as well as specifically for the power, transportation, and industry sectors.

The resultant report reviews the key themes and takeaways that emerged from the closed-door discussions. It builds on the “U.S.-China Joint Statement Addressing the Climate Crisis” released by the U.S. Department of State on April 17, 2021 and shares some common themes with the “U.S.-China Joint Glasgow Declaration on Enhancing Climate Action in the 2020s” released on November 10, 2021. Shiran Victoria Shen of the Hoover Institution authored the report, with contributions by Yi Cui of the Precourt Institute for Energy, Zhijun Jin of the Institute of Energy and Jean Oi, Director of APARC's China Program. 

The report suggests that tensions in U.S.-China relations have hindered the acceleration of decarbonization and that open science in fundamental research areas must be encouraged. Universities can educate future leaders, advance knowledge, and foster U.S.-China collaboration on open-science R&D, regardless of the political environment. The report argues that the most promising strategy to decarbonize energy is to electrify consumption now served by fossil fuels as much as possible while decarbonizing electricity generation. 

The roundtables identified six areas where the U.S. and China could collaborate: global green finance, carbon capture and storage, low-carbon agriculture and food processing, methane leak reduction, grid integration and greater use of intermittent renewables, and governance, including at the subnational level. The report further identifies more concrete and additional promising areas for accelerated decarbonization and bilateral collaboration, as well as the obstacles to be tackled, including institutional, political, and financial constraints.