Westminster Hall
(11 years, 8 months ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
UN Framework Convention on Climate Change
(11 years, 8 months ago)
Westminster HallRead Full debate Read Hansard Text
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mr Tim Yeo (South Suffolk) (Con)
I warmly welcome the opportunity to debate the UN framework convention on climate change process—a subject in which the Select Committee on Energy and Climate Change takes a close interest, and will go on doing so during 2014. Our previous report on the subject was published in July 2012, and I will run through some of the recommendations.
In general terms, we attach importance to the UNFCCC process. It is the international route for trying to reach agreement on how to tackle climate change. It is clearly—evidence shows this—a tortuous route, so while we affirm our belief in its vital importance, we should not feel dismayed or frustrated by the lack of progress. There is a danger in thinking that unless we reach a global agreement, nothing much will have come out of this. I believe that the existence of the UNFCCC process is a valuable spur to countries doing things individually. Many of the commitments that have been made on emissions targets and the progress on achieving climate change legislation around the world have resulted, at least in part, from the fact that we have the parallel process taking place—international negotiations—which focuses the minds of individual Governments.
In that context, I commend the work of GLOBE International, with which many members of my Committee and several hon. Members present are closely engaged, in helping to spread awareness of the benefits of climate change legislation. As we speak, the Chinese version of the latest GLOBE legislative study is being unveiled in Beijing by some of our colleagues. Does my right hon. Friend the Minister want to intervene?
Mr Yeo
I am sorry; the Minister was paying such close attention that I thought some gem—some pearl—must be about to drop from his lips, but that will come later.
Let me deal with some of the key recommendations and the responses to and outcomes of the report—first, on monitoring, reporting and verification. We recommended that the Department of Energy and Climate Change push for a single accounting regime to ensure effective MRV. DECC agreed that a common accounting framework was necessary and hoped to see progress on that at Doha. The outcome was a number of changes to the MRV framework to improve transparency and accountability.
Energy efficiency is a subject close to the heart of my Committee in a number of contexts, and we recommended that the Government prioritise it as a mitigation strategy, using EU cohesion funds and EU emissions trading scheme credits to drive energy efficiency policies. The Government agreed with those recommendations, although they noted the need for a stricter cap or for structural reforms to achieve that with the EU ETS. I shall return to emissions trading in a moment.
On the role of the UNFCCC, the Committee considers it the leading multilateral forum through which to combat climate change. The Government share that view. We should not allow the rather tortuous progress to be a reason to despair. Alongside the international process, the bottom-up process should give every possible encouragement. We increasingly see individual countries making national commitments.
Sir Malcolm Bruce (Gordon) (LD)
The hon. Gentleman has already mentioned GLOBE, but does he not agree that if GLOBE had not existed, the progress that has been made in countries such as Mexico and China might not have been achieved and that it is vital that we continue to work at that level? He makes exactly this point: international co-ordination is important as a driver, but without national input we simply would not get international agreement.
Mr Yeo
I entirely agree with the right hon. Gentleman. I am pleased that the Foreign and Commonwealth Office is supporting GLOBE; it should continue to do so, because of the beneficial impact it has had. Interestingly, there is also some correlation between the location of the conference of the parties meetings and progress by individual countries. The progress made in Mexico and South Africa was encouraged by the fact that they hosted COP meetings, and the selection of venues for future COPs will have a bearing on further progress. When South Korea was in the frame to host the COP last year, I was disappointed that it was not chosen. South Korea is another high energy user with a rapidly growing economy, and it has shown a lot of interest in wanting to address the need for low-carbon technology.
We received evidence on emissions trading and the desirability of a global cap-and-trade system, and I think that the Government broadly share our view, but we are all aware of the enormous practical obstacles. Nevertheless, I hope that we face something of a critical moment in emissions trading, particularly after this week’s vote in the European Parliament. It is much to be regretted that the enormous impact of the recession on emissions in the EU—reducing them to well below the pathway that would have been realistically forecast five years ago—is not in any way recognised through tightening of the limits in phase 3. We have seen the effect of that on the carbon price. Alongside that, however, we can take encouragement from the commencement of emissions trading in California at the start of this year, where there seems to be real commitment from the state, and the governor in particular, to making it work, and from the emissions trading pilots under way in China, which we will focus on in the second of the afternoon’s debates.
