U.S.-China coordination on carbon neutrality: an analytical framework

ABSTRACT

The United States (U.S.) and China are key to meeting the goals of the Paris Agreement and reaching carbon neutrality by around mid-century. Despite differences, carbon neutrality will be met more rapidly if the two countries coordinate and facilitate synergies in carbon-neutral technologies and policy development and implementation. Building on long-term pathway models in the U.S. and China, current emissions trends and sources, and a policy analysis, this paper puts forward a novel framework for U.S.-China coordination on carbon neutrality. The analysis reveals similar technology and policy pathways, policy gaps, and shared milestones for decarbonization in 2030, 2040, and 2050-2060. The main technological pathways focus on reductions in energy demand and non-energy-related CO₂ emissions, decarbonization of electricity and fuels, and increases in electrification rates and CO₂ sequestration. Given existing domestic policies and opportunities for further action, areas for coordination on carbon neutrality include common policy milestones; dialogue and technical exchange; research, development, and demonstration (RD&D); and international climate leadership. Despite escalated tensions between the U.S. and China, and challenges for climate cooperation, coordination between both countries on carbon neutrality is both possible and necessary.

Key policy insights

• Carbon neutrality will be met more swiftly if the U.S. and China coordinate and facilitate synergies in carbon-neutral technologies and policy.

• Despite the rise in geo-political tensions between the U.S. and China, coordination on carbon neutrality is both possible and necessary.

• An analytical framework for U.S.-China coordination on carbon neutrality, includes technology and policy pathways, and common milestones of key sectors’ decarbonization for 2030, 2040, and 2050-2050.

• The two countries could coordinate on common policy milestones, dialogue and technical exchange, research and development, and international climate leadership.

KEYWORDS:

• China
• United States
• climate policy frameworks
• international cooperation
• carbon neutrality

1. Introduction

The Paris Agreement brought carbon neutrality to the forefront of climate policy. The IPCC's report estimated that limiting global average temperature increases to 1.5 degrees Celsius (C) would likely be consistent with reducing CO₂ emissions to net zero by around mid-century (IPCC, 2018). Following the Agreement, countries, states, and companies have announced plans to reach these long-term goals (Soest et al., 2021). The United States and China, the world’s largest economies and carbon dioxide (CO₂) emitters, are among them. In 2021, the Biden-Harris Administration committed to reach carbon neutrality by 2050 (The White House, 2021). In China, President Xi Jinping made the first commitment to carbon neutrality at the 75th United Nations (UN) General Assembly, stating that China will achieve carbon neutrality before 2060 and peak carbon dioxide emissions before 2030 (Ministry of Foreign Affairs of the People’s Republic of China, 2020). In both countries, a suite of policies has followed to support these actions.

The success of these two countries meeting their national goals will have a far-reaching impact on whether the world will achieve the Paris Agreement goals. First of all, the United States and China together account for almost half of global emissions. Secondly, both countries have a large influence beyond their borders due to the size of their economies and their pivotal roles in all stages of research, development and demonstration, deployment, and manufacturing of low-carbon technologies (Davidson et al., 2022). The U.S. and China are critical for international technology convergence, which would further drive down the costs for and enable access to zero emissions technologies in the Global South (Feng et al., 2020). For technologies such as solar, technology convergence has been borne out in practice driven by a combination of emission-reducing and energy efficiency policies (Lu et al., 2020).

There is much promise in the U.S. and China working together. Historically, the U.S. and China have formally and informally cooperated on climate (Lewis, 2017). Some notable agreements include the U.S. Energy and Environment Ten-Year Cooperation Framework Document in 2008; the Joint U.S.-China Statement on Climate Change in 2014; and the U.S.-China Glasgow Declaration on Enhanced Climate Action in the 2020s. Despite the differences in national contexts from economy to industrial organization, the United States and China – and their bilateral relations – were instrumental in forming the 2015 Paris Agreement (Schreurs, 2016) and recently brought momentum to the negotiations at COP26. Recently, climate has become entangled within a strained bilateral relationship limiting the prospects for close collaboration (Jotzo et al., 2018), particularly in the context of strategic competition over low-carbon supply chains such as reflected in the CHIPs Act (The White House, 2022b) and Inflation Reduction Act (The White House, 2022a) in the U.S. and escalated tensions between the two countries. While China paused the bilateral climate talks with the U.S. as a retaliation to the U.S. House of Representatives Nancy Pelosi’s visit to Taiwan in August 2022, dialogue was resumed after the two Presidents’ meeting at G20 in Indonesia and renewed in November at the UN Climate Conference COP27.

