AbstractHaving undergone more than a decade of institutionalized development, China-Europe climate cooperation has evolved from policy dialogues into a systematic partnership spanning carbon markets, clean technology supply chains, green finance, and standard-setting. From the perspective of a European think tank, this paper argues that the core logic of China-Europe green cooperation has shifted from "complementary division of labor" to "symbiotic synergy." Significant room for cooperation exists across five key areas: the interconnection of carbon markets, mutual recognition of green electricity certification, clean technology supply chain synergy, third-party market cooperation, and the alignment of circular economy rules. Although "derisking" rhetoric and trade frictions create realistic tension, the strategic stability of climate issues and the deep complementarity of industrial structures enable the China-Europe green partnership to continue serving as a "ballast stone" for the global decarbonization process. This paper suggests that both sides should use carbon market rule coordination as an institutional anchor, green electricity certification mutual recognition as a breakthrough for trade facilitation, and third-party market cooperation as an incremental space, thereby constructing a more resilient climate and economic cooperation framework.
I. Introduction: Why China-Europe Climate Cooperation Matters More Than EverThe joint statement issued following the China-Europe leaders' meeting in July 2025 reaffirmed both sides' commitment to the Paris Agreement, agreeing to strengthen bilateral cooperation in areas such as carbon markets and green, low-carbon technologies, and jointly promote their respective green and low-carbon transition processes. This political signal holds special significance today: as global climate governance faces multiple pressures from geopolitical fragmentation, a resurgence of unilateralism, and supply chain security anxieties, the depth and breadth of cooperation between China and Europe—as the world's two largest clean technology markets and manufacturing economies—directly affect the pace and credibility of the global decarbonization process.
From the perspective of a European think tank, China-Europe green cooperation is no longer a simple exchange of "technology for markets" or "experience sharing," but has evolved into a deeply nested symbiotic relationship. China has established economies-of-scale manufacturing advantages in sectors such as photovoltaics, wind power, and battery storage, while the European Union has accumulated profound institutional capital in carbon pricing mechanisms, green finance standards, high-end equipment manufacturing, and regulatory frameworks. This complementarity was once seen as the starting point for cooperation, but today, greater attention must be paid to the potential for cooperation at "institutional interfaces" such as rule coordination, standard mutual recognition, and third-party market development.
Notably, European think tanks' perceptions of China-Europe green cooperation are undergoing a subtle yet important shift. In its latest report, Bruegel pointed out that as the world's two largest clean technology markets, China and Europe play increasingly important roles in carbon markets, emission tracking, and sustainable finance standard-setting. The Institute for European Environmental Policy (IEEP) emphasized that China's accumulated industrial advantages in new energy, energy storage, and green manufacturing provide "unprecedented opportunities" for Europe-China collaboration in low-carbon investment and carbon market construction. Meanwhile, research from Chatham House (the Royal Institute of International Affairs) noted that the incorporation of China's national carbon peak targets and local action plans in its 15th Five-Year Plan proposal has a "knock-on effect" on Europe's realization of the "Green Deal" goals.
The common point of these assessments is that the externalities of China-Europe climate cooperation are growing. Progress in each other's internal climate policies increasingly generates cross-border governance effects. This means that both the necessity and potential returns of cooperation are rising, while the costs of coordination failure are amplifying simultaneously.
II. Strategic Logic: From "Complementary Division of Labor" to "Symbiotic Synergy"Understanding the prospects of China-Europe green cooperation requires moving beyond traditional "North-South cooperation" or "technology transfer" frameworks. Over the past decade, the underlying logic of the relationship has undergone structural changes.
First, the industrial structure has shifted from "vertical complementarity" to "horizontal interweaving." In early China-Europe clean energy cooperation, Europe provided technology, equipment, and engineering experience, while China provided the market and manufacturing base, resulting in a clear division of labor. Today, China has become a major global supplier of photovoltaic modules, lithium batteries, and wind turbine assemblies, while European companies maintain a lead in inverter control systems, green hydrogen certification, and sustainable aviation fuels. More importantly, the clean technology supply chains of both sides are deeply intertwined: Europe's energy transition projects rely on Chinese-manufactured components to control costs, and China's green product exports require European certification systems and market access. This interdependence has generated both cooperative gains and political pressure stemming from "derisking."
Second, institutional resources have shifted from "one-way learning" to "two-way coordination." The EU Emissions Trading System (ETS) is the world's longest-running and broadest-coverage carbon market. Since 2014, China has built its national carbon market with EU funding, and in 2024, the two sides signed an updated version of the ETS cooperation Memorandum of Understanding, expanding the scope of cooperation to carbon market interconnection and compliance mechanism building. At the same time, China's practices in green electricity consumption certification and zero-carbon industrial park construction have also begun to provide operable solutions for Europe's supply chain decarbonization. The two-way flow of institutional resources means that cooperation is no longer a "teacher-student relationship," but rather rule coordination between two mature systems.