It is the view of the Committee, and my very strong view, that what happened this week in the European Parliament underlines the damage that the UK Treasury’s unilateral imposition of a floor price for carbon could do to some sections of British industry. That should now be seen and acknowledged for what it is: a straightforward tax, introduced by the Treasury for revenue-raising purposes. It will do nothing to reduce carbon emissions; it might divert some emissions from this country to the rest of the EU, and it might put British business at a competitive disadvantage compared with the EU, just for the Treasury to collect another few billion pounds a year. If the Treasury says, “We’re going to have a tax,” that is fine, but do not dress it up as an environmental measure which, I am afraid, tends simply to discredit the concept of carbon pricing.
Barry Gardiner (Brent North) (Lab)
I pay tribute to the hon. Gentleman for the way he has steered the Committee in producing the two reports and for his remarks so far. Does he agree that what has happened with the carbon price and the announcement in the Finance Bill about raising the carbon floor price will act as a direct subsidy to nuclear production companies in this country, such as EDF, in a way that will distort the market? Like him, I support nuclear, but we must recognise that the market will be distorted by giving nuclear a substantial subsidy at the very time when the Government are attempting the difficult process of negotiating a strike price with EDF over the future of energy costs in this country.
Mr Yeo
I certainly do not dissent from the hon. Gentleman’s analysis of the effects. We are at a sensitive stage in the nuclear negotiations and this may be another unhelpful dimension. I would like to see a rational approach. There is an important role for nuclear, alongside a lot of other low-carbon technologies, but we need to get it at the best value for money for electricity consumers and the competitive position of British business.
David Mowat (Warrington South) (Con)
I wish to follow up on the point made by the hon. Member for Brent North (Barry Gardiner). A subsidy for new nuclear would be more defensible, but the issue is that it is a subsidy for existing nuclear, which makes no sense whatever. I reiterate the point made by the Chairman of the Select Committee, my hon. Friend the Member for South Suffolk (Mr Yeo): such a differential between us and the rest of the EU could wipe out large parts of the process industry in the north of England. It is not tenable—not at all.
Mr Yeo
My hon. Friend is right about the difference between new and old nuclear, and I take his point. I reiterate that my Committee and I are wholly opposed to the floor price for carbon, which is a tax. It is not a green measure, although it was introduced as one, and it was never going to have that effect. I am a great supporter of the concept of emissions trading and a great advocate of more urgent action to accelerate the introduction of low-carbon technology. The floor price for carbon will not do anything to achieve those objectives.
Dr Alan Whitehead (Southampton, Test) (Lab)
Will the Chairman of the Committee reflect on the fact that not only was a substantial floor price escalator effectively announced in the Finance Bill, but that escalator was £1 above EU ETS prices with respect to what was originally proposed in the consultative document on which the new rates are based; was put into place at £5 above EU ETS prices; and now, with the projections to 2015-16, is £12 above EU ETS prices? Does he have any thoughts on that trajectory and the way it was laid out?
Mr Yeo
The hon. Gentleman makes a telling point. It is clear that, even in the Treasury, the floor price is simply seen as a way to extract revenue, but it has chosen to do that in a way that is particularly damaging to some sections of British business. Incidentally, his thoughtful intervention has given me time to remember that, in opening, I should have drawn attention to my entry in the Register of Members’ Financial Interests and declared an interest in a number of energy businesses. I reiterate, as I have on previous occasions, that those interests were acquired long after my views on these subjects were formed 20 years ago, when I had some ministerial responsibility for the matter.