Developing scientific and effective carbon emission reduction pathways is the key to achieving carbon neutrality. Global, country, and regional studies have been conducted to understand emissions pathways to meet Paris Agreements 2°C and 1.5°C targets (IPCC, 2018; Jung & Park, 2018; Zhou et al., 2020). Recognizing that the timeline of achieving carbon neutrality varies in the U.S. and China, our paper applies long-term decarbonization pathways studies in the United States and China to guide coordination during a period of bilateral tensions. Climate collaboration can take many forms along a continuum from coordination to cooperation (Keohane & Victor, 2016). Coordination, in this case, equates to a shared understanding of technology pathways and sectoral transitions, which can support common measures of progress, dialogue, and exchange.

There is broad consensus that U.S and China coordination is important, and eventually can lead to enhanced cooperation. ‘Cooperation’ has been a term used in the context of the U.S.-China relations for collective efforts by both parties, often used in contrast to the term ‘competition,’ while ‘coordination’ refers to working level efforts to inform and act to fulfil common objectives. This paper builds on the belief that coordination towards common goals is more feasible in the context of the fraying bilateral relationship between the two countries, while cooperation could serve as an eventual goal for joint efforts.

There has not been a practical, meaningful framework for how cooperation might work in a way that achieves long-term carbon neutrality goals. A bottom-up strategy is most effective, starting from technology and policy transitions and looking backward from the carbon neutrality goals of both countries. It also should be grounded in the political realities in both countries and their bilateral relationship. Given the current geo-political tensions, this requires moving away from a focus on goal setting, monitoring, and verification and toward more of a focus on technology, policy, and RD&D coordination.

Therefore, this paper develops a novel coordination framework on climate change mitigation between China and the U.S., to guide and prioritize specific and joint climate actions over the near- and long-term between these two countries. To answer the research question of what framework could guide the U.S.-China climate cooperation, this study first summarizes the key areas and synergies for the carbon neutrality pathways in the U.S. and China, then it identifies the metrics that could be applied to evaluate the progress of climate action and support coordination for joint efforts.

2. Carbon neutrality pathway studies

Scholars have developed long-term pathways studies for the United States and China. Across these studies are assumptions in policy interventions, investments and finance, technological changes, and research, development and deployment to support the transitions to carbon neutrality. In China, there have been several significant analyzes which have developed pathways for meeting these global goals with different final energy consumption projections, peaking years, and macroeconomic assumptions (eg., Energy Foundation China, 2020; Jiang et al., 2018; Tsinghua University, 2020). For instance, Jiang et al. assume that peaking has already occurred with a rapid decline in emissions from 2020 to 2050 (Jiang et al., 2018). The Tsinghua 1.5 degree pathway has carbon peaking in 2030 with steep declines thereafter (Tsinghua University, 2020). In the United States, the focus of recent work has been on reaching carbon neutrality by 2050, through transitioning the economy to clean energy (Larson et al., 2020; Williams et al., 2021). Studies in both countries point to the combination of policy and technological innovation that will be required to meet carbon neutrality.

While there have been many long-term decarbonization studies in the U.S. and China, there have not been any efforts to look at what these studies imply for U.S.-China coordination. There has been limited theoretical analysis on the structure and focus for this joint action grounded in national technological and policy pathways. Through applying a comparative lens to these studies, our analysis reveals similarities in carbon reduction pathways and carbon neutrality targets between the United States and China. This indicates the possibility of joint action on carbon neutrality goals and the potential for achievement of the Paris Agreement goals.

3. Methods and analytical framework

In order to develop a framework for coordinated action, a review of key carbon neutrality pathway studies, an analysis of emissions trends and sources, and a climate policy review was conducted for the United States and China. The literature review began as a broad search across the academic, government, and grey literature on economy-wide and sectoral carbon neutrality pathway studies for the United States and China. Through this review, we focused on the most recent and whole-of-economy analysis consistent with global 1.5°C or 2°C-compatible pathways or with explicit carbon neutrality goals to narrow to a comparative review of nine mid-century scenarios in the United States and ten mid-century scenarios for China (CNREC, 2019; E3, 2020a, 2020b; EFC, 2020; ETC, 2019; Jiang et al., 2018; Mahajan et al., 2020; Larson et al., 2020; Pan et al., 2017; White House, 2016; Williams et al., 2014, 2021; Zhou et al., 2020). These studies were then compared within each country and between the United States and China, including an analysis of the emission trends and sources to develop the key components of our analytical framework: key sectors, pillar strategies, and milestones (see Figure 1). Finally, a review of policies within key sectors and key technological strategies was conducted to link the pathways to existing supportive policy actions.

Figure 1. Analytical framework.

To achieve carbon neutrality by mid-century calls for long-term planning and near-term action to maintain focus on decarbonization targets while adapting to the changing technological and socio-economic contexts. Carbon neutrality pathways studies in the United States and China have focused on the technology and policy changes in the primary sources on emissions such as energy (Jiang et al., 2018; Liu et al., 2022; Xu et al., 2020), buildings (Garimella et al., 2022; Li et al., 2022; Zhang et al., 2022), transportation (Ross Morrow et al., 2010), natural and working lands (Sroufe & Watts, 2022), and industry (Hu et al., 2020). For energy, studies focus both on electricity generation and fuels. For China, for example, buildings have one of the greatest sectoral potentials for electrification (Sun et al., 2022).

