What the US-China climate agreement means for the future of cleantech

Last week, the US and China took a huge step forward in advancing clean energy and cutting carbon emissions. Here are some key things it could mean for the future of renewable energy technology.

A solar array on top of a roof in Los Angeles, California.
Image: Lyndsey Gilpin/TechRepublic

Last week, the world's two biggest economies -- and also the two biggest emitters of greenhouse gas emissions -- came to a historic agreement. The US and China jointly announced a deal to cut carbon emissions, reduce greenhouse gases, and tackle climate change. They took a powerful stance on the issue, which could prompt the international community to take action and create new urgency in the cleantech sector.

We can expect a boom in solar power generation, electric vehicles, and energy storage and smart grid deployment -- that is, if China and the US make good on their promises and follow through with the obligations they've created.

Here are five things to know about the agreement and what it means for the future of renewable energy and the technology behind it.

1. Expect a boom in renewable energy

The US declared that it will cut carbon emissions by 26% to 28% below 2005 levels by 2025. That's a big jump from Obama's previous plan of cutting emissions 17% by 2020, so this plan is ambitious but attainable. On its current trajectory, the US is reducing those emissions by 1.2% each year until 2020, but then it will have to reduce by 2.3% to 2.8% from 2020 to 2025. But, there are no new regulations. All these reductions will occur under existing law, according to the White House release.

China is committing to peak its carbon emissions around 2030 -- but trying to peak early -- and boost its renewable energy to 20%. The International Energy Agency states that China's peak will probably be around 2019. To accomplish this goal, though, China will have to deploy an additional 800 to 1,000 gigawatts of zero-emission generation capacity by 2030, according to the White House. China already has an existing goal of 15% renewables by 2020.

2. Solar will play a larger role going forward

By the end of 2014, the Solar Energy Industries Association (SEIA) estimates that the US will have 20.2 gigawatts of installed solar capacity, which will be enough to power about 4 million homes, and another 20 gigawatts for 2015. The solar industry employs 143,000 Americans and pumps nearly $20 billion a year into the US economy, said Ken Johnson, vice president of communication for SEIA.

According to him, that growth is due, in large part, to smart and effective public policies, such as the Solar Investment Tax Credit (ITC), Net Energy Metering (NEM) and Renewable Portfolio Standards (RPS).

"If governments are smart and forward looking - and send 'clear, credible and consistent' signals as called for by the International Energy Agency (IEA) - we concur with IEA that solar could be the world's largest source of electricity by 2050," Johnson said.

3. This agreement will likely change the solar industry

The agreement will have a positive impact on the US solar industry, but we will probably hit some speed bumps along the way, according to Johnson.

"With worldwide manufacturing capacity of PV panels already tight, any immediate ramping up of solar installations by China could squeeze supplies and increase prices. By how much? It's hard to tell right now," he said. "But at the same time, higher demand will also open up exciting new manufacturing opportunities - both here in the United States and around the world - while moderating prices. It's simply too early to tell how this will all shake out in the end."

The SEIA's stance is that the agreement sends a very clear signal to private investors, political leaders and regulators that solar energy can be a huge asset in the fight against climate change. Solar power can provide more clean, renewable, affordable energy, but it can also help states meet proposed new obligations under the Clean Air Act and under the China/US agreement.

4. We still need more talk about technology

Making this announcement was a huge step, but to follow through on the agreement will require important policy decisions in renewable energy technologies, specifically regarding storage and transmission -- which are areas that have been moving the slowest.

The US-China agreement doesn't specifically mention much about new clean energy technologies like solar, wind, or hydro power. "Solar energy" is mentioned one time at the end, in the context of collaborative projects and pilot programs between the two nations.

But the majority of the "technology" the agreement discussed refers to clean coal technologies, as Al Jazeera pointed out.

The U.S.-China Clean Energy Research Center was established to study how to more efficiently run buildings and vehicles, but also how to make carbon capture and storage technologies, which are very controversial, more efficient. These systems are often referred to as "clean coal," because the coal is scrubbed more than usual, and then the carbon is captured and buried underground. It is a solution that could potentially fare well for China, who produced 4 billion tons of coal in 2013, according to the World Coal Association.

So even though this agreement is historic, to make good on the obligations, both nations will have to put a lot of R&D -- along with more money, and more compromises -- into technology other than just clean coal to deploy renewable energy faster and more effectively.

5. This is a good step for trade relations

China and the US haven't exactly been friendly about trade agreements regarding clean energy until now, so this agreement is important for trade relations. As the solar power industry has exploded in growth, there have been some tense moments between the two nations, like earlier this year when China was accused of illegally dumping low-priced solar panels on the US, at a time when the US was trying to boost domestic solar panel production. The Commerce Department raised tariffs this summer on Chinese solar technology.

China is currently the world's largest producer of solar panels, and with their new clean energy generation goals, that doesn't look to be changing anytime soon. There are no details yet on when manufacturing will begin or ramp up in either country, or how market prices will change for solar. However, the collaborative efforts between the US and China bode well for the solar industry in both countries going forward.

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