Third, the cooperation space has expanded from "bilateral" to "multilateral and third-party." During COP30 in 2025, China, Europe, and Brazil jointly promoted the declaration of the "Compliance Carbon Market Open Alliance," marking the elevation of carbon pricing cooperation from the bilateral level to global governance. In third-party markets, Chinese and European enterprises have formed cooperative models in projects such as the Korlat photovoltaic power plant in Croatia and a lithium battery factory in Portugal, combining Chinese manufacturing capacity with European market channels and engineering standards. This "joint going global" model provides cost-effective solutions for the energy transition of Global South countries.
From a European think tank perspective, the strategic value of this symbiotic relationship lies in the fact that it provides a stable model of "competitive cooperation" for global climate governance. The two sides engage in genuine competition over market share, technical standards, and industrial subsidies, but share irreplaceable common interests in safeguarding multilateral climate frameworks, promoting the diffusion of carbon pricing mechanisms, and ensuring the resilience of clean technology supply chains.
III. Areas of Cooperation: Five Priorities to Advance
(I) Carbon Market Interconnection and Carbon Pricing Rule Coordination
Carbon market cooperation is the area of greatest institutional depth in China-Europe climate relations. Since its operation in 2005, the EU ETS has covered about 40% of EU emissions across power, industry, and aviation sectors. China's national carbon market, launched in 2021, initially covered the power sector and is gradually expanding to more high-emission industries. The updated MoU signed in 2024 significantly broadens the scope of cooperation, reflecting an intent to upgrade from "capacity building" to "rule coordination."
Operable directions for cooperation include:
- Mutual recognition of carbon accounting methodologies and emission monitoring standards. Chinese and European enterprises face duplicate accounting and compliance burdens when operating in each other's markets. Promoting the mutual recognition of emission accounting methods and Monitoring, Reporting, and Verification (MRV) systems can significantly lower cross-border carbon compliance costs. During the 6th China-EU High-Level Dialogue on Environment and Climate in 2025, both sides exchanged views on the latest carbon market developments and work plans, laying a foundation for technical-level coordination.
- Dialogue and buffer design regarding the Carbon Border Adjustment Mechanism (CBAM). Since CBAM entered its transitional phase in 2023, Chinese industry has expressed concerns over its compliance burdens and potential trade barrier effects. China and Europe have established a dedicated CBAM dialogue mechanism for regular expert-level exchanges. From a think tank perspective, the pragmatic path is not to evade CBAM, but to strive for flexibility in transition period arrangements through dialogue, while accelerating the alignment of China's carbon market with the EU ETS on accounting rules so that CBAM's calculation basis reflects Chinese enterprises' actual emission reduction efforts as much as possible.
- Exploring a gradual path toward carbon market linkage. Full interconnection is unrealistic in the short term, but cooperation can start with the "mutual recognition of carbon credits." The restart of China's Certified Emission Reduction (CCER) mechanism provides a possible window for mutual recognition of carbon credits in specific project types (such as forestry carbon sinks and renewable energy). The "Compliance Carbon Market Open Alliance" declaration jointly promoted by China and Europe during COP30 provides a multilateral framework and legitimacy for this gradual path.
(II) Green Electricity Certification Mutual Recognition and Green Trade Facilitation
Green electricity certification mutual recognition is a "small yet critical" issue in China-Europe green trade. Policies such as the EU CBAM and Battery Regulation require imported products to provide proof of embedded emissions and green electricity consumption, while Chinese exporting enterprises face the practical challenge of converting domestic green electricity procurement into EU-recognized credentials. At the 4th China-Europe Energy Technology Innovation Cooperation Forum held in June 2026, the Electric Power Planning and Design Institute and the Climate Group jointly released the "RE100 China Green Electricity Park" initiative, announcing the establishment of an international cooperation innovation consortium for green electricity certification to promote the construction of a green electricity park standard library.
The significance of this progress lies in transforming green electricity certification from a technical issue into a trade facilitation tool. China possesses the world's largest wind and solar installed capacity with abundant green electricity resource endowments, but the "traceability" and "recognizability" of green electricity's environmental attributes in international trade have yet to be fully realized. Coordination between China and Europe on green electricity certification rules can help Chinese exporting enterprises prove the green attributes of their products at lower compliance costs, while providing credible credentials for European enterprises' green procurement in the Chinese market.