In many sectors, the dominant strategies or ‘pillars’ are similar across United States and China studies, though in some instances expectations reflect different assumptions and structural differences. There is strong agreement on the key pillar strategies for decarbonization, including: electrification, energy sector decarbonization, energy efficiency, and carbon sequestration (Bataille et al., 2016). Studies in both countries point to the combination of policy and technological innovation that will be required to meet carbon neutrality. The pillar strategies across studies focus on the primary strategies. Finally, it is widely agreed that metrics are important to measure the progress of long-term carbon neutrality planning and inform decision-making (Grubert & Hastings-Simon, 2022). Metrics have been developed based on specific sectoral strategies. The primary metrics used across reviewed studies are incorporated into our milestones.

Sectors: The sectors cover the primary sources of emissions in the U.S. and China. The achievement of net-zero emissions can be explored strategically by sector. Activities – including commercial and residential energy consumption, economic activities (including construction and production of commodities), and travel demand and modal share – result in carbon dioxide (CO₂) emissions in the end-use sectors (buildings, industry and transportation) due to consumption of fossil fuels provided by the energy supply sector (electricity and non-electric fuels).

Pillar strategies: Pillar strategies denote high-level strategies for greenhouse gas (GHG) emission reduction. The relationship between different pillars and carbon neutrality can be defined as follows: $\mathrm{N}\mathrm{C}=\mathrm{P}\mathrm{E}\times \mathrm{P}\mathrm{P}\times \left[\alpha \times EF+\right(1-\alpha )\times EF]+\mathrm{N}\mathrm{E}\text{-}\mathrm{C}\mathrm{S}$where NC denotes carbon neutrality; PE is per capita final energy consumption; PP is population; ɑ represents the share of electricity; EF represents gross emission factors; NE indicates non-energy CO₂ emissions; and CS is sequestered CO₂ emissions (terrestrial or geological). According to the equation, carbon neutrality (NC = 0) is reached when carbon sequestration (CS) equals energy-related and non-energy CO₂ emissions.

Milestones: While net-zero carbon emissions is the ultimate goal to be reached by mid-century, it requires step changes, or specific milestones, to be achieved. Milestones could be legislated targets, executive goals, or announced soft targets in time horizon of the near-, mid- and long-term. Milestones provide a vision of the technological changes required over time and help to propel progress towards the ultimate goal. Each milestone should be specific in time and event, and despite differences in the United States and China, the commonality in their milestones (shared milestones) could give rise to the feasibility and necessity of their coordination.

4. Pathways and shared milestones for achieving carbon neutrality

Recent studies have documented that the United States and China have similar technological pathways and strategies for achieving carbon neutrality (He, 2020; Williams et al., 2021). We first apply our framework to analyze pillar and sectoral strategies for CO₂ emissions reduction. The main technological pathways focus on reductions in energy demand and non-energy-related CO₂ emissions, decarbonization of electricity and fuels, and increases in electrification rates and CO₂ sequestration (Table 1). As can be seen from Table 1, while the magnitude of emission reductions varies by country, it is crucial to note that there are similarities in the CO₂ reduction paths between the United States and China. Compared to the United States, China has a higher electrification rate, which may be a result of less consumption of natural gas in industry. Besides, China has higher emission factors for electricity and fuels, requiring larger CO₂ sinks for achieving carbon neutrality.

Table 1. Pillar strategies and milestone metrics: 2018 actual and 2050 illustrative data.

Pillar strategies	UNITED STATES		CHINA
	2018	2050	2018	2050
Electricity decarbonization (t$C{O}_2/TJ$)	131	5	224	10
Fuels decarbonization ($tC{O}_2/TJ$)	54	25	67	35
Energy demand reduction (GJ/person)	203	130	60	60
Electrification (%)	21%	50%	25%	70%
Non-energy CO2 reduction ($MtC{O}_2/yr$)	258	/	1320	250
CO2 sequestration by natural and working lands ($MtC{O}_2/yr$)	/	0.8	/	1.7

Note: Table 1 is depicted based on the following two studies: (1) the Central scenario (net zero CO₂ emissions) from Carbon-Neutral Pathways for the United States (Williams et al., 2021); and (2) the 1.5°C scenario from China’s Long-term Low-carbon Development Strategy and Pathway (He, 2020).

