The Secret Deal to Save the Planet

It was not just because China was the world’s biggest polluter (an honor the U.S. had held until about 2006), but the Chinese also hold tremendous sway over developing nations of the world. Get China to take action, and chances were good that India, Brazil, South Korea, Mexico, Indonesia and other increasingly prosperous nations would come along too. 

But moving climate to the top of the agenda, Podesta realized, would be difficult. “In China, the politics of climate change are different than in the U.S.,” says Li Shuo, a Greenpeace activist in Beijing. “No one in China denies climate change is a problem. But we have more immediate problems – like air and water pollution, most of which come from our dependence on coal.” According to one study, air pollution contributed to the premature death of 1.2 million people in China in 2010. “China today is a lot like America was in the 1960s and Seventies – the rivers are on fire, the sky polluted, and the rising middle class is not going to put up with it anymore,” says Jigar Shah, a solar-industry pioneer. For U.S. negotiators, it was important to convince the Chinese that cutting carbon pollution would not only clean up the air but also lead to more political stability for the regime. “They will have a social revolt on their hands if they don’t come up with a way of dealing with this,” U.S. Ambassador Max Baucus told me bluntly when I was in Beijing this past summer.

But for the U.S., nothing with China comes easy. “The relationship between China and the U.S. has been on a downhill slide,” says author Orville Schell, who has been writing about China since the 1970s and now heads the Center on U.S.-China Relations at the Asia Society in New York. The Chinese fear the U.S. has a long-term strategy to contain China, while the U.S. fears China’s increasing strength means trouble for American interests in Asia and beyond.

On top of the rising superpower tensions, climate negotiations are made more difficult by the fact that China is a developing nation. It may be the world’s number-one polluter by volume, but its per-capita emissions are far lower than ours. The Chinese argue (with some justification) that global warming is a problem that has been largely caused by 200 years of fossil-fuel burning, mostly in the U.S. and Europe, and so it is the West that bears most of the responsibility for fixing it. Which meant that if U.S. negotiators were going to entice China into making a commitment to cut carbon emissions, the U.S. needed to jump first. But Obama’s hands were tied. The U.S. Congress was not going to pass global warming legislation, so the only option was executive action. Everything depended on the EPA rules on power-plant pollution, which were still in the works, and dependent on withstanding court challenges – not at all a sure thing.

“A candidate who denies the reality of climate change,” says Podesta, “will have a hard time getting elected president.”

Still, after some discussion between the White House and the State Department, Obama gave them the go-ahead to pursue a deal. After Stern made the phone call to Xie in February, Kerry broached the idea with many key figures in the Chinese leadership, including President Xi, on his swing through Asia a few days later. The response: “ ’Oh, this is interesting,’ but they were not eager to pursue it,” Podesta says. It became clear it would take presidential muscle to get any kind of a deal moving. In mid-March, Obama sent a private letter to President Xi that brought up a range of subjects, from the nuclearization of North Korea to territorial disputes in the South China Sea, but which also pushed for a climate agreement between the two nations. The gist of the letter, according to Podesta, was that “ ’this could be meaningful, if we both make serious post-2020 contributions.’ ” 

Soon after Xi, whom Schell describes as “a ruthless utilitarian,” ascended to the role of China’s president in 2013, he had traveled to Rancho Mirage, California, to meet with Obama for two days of informal talks, where, among other things, they struck a deal to limit emissions of hydrofluorocarbons, a climate-eating gas. Schell describes their relationship as wary, but pragmatic. “There is no warmth between them,” he says. “There is a lack of trust, a paranoid attitude toward each other. But also an awareness that they have to work together.” 

Obama’s hand was strengthened in early June, when the EPA formally announced the Clean Power Plan, which would cut carbon from power plants by 30 percent by 2030. The result of a 2013 executive action in which Obama instructed the agency to come up with new regulations on power-plant emissions, the plan was well constructed and would likely hold up in court. It was an important sign of the seriousness of the administration’s effort, and it gave U.S. negotiators leverage to say to the Chinese, “Hey, we mean business.”

A few weeks later, a swarm of U.S. diplomats, including Kerry, Podesta and Stern, flew to Beijing for the Strategic and Economic Dialogue, a high-level diplomatic meeting between the United States and China. I accompanied the U.S. delegation on this trip. There was a lot of talk about what kind of commitment the Chinese might make in Paris and about what the U.S. could do to strengthen that commitment, but no indication, on or off the record, that a secret deal was in the works. But clearly, talks were serious. The day before the official meeting, Podesta and Stern, as well as U.S. Energy Secretary Ernest Moniz, spent a full day at the Diaoyutai State Guest House with their Chinese counterparts, going over economic modeling results and various technological options, trying to get a sense of what the costs of various levels of carbon reductions would be.

In addition, Stern and Podesta had one-on-one meetings with Xie Zhenhau and Vice Premier Zhang Gaoli (“the man with the portfolio,” Podesta says). “They told us we might be able to put a deal together, but not until 2015,” Podesta recalls. “But Todd and I both thought there was potential to do something earlier.” U.S. negotiators knew that the sooner the deal could be announced, the more leverage they would have to shape the outcome of the Paris negotiations.