Suggested implementation steps include: first, launching pilot mutual recognition at the zero-carbon industrial park level, selecting several parks with strong foundations for China-Europe cooperation (such as those in Chengdu, Nanjing, and Taicang) to pilot initiatives; second, expanding the scope of mutual recognition from green electricity consumption volume to the mutual recognition of green certificate issuance and transaction records; and finally, promoting joint recognition mechanisms between certification bodies and regulatory authorities on both sides. The appeal of this path is that it avoids sensitive areas of carbon pricing, is more technical than political, and easily yields early harvests.
(III) "Resilient Synergy" in Clean Technology Supply Chains
Clean technology supply chains are the most tense yet promising area in China-Europe economic relations. Europe's high import dependence on photovoltaic modules, batteries, and rare earth permanent magnets has triggered "strategic autonomy" concerns, while Chinese enterprises face an increasingly complex regulatory environment when investing in European markets. However, simple "decoupling" is neither economic nor realistic: Europe's energy transition goals require the scale and cost advantages of Chinese manufacturing, while China's green industrial upgrading requires European market access and technological cooperation.
From the standpoint of European think tanks, the pragmatic path is "resilient synergy" rather than "decoupling or breaking links." This means that both sides need to establish a rule framework across several levels:
- Transparent mechanisms for investment and capacity cooperation. Chinese enterprise investments in battery plants in Hungary, Germany, and Spain, as well as European enterprise layouts in China's green manufacturing, require clearer policy expectations and compliance guidelines. Although the EU-China Comprehensive Agreement on Investment (CAI) remains frozen, investment facilitation arrangements in the green sector can be progressively advanced through bilateral dialogues and industry agreements.
- Joint early warning for critical minerals and supply chains. The supply security of critical minerals such as lithium, cobalt, and rare earths is a shared concern for both sides. China and Europe can establish information-sharing and early-warning mechanisms for critical mineral supply chains to reduce the risk of supply disruptions caused by export controls or geopolitical shocks. This mechanism does not seek "self-sufficiency," but rather enhances system resilience through diversification and transparency.
- Industry chain synergy in circular economy and battery recycling. The China-Europe Circular Economy Roadmap launched in 2024 prioritizes plastics, batteries, and remanufacturing. Battery recycling is of particular strategic significance: Europe needs to build domestic recycling capacity to meet the recycled material content requirements of the Battery Regulation, while China has accumulated rich experience in battery recycling technology and large-scale processing. Cooperation between both sides in recycling standards, recycled material certification, and cross-border recycling logistics can simultaneously serve supply chain security and circular economy goals.
(IV) Climate Financing and Investment Cooperation in Third-Party Markets
China-Europe climate cooperation in third-party markets is an underestimated area. Both sides possess the capability and willingness to provide clean energy solutions to Global South countries, but their respective advantages differ: China excels in project development, equipment supply, and engineering implementation efficiency, while Europe has rich experience in project financing, risk management, and multilateral institutional coordination. Combining the two can significantly reduce financing costs and implementation risks for energy transition projects in developing countries.
The Korlat photovoltaic power plant in Croatia is a prime example of China-Europe third-party market cooperation: a Chinese consortium is responsible for construction, and upon completion, the project is expected to become Croatia's largest photovoltaic facility, reducing carbon dioxide emissions by about 150,000 tons annually. Success factors of this model include host country policy support, Chinese engineering efficiency, and European (or international financial institution) financing participation. Similar cooperation opportunities exist in the Western Balkans, Southeast Asia, Africa, and other regions.
The think-tank-level recommendation is to incorporate third-party market climate cooperation into the institutionalized framework of the China-Europe green partnership, establishing a project information-sharing platform and joint financing mechanism. Specifically, a standardized cooperation template of "Made in China + European Financing + Multilateral Institutional Guarantee" can be explored to lower transaction costs and improve project replicability. In global climate financing discussions following COP30, this tripartite cooperation model can also provide common narrative resources for China and Europe.
(V) Rule Alignment in Circular Economy and Green Standards
The circular economy represents an area of relatively solid institutional foundation in China-Europe green cooperation. Launched in 2024, the China-Europe Circular Economy Roadmap focuses on plastics, batteries, and remanufacturing, with both sides agreeing to continue dialogue and share best practices on eco-design, recycled material markets, and circular economy opportunities and challenges.
The value of cooperation in this field lies in its "standard export" potential. Coordination between China and Europe on circular economy rules will not only affect bilateral trade but may also provide a rule template for global circular economy governance. For instance, in the design of the "battery passport," if China and Europe can reach consensus on data fields, disclosure requirements, and verification mechanisms, it will significantly lower compliance costs across the global battery supply chain while providing a reference model for other economies.