I shall touch briefly on one or two other recommendations. The Government agree with the Committee that we should work with industrial sectors and stakeholders to develop a sectoral trading scheme between developed and developing nations. The Government also accepted the Committee’s recommendation that the second commitment period of the Kyoto protocol should last eight years and include a review clause to allow for more ambitious emissions targets, if necessary. They also agree that efforts should be focused on developing the Durban platform, because countries such as Canada, Russia and Japan were unlikely to sign up to a second Kyoto period.
I share the concern of some commentators that more progress has not been made towards closing the emissions gap. Without wishing to provoke my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) into too much anger, I will quote Lord Stern, whose comments on it were apt. He said that
“there has been, yet again, a very big mismatch between the scale and urgency of action required to effectively manage the huge risks of climate change, and the political will and ambition that has been displayed in Doha. Current commitments and pledges by countries to reduce emissions by 2020 are clearly not consistent with the goal of giving the world a reasonable chance of avoiding global warming of more than 2 centigrade degrees. We are headed on current plans for likely increases of 3 centigrade degrees or more”.
He has more to say, but I think I have perhaps said enough on that point.
The Government also supported the Committee’s view that a target of a 30% emissions reduction by 2020 should be set at EU level, and the view that that would be in the UK’s long-term economic, as well as environmental, interest.
I will leave other members of the Committee to address some of the report’s other recommendations, because I want to allow a little more time, if possible, for the second debate, which is on low-carbon links with China. The process that we consider in the report and are debating this afternoon remains important and, frustrating though it is, I am glad that the Government continue to participate fully and constructively in it.
David Mowat
My hon. Friend makes a point that I have been reflecting on. He says that his Committee is of the view that a 30% cap is in the UK’s long-term economic interest. For my own education, will he tell me the main thrust of the argument on how that long- term interest will be met by that?
Mr Yeo
Gladly. I am pleased that my hon. Friend has raised that point. I was suggesting a 30% target for the EU, rather than for just the UK. I believe it is highly probable that global concern about climate change will intensify substantially in the next 15 to 20 years, and that by the mid-2020s large areas of the globe will be covered by emissions trading and have carbon pricing mechanisms. It is also likely that that will be supplemented, in many countries, by carbon taxes. If that turns out to be the case—of course, I cannot be sure it will—I believe that countries that have moved more quickly towards low-carbon transport systems and electricity generation, and energy-efficient low-carbon buildings of all kinds, will have an economic advantage, as well as their having done the right thing environmentally. The probability is that in that situation the costs attached to fossil fuel consumption will become very high.
I entirely accept that if my expectation is wrong, and if concern about climate change decreases rather than increases, with the world being quite happy to burn huge quantities of coal and gas, my judgment will turn out to have been wrong and a fairly small competitive disadvantage will have been suffered by countries that chose to diversify their energy mix in the way I suggest.
There are also energy security reasons for not saying, “Let’s bet the farm on gas.” I look at what has happened to gas prices in the past five or six years, the International Energy Agency projections for gas consumption, particularly in Asia, and the possibility of planning difficulties with the uncontrolled roll-out of shale gas developments in this country, and I think that in policy terms it is rash to believe, “We have a secure energy future by saying it’s all going to come from gas.” I strongly favour a diverse mix, with nuclear, low-carbon renewables and much more emphasis on energy efficiency—a true “no regrets” policy. Countries adopting that model are likely to be in a better position in the 2020s and might have a big competitive advantage.
David Mowat
I agree with what I think is the point that the Chairman of the Select Committee is making, which is that if the world continues to show great concern about climate change, the first movers might have an advantage. Does it not give him pause for thought, though, that the EU in particular now appears to be showing some reluctance on building in a persistent competitive disadvantage to the United States? That would be one interpretation of the vote this week. If that were to become more pervasive, it would create some issues with respect to my hon. Friend’s analysis.
