U.S.-China carbon pledge short on specifics

Wednesday's announcement in Beijing that the U.S. and China would jointly embark on an ambitious effort to reduce their greenhouse gas emissions is being scrutinized for its diplomatic and political impact. But economists and others interested in the agreement's potential economic repercussions are also taking a close look.

A statement on the White House Blog stresses how China and the U.S., the "world's two largest economies, energy consumers, and carbon emitters are reaching across traditional divides and working together to demonstrate leadership on an issue that affects the entire world."

But some environmental activists say the announcement is economically and scientifically unrealistic, as well as vague on just how these emission reductions are to occur.

In a statement issued Wednesday, Friends of the Earth U.S. President Erich Pica said the U.S. emissions reduction target "is grounded in neither the physical reality of climate science nor the lived reality of hundreds of millions of people in developing countries whose lives and livelihoods are in jeopardy due to drought, flooding, fire and other extreme weather events."

Pica also said the announcement is "silent" when it comes to how the U.S. will fund these programs, especially "in regards to the rest of the world." And he said the Obama administration's first real test will be next week in Berlin during a high-level pledging session of the so-called Green Climate Fund, an international program to help developing countries reduce their carbon emissions and adapt to climate change.

One sector widely expected to benefit from the announcement is America's renewable or "alternative" energy industry. And, as expected, trade organizations representing U.S. wind and solar power companies praised the bilateral agreement between Washington and Beijing. The American Wind Energy Association (AWEA) said the agreement "sends a market signal" to private investors interested in clean energy.

"Wind power is one of the biggest, fastest, cheapest ways to reduce carbon pollution and it means American workers can make more of our own energy right here in America," AWEA Chief Executive Tom Kiernan said in a statement.

"This agreement sends the right message to businesses and investors that scaling up clean energy not only benefits our economy," he added, "but will continue to be supported at the highest levels as something the world needs."

The AWEA also pointed out that while China leads the world in installed wind turbine capacity, the U.S. currently has more wind energy going into its electrical grid than any other country and that over $120 billion worth of wind energy projects have been installed in the U.S. since 2000.

Matthew Kahn, a professor at the UCLA Institute of the Environment, believes the U.S.-China announcement does show a commitment by both nations toward solar and wind power. "This 'Big Push' in demand will benefit U.S. high-tech firms who innovate and create such technologies," he told CBS MoneyWatch.

But Kahn says given China's ambitious plans to build up its renewable energy sector, "the actual equipment is likely to be produced in China. How much U.S renewable firms gain remains an open question."

However, he is optimistic that U.S. companies investing in their own renewable energy projects, such as retail giant Walmart (WMT), will be able to do so at a lower cost, which could create a corporate domino effect.

"It will now be cheaper for Walmart to implement this as China makes greater investments in its renewable power generation equipment industry," Kahn said. "Other U.S companies will likely follow, and thus increased international trade in renewable power equipment will lower the cost of the U.S. decarbonizing."