Conference Call: Assessing the U.S.-China Climate Deal

MCMAHON: Thank you all for joining this Council on Foreign Relations on-the-record conference call which is going to be assessing the U.S.-China climate deal just announced this week.

I'm Robert McMahon. I'm editor of CFR.org and I'm moderating this call for the next hour.

We are fortunate to have with us Michael Levi who's CFR's senior fellow for energy and the environment. He's also director of the Center for Geoeconomic Studies and he's co-author with CFR's Elizabeth Economy of the book "By All Means Necessary: How China's Resource Quest is Changing the World."

We're going to be talking today through one of the biggest news-making developments of President Obama's trip to Asia and the Pacific Rim. I'm going to start off by discussing the climate agreement with Mike for about 20 minutes or so and then open the call for your questions.

Mike, I'd like to kick off with -- with kind of a broad view about the announcement which has spurred a great deal of excitement. It's now been brewing for a couple of days; it's also stirred some cynicism and maybe a good bit of distortion, as well. How about you just tell us what kind of deal this is; what -- how new is this for China, how new is it for United States?

LEVI: So Bob, why don't we start just going through the very basic numbers quickly. This was a joint announcement -- some might call it a deal, others might not. It was a joint announcement where President Obama said that the United States would cut its greenhouse gas emissions to 26 to 28 percent below 2005 levels by 2025.

And Chinese President Xi Jinping announced a target of peaking carbon dioxide emissions around 2030 with a goal of doing that earlier, and at least as important in my account, a goal to increase the share of energy coming from non-fossil sources to around 20 percent by 2030.

So, the first question that has been on people's minds is how does this compare to where everyone was already heading? And I think in both cases, this is a move beyond the status quo. In the United States, that's relatively clear. We have projections for the impacts of various policies that the administration has been pursuing and they don't add up to a 26 to 28 percent reduction by 2025. You need to do more in order to get there.

And what I would say in terms of ambition is that the U.S. goal is a real stretch for the use of existing legal authority, which is the way the administration framed it and the way the fact sheet framed it.

It's not necessarily an enormous stretch in the grand scheme of things. If you were able to proper legislation and target opportunities that way, it would actually be easier to achieve this sort of goal. But using distant (ph) authority, this is -- this is a real stretch and we can talk more about that.

For the Chinese case, there's been a lot of debate in the media over whether this is business as usual, whether this is already what we expect or whether it goes beyond that.

On the peaking announcement, you can certainly find projections of Chinese emissions that foresee a peak around 2030. But typically, those projections are not only projecting economic dynamics, they're projecting future policies. So, they are looking out at the world saying we expect China to pursue policies that they aren't right now and those policies would lead to a peak around 2030.

And that's all fine but it's difficult to then turn around and say whenever China announces new policy, that doesn't really count because we're already expecting you do to do it. And I think if you look at the projections that don't anticipate new policies, that say where are you today and where does that take you, this does look genuinely new.

The other thing I'd add on, the sort of newness of the Chinese goals, is that while we like to fixate on emissions targets, this goal of getting 20 percent of primary energy from zero carbon sources or non-fossil sources by 2030 is a big, big change from business as usual against almost every projection that we have out there.

MCMAHON: And so -- so, it is new; it's a potential game-changer. Why would China, though -- although it's not -- it's not seen as a binding agreement, shall we say, but it's -- they decided to go in jointly with the U.S. on this. Why make a joint declaration like this from a Chinese perspective?

LEVI: Well first let's take a quick step back. I don't know that I would use the word game-changer. I think this constitutes progress.

And when you're talking about climate policy, the bar is often very low, certainly (ph) if (ph) you're comparing things to past actions. So, something doesn't need to be a game-changer in order to be significant and meaningful.

I think part of the -- the confusion in the public debate has been over whether this saves the world or whether it's absolutely nothing -- and it's neither of those. This is on -- when it comes to sort of substantive energy progress, it's incremental.

I think where it is -- where there is a more fundamental break is on the way this was announced and the way this was done jointly. It might seem small but historically the Chinese have been extremely reluctant to make anything approaching this sort of joint announcement with the United States.

On energy but particularly on something that's specifically climate policy, the Chinese have guarded their independence -- not just as a matter of substance but as a matter of principle. And so, nothing that might hint that their energy policies are shaped by international dialogue or discussion, particularly around climate, was going to be broached.

