Two transformations are likely to dominate the first half of the twenty-first century. One is the shift in economic power from the West (North America and Western Europe) to the East (China and the East Asian production system). The second is the transition from a high to low carbon economy. The first shift is at an advanced stage; the second at an early stage. The purpose of this paper is to discuss how the first shift affects the second.

This paper concentrates on the Europe–China relationship and explores two dynamics, one economic and one political.

on the economic side, it asks how the global power shift affects the cost and speed of the transformation to low carbon economy and the distribution of the gains between Europe and China
on the political side it asks how the power shift affects the formation of transformative alliances and the likelihood of accelerating the transformation

While Europe remains a technological leader in most low carbon sectors – China has been able to catch up quickly such that it has become the world’s biggest producer in some of these sectors, notably solar panels and wind turbines.

While it is too soon to tell whether China’s rise in the wind energy industry has had a major effect on the low carbon transformation globally, it is clear that the employment and income benefits from investing in the low carbon industry are no longer concentrated in the West. Such benefits are being reaped increasingly by China. We can anticipate that China’s rise in the low carbon industries will have an effect on the low carbon alliances in Europe.