By Serge Abou (China Daily)
Updated: 2008-04-23 07:27

China and the EU are strategic partners. It is important to reiterate this and to convey this simple and strong message to our respective public opinions.

This means that our relations are based on a deep understanding of our long-term mutual interests, that we favor dialogue as a means to sort out our differences when they occur.

Indeed, when we consider the range of issues we are both confronted with - world peace and stability, world trade and investments, energy, macroeconomic imbalances and resurgence of inflation, food supply, the environment, climate change, and so on - there is not one single issue which does not call for increased cooperation between China and Europe not only for our mutual benefit but also for the benefit of the entire world.

When the President of the European Commission, Jos Manuel Barroso, visits China tomorrow and on Friday along with a group of nine members of the commission, climate change and sustainable development are going to be among the main issues he will raise with the Chinese leaders.

The Kyoto Protocol that came into force in 2005 stipulates that the European Union shall reduce greenhouse gas emissions by 8 percent by 2012 over the 1990 levels. EU emissions are now very close to this target and through a series of new policies introduced in the EU we are set to meet the target.

A part of this reduction has been achieved by making use of the Clean Development Mechanism (CDM) under the Kyoto Protocol.

This instrument allows countries and companies that have emission caps to offset emissions by buying credits from countries, such as China, that do not have any emission caps but are nevertheless parties to the Kyoto Protocol. Their main interest in doing this comes from the fact that emission reductions in China can be achieved at lower costs than in Europe.

Europe and China are the leading players in the fast-growing business of CDM. The EU is buying more than 80 percent of all emission credits globally and China's share of the market as seller is more than 50 percent.

Only in 2007, European companies subject to emission caps as well as European states facing hard-to-reach targets have provided finance that has made it possible for China to reduce greenhouse gas emissions through some 650 projects implemented in various parts of the country.

The total value of these projects, in terms of emission rights trading, is estimated at 40-50 billion yuan. This shows the scope of financial and technological transfers from the EU to China that is taking place under the CDM.

Business cooperation under the CDM is providing vital support to China's transition to a low carbon economy, by financing real emission reductions in sectors such as energy generation (through hydropower, windpower, high efficiency coal plants and fossil fuel switch), coal mining and chemical industry.

This source of finance adds to policy support, institutional capacity building and research cooperation under the EU-China Climate Change Partnership established in 2005 and to financing by EU development banks, including the China Climate Change Framework Loan of 500 million euros that the European Investment Bank has made available to the Ministry of Finance of China.

The European Union has played an important role in creating the conditions for the CDM market to thrive here in China.

The EU has done this first by strictly implementing the commitments that its member states have taken under the Kyoto Protocol, and by ensuring that the companies in the European emissions trading system are given strict emission caps.

Secondly, it has been done by helping China set up the necessary infrastructures for CDM - for example, we are currently teaching Chinese verifiers how to check that CDM proposals meet the requirements laid down under the Kyoto Protocol.

This joint action on CDM goes hand in hand with many cooperation projects between the EU and China in the field of Energy, environment and climate change, the latest being the creation in Beijing of a "EU-China clean energy technology center" in order to foster exchanges of technologies between our respective research centers, industries and business.

The European Union has started to channel investment spending into cleaner, low-emission technologies. We look forward to intensifying our dialogue with the Chinese government with a view to reaching a new international agreement for which, I hope, future generations will thank us.

The author is EU Ambassador to China

(China Daily 04/23/2008 page9)