Executive Summary

We are on the cusp of a new industrial revolution, one driven by energy and climate security concerns. Policy-makers and business leaders are beginning to calibrate decisions on trade, financing and production planning against this new reality. Central to making this vision work is enlightened thinking around the potential economic and political benefits – rather than the costs – of the transition to a low-carbon future.

China and the European Union (EU) together account for around 30% of global energy consumption and 30% of global emissions. Their common interests provide a foundation for deepening collaborative efforts on energy and climate security over the next quarter-century. The combined economic might of the EU, the world’s largest single market, and China, the fastest-growing economy, can provide unprecedented opportunities to generate benefits of scale that will lower the costs of climate-friendly goods and services globally. By working together, China and Europe could become the de facto engine of global low-carbon transformation.

Business as Usual (BAU) is not an option. The International Energy Agency (IEA) forecasts a global increase in energy consumption of more than 55% by 2030. There is no sign that energy demand and consumption will abate in the near future. Oil prices increased fivefold over the last eight years, in real terms hitting the 1979 high in October 2007. The era of cheap hydrocarbons may now be over. Waiting for world oil production to reach its maximum capacity could leave the world with a significant liquid fuel deficit for at least two decades. Supply concerns are driving investments towards unconventional fossil fuel sources, with large associated energy costs and significant CO2 emissions.

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