Mr Yeo
I do not want to get too distracted by that, but the terms of trade in the debate have clearly shifted a lot in the past year or so. The two big factors are, first, that the recession seems to be longer and worse that we had thought—not just in this country, but across the EU, although perhaps for slightly different reasons, and, secondly, the extent of the competitive advantage that shale gas now gives the US. Despite all that, if we say, “Okay, that’s fine. Let’s not bother with nuclear or low-carbon renewables, it’s all going to be gas,” we might find that we are buying gas expensively from a variety of places, which might even include America.
We would not have done much for our competitive position if we landed up completely dependent on fossil fuel imports, the price of which would be completely outside our control, and even the supply of which might not be wholly reliable. I point to the views of all sorts of businesses that are not green-dreaming tree huggers—some are not even connected with the energy industry—but which clearly feel that an energy mix involving a variety of technologies is a better bet than complete reliance on fossil fuels.
Dr Whitehead
Might the Chairman of the Committee wish to consider a distinction between internal domestic prices in the US and its export prices? Might he also reflect on the price of the most recent cargo of liquefied natural gas from the US, and the extent to which it was or was not related to the overriding price of shale gas within the US? The extent to which the competitive advantage of the UK may be exported is very much in doubt, and it is likely that world prices, not US domestic prices, will prevail.
Mr Andrew Turner (in the Chair)
Order. Will Members on both sides of the Chamber ensure that interventions are brief?
Mr Yeo
The hon. Gentleman makes another telling point, which is that a US exporter of shale gas, or any other form of gas via LNG, will sell it in the market in which it can get the best price. It is likely, in my view, that we will see regional gas pricing, with the US, and perhaps north America generally, enjoying a very low price, western Europe enjoying perhaps a middle price and Asia possibly an even higher price, depending on how discoveries go. At any rate, there is absolutely no reason why the US should not sell its gas to the highest bidder. Therefore, it will enjoy an even greater competitive advantage if the rest of the world says, “Okay, let’s all just rely on gas,” because the demand for gas will become greater and greater.
I will conclude my remarks rather than take any more interventions, because I am keen to hear what my colleagues have to say.
John Robertson (Glasgow North West) (Lab)
It is a pleasure to serve under your chairmanship, Mr Turner. I do not intend to take up too much time, but I was fortunate to be the representative of the Select Committee on Energy and Climate Change at COP 18, and I thank my colleagues for allowing me to do that.
COP 18 was an interesting event, and I met the Minister there, but for the next conference of the parties, his Department could look into the fact that I did not have delegate status—I was just a visitor. I believe that I was excluded from meetings that might have been of some advantage to the Committee and of help to the Government. I believe that the current Committee and the one during the previous Parliament have been helpful to both Governments. We might discuss and occasionally argue points, but in general terms there is no political bias and we are all, as we and the Prime Minister would say, in it together. We should therefore point out the problems.
Barry Gardiner
That point is important. Many national delegations include legislators who are not bearers of ministerial office or part of the Executive. I believe that civil society representatives from the UK were given delegate status at Doha. The Government have, in principle, recognised the importance of reaching out and of there being other avenues and channels of communication at the COP. Certainly from the point of view of GLOBE—
John Robertson
I totally agree with my hon. Friend’s point. What he says would have been helpful on occasion. Some of the delegations that I met had made an assumption that I would be at a subsequent meeting, believing that it was important that Britain took a lead, but I could not be there. Not only would my being there have been helpful for the Select Committee; it would have been helpful for Parliament, in effect, to be represented by a member of the Committee. That is something to consider for the future.
Mexico has been mentioned. Along with some of the other countries, Mexico is really taking on board the leadership that has been shown by this country. I met a number of Mexican delegates and people who told me that they were trying to emulate what we did here some years ago, going down the route of a Bill that would give them an energy and climate change policy written in statute. They were impressed by what we had done, to such an extent that I have since met more of them, with my hon. Friend the Member for Islington North (Jeremy Corbyn), who is well known in Mexican circles. I met their energy and climate change MPs when they were here, and saw how important the subject was to them.