Typically, as outlined in Table 2, major GHG emission mitigation and sequestration strategies are adopted to achieve the sectoral emission reduction targets in the U.S. and China. In the power sector, solar and wind power are expected to be the main sources of scalable non-fossil energy over the next three decades; therefore, the deployment of renewable electricity generation will be a vital strategy for the power sector. In the energy sector, there are two key strategies for low-carbon fuels, i.e. significant expansion of biofuels and a relatively small contribution of hydrogen supply. The role of bioenergy in energy systems is expected to become greater in the United States and China. In the building, transportation, and industrial sectors, electrification will be the primary emission reduction strategy. Among them, the low level of industrial electrification in the United States and China implies that the primary strategy in industry is still uncertain. In the area of terrestrial CO₂ sequestration, the main strategy is afforestation and reforestation, although there is still controversy about the size of the existing forest carbon sink and its potential expansion by 2050.

Table 2. Primary sectoral strategies and corresponding 2050 metric values.

Sector	Dominant strategy	2050 metric	U.S.	CHINA
Electricity	Scale up solar and wind generation	Solar and wind share of electricity generation (%)	70–90%	40–70%
Fuels	Increase biofuel supply	Primary biofuel supply (EJ)	10–15EJ	2–10EJ
	Increase hydrogen supply	Delivered hydrogen (EJ)	2–20EJ	5–15EJ
Buildings	Electrification	Electrification rate (%)	70–90%	55–75%
Transportation	Electrification	Electrification rate (%)	45–55%	35–55%
Industry	Electrification	Electrification rate (%)	20–50%	50–70%
Terrestrial $C{O}_2$sequestration	Afforestation and Reforestation	Annual forest Sequestration (GCO2/yr)	0.3–1.5	0.7–0.8

Note: All values except for afforestation and reforestation are rounded to the nearest five but not to zero. Source: All values are from Loken et al. (2021) and the 1.5°C scenarios in Khanna et al. (2021) except for fuels and terrestrial CO2 sequestration. Primary biofuel ranges in the U.S. are based on Williams et al. (2021) (lower range) and Larson et al. (2020) (B+ scenario) (higher range). Primary biofuel ranges in China are from Jiang et al. (2018) (lower range), which assumes most bioenergy is used in BECCS power generation, and from Sha et al. (2020) (higher range). Delivered hydrogen ranges in the U.S. are based on Williams et al. (2021) (lower range) and Larson et al. (2020) (higher range). Delivered hydrogen ranges in China are from Sha et al. (2020). Afforestation and reforestation ranges are from Larson et al. (2020) and He (2020).

Technological innovation may result in changes in the primary strategies mentioned in Table 2. However, the pathways to 2050 are clearly stated in both countries: the deployment of renewable energy to decarbonize the power sector; the adoption of low-carbon fuels to decarbonize the energy sector; the electrification of the building, transportation, and industrial sectors; and land use policies that promote CO₂ sequestration. Similarly, the comparison in Table 2 suggests that while the United States and China may differ in the details of their sectoral strategies, their technology pathways for achieving carbon neutrality may be similar.

Building on the analysis of sectoral strategies, we then identified and assessed the shared milestones for achieving carbon neutrality in the U.S. and China. It will likely be important for the United States and China to have a shared understanding of the pace and direction of technology transition and milestones, which may promote future technological innovation and cost reductions. The United States and China have the potential to obtain a common set of milestones by 2030, 2040, and 2050–2060 according to the shared nature of technology pathways, as shown in Figure 2. We identify seven impactful and common milestones metrics that are reasonable and practical to keep track of the progress, as shown in Table 3.

Figure 2. Shared milestones for U.S.-China carbon neutrality. Note: The base year (2018) is represented by the vertical grey bars, where applicable. The target for each period is listed below the date for that period. For example, for the electricity sector, China’s share was 30% and the U.S. was 36% in 2018. The shared milestones are 50% by 2030, 70% by 2040, and 90–100% by 2050–2060.

Table 3. Shared carbon neutrality milestones for the United States and China.

Sectors		Milestone Metric	2018 Baselines		Milestones (Soft targets)
			China	U.S.	2030	2040	2050–2060
Energy supply	Electricity	Share of non-fossil generation in total electricity generation	30%	36%	50%	70%	90–100%
	Fuels	Share of low-carbon fuels in total fuels	0%	2%	5%	30%	60–100%
Transport	On-Road Passenger	ZEV sales share of total on-road passenger vehicle sales	5%	3%	50%	100%	100%
	On-Road Freight	ZEV sales share of total on-road freight vehicle sales	∼0%	∼0%	30%	70%	90–100%
Buildings	Electrification	Share of electricity in building final energy consumption	33%	53%	45% (CN) 65% (US)	60% (CN) 80% (US)	70–80% (CN) 90–100% (US)
Industry	Industry-wide CO2 reductions	Percent reduction in year 2019 industrial CO2 emissions	/	/	15%	40%	80–90%
Forestry	Terrestrial CO2 sink	Net increase in forest volume (Bm^3)	/	/	4	8	12

Note: ZEV represents zero-emission vehicles, which are primarily full electric vehicles (EVs) and fuel cell vehicles (FCVs) under current technologies.

