This September, China and California took a major step in a process that is slow-moving, but immensely important to the future and effectiveness of international climate change measures. On September 13, 2013, California Governor Jerry Brown met with Vice Chairman Xie Zhenhua of the National Development and Reform Commission of the People’s Republic of China (NDRC) to sign a memorandum of understanding to enhance cooperation in an effort to combat greenhouse gases and carbon emissions, including strengthening of performance standards to control greenhouse gasses and designing and implementing carbon emissions trading systems.¹

The agreement is the first of any such agreement between a U.S. state and a major Chinese governmental entity. Many hope that this unique relationship between two of the world’s largest economies will serve as a driving force to fund clean energy technology and innovation.

China, as the world’s fastest growing large economy, offers fertile ground for the rapid growth of new energy technologies, energy efficiency programs and other sustainability measures. For example, China is currently experimenting with a cap-and-trade carbon pricing mechanism and recently set up emissions trading schemes in seven of its largest cities.

Over the last several years, there have been a host of investments in U.S. clean tech companies by Chinese companies. These have brought welcome dollars to a range of U.S. emerging growth energy tech companies, as U.S. venture capital investing in the sector slowed significantly.

The new agreement is the culmination of a year’s worth of diplomatic outreach between California and China. Last June, Governor Brown undertook a trade mission to China (which formed the basis for a similar trade-focused agreement also signed on September 13). He highlighted in his talks with Chinese President Xi Jinping that China must take climate change seriously if a partnership was to succeed, citing the overwhelming smog that hangs over Beijing. In her visit this summer to Shenzhen, the site of China’s first carbon trading program, California Air Resources Board Chair Mary Nichols also underscored this need in her efforts to build a solid foundation for future emissions trading.

Brown said that he sees “the partnership between China, between provinces in China, and the State of California as a catalyst and as a lever to change policies in the United States and ultimately change policies throughout the world.”

The agreement clearly establishes a partnership between China and California that aims to mitigate carbon emissions, strengthen performance standards to control greenhouse gasses, design and implement carbon emissions trading systems, research clean and efficient technologies, and trade expertise and skilled personnel in the field.

Efforts to reinvigorate trade, investment, and resource sharing relations between China and the United States have been a priority for the top two world economic super powers during the past year. At the G-20 Summit in early September in St. Petersburg, Russia, President Barack Obama and President Xi announced that they would actively work to uphold the 1987 Montreal Protocol, a treaty that phased out ozone-depleting substances. At the Sunnylands Summit in California — the first face-to-face meeting between the leaders — they agreed to work together to phase out the consumption and production of hydrofluorocarbons (HFCs) — substitutes for ozone-depleting chlorofluorocarbons (CFCs) and GHGs.

In July, the United States-China Climate Change Working Group presented a report that proposed five new areas of focus to help guide China’s efforts to mitigate the effects of climate change. These included transportation, smart grids, the capture, utilization and storage of carbon, energy efficiency measures and data transparency.

At the signing of the MOU, Brown’s sentiment that climate change was “the greatest problem mankind has ever faced,” was reaffirmed by Vice Chairman Xie, who said that climate change has become more of a priority as the human and economic toll it has leveled becomes less and less avoidable.

Although it may be a slow process to achieve implementation of specific programs under the new agreement, this kind of cooperation is a signal that change is in the air.

_{¹ The full text of the English language version of the agreement can be found here: http://www.gov.ca.gov/news.php?id=18205}