If a country such as Mexico, which is an emerging nation, can take that subject on board, perhaps there is hope for some of the countries—Brazil, and even China for that matter—that we might say have not been helpful in promoting climate change properly. However, we are all talking, which is a good thing, but talk is cheap and we must ensure that we get some kind of development from it.
I have noticed that some countries—particularly developing nations, although not Mexico in this case—still harbour ill will towards us, the Americans and any others who have done the things that we are telling them not to do. I have pointed out to them that it is important to look at history, from which we can learn for the future. There has always been a nation or some kind of empire leading the way in development. In the UK, that happened during the industrial revolution, which I do not think we should apologise for, because it was an evolutionary step between what went before and what came after. We have moved on from there, and the next evolutionary step is to start to look after our climate. I believe that, with the work that can be done and with cross-Bench co-operation, we can do that and go forwards.
GLOBE was very helpful, as was my hon. Friend the Member for Brent North (Barry Gardiner), in setting it up for me to go to COP 18, because I had never been to anything like it. What should also be taken on board before we send someone else is the need to ensure that they know what will happen when they get there and who to contact. Being a delegate would of course make a big difference.
GLOBE hopes that countries such as Mexico and Brazil will sign up to more on climate change; I think that Mexico will—it has done so—and I hope that other countries will, too. The one country not mentioned by the hon. Member for South Suffolk (Mr Yeo) was the United States. It has not signed up to anything, but I must say that some of the work done there is way beyond much that we have done. The Select Committee recently went to California, which is still ahead of us on this kind of thing. People there tell us that we are doing a great job, and they look to us; yet what they are doing on efficiency levels and such matters is way beyond what we have done until now. We will get better, however, and we will do it.
I believe that, with the support of the Select Committee and my party—I look forward to the speech of my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger)—we can ensure that this country is still one of the leaders. In years to come, we will think of Tony Blair as the man who started it all off in relation to bringing energy and climate change into the political arena.
Mr Peter Lilley (Hitchin and Harpenden) (Con)
It is a great pleasure to participate in this debate under your chairmanship, Mr Turner. Like the Chair of the Energy and Climate Change Committee, my hon. Friend the Member for South Suffolk (Mr Yeo), I must draw the Chamber’s attention to my entry in the Register of Members’ Financial Interests—not that I am aware of any way in which the outcome of this debate or the issues raised in it could affect my well-being through those interests.
I admit that I was not a member of the Select Committee when it drew up the two reports that we are considering, so I cannot claim credit for them or share in any blame. I put myself forward for the Committee precisely because I was concerned about the rather over-cosy relationship between it and the Government, which has allowed them both, and the whole intellectual establishment in this country, to live in a dream world on energy and climate change issues. Mercifully, through the operation of a secret ballot, I was elected to the Committee.
Those whom the gods wish to destroy they first make mad. One of the early signs of madness is an indulgence in compulsive displacement activity, which could not be a better description of the whole COP process. Tens of thousands of people are displaced across the globe to an environment where they are cut off from reality and the rest of the world, where they can indulge themselves in demonstrating their lack of realism and reality, and where the original objective of obtaining a legally binding agreement between nations to reduce worldwide emissions has itself been displaced by the alternative objective of reaching an agreement to meet again—and to agree to reach an agreement at some distant future time. That is displacement activity on a massive scale, and it involves a massive degree of hypocrisy, given the huge emissions incurred by these eco-warriors as they swan across the globe in jets and hire fleets of limousines, so emitting more CO2 than a small African country.
The aim of displacement activity is of course to avoid facing up to reality, so I will just point out a few facts that have not found their way into the report or into discussions of such matters, but seem to me to be rather pertinent. The original aim of the Kyoto protocol and the agreement in 1992 was to reduce emissions by the contracting parties by 5% by now—or by last year—but world emissions have actually gone up by nearer 50%. By happy chance, the rise in the world temperature over that period was much less than anticipated, despite the fact that the supposed cause of that rise in temperature was even greater and more powerful than anticipated.