Source: The data are from IEA (2019a, 2019b and 2020). ‘On-road passenger’ includes cars and buses; ‘on-road freight’ contains lighter and heavier trucks. ‘Total sales’ includes new vehicle sales and leases. The list does not include building efficiency milestones; due to differences in climate, developing common metrics around building efficiency is challenging.

Share of non-fossil generation in total power generation: We propose milestones for the share of non-fossil electricity generation. For the United States and China, achieving a 50% non-fossil generation goal by 2030 requires a total of around 2 terawatt (TW) of new solar and wind generation capacity, which is equal to 200 gigawatt (GW) per year increases in installed capacity between 2020 and 2030.

Share of low-carbon fuels in total fuels: In the United States and China, a 5% milestone by 2030 for the share of low-carbon fuels indicates approximately 2–3 exajoules (EJ) of low-carbon fuels each year. If half of these fuels are biomass-based and half are derived from electricity, each country requires around 2–3 EJ biomass supply per year and around 900-1,500 Terawatt-hour (TWh) increase in electricity generation per year. A 30% milestone in 2040 requires around 10–15 EJ of low-carbon fuels, and then increases to 20–27 EJ by 2050 for the 60%−100% milestone.

ZEV sales share of on-road passenger and freight vehicle sales: We propose milestones for zero-emission vehicle (ZEV) sales of both on-road passenger and on-road freight vehicles, which illustrate a significant increase in sales of these vehicles by 2030 and 2040. China’s current policies aim to have a 20% share of ‘new energy vehicles’ in new passenger and commercial vehicle sales by 2025, which could be consistent with a 50% ZEV target by 2030 and 100% by 2040. The Biden Administration set a target of 50% ZEV sales share by 2030 (The White House, 2021; House 2021b). Ahead of the Administration, through Executive Order set the target of 50% ZEV sales share by 2030 (The White House, 2021), some states have set or proposed ZEV targets that are aligned with or exceed the milestones proposed in Table 3.

National targets for zero-emissions freight vehicles in the United States and China have not been developed and sales of these vehicles are still low. The 30% milestone in 2030 would thus be ambitious but is promising considering U.S. state-level policies. For instance, in 2020, a coalition of 15 U.S. states signed a memorandum of understanding (MOU) setting a target of 30% ZEV sales for medium- and heavy-duty vehicles by 2030 (Young & Miller, 2020).

Share of electricity in building final energy consumption: Based on the total electricity consumed in buildings as a share of final energy consumption, we propose milestones for residential and commercial buildings, implying that a significant fraction of new buildings would be all-electric or that a significant number of existing buildings would replace fossil fuel-based heating systems with electric heat pumps. The Chinese government assumes that it will be more cost-effective in many cases to reduce CO₂ emissions from buildings through electrification than with district heating. Otherwise, the milestone values in 2050–2060 and in the intermediate years would be lower.

Percent reduction in industrial CO₂ emissions: Industry milestones are cross-sectoral and are measured in absolute reductions. Based on CO₂ emissions from final energy consumption (not including electricity emissions) and industrial process, this approach allows the United States and China to share a range of different strategies to reduce industrial CO₂ emissions, e.g. structural economic change, end-use efficiency, electrification, fuel switching, and carbon capture and storage (CCS). The proposed targets aim to reduce industrial CO₂ intensity by around 35% by 2030 to meet the 2030 milestone of a 15% reduction in year 2019 emissions.

Net increase in forest volume: Although the estimated values of carbon sinks in the United States and China vary by approach (EPA, 2020; Wang et al., 2020), reforestation and afforestation still work as the main resources for the current terrestrial CO₂ sink over the past two decades. Maintaining and expanding the current levels of terrestrial carbon sink (0.7-0.8 gigatons of carbon dioxide per year (GtCO₂/yr) in each country) over the next 30 years requires more forest policy efforts. The milestones aim to capture a level of CO₂ sequestration in forests, in volumetric terms, that is equivalent to maintaining the current annual forestry sink for the next three decades.

5. Discussion: potential areas of U.S.-China coordination on carbon neutrality

The similarities between pillar strategies and milestones implies that the United States and China can make further efforts in carbon neutrality coordination. To explore the specific areas of coordination, we apply the framework to analyze gaps in technology and policy to gain an understanding of the common challenges. As outlined in Table 4, our discussion starts with outlining the current strategies in key sectors and evaluates the remaining challenges that the U.S. and China face in achieving their carbon neutrality milestones. Then, in Table 5, we identify forms of cooperation such as common policy milestones, dialogues and technical exchange, RD&D prioritization, and international leadership, and areas for prioritization of actions.