And I'm -- I'm confident that this wasn't an easy fight within the Chinese government to -- to do this sort of thing. Obviously President Xi has the final word -- word but politics still matters within the Chinese government. I would be shocked to discover that Chinese climate negotiators were happy with this approach; they've been very protective of China's independence in the climate process.

And so, this signals a new level of comfort with the different approach. I think it also signals a decision by Xi Jinping that this is important; that showing an eagerness and ability to cooperate at some level with the United States on an important global issue matters.

I think it may also signal that the underlying energy policies that would affect this transformation that are driven by concerns about pollution, concerns about the need to restructure the Chinese economy -- that these are real priorities for him and that by making an international not quite commitment, but at least some sort of pledge on -- on some of these goals, he will gain an additional lever domestically to pursue some of those targets. So, it's also a sign that these various efforts to transform the Chinese energy system, the Chinese economy, are ones that he's pursuing aggressively.

MCMAHON: OK, so let's look at from the U.S. side, then. It -- this announcement comes shortly after the mid-term elections in which President Obama's party, the Democrats, were soundly defeated in terms of losing seats in the House and losing control of the Senate, as well.

The Senate will -- emerging in the Senate will be some -- some senators who are known as skeptics on climate change. How much does any of this matter for the goals laid out by Obama?

LEVI: I don't think there was much prospect of a lot of progress on some of these goals and in Congress with the current arrangement. And so, I don't know that the changes in Congress have a huge impact.

There certainly has been hostility in a lot of quarters to the administration's aggressive use of existing authority, particularly with the EPA, in order to get their hands around emissions.

And this announcement particularly as it comes without any details about how the U.S. goals are going to be achieved can only make -- can only make members of Congress and senators more skeptical and more concerned.

That said, it's hard to see how Congress even in its new configuration gets a veto-proof vote on these issues. And one of the signals that the president is sending through this announcement is that this is a high priority for him just like it's a high priority for the Chinese president; so, high priority for him. And I think it would take a lot to force the president into a situation where he was unwilling or unable to use his veto.

And the other thing we're keeping in mind in all of this is that the decisions that will ultimately determine whether the United States reaches these goals, certainly if they are reached using executive authority, will be made by the next president, not by this one.

One way I try to get context on this is by -- by thinking (ph) to (ph) an analogy. It's 2014; we're talking about a goal in 2025, OK? The previous goal we talked about was for 2020.

So, this is an 11-year lead; an 11-year lead for 2020 was 2009. So, think back to 2009 when the United States said we're going to cut our emissions 17 percent below 2005 levels by 2020. At the time, we thought we were going to do that with the cap and trade bill; that's now moved.

We didn't have a sense that there was going to be a massive natural gas boom that would create new opportunities to cut emissions. We didn't have a sense that there was going to be rapidly falling costs for renewable energy that would open up new opportunities there. We didn't know if the decline in U.S. oil consumption was purely driven by the business cycle or if it was part of a more secular trend.

And so, had we sat down and asked in 2009 how are we going to achieve these goals I don't think we would have had a very clear idea. Even today, five years later, we still haven't finished -- the government still hasn't finished putting in place the rules, the programs that they need to achieve the 2020 goal.

So, the idea that this is all going to be wrapped up for 2025 and predetermined in the last two years of the Obama administration I think is a real stretch and isn't consistent with the experience we've had.

MCMAHON: So, in the extremely shorter term, there is this -- this deadline for a global deal by December 2015 in Paris. What does this announcement this week mean for client negotiations over the next year?

LEVI: It's generally positive for climate negotiations over the next year, as is the news today about U.S. contribution to the Green Climate Fund, which is an international fund, part of the efforts to mobilize support for developing countries. But I think that focusing on the question of what this means for the Paris climate talks sort of misses the point, or at least misses the central point.

I mean first, global emissions are dominated by China in the United States. The biggest reason you might want a global agreement is because of what it does for China and the United States. So in that right, the Chinese and U.S. decisions are the game and what they mean for the Paris talks is somewhat secondary.

I think even more than that, climate policy is still 90 percent domestic and 10 percent international. And so, even when you look at the U.S. and Chinese announcements or the Paris talks, where they matter isn't how they affect leverage domestically and how they affect momentum domestically. And -- and they can only do so much there; these countries' decisions are still going to be driven by their domestic economics, their domestic environmental situation, by their international security concerns.