Since the Kyoto agreement was signed, Canada, Japan and Russia have resiled from it. Far from making progress in getting countries to sign up, we have lost three very important world players. The US will not sign up to Kyoto or its successor, or to any legally binding agreement, as long as developing countries are allowed to continue to increase their emissions unconstrained. It was not President Bush who prevented America signing up, but the Senate. Senators refused to sign up to Kyoto by 98 votes to zero.
That situation has not changed since President Obama’s election: there is no chance of America signing up to legally binding restraints on its emissions as long as developing countries are not also bound by them. But the developing countries want to grow, and I want them to grow. I do not like seeing hundreds of millions of my fellow human beings wallowing in misery and living lives that are stunted relative to what their material living standards might be if they achieved economic growth. But growth requires energy—it is almost synonymous with the rise in the use of energy—and the growth in energy use needed to raise their living standards will absorb much of their capacity to invest and much of the capital available for them to invest in future decades.
Fossil fuels are the cheapest form of energy. Renewables cost two or more times as much as fossil fuels to produce a given amount of energy. If developing countries were forced to use renewables, they could only afford less than half as much energy as they would otherwise be able to bring on stream. That means they will not use renewables; they will continue to develop by exploiting the use of fossil fuels.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
I do not know whether the right hon. Gentleman has had the chance to go to any developing countries, but I had the opportunity to go to Tanzania last year and saw for myself at first hand how communities, which do not have access to any gas or electricity on grid, were successfully harnessing the power of the sun via solar panels to provide whole villages with energy.
Mr Lilley
The hon. Lady may seriously believe in the use of renewables in places where it is sensible to use them. If an area is a long way from the grid, it may be sensible to use a windmill or a solar panel, even though it will not provide light at night or electricity when the wind is not blowing.
Mr Lilley
If my right hon. Friend the Minister thinks that it is economic at present to store electricity in batteries, he is living in a dream world. That means that it will be not two times as expensive, as is the case with wind, or eight times as expensive, as is the case with solar, but more like 20 times as expensive if it is stored in batteries. If someone could develop storage for renewables, that would be wonderful; I would be grateful to him and he would be a great benefactor to humanity. However, I do not think that my right hon. Friend knows of such an invention.
Gregory Barker
My right hon. Friend is comparing two completely different things. He is talking about industrial-scale storage. As the hon. Member for Liverpool, Wavertree (Luciana Berger) said, the reality in the developing world is that most people require very small amounts of energy. Typically, they need it to use a laptop, a phone and possibly a refrigerator. Battery storage is not only viable, but happening at scale. There are nearly 500 million people in India off the grid, and hundreds of millions of people in Africa.
Mr Andrew Turner (in the Chair)
Order. I have two points. First, the intervention was too long. Secondly, Mr Lilley needs to bring his remarks closer to the subject.
Mr Lilley
I am merely explaining why the COP process is completely ridiculous and will not result in any agreement. We have this unrealistic agreement between the two Front-Bench speakers that the matter will be solved by installing a few wind turbines and solar panels in villages in Tanzania. India and China, in which effectively half the world’s population live, are industrialising. They are industrialising not by building a few windmills and solar panels, but by building nuclear—sometimes, but that is very expensive—coal above all and gas where they have it. Of course they will sometimes use renewables where it is appropriate and where an area is a long way from the grid, but let us not kid ourselves that because we have seen one windmill in Africa, the whole developing world will develop by means of renewables. If the two Front-Bench speakers, who are united in their lunacy, would like to tell me that that is seriously their belief and that they think the developing countries will grow primarily by harnessing renewables, I will give way to them.
Mr Andrew Turner (in the Chair)
Mr Lilley, it is your choice as to who is to speak. Who do you wish to speak?
Gregory Barker
I thank my right hon. Friend. The key point here is that we are not comparing shale gas in America with the opportunity for development in the developing world. We are comparing the marginal cost of a diesel generator for hundreds of millions of people in the developing world with a renewable alternative. In most cases, it is viable without any form of subsidy.
