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U.S., China ink coal, clean energy deals but climate differences remain

By Valerie Volcovici and Michael Martina

WASHINGTON/BEIJING (Reuters) - The United States and China on Tuesday signed eight partnership pacts to cut greenhouse gases that will bring the world's two biggest carbon emitters closer together on climate policy, but fundamental differences between the two sides remain.

Consensus between the United States and China will be a crucial part of any new global climate pact to replace the 1997 Kyoto Protocol, but they have long struggled to come to an agreement on how the costs of cutting greenhouse gases should be distributed among rich and poor nations.

Speaking in Beijing during the latest round of the U.S.-China Strategic and Economic Dialogue, U.S. Secretary of State John Kerry said on Wednesday that the two sides remained committed to "close dialogue" on climate change negotiations.

"The significance of these two nations coming together can't be understated.  We are working hard to find a solution together that can have an impact on the rest of the world."

The deals, which involve companies and research bodies, were signed in Beijing ahead of a two-day visit to China by top Obama administration officials, including Kerry, Treasury Secretary Jack Lew and Energy Secretary Ernest Moniz.

The signing was attended by Xie Zhenhua, vice chairman of China's influential economic planner, the National Development and Reform Commission (NDRC), Todd Stern, the lead U.S. climate treaty negotiator at the U.S. State Department, Obama adviser John Podesta and Lee Zak, director of the U.S. Trade and Development Agency.

In one of the memoranda of understanding (MOUs), China's Huaneng Clean Energy Research Institute, a subsidiary of state-owned power company China Huaneng and Washington-based Summit Power Group agreed to share information on clean coal power generation technology.

Huaneng is part of a Chinese consortium operating a 400-MW pilot integrated gasification combined cycle plant in Tianjin.

Under the pact, Huaneng will share information with Summit Power, which is expected to soon break ground on a similar project in Texas after it secures engineering and procurement support from Petrochina and Chinese engineering firm Huanqiu Contracting and Engineering.

The MOU is expected to be signed on Wednesday in Beijing.

Summit, in turn, will share information and technology for recovering oil from captured carbon.

"This (pact) accelerates sharing of information on carbon capture and storage for power," said Julio Friedmann, deputy assistant Secretary for Clean Coal for the U.S. Department of Energy.

The partnership will be a boon to both countries, said Laura Miller, a former mayor of Dallas who now manages the Texas Clean Energy Project.

"We will be sharing expertise, years of development experience and non-proprietary technology on both projects, all while making giant steps forward for the world's environment," she said in an interview.

Another project partners West Virginia University with Yanchang Petroleum on an industrialized demonstration of ultra-cleaning technology in northern Shaanxi province.

The University of Kentucky, another coal state university, will partner with Shanxi Coal International Energy Group and Air Products and Chemicals Inc on a project feasibility study for a 350MW supercritical coal-fired power plant that can capture 2 million tonnes of CO2 a year.

STICKING POINTS

At a news briefing in the Chinese capital on Wednesday, the NDRC's Xie welcomed the closer partnership of the world's top two CO2 emitters, but said more was needed in areas such as technological cooperation.

"Developing countries are most concerned that they get funds and technological support from developed countries," he said. "On this issue, we are still having great difficulties and we have to put forth more effort."

China has led the way in trying to persuade developed countries to set up financing mechanisms to help poorer nations cut emissions and adapt to climate change.

The issue remains a major stumbling-block in talks on a new global accord, with the United States and others reluctant to commit funds.

Stern, the U.S. climate negotiator, said the United States didn't disagree with China that there should be a differentiation in responsibilities between developing and developed countries, but that using old definitions for those labels established in 1992 was a sticking point.

"I've had long and detailed conversations on this subject with vice chairman Xie and others," he said. "We don't quarrel with the basic concept."

Xie told Chinese media on Tuesday that wider two-way talks would include a special high-level meeting on climate change, focused on discussing domestic and international policies and possible cooperation.

The U.S. delegation is in China for the sixth round of the U.S.-China Strategic and Economic Dialogue, which are high-level meetings on cooperation in areas from security to agriculture.

(Additional reporting by Lesley Wroughton, Kathy Chen and David Stanway in Beijing; Editing by Ros Krasny, Clarence Fernandez and Jeremy Laurence)

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