So, when it comes to Paris, once again what's going to matter is at least as much atmospherics, the general attitude that comes out of it -- whether that is positive or negative, whether that is seen as a single that this is an enterprise worth engaging in or one that's doomed to fail. And I guess in that -- in that regard, at least we're moving one point of contention among the United States and China -- is promising. And more broadly, this sign that the United States and China are able to work together and want to work together to come to these sorts of agreements is promising.

But it -- but to drive home this bottom line, I don't think that should distract us from the fact that this deal matters because of the deal and because of what it signals; not a lot more because of what it says about a future agreement comparison.

MCMAHON: OK, so let me ask one more question related to the deal and then open up the call for questions from any people on the line.

You had -- you summed up your -- your opening remarks talking about the significance of the Chinese pledge of 20 percent, I believe, clean energy by 2030. Can you talk a little bit about what this actually means in terms of the scale of clean energy and what China's been doing in that area now to make us think they could reach that?

LEVI: Right, so the first thing to say there is it's important to be clear about what that goal is. It is not, contrary to some of the reporting, a renewable energy goal. It is a goal for, depending on how it's being reported, non-fossil energy or zero-carbon energy, both of which prominently include nuclear power -- and even within the renewables category, both of which prominently include hydroelectric power, so not the usual suspects of wind and solar.

I don't know that the Chinese know exactly how they get there and what the mix is between these different sources but I -- I think we can be confident that it is a mix; it's not just one or the other.

And China's been investing a lot in -- in these areas. One of the challenges here is even as they invest a lot in boosting their zero-carbon sources, particularly in electricity generation, this is not a target for a percentage of electricity generation. This is a target for a percentage of total energy, which means that it includes transportation, it includes industry; so that makes it tougher.

What we also know is that Copenhagen's promised a goal of 15 percent of penetration of zero-carbon sources by 2020 and that's already proving challenging to reach. If you look at sort of mainstream projections out there using -- using Chinese accounting methods, you'll find International Energy Agency's new projections foresee under current policy somewhere around 15 percent of Chinese energy from non-fossil sources by 2030. The U.S. projections, or at least last year, about 13 percent, and other projections at similar levels.

So, you have a large difference between -- between where a lot of smart analysts think the Chinese are heading now and where they would have to come in if they were to meet these goals. Can they achieve it? I think it's challenging; it's particularly challenging if they have a heavier reliance on renewables because at that kind of penetration, you get real -- real challenges with grid integration with dealing with the fact that these are intermittent sources.

And with nuclear power, China still starts from a very low level and there are a lot of -- a lot of unknowns there. We've seen nuclear power programs that appear to be destined for escape velocity -- never really take off. You certainly saw high hopes in the United States back in the 1970s for nuclear power that all of the sudden flattened. So, it's also difficult to know exactly where that heads.

Again, I don't think one ought to evaluate this deal on whether 20 percent is good enough or not good enough or 2030 is good enough or not good enough, but on whether this pushes things in the right direction. And I think having that sort of goal does.

MCMAHON: OK, great. So, we've got a good -- good framing now to dive into this a little bit more -- a bit more depth and I want to open up this call to those on the line.

Just as a reminder, this is a Council on Foreign Relations on-the-record conference call and we're assessing the U.S.-China climate deal announced this week. I'm Robert McMahon, editor of CFR.org, and I'm speaking with Michael Levi who is CFR's senior fellow for energy and the environment and co-author, along with Elizabeth Economy of CRF of the book "By All Means Necessary: How China's Resource Quest is Changing the World."

And with that, operator, could you please let us know if you have a question on the line right now?

OPERATOR: At this time, we will open the floor for questions. If you would like to ask a question, please press the star key followed by the one key on your touchtone phone now. Questions will be taken in the order in which they are received.

If at any time you would like to remove yourself from the questioning queue, just press star two. Again, to ask a question, please press star one.

And at this time we do have a question from David Wirth.

QUESTION: Yeah, David Wirth, Boston College Law School. Getting back to the relationship with the Paris talks, paragraph two explicitly references the protocol or another legal instrument or agreed outcome with legal force under the convention.

And I was wondering to -- wouldn't one expect that this would establish at least a floor for the proposals that both China and the United States would be expected to make next spring in anticipation of the -- of the Paris conference? And could you answer with respect to both countries, because both of them have been a little bit vague about their commitments in the -- in the Paris process.

