On 24 July 2025, Chinese and EU leaders will gather in Beijing for the China-EU summit, against a backdrop of ongoing trade tensions and geopolitical instability, including the erratic policies of the Trump Administration.
The China-EU summit provides an opportunity for the two sides to air their grievances and complaints about one another’s perceived misbehaviors regarding trade, intellectual property, human rights, greenhouse gas emissions, and much else. But this important summit, marking the 50th anniversary of China-EU diplomatic relations, also provides a much better opportunity: to rise above the familiar bickering and to achieve some genuine progress in morally based cooperation. Our world is at serious risk of degradation, both moral and ecological. Rising above their petty differences, China and Europe, together, can steer humanity through these troubled times. It is their historical responsibility to lend their very best joint efforts to this task.
Such genuine, morally-based cooperation with each other — and with willing partners, especially from the global South — is made more urgent by the recent dramatic renunciation of such cooperation from the government of the United States. It has proclaimed an ideology of unconstrained selfishness under the slogan “Make America Great Again” but, in reality, aims to serve not the 35 sovereign countries of that continent, nor even the entire population of the United States, but rather the much narrower interests of a small elite of leaders and owners of U.S. corporations, banks, hedge funds, law firms, and consultancies who are financing the electoral campaigns of the two U.S. political parties. With increasing openness, this small superrich elite is fighting a two-front war. Within the United States, they fight to convert the country into an enduring plutocracy in which their wealth will enable them to dominate the three branches of government forever. Internationally, they utilize the vast military, economic, and diplomatic power of the U.S. government to expand their dominion: to structure the global trade and financial systems to their extractive advantage and to modify or disable any states and other organizations that resist their agenda.
With Trump as President and ample support from the legislature and the Supreme Court, this elite has enough confidence in its power to dispense with efforts to preserve a veneer of moral propriety. Risking millions of premature deaths abroad, the U.S. has imposed steep tariffs on imports from some of the world’s poorest countries and abruptly canceled most of its contributions to global health and anti-poverty efforts. It has withdrawn from the World Health Organization, the UN Human Rights Council, UNESCO, and the Paris Agreement, among others. The U.S. has also defunded most research into the health and climate effects of fossil fuel pollution, decimated environmental protection efforts, and withdrawn much support for green-technology development and diffusion while greatly facilitating the production and consumption of fossil fuels. The U.S. has made quite clear that, in the next few years, it will not participate in multilateral cooperations to fight poverty, to achieve the SDGs, to contain the threat of war, or to protect human rights, human health, and our natural environment.
Such intransigence by the United States during a critical period of heightened violence and unusual technological instability (AI) makes China-EU cooperation all but indispensable. Such cooperation has several important dimensions, including security (curtailing state violence and the threat thereof), environmental protection, safeguarding of human health, and eradication of world poverty. Let us here paradigmatically concentrate on the second dimension.
During their respective industrializations, both Europe and China have harmed our planetary environment (albeit it less so than the much less populous United States). Both are making substantial efforts to reduce their ecological footprints. Each is calling on the other to do even more — for example, at the recent Fifth China-EU High-Level Environment and Climate Dialogue in Brussels on 18 June 2025. And rightly so; it matters greatly how the emissions of China and the EU will evolve over the next years and decades.
But there is something that, in the long run, matters even more than the future emissions paths of the three great polluters of the global North, and that is the future emissions path of the low and lower-middle income countries, which are home to more than half of the human population. In the remainder of this 21st century, these countries will still experience large population increases and substantial economic growth. The technologies they will use, the practices and habits they will form, and the roles they will be prepared to play in the fight for a livable planet will be far more important than any decisions that today’s more affluent nations will make within their borders. While those countries, due to their poverty, have contributed little to existing environmental problems, their contributions are rising steeply and could soon cause devastating ecological harm. If the 4 billion Africans projected for the year 2100 were to live like the inhabitants of the U.S. today, they would cause 12 times as much ecological harm as the U.S. does today! It is of the utmost importance to avert such a scenario. Of course, this must not mean that the world’s poorer population will be forever deprived of the protections and conveniences of modern life. The task is rather to achieve a rapid and thorough green transition in the lower-income countries. This requires that highly effective and locally appropriate green technologies — many of them yet to be developed — be quickly and widely deployed in the global South. China and the EU have the capital and expertise to help dramatically accelerate the needed transition.
How can this transition be achieved in the most cost-effective way? I have proposed creation of an Ecological Impact Fund (EIF) that would incentivize and reward the development of green technologies (‘greenovations’) for, and their deployment in, a defined set of lower-income countries (‘the EIF-Zone’). The EIF would make annual disbursements of pre-announced size, initially perhaps about ¥ 30 billion, to be divided among registered greenovations. This division would be based on how much ecological harm is averted through deployments of each of these greenovations in the EIF-Zone during the preceding year. Harm is measured as a weighted sum of greenhouse gas emissions (CO2eq) and lost health and life years (QALYs).
With participation optional and the size of the annual disbursement set in advance, the EIF’s reward rate would be internally self-regulating and gravitate to a stable level that is seen as fair between participating firms and the EIF’s funders: when firms find it unattractive, participant registrations dry up, causing the reward rate to rise; when the reward rate is seen as generous, registrations multiply, driving the reward rate down. Fairness among participating firms is also assured as all are paid at the same reward-to-benefit rate.
In exchange for partaking in EIF disbursements for five years, any registered innovation would permanently lose patent-based monopoly privileges in the EIF-Zone (while patent privileges outside the EIF-Zone and of unregistered greenovations remain unaffected). The EIF gives greenovator firms new opportunities to profit from delivering greenovations in EIF-Zone countries while letting them choose, for each greenovation, whether to register it or to stick with patent privileges.
