Friday, June 12, 2009

What China Really Wants - Technology

The US delegation that recently visited China failed to return with any substantive concessions on the part of either country. Despite its rhetoric that developed countries should cut emissions by 40% from 1990 levels by 2020, in the course of negotiations, it’s clear that China wants easier access to high level US technology. That’s the key demand, an issue of technology and development rather than a claim of fairness based on history.

But the US is hesitant to acquiesce over concerns of intellectual property violations for fear investors would be skittish over pouring money into technology that would be cheaply copied. Specifically, currently non-commercial cleaner energy sources like clean-coal, geothermal, and deep sea floating wind-turbines, all require large upfront capital and R&D costs. These sunk costs would not be borne by a country that copies the technology. It would be difficult, both economically and politically, to give China this kind of technology for free. It could undercut US competitiveness. China – though unlikely to spend them – holds over a trillion dollars worth of US Treasury Bills already; its hard to argue that they can’t afford to invest in this technology themselves.

What China might be trying to do is use climate change as leverage to gain easier access to some of these technologies so they develop faster and at the same time mitigate emissions. Today, US lead negotiator on climate change Todd Stern clarified the US position on China’s obligations stating that “We are expecting China to reduce emissions very considerably compared to where they would otherwise be...[in] a business-as-usual trajectory”. He also said China should establish a timetable for peak years of emissions.

Good idea, but in clarifying these expectations months ahead of the Copenhagen negotiations, is the US weakening its bargaining position? As the Guardian article says “Observers see the 40% demand as unrealistic, suggesting the US move amounts to blinking first in the negotiations”.

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