LEVI: So, it's a great question. The first thing, and you point to paragraph two; I -- I trust that the fact sheet that the White House released, which reiterates some of the components of an agreement, and the first thing of the...

(CROSSTALK)

QUESTION: And I'm talking about -- I'm talking about the actual agreement.

LEVI: OK. In -- in either case, one of the things you have there is a reiteration of some of the elements that would have in the agreement, particularly ones (ph) China wants around come (ph) the differentiated (ph) responsibilities. And what that says is that that's not going to be a sticking point in Paris if they've already agreed on this; there's unlikely to be a sticking point in Paris if they have already agreed on it.

When it comes to the actual proposals that the countries bring forward which they're supposed to put forward in the first quarter of next year, I want to say I think you're right. I think this establishes a lower bound on that. And for each country, I think people will be looking for some more detail.

I think with the United States, people will be looking for at least a bit more information about how the United States envisions reaching this 26 to 28 percent objectives; how -- what is the mix between energy and non-energy, what is the mix between carbon dioxide reductions, reductions of other sources, how does forestry figure in -- there are a lot of different pieces here.

With the Chinese announcement, I think the big thing people are going to be looking for is a target for reducing the carbon intensity of the economy -- the amount of emissions per unit GDP. The Chinese signaled at the U.N. Climate Summit in September that a carbon intensity target would be -- need to be part of a sensible vision or path for their emissions.

And there's a bit of an irony here. For a long time people focused on climate have said carbon intensity targets don't matter so much. They don't tell you that you're actually going to reduce emissions; they only tell you what will happen relative to GDP. And you can have a carbon intensity goal and still keep increasing your emissions.

What we have now is we have a peaking year, which people have been asking for for a long time, but we have no idea at what level the Chinese envision peaking. You can peak in 2030 at 15 percent above current levels; you can peak in 2030 at 30 percent above current levels. And one of the key ingredients to knowing which of these levels or whether it will be another that they reach is going to be knowing what their carbon intensity goals are. So, I think that will be a big thing to watch for in the first quarter of next year.

MCMAHON: That's for that question, David.

Operator, do we have another question, please?

OPERATOR: We do. Our next question comes from James Fallows.

QUESTION: Yes, this is Jim Fallows from the Atlantic here in D.C. I have a question about the larger China-U.S. aspect of the relationship. And you may or may not be involved in what I'm going to ask.

One of the reasons the -- the announcement was so surprising apart from the very important climate implications was that it was the -- just about the first positive thing we've seen China and the U.S. for quite a while. And the -- almost the first time where the reform side of the Xi Jinping regime was more evident than the crackdown side.

Is there anything you can tell us about the road to this negotiation and why -- why this -- why it had those aspects? Why as the U.S. able to get a deal on this and not on some other things?

LEVI: That's a great question, Jim. And it's hard for me to answer the part about the other pieces.

On the -- on the climate one, I can offer a few ideas. First, by most accounts, while the relationship has been tense and particularly there's been tension in the region between China and U.S. friends and allies, there seems to be at least some recognition on Xi Jinping's part that a purely bad news story about the relationship between the big rising power and the big established power tends to lead to very ugly outcomes -- that history is not kind to that sort of narrative and that sort of narrative ends poorly.

And so, at a minimum to have at least one thing that friends can point to, that people who want to sell a positive story can point to is a useful thing.

Now, why energy and climate? It may be that this is one place where the -- where international cooperation and lining up with the United States bolsters his domestic goals. He wants to reduce air pollution to deal with the political and economic fallout that comes with it; he wants to restructure the economy as leaders have before him. And -- and we know that that's always been -- that's been a challenging thing to do, not just economically but politically.

And so, each of these, if we can get a little bit more support and another, you know, add another piece of ammunition to those who want to push in that direction internally (ph), that's a valuable thing to do. And if there can be a signal sent that this isn't all about a clash and this isn't all about antagonism then you get something positive out of there, too.

But I'm confident that this wasn't easy and I'm confident that this was not something that everyone in the Chinese government lined up behind. I would be very surprised -- I might have said this earlier -- the Chinese climate negotiators like this. And I'm sure there are others who don't like the reform side of the equation who would not have been warm toward -- toward this sort of decision.

QUESTION: All right, thank you.

MCMAHON: Thank -- thank you.

Operator, is there another question, please?

OPERATOR: Yes, your next question comes from Jim (ph) Derrick (ph).