Table 4. Key technological solutions, policy, and policy and technology gaps (RD&D represents ‘Research, Development & Deployment’).

Sectors	Key Technological Strategies	Current Policy and Action		Policy and technology gaps
		U.S.	China
Electricity	Scale up wind and solar power generation	Established a national goal of 100% carbon free electricity by 2035 (The White House, 2021; House, 2021a)	Increase installed capacity of wind and solar; 20% of non-fossil fuel share of primary energy in by 2025 (Xinhua News, 2021)	-Land use trade-offs, integration obstacles for renewables -Coal phase-out in China -Lack of cost-effective reliable energy and long-duration storage technologies
Fuels	Increasing biofuel and hydrogen supply	Advancing smart fuel efficiency standards (USDOT, 2022)	China released the country’s first long-term hydrogen plan in 2022 to develop the domestic hydrogen industry by 2035 (CSIS, 2022)	-High costs, lack of regulatory framework. -Lack of cost-effective advanced (land efficient) biofuel technologies
On-road passenger and freight transport	Electrification and fuel switching	50% EV sales in the US by 2030 (The White House, 2021)	New energy vehicles and improving charging infrastructure for private and public vehicles (IEA, 2021)	Adoption barriers and new charging and electricity distribution infrastructure requirements
Buildings	Electrification	Increase electrification and energy efficiency in buildings (The White House, 2022c)	Focus on energy efficiency and reduced energy use in new and old buildings (IEA, 2021)	-High costs, adoption barriers and new electricity distribution infrastructure requirements. -Adoption barriers and new electricity distribution infrastructure requirements
Industry	Electrification and fuel switching. Technologies to reduce industrial CO2 process emissions	The Infrastructure Law passed in 2021 provides $20 billion for key industrial decarbonization investment, including hydrogen, carbon capture and storage (US Congress, 2021)	Reducing emissions and energy consumption in important and high energy consumption industries (IEA, 2021)	-High costs and lack of business models -Lack of cost-effective alternative energy technologies for some industrial processes. -Lack of cost-effective technologies for reducing process emissions
Forestry and agriculture	Afforestation, reforestation, and soil carbon sequestration	Climate smart agriculture and forestry strategy includes to enhance soil as a carbon sink, reduce and capture livestock emission, and enhance carbon storage in forest sector (The White House, 2021)	Expanding forest coverage, increasing conservation areas; reducing methane emissions from agricultural and waste sectors (Z Li et al., 2021)	Lack of funding, monitoring, verification, and compliance mechanisms
Geological sink	Power and industry Carbon Capture and Storage	Department of Energy invests 45M to CCS of natural gas power and industrial sectors (US DOE, 2021a)	Prioritizing CCUS in the coal-fired power sector (N Wei, 2021)	Lowering the cost of CCS and CCUS for deployment and scaling

Table 5. The key areas of carbon-neutral coordination between the U.S. and China.

Potential Focus Areas for U.S.-China Coordination on Carbon Neutrality
Collaboration forms		Areas for Prioritization
Common Milestones		Developing common and specific milestones for 2030, 2040, and 2050-2060, along the timelines of the milestones proposed in this report, and sharing information on effective policies and programs for achieving milestones.
Dialogue and Technical Exchange	Technical approaches and policy planning	Technical approaches and policy planning to achieve carbon neutrality goals in the medium and long-term.
	Different development directions for industries	Industry decarbonization. What are the technologies and potential policy and regulatory measures to encourage CO2 reductions in industry, focusing on the steel, cement, and chemicals sectors and cross-cutting technologies in other sectors?
		Forestry and agricultural extension. What management and extension practices can promote forest and agricultural soil carbon sequestration on a large scale, and how can sequestration be funded, monitored, and verified?
		Finance. How can the financial industry support the transition to lower carbon energy systems and more sustainable agriculture, forestry, and waste management systems?
	Reduce carbon emissions and improve energy efficiency	Renewable electricity systems. How can electricity systems be operated cost-effectively and reliably with much higher penetrations of solar and wind generation?
		Low-carbon fuels. What are potential regulatory and business models that can support an industry for low-carbon fuels – biofuels, hydrogen, and synthetic fuels? How can the sustainability and food security concerns around biofuels be addressed?
		Zero emission vehicles. What policy and regulatory measures can support the scaling up in manufacturing and adoption needed to electrify passenger transport? What are potential regulatory models for encouraging zero emission vehicles in freight transport?
		Zero emission buildings. What policy and regulatory measures can support electrification and building shell efficiency improvements for new and existing buildings?
		Non-CO2 GHG mitigation. What technologies and regulatory approaches can reduce methane emissions in energy systems and methane and nitrous oxide emissions in agriculture? What regulatory approaches can support alternatives to hydrofluorocarbons (HFCs)?
RD&D Prioritization		Reliable zero emission energy and long-duration storage technologies, which would facilitate low-cost, reliable 100% renewable electricity systems.
		Advanced biofuels, which would reduce the land use impacts and food security concerns with biofuels.
		Scalable building retrofit technologies and tools, which would reduce the costs of electrifying or improving building shell efficiency in existing buildings.
		Low emissions technologies for industry, which would provide low-cost technology options for reducing CO2 emissions in the steel, cement, and chemical sectors and for other cross-cutting technologies.
International Leadership		International shipping and aviation. Leadership in international organizations that creates a path to zero emissions ships and planes.
		Technology transfer. Incorporating CO2 emissions standards into guidelines for international development aid.
		CO2 sink governance. Development of international institutions to monitor, verify, and enforce CO2 sequestration.