The EIF would greatly increase uptake and impact of greenovations in EIF-Zone countries, while avoiding monopoly markups that would raise their price. The added incentive of impact rewards would motivate firms to promote their registered greenovation’s wide deployment and effective use. Through the prospect of enhanced profits, the EIF would also stimulate the development of additional greenovations designed to fit the EIF-Zone populations’ needs, cultures, circumstances, and preferences.
By thus stimulating diffusion and innovation in and for the EIF-Zone, the EIF would also expand local capacities to develop, manufacture, distribute, deploy, operate, maintain, and repair greenovations.
The EIF could be created by China and the EU with possible support from other OECD countries, most of whom have committed themselves to contribute to international climate finance. Additional funds could come from international offset markets and eventually from a capital endowment built steadily over time from treaty-based state contributions, bequests, and donations by firms, foundations, and philanthropists.
Eight design features make the EIF vastly more cost-effective than existing patent incentives, with their well-known gaps and inefficiencies, and ensure that the funding the EIF requires will have vastly greater impact that existing international climate finance.
1) Focus on Lower-Income Countries, where the most cost-effective gains can be made. Because of its huge population (three time’s China’s already today!) and large potential for steep increases in per-capita emissions, the global South is the crucial battleground in the fight to save our planet.
2) Pay for Success. Traditional funding often goes to actors who can sell themselves well. The EIF does not reward anticipated performance ex ante (push funding), but actual performance ex post (pull funding). The innovator bears the risk. This motivates greenovators — who are best able to assess their own capabilities — to formulate their goals wisely and to pursue them vigorously.
3) Complete Implementation. The EIF rewards final results: only if and insofar as a greenovation effectively prevents environmental harm. Greenovators seeking to earn EIF rewards must therefore holistically consider the entire path from laboratory to end-use, focusing on those greenovations that achieve the most cost-effective harm reduction. Even the most brilliant greenovation remains unrewarded if it is not adopted and deployed to reduce harm.
4) Open Innovation Space. The EIF does not pick research targets but instead provides a general benchmark against which greenovations are assessed. This is because innovators are better able than funders to determine with which projects they can reduce harm most cost-effectively. This sets the EIF apart from innovation prizes, which prescribe a specific, possibly unpromising research direction. Prizes often lead to duplication of work and divert attention from potentially more promising research paths. In contrast, the EIF creates an artificial market on which diverse greenovations can thrive.
5) Dynamic Competition. This artificial market is designed to keep the reward rate efficiently low through broad competition. If the reward rate rises above the level necessary to incentivize greenovative efforts, this increases the incentive to develop and register additional greenovations, which in turn lowers the reward rate to the necessary minimum. Such readjustment is facilitated by the broad formulation of the EIF incentives, which opens the EIF to all greenovators and to greenovations of all kinds.
6) Strengthening Neglected Markets. The EIF attracts investments toward high-impact greenovations that have been neglected because their potential users are poor or because their buyers can expect only a tiny fraction of the benefits generated by their use (a common case for greenovations!). It is precisely such greenovations that the EIF incentivizes by supplementing sales revenues with impact rewards that reflect the total global and future benefit of a greenovation’s use. This added reward can make sales to poor people profitable even at very low prices — thereby also making it lucrative to develop high-impact greenovations tailored to their needs and living conditions.
7) Incentives for Wide Adoption. The EIF would significantly enhance the reach of registered greenovations by ensuring attractive profits despite low prices, thereby motivating participating greenovators to invest in rapid, widespread, and effective dissemination of their greenovations. By replacing patent royalties with impact rewards, the EIF transforms the motivation of participating innovators: instead of seeking to detect, prevent, and deter patent infringements, they would actively promote the rapid, broad, and effective adoption of their greenovation to earn higher rewards. Even if they do not profit from the sales price, they would support the efficient use of their greenovation through technical assistance, maintenance, and discounts — insofar as they foresee that the resulting revenue increase from such promotional investments outweighs their costs. Every EIF-registered greenovation would thus achieve far more than a comparable greenovation under the current incentive regime.
8) Exponential Progress. By accelerating the pace of innovation, the EIF continually raises the baseline against which newly registered greenovations are assessed. This effect will become quite large over time. A greenovation registered in 2040 will be rewarded based on the environmental harm reduction it achieves compared to alternatives available in that year. However, the state of technology in 2040 will be far more advanced than it would have been without the EIF’s existence in previous years. This acceleration of greenovation progress is a great built-in benefit of the EIF at no additional cost. It is likely that this benefit will be especially significant for classes of greenovation that are currently neglected because they are primarily suited for poor populations, are more expensive to produce and deploy than their dirtier alternatives, or provide widespread benefits that potential buyers care little about. Due to learning curve effects following Wright’s Law, this acceleration in progress will additionally lead to increasing cost and price reductions.
By joining hands to create the EIF, China and the EU would also establish a morally grounded multilateral partnership that, over time, could grow far beyond the EIF and its founding members, reduce national selfishness, and foster a willingness to cooperate for justice and the common good, to build a human community with a shared future. As a first step, China and the EU could agree to launch an experimental pilot to test and refine the EIF idea. This pilot might involve a single reward pool of, say, ¥1 billion, to be split among a few preselected greenovations in proportion to the pollution reductions achieved through their deployments, competitively priced, in a self-selected region of the EIF-Zone over a two-year period. The pilot would show concretely how greenovators respond to competitive impact rewards and how ecological impact can be estimated in a prompt and reliable manner. It would help refine impact assessment and provide an indication of the cost-effectiveness of the new impact rewards. The EIF pilot would also yield its own ecological benefits and policy insights through the pilot projects it monitors and rewards.
There is only one world, only one human history, only one time for our generation to leave its mark. Let us rise to the challenge!