Specific cooperation levers include: mutual recognition of accounting methodologies for recycled material content, coordination of eco-design requirements (avoiding incompatible energy efficiency or recyclability standards issued separately), and trade facilitation arrangements for circular economy products. These topics are highly technical with relatively low political sensitivity, making them suitable as "steadily advancing" sectors in China-Europe green cooperation.
IV. Challenges and Tensions: Realities That Must Be AddressedFrom a European think tank perspective, discussing the prospects of China-Europe climate cooperation cannot bypass structural tensions. The influence of "derisking" rhetoric in European policy circles continues to rise, and the "securitization" trend of clean technology supply chains exerts continuous pressure on the cooperative atmosphere. The local content requirements and subsidy clauses contained in the EU’s Net-Zero Industry Act and "Clean Industrial Deal" may have substantive impacts on Chinese enterprises' market access.
The Carbon Border Adjustment Mechanism is another sensitive point. Although China and Europe have established a CBAM dialogue mechanism, Chinese industrial and policy circles' misgivings regarding CBAM as "protectionism" have not been dispelled. If CBAM's revenue-use direction, transitional arrangements, and accounting rules fail to adequately address the legitimate concerns of developing countries, it could evolve from a climate tool into a catalyst for trade friction.
In addition, differences in understanding between China and Europe on the principle of "common but differentiated responsibilities," differing expectations regarding the pace of multilateral climate governance, and interference from third-party factors (such as the volatility of US climate policy) could all affect the stability of cooperation. Against the backdrop of the US once again withdrawing from the Paris Agreement in 2025, the burden of climate leadership responsibility for China and Europe has risen, but this also means that both sides must coordinate positions without US participation, multiplying both difficulty and pressure.
V. Policy Recommendations: Constructing a "Resilient Symbiotic Relationship"Based on the above analysis, this paper puts forward the following policy recommendations from a European think tank perspective:
First, establish carbon market rule coordination as the "institutional anchor" for China-Europe climate cooperation. Carbon market cooperation possesses technical, long-term, and institutional spillover characteristics, providing a stable foundation for China-Europe relations that transcends short-term political fluctuations. It is recommended to build upon existing ETS dialogues by establishing a "Carbon Market Rule Coordination Working Group," focusing on technical solutions for accounting methods, MRV systems, and carbon credit mutual recognition, with the aim of forming several operable mutual recognition arrangements before 2027.
Second, take green electricity certification mutual recognition as a breakthrough for green trade facilitation. The benefits of green electricity certification mutual recognition are direct, technical obstacles are controllable, and political sensitivity is low, making it suitable as an "early harvest" project. It is recommended to initiate pilot programs at the zero-carbon industrial park level, gradually expanding to green certificate mutual recognition and joint recognition by certification bodies, ultimately forming a "single credible credential" mechanism for China-Europe green electricity consumption.
Third, build a "resilient synergy" framework for clean technology supply chains. It is recommended that China and Europe conduct institutional cooperation in three directions: critical mineral early warning, investment transparency, and battery chain synergy in recycling. The goal of this framework is not to eliminate competition, but to coexist within competition, reducing systemic risks through transparency and diversification.
Fourth, institutionalize third-party market cooperation. It is recommended to establish a dedicated China-Europe third-party market climate cooperation fund or coordination mechanism to provide standardized support for the "Made in China + European Financing + Multilateral Guarantee" model. This mechanism can become an important vehicle for China and Europe to provide public goods in global climate governance.
Fifth, maintain the continuity and technical nature of circular economy and green standard dialogues. It is recommended to link the implementation of the Circular Economy Roadmap with the China-Europe standard coordination mechanism, striving to take the lead in forming mutual recognition outcomes in fields such as battery passports, recycled material accounting, and eco-design.
VI. ConclusionChina-Europe climate and economic cooperation is at a critical transitional juncture. The shift from "complementary division of labor" to "symbiotic synergy" is both an objective result of industrial structure evolution and a structural requirement placed by global climate governance on the two largest clean technology markets. This transition will not happen automatically; it requires sustained investments of political capital and technical energy from both sides at "institutional interfaces" such as rule coordination, standard mutual recognition, and third-party cooperation.
From the standpoint of European think tanks, the strategic value of the China-Europe green partnership lies not only in bilateral gains, but also in providing a viable model of "competitive cooperation" for global decarbonization. At a time when multilateralism faces pressure, this model itself constitutes a public good. Whether China and Europe can successfully manage competition, deepen cooperation, and expand common ground will profoundly affect the credibility and effectiveness of global climate governance. For researchers concerned with climate policy and economic transformation, the evolution of China-Europe green relations deserves continuous and meticulous tracking and analysis.