David Mowat
I just wanted to put my tuppence-worth into the example from Tanzania. If that were the way forward at scale, China would not be building 50 unabated coal stations every year. That is what is happening, but it does not mean that solar power cannot power laptops in Tanzania. The proof is in the pudding. I want to go back to the remarks made by my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley). Where does he see nuclear?
Mr Lilley
I am grateful to hear that there is another voice of common sense in this Chamber. Where do I see nuclear? Unfortunately, it has become extremely expensive but it is, none the less, a source of major power that is not dependent on the vagaries of the weather or the fact that the sun goes in at night.
Dr Whitehead
For completeness, will the right hon. Gentleman put on the record the extent to which he accepts any externalities in the extraction, transportation and use of fossil fuels, or does he think that they could be made even cheaper by having 12-year-olds dig them out of the ground with no safety rules whatever, no transportation and no concerns? What are his particular parameters in terms of the comparisons he is making?
Mr Andrew Turner (in the Chair)
Order. I am sorry but we must have brief interventions. That will get us back on to a swifter speech.
Mr Lilley
I do not know why the hon. Gentleman raises the issue of 12-year-olds being employed in any particular industry; I am not in favour of that. Do I accept that there are externalities involved in the activities? Yes I do, and, for the sake of argument, I will accept all the externalities that are attributed to CO2. I am simply pointing to the reality that India and China, with half the population of the world, Africa, with a further major share of the world, and Latin America are going to develop by harnessing fossil fuels. We will not prevent them from doing so unless we ourselves are prepared to subsidise the difference between fossil fuels and the cost of renewable alternatives.
Mr Lilley
I will do so in a moment. I do not believe that this country, or Europe as a whole, can afford simultaneously to bear the costs of cutting its own emissions by 80% and the cost of the developing world’s developing at the speed and pace they want to while we absorb the additional costs we would force them to incur if they did so using renewables instead of fossil fuels. It just will not happen. It cannot happen, and the Government would not get re-elected if they proposed to the British electorate that we should incur that burden.
Sir Malcolm Bruce
May I suggest that the right hon. Gentleman is advancing a false prospectus? No one is suggesting that developing countries should not use fossil fuels. We are saying that they should use a sensible mix, and be encouraged to have access to renewables. That is why, for example, Ethiopia is building dams to generate hydroelectric power and China has a huge investment programme in renewable energy. They know that they have a mix. The right hon. Gentleman seems to be arguing that there should be no mix.
Mr Lilley
The Chinese, whom we will come on to in the next debate, are planning to produce, by 2030, 11% of their energy from renewables. The bulk of it will be hydroelectric, which is a conventional source of electricity; no one would argue against that. Where countries have hydro power and they can harness it, they should go ahead and do so. That has always been happening and it will happen anyway. It is happening regardless of whether CO2 is a serious problem for them. Hon. Members must recognise that the world is developing using fossil fuels. We can wish that that was not the case. We can finance great jamborees every year or two. We can all get together and pretend to ignore it, but as long as those in the developing world are free to exploit fossil fuels and any renewables they find economic or choose to inflict on themselves, America will not sign up either. If America, China, India, Canada, Russia and Japan will not sign up, it seems slightly perverse of us to assume that by gathering together we are somehow going to overcome that resistance; we will not.
Mr Yeo
For the sake of accuracy—I may have misheard my right hon. Friend—let me say that the target in China is for 11.4% of its energy mix to come from non-fossil sources by 2015. That is in less than three years from now. I might have misheard my right hon. Friend, but I think that he mentioned a later date. May I also put on record that China’s explicit goal is to reduce substantially the use of coal as a proportion of its total energy mix over the next two decades, and it is already the world’s largest investor in renewable energy sources?
Mr Lilley
I take all those points, and I probably did give the wrong date for the Chinese. However, I remember also seeing their figure for further ahead, which was not much higher. There would be a large increase in the amount of renewables, but not in the percentage of renewables, and still the vast bulk of their energy will come from conventional sources.
