COMMONS

"Work with China to deliver low-Carbon growth" urges Energy Committee

29 August 2012

Assisting China on low-carbon development should be at the heart of Government plans to tackle climate change and secure high-value business opportunities for UK firms, a report by MPs on the Energy and Climate Change Committee argues.

Comment from the Chair

The Chair of the Energy and Climate Change Committee, Tim Yeo MP, said:

"China must succeed in building a low-carbon economy if the world is to avoid dangerous and disruptive temperature rises in the coming decades.
We applaud the steps China is now taking to do this and the emphasis placed in the 12th Five Year Plan on promoting low carbon technology and infrastructure
By demonstrating low-carbon leadership at home, the UK could punch well above its weight in encouraging major emitters like China towards low-carbon development, but only if Ministers can come up with a more focused strategy.
British firms could benefit enormously as China invests in carbon, capture and storage and wind, wave and tidal power, but the Government needs to do more to help them gain access to these huge potential markets."

The People's Republic of China is the fastest growing economy in the world and by 2030 could account for half of the world's CO2 emissions. It has recently set out ambitious plans to reduce the carbon intensity of its economy, boost green energy, draft a new climate law and introduce carbon trading. The MPs say that this is the ideal time for the UK to work together with China; both to prepare the ground for a future international agreement on climate change – which will not be possible without Chinese engagement - and also to secure potential opportunities for British businesses in China's burgeoning markets for low-carbon technologies (currently worth around £430 billion).

The report warns, however, that the Government’s work in China suffers from a lack of strategic direction. There are too many small projects, focused on too many different areas, rather than a coordinated effort to achieve key objectives. The UK Government should focus instead on a smaller number of strategic interventions that are tailored to appeal to Chinese priorities and which build on UK strengths. For policy, this means a focus on carbon pricing and accounting, where the UK has experience to offer. In the business area this mean identifying the potential markets and technologies in which the UK could have a comparative advantage.

Tim Yeo MP, added:

"The UK is well-placed to help China develop the legal infrastructure for carbon trading and establish effective systems for emissions accounting as it drafts its new climate law."

The MPs are not convinced that the UK Trade and Investment arm of the Business Department is currently focusing on the right areas to deliver high value opportunities for British business. The report calls on the Government to undertake a systematic assessment of the sectors where the UK could have such an advantage and then develop a strategy for their promotion and deployment in China.

One area in which the UK could establish a comparative advantage with the right Government support, according to the MPs, is carbon, capture and storage (CCS) technology. The development of CCS is both an environmental imperative and a commercial opportunity for the UK, the report points out. Coal is abundant and cheap in China and coal-burning power stations still produce 70% of the country’s electricity. Deploying CCS in China will therefore be crucial to keeping global temperatures within safe limits and could be a substantial export earner if the UK is able to develop CCS expertise early. The Government must make up for its earlier failure to deliver a CCS demonstration project by setting a more challenging objective for the first operational project in the UK – with a start date of 2016 or earlier.

The UK’s ability to influence policy in China and to compete for business in low-carbon development depends on the reputation of the UK as a credible leader. However, the UK has not been as effective as other countries at showing China what the UK has to offer, according to the report. Action at home will be key to maintaining British influence in international debates and the competitiveness of UK low-carbon industries, the MPs believe. Slowing the pace of decarbonisation at home, the report warns, could undermine our low-carbon businesses and the export opportunities for this sector, and the credibility of UK leadership on climate change.

Tim Yeo MP, concluded:

"The UK’s image is unfortunately in danger of becoming  tarnished by a reputation of being more talk than action when it comes to climate change.
If we want to convince the Chinese that they should be doing business with us in this area, then we will need to  strengthen our brand.
The Government must not allow the UK to fall behind in the high-tech low carbon race by faltering on its commitments to create a low-carbon economy here at home.

By demonstrating that we can deliver real carbon reductions as well as we deliver climate change rhetoric, we could put UK plc out in front in the low-carbon industrial revolution set to sweep the world and thereby enjoy economic as well as environmental advantages."

Further Information

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