For carbon source reduction in the energy sector, China has recently announced a significant wind and solar power rollout in the Gobi Desert. However, the challenge remains stopping the increasing use of coal power plants (Lo & Gerresten, 2022). Besides, there are increasing costs to maintain the reliability, resilience, and security demands for the electricity sector (Sepulveda et al., 2018). High costs also lower the market competitiveness of biofuels and hydrogen, and in neither country do sufficient policies, regulations, or business models exist to support these clean energy sources. In the U.S., given its recent climate policy advances, a more bipartisan approach to renewable policy could bring long-term growth of the industry and substantial technology innovation (Bang, 2021; Bang et al., 2016). In the transportation sector, more effective policies need to be released to encourage the deployment of electrification in vehicles for both nations. In the United States, there is a lack of regulations for EV promotion, but the Inflation Reduction Act (2022), with a total USD $370 billion climate and clean energy investment, provides significant incentives for EV deployment in the coming years. In China, though subsidies are already provided for ‘new energy vehicles,’ larger-scale policies and corresponding facilities, such as a charging networks, are still needed to narrow the implementation gap. In the building sector, research, development, and deployment (RD&D) is needed for new buildings to address challenges in the performance and requirement of electric facilities in cold weather. For existing buildings, other obstacles may hamper the implementation of electrification, such as the high costs of transitioning to a low-carbon electrical system. In the industrial sector, key industries including steel, chemicals, and cement, still lack clear technology pathways for GHG reductions and require future RD&D (EIA, 2020). Other challenges are the lack of electrification business models, cost-effective alternative technologies, and a useful low-carbon transition policy mix.

In addition to controlling carbon sources, the United States and China can expand carbon sinks. For forestry and agriculture, the key strategies are to increase carbon sequestration capacity by a payment to landowners for conservation through national programs or a permanent or long-term carbon sequestration payment through cap-and-trade programs. There are already some relevant national policies and programs in both nations, although corresponding program management systems for cap-and-trade programs are still lacking, despite the availability of ample funding. Geological carbon sinks lack a commercial model and sufficient international governance with verification and monitoring of sequestration quantities, despite the fact that the technology for capturing and geologically sequestering CO₂ is becoming increasingly sophisticated.

Besides policy and technological barriers, challenges exist in climate coordination and cooperation between the U.S. and China. One obvious impact comes from the rising tensions between the two countries, such that China announced a decision to pause climate talks with the U.S in August 2022. Meanwhile, one successful example of prior RD&D cooperation was the U.S.-China Clean Energy Research Center (CERC), which was a consortium formed during the Obama Administration to work with China closely on clean energy development (Lewis, 2014). However, this effort was discontinued during the Trump Administration, which explains the halting impact political leadership can bring to such bilateral cooperation. After a few months of suspension, U.S.-China climate talks were resumed immediately after a meeting between President Xi and President Biden in the margins of the G20 meeting in Indonesia in November 2022 (The White House, 2022c). The two leaders agreed to empower key senior officials to communicate and strengthen their joint climate efforts through existing mechanisms, such as working groups, which could create opportunities for high-level coordination on key strategies. Our proposed analytical framework (Figure 1) provides a feasible structure for dialogues and coordination for decarbonization in key sectors.

Another major challenge stems from the competing strategic interests in developing zero-energy-related industries and supply chains. An example is in the battery industry, where the U.S. has set its ambitious target to ramp up electric vehicle sales of 50% by 2030 and rapidly electrify its federal fleet, while China dominates both the supply chain of critical materials and battery production globally. Competing for more abundant raw materials and localized manufacturing capacity would lead to divergent industrial policies, which could lead to decreased willingness to cooperate and supply chain issues. Last but not least, issues in intellectual property infringement and forced technology transfer are obstacles to tackle for technological and RD&D coordination between the two countries. Although China is committed to improve its protection of intellectual property with more stringent law enforcement, the United States Trade Representative (USTR) found that China uses its foreign investment policy to encourage technology transfer through joint ventures with foreign companies.

In light of these technology and policy gaps, as well as challenges for cooperation, this study identifies several areas and forms for U.S.-China coordination, as shown in Table 5.