We can make ourselves feel better by bigging up in our mind the amount of renewables and by getting warm feelings about the sight of solar panels bringing light to small villages in isolated parts of Africa. However, if we seriously imagine that these great jamborees will result in an agreement by the countries in the developing world to constrain significantly their ability to grow by constraining their ability to use fossil fuels, we are living in a dream world, and everything that has happened in this debate suggests that the majority of Members present for it are part of that dream.
David Mowat
I will make a quick intervention to point out that we are saying that fossil fuel usage is a developing world phenomenon—it is not. The EU is increasing its use of coal. Last year, the increase of coal use in the EU was significant. For example, it is one of the reasons why Germany has much higher carbon usage than we do, both per head and per unit of GDP.
Mr Lilley
My hon. Friend is absolutely right. Of course, Germany is moving away from renewables, if one counts nuclear as a renewable. It is moving away from nuclear. It is planning to close down all its nuclear plants, and by and large that will mean replacing them with fossil fuel plants instead. [Interruption.] Does the hon. Member for Southampton, Test (Dr Whitehead) want to intervene?
Dr Whitehead
I was just pointing out that the right hon. Gentleman said that nuclear is a renewable. I recall the process of getting uranium out of the ground in order to fuel nuclear reactors, and once it is out of the ground it cannot be put back in again. Nuclear is not a renewable.
Mr Lilley
Okay. I take the hon. Gentleman’s pedantry in good heart, since I am a pedant myself. I should not have said “renewable”; I should have said “non-fossil fuel”. Nevertheless, Germany is moving away from its dependence on nuclear, which is a non-fossil fuel, and it will rely more on fossil fuels, despite its already large commitment to solar and wind.
At this point, Mr Turner, to avoid yet more interventions, which might incur your wrath, and further replies to them from me, which might be too long, I will leave Westminster Hall to those who wish to indulge their fantasies in public, so that they can have their say.
Barry Gardiner (Brent North) (Lab)
Mr Turner, it is a great pleasure to speak in this debate under your chairmanship. I should declare my interests, such as they are. They are non-pecuniary, but I am the chairman of the board of GLOBE International, which has already been referenced in this debate.
There is one thing at least on which I agree with the right hon. Member for Hitchin and Harpenden (Mr Lilley), and that is that those whom the gods wish to destroy they first make mad. I wonder whether he would agree with me on another epithet, or epigram: just as the stone age did not end because of a lack of stone, so the oil age will not end because of a shortage of oil. But while we have many fossil fuel resources left in the world that we are able to mine and access, and which countries are seeking ever more to discover the resources to dig or pump up and use, none the less there will be a time, I think, when we realise that the effects of doing so are such that we have to desist.
I will focus my remarks more clearly on the UNFCCC itself and the process of the UNFCCC. I begin by outlining why a change in climate should matter at all. The UNFCCC is the United Nations framework convention on climate change and the world has occupied itself with this problem of climate change for a very long time now; why should we? It is certainly the most complex and intractable question of justice that the world has ever seen, in that it is not simply about justice between peoples separated by geography and wealth, but about justice between peoples separated in time, across the generations. It has proved a singularly intractable problem to reconcile those competing interests.
Why does a change in climate matter? In and of itself it should not, were it not for the fact that species—biodiversity—find it difficult to keep pace with the rate of climate change. What we have seen is a change in the rate of extinctions in the modern era that has gathered pace to such an extent that we now have, in comparison with the fossil record, a 1,000% increase in the rate of extinctions. That is higher than in any other period in the whole of the fossil record. We are living in the midst of that, and sometimes when living in the midst of things it is difficult to see the wood for the trees; but that is what is going on. The rate of extinctions that we are experiencing is really quite remarkable.
Mr Lilley
Does the hon. Gentleman recognise that although extinctions are taking place, particularly localised extinctions, they are almost exclusively due to change in habitat as a result of economic development, not as a result of change in temperature? I believe that only one species is known to have been rendered extinct by a change in temperature.
Barry Gardiner
No, I do not accept