QUESTION: Yes, Michael, this is Jim (ph) Derrick (ph), energy attorney from Houston, Texas. I wonder if you would be willing to share with us your views about how this agreement between the U.S. and China might influence the position of other countries in the world with significant economies such as India and Brazil and the countries of the U -- of the E.U. with respect to the climate matters.

LEVI: So, I go back to my 90-10 rule -- 90 percent of countries' climate policies are shaped by domestic considerations and maybe 10 percent are shaped by international ones, or at least by international climate ones. And for every other country, this U.S.-China agreement is an international climate and energy consideration.

What this -- so, that's a --- that's a way of saying I don't expect radical changes in Indian policy as a result of this. I don't expect radical changes in Brazilian policy as a -- as a result of this. I think we're seeing changes in India, for example, on -- on support for solar, on changes in diesel subsidies for all sorts of other reasons; those are significant, but not as much for this.

What this does do is provide leaders in those others countries an opportunity to play a similar sort of game where they can get international points for doing something that they already see as desirable domestically for other reasons. And they can get a big of support domestically.

So, if there is political tension and bureaucratic tension over changes being sought in India and Brazil and Indonesia and Europe and elsewhere, it does help if you can say look, there is this international climate process -- it's working better than you think; we want to be part of it. And in order to be part of it, we need to make these changes. By the way, we want to make these changes also because of air pollution because they'll be better for our economy, because they're better for (ph) security (ph) -- not in all cases, but in some.

I'd say this is particularly going to be the case in some of the developing countries. I think in Europe, it's -- they're in some sense on their own track. I was going to say out ahead; that's true time-wise. I think people overstate how far they are ahead as a matter of substance.

But -- but that's how I see the -- the relationship between this and the decisions that other countries make.

I'll give you -- give one other sort of reminder -- that's at the substantive level. At the diplomatic level, we have seen repeatedly in recent years the United States and China able to bury their differences to muddle through these global climate talks, and opposition from elsewhere -- sometimes India, sometimes some of the Latin American countries, sometimes the big oil producers that have been able to throw a wrench in the process.

So, U.S.-China camaraderie (ph) is a necessary condition for at least moving through the diplomatic side of things with some grace but it's not sufficient one.

QUESTION: Thank you, thank you.

MCMAHON: And just to follow on that, Michael, so probably safe to say the G20 in Brisbane this weekend is not going to be jumping out to embrace this deal probably?

LEVI: I don't know that it would be jumping out one way or another. People will be trying to process it. And the big climate buzz around the G20 discussion is around contributions to the Global Climate Fund -- sorry, to the Green Climate Fund, which is this vehicle that was set up maybe four years ago to -- to help leverage public money together with private money to assist with adaptation (ph) and mitigation of climate change in developing countries.

So, announcements say the United States intends to contribute $3 billion to that. That's one where Congress is going to have more of a say than in the mitigation question -- the domestic mitigation question, the emissions reductions that we're talking about. I suspect that might be more of a substantive focus.

There's long been a tension over how much you ought to include climate change in G20 meetings. There's a school that says this is our one big global gathering, we ought to use it; there's another that says that G20 is already creaking under the weight of too many different subjects and agendas and that this ought to be kept out of it. I don't know if that will be resolved in Brisbane.

MCMAHON: Thanks.

Operator, do we have another question on the line, please?

OPERATOR: We do. And just as a reminder, if anyone would like to ask a question, please press star one on your phones.

Our next question comes from Evelyn Leopold.

QUESTION: Hello. I -- I apologize in advance because I had phone trouble at the beginning. So, if you already went over this, ignore my question.

But the controversy over the Keystone project -- if that goes through, is it going to set back some of the goals and just add to more oil reduction?

LEVI: So, I actually think that the Keystone issue has been a distraction for things that matter a lot in the context of global emissions. And frankly, this joint announcement is a reminder that there are bigger fish to fry than the Keystone Pipeline.

And I'm setting aside that the Keystone benefit -- the Keystone Pipeline is not just about climate cost; it's also about economic benefits -- there are trade-offs involved -- involved there.

But -- and the reality is that if you look at how global oil markets function, if you were to succeed in blocking Canadian oil production, whether that's desirable or not, if you were to succeed in blocking standing (ph) oil production, you would have adjustments in the global market, you would have supply gains elsewhere that could substantially offset -- offset those changes. On top of that, again, the numbers are just small in the global context.