1. Developing intermediate and long-term sectoral common milestones for decarbonization is necessary to ensure mutual understanding of overall strategies and approaches for carbon neutrality. The metrics of such common milestones can help keep track of the progress being made in both countries against their climate targets respectively. In addition, shared understanding of these milestones and metrics can help guide the investment flowing into the targeted sector and accelerate the adoption of common strategies and technological solutions.

2. Another potential area of coordination between China and the U.S. is to conduct dialogue and technical exchange focused on similar challenges both countries are facing and on discussions that can drive convergence in technology strategies. Potential focus areas include medium- and long-term planning, renewable electricity systems, low-carbon fuels, zero-emission vehicles, zero-emission buildings, industry decarbonization, forestry and agricultural extension, and non-CO₂ GHG mitigation. Moreover, since the two countries have comparative strengths in climate policy, where the states are at the frontier of climate policy development in the U.S. while China has shown its strength on centralised planning and policy consistency, facilitating dialogue and technical exchange between the national and subnational levels could provide additional avenues for both countries in reaching carbon neutrality (DOE, 2021b).

3. RD&D prioritization is vital for achieving deep decarbonization and carbon neutrality. Both countries should conduct RD&D both domestically and collaboratively to the extent of the agreed intellectual property (IP) arrangement to improve existing technologies or new technologies to advance climate solutions. Some of the priorities in RD&D include additional low-cost reliable generation and long-duration storage technologies for the support of renewable electricity systems, scalable building retrofit technologies and tools, and energy efficiency solutions for industry. With successful RD&D coordination, both countries can go further than they would alone, assuming they have the same RD&D priorities, focus on common or complementary issues, and publish results on the progress they make.

4. In the future, the United States and China can exert international leadership in their coordination both domestically and globally and provide useful domestic and global signals about expected worldwide technological changes. The two countries can provide coordinated leadership on the issues of zero emissions in international shipping and aviation through international organizations (such as the International Civil Aviation Organization (ICAO) and International Maritime Organization (IMO)); technology transfer that incorporates CO₂ emissions standards into guidelines for international development aid; and CO₂ sink governance with the development of international institutions to monitor, verify, and enforce CO₂ sequestration. By initiating such international leadership, both countries will be able to increase the value of their actions, promoting global initiatives as well. To ensure that improved coordination leads to better climate outcomes, both countries should and could coordinate on data transparency, which could be part of the dialogues on progress and shared learning on data collection and monitoring, reporting & verification.

6. Conclusion

Our study suggests, even during the challenging times of bilateral relationship, coordination between the U.S and China on climate and carbon neutrality is necessary and possible. To coordinate on climate change is not denying the current challenges in bilateral relations between the U.S. and China, nor to ignore the barriers for such cooperation to happen. Despite current challenges in the U.S.-China bilateral relationship, there is still broad consensus that the U.S. and China will, at a minimum, need to coordinate efforts to achieve carbon neutrality to meet the Paris Agreement’s goal of global carbon neutrality by around mid-century. Both countries are facing the common challenge of implementing significant carbon mitigation initiatives to reach carbon neutrality by around mid-century. This challenge may be better met if the countries coordinate and facilitate synergies in carbon-neutral technology and policy development and implementation. Although the differences between the United States and China remain, technology pathways for achieving carbon neutrality are often similar, leading to the possibility of common medium- and long-term carbon neutrality milestones. Moreover, the U.S. and China share similar policy and technology gaps, which provides the common ground for policy and technical exchanges in practice.

Although ambitions can be aligned bilaterally or globally, actions are rooted domestically. To restore the cooperation between the US and China, focus can be placed on two dimensions: (1) re-establishing dialogues on the political and diplomatic front, as well as continuing technical exchange, and (2) coordinating on national and joint milestones on policy and technology development. The low-hanging fruits of policy coordination could include both countries setting up their own quantifiable decarbonization targets for key sectors such as electricity, building and transportation decarbonization targets, and sharing the best practices in these areas respectively. While uncertainties remain in national foreign policy and diplomacy, exchange at the subnational level could serve as an important channel for engagement. Particularly, states, provinces, and cities, as the pioneering laboratories for solutions, can play a larger role in the bilateral exchanges and coordination. Exchange and RD&D prioritization can also increase the scale of deployment of technologies, and contribute to broader international climate governance and leadership by demonstrating partnerships.

U.S.-China cooperation is critical for dealing with climate change. Cooperation could be built upon coordination, and needs to be rooted in technological strategies, and grounded in political realities. The deterioration of the U.S.-China bilateral relationship does not mean that the two countries cannot lay the groundwork for coordination and eventually enhanced cooperation; indeed, each country going its separate way is unlikely to solve a problem that is fundamentally global in nature.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by William and Flora Hewlett Foundation: [Grant Number 052766-001].