So in some ways, I hope that this announcement is a useful refocusing on the more consequential aspects of -- of what's happening with climate change and the opportunities to deal with it.

Now, this could feed into the politics. So, there's no question -- I don't think that it's particularly important on the substance, but certainly there's interplay on the politics and we see an effort on Capitol Hill to essentially bypass the president in approving the pipeline. This has become a sort of political beast that exists by itself independent from actual energy policy, or at least energy policy analysis.

But -- but I really do think that the focus on the U.S. side in reducing U.S. emissions -- it's not about reducing U.S. oil production or U.S. natural gas productions; it's about reducing U.S. emissions. And in China, again, the focus on curbing emissions, increasing the use of zero-carbon energy -- nothing about reducing the production of others (ph). So, I think that's the right place to focus.

QUESTION: So you don't think that the -- if it goes through, it makes any difference in -- in...

LEVI: I think it makes a very small difference; I think it makes a very small difference in the big emissions picture. And I don't think it makes a meaningful difference to whether these goals can be accomplished.

I don't have numbers off the top of my head but the U.S. target of 26 to 28 percent below 2005 levels -- I would be surprised if a decision on Keystone had an impact of more than 0.1 percentage points there.

MCMAHON: Evelyn, thanks for that question.

Operator, is there another question, please?

OPERATOR: Your next question comes from Steven (ph) Cass (ph).

QUESTION: Michael, I may have missed this at the beginning, but I wanted to follow up on your response about the China peaking commitment. Does it -- is it really going to make any difference in terms of what energy utilities they install over the next 10 or 15 years? I mean, couldn't they get all their coal plants up and running by that date and -- and thereafter turn to more renewable sources, effectively having no real change in what they're otherwise doing?

LEVI: So, I think that if you're -- you know, if this is just a matter of accounting, then in principle, yes. You can do whatever you want up until that date and then shift course.

But the reality is that in real political and economic systems, change doesn't happen that way. You don't get a peak in 2020 by doing nothing until the end of December in 2029 and then despiting (ph) to turn everything on a dime.

By the way, if you're delaying action until 2030 because you think it's economically useful, you certainly wouldn't want to turn on a dime in 2030 and go another direction because that would be economically unwise. If you wanted to peak in 2030, the economically ample (ph) path to doing that requires changes earlier.

Now, I think I said before there are a wide range of paths that get you to peaking around 2030. And by the way, this is important -- the announcement says around 2030 with the goals of doing this earlier. Whether -- you know, the strength of that goal is difficult to determine; but again, it plays into the domestic policymaking process in China.

The thing I'd add to that is this is a reason why the zero-carbon pledge matters. So, everything I said is -- I'm confident about as an analysis. The reality is as a matter of public relations, the Chinese could be on the wrong course in December 15th, 2029 and still say, but, you know, just hold on -- you'll see, next year this will change.

That's not true for the zero-carbon energy pledge. You can't sit around on December 25th, 2029 with 15 percent of energy from zero-carbon sources and say whoa, let's build some new nuclear power plants and some solar panels in the next 15 days so that we can hit our 2030 target; it just doesn't work that way.

So, that's a -- that's a place where it will be possible to more visibly benchmark progress toward the sort of announced intended outcome.

QUESTION: Thank you.

MCMAHON: Thanks for that question.

And I want to remind those on the call, this is a Council on Foreign Relations on-the-record conference call and we're assessing the U.S.-China climate deal with Michael Levi, CFR's senior fellow for energy and the environment and director at the Center for Geoeconomic Studies at CFR.

Operator, do we have another question on the line, please?

OPERATOR: We do. Again, to ask a question, please press star one.

Our next question comes from Ruben (ph) Grame (ph).

QUESTION: Thank you. Michael, I -- I -- I take your point that this -- this points in the right direction and it's incrementally a step forward. My question, however, is -- or let me ask it in two different ways. One is does this in effect create not only a floor, in terms of what the commitments are likely to be in the context of the ongoing negotiations but also a likely ceiling in the sense that it'll be very difficult to push for a trajectory between now and 2030 that really stands any sort of a chance of keeping temperature increases, which is ultimately what this is about, to within a safe range?

And stated more specifically, do you think this would stop the U.S. or this would preempt or preclude the U.S. from putting in place initiatives between now and then that, for example, might impact the import of Chinese products to the United States? In other words, if the U.S. wanted to, for example, put in place a carbon tax and a border adjustment associated with that, would this give the Chinese a good reason to say, you know, we had an understanding that this is all we were required to do and you are now in effect moving the goalposts unacceptably.

LEVI: So, there's a lot of good stuff in there, Ruben (ph). There's several questions and let me try to get at a few of them.

I mean, first, in terms of the overall ambition -- so -- so, you asked about whether this is a ceiling. It's probably a ceiling for the discussions in the next year...

QUESTION: Right.

LEVI: Though again, it's a very flexible ceiling because within it, particularly on the Chinese side, there are a lot of different possibilities, depending on where they see their carbon intensity heading.

I don't think that it is a feeling in a broad sense over the longer term. The United States certainly pursued a lot of climate policies in the 2000s absent any international commitment. And so, I don't know that there is a sort of restriction there.

On the Chinese one, I think that's even more the case. And again, when I think about distant dates, I like to go backwards to -- to get myself analog.

So, 2030 is 16 years from now, OK? Sixteen years ago was 1998. 1998 was before we even knew that China was going to dominate global emissions in a relatively short period of time. Asia was mired in the financial crisis -- previous financial crisis.

We didn't expect the same level of oil consumption growth; we didn't expect anywhere close to the same level of coal growth.

And so, things have happened -- some of them just basic economic circumstances and miscalculations, some of them through policy between 1998 and now. And I don't think anyone would say that the decisions that determined China in 2014 were all made in 1998 or probably (ph) 1990 (ph).

(CROSSTALK)

QUESTION: That's (ph) true (ph).

LEVI: And I don't know that having an international announcement changes that. By the way, in 1998, China had a Kyoto agreement that said it didn't have to do anything yet that hasn't made it not do anything in the intervening years.

So, I think that that -- to me, that sort of looking backwards to look forward approach says don't overestimate how much actions now bracket what can be done in the future.

You have two other things that I think are interesting -- one is does this get us to somewhere safe. And the -- the chief answer is we don't know where somewhere safe is. We talk a lot about 2 degrees but (ph) these (ph) are (ph) -- we talk a lot about 450 parts per million, we talk about carbon budgets. But there's a lot of uncertainty around those.

And so, part of the answer is we're not going to get anywhere close to the sorts of numbers that diplomats talk about with just this agreement but we do get closer. And we get safer rather than safe, per say.

So, I think anyone who thinks this is sort of an end point is kidding themselves. But if the -- if the judgment is always going to be does this do 2 degrees or not, I think we miss a lot of important opportunities.

You asked this one last one that's interesting -- I haven't thought about yet. And so, for people on the call, maybe a bit of context -- there's been a lot of talk -- there was a lot of talk when the United States was pursuing cap and trade program about imposing charges on imports from countries like China at the border in order to equalize the cost. If you're going to make U.S. industrial producers spend more on their electricity, then you ought to make Chinese producers shipping things to the United States spend more on -- you know, pay a similar charge.

And one of the -- the debates over that -- and you know this much better than I do as a lawyer who's thought about these things; Steven (ph) does this (ph) for (ph) others on -- on this call -- is that one of the questions about whether it's legal to impose these sorts of border adjustments is have you tried in good faith to come up with an alternative cooperative arrangement and have you failed.

And I think what you're suggesting is that in this context, the Chinese might be able to go to WTO and say not only did they try, they succeeded. And therefore, it's not appropriate for them to impose these.

I'm not going to try to give you an answer to that; I'm not going to give a pop legal analysis, not having thought through it and not being a lawyer. But I actually think that's a very interesting question to consider.

QUESTION: Thank you, thanks.

MCMAHON: Thanks for those great questions.

Operator, is there anyone else on the line at this moment?

OPERATOR: At this time we have no questions waiting in the queue.

MCMAHON: All right, well I -- I think then we're ready to -- to wrap up this call. I think I'd like to thank Michael Levi, CFR's senior fellow for energy and the environment and the co-author with Elizabeth Economy of CFR of the book "By All Means Necessary: How China's Resource Quest is Changing the World" for digging into these issues and really helping us navigate through, you know, what to think about this deal and what to look for, especially just around the corner, the first quarter of next year as the climate deal at the end of next year approaches.

So, thank you for those on the call and thank you, Michael, for framing the issues involving the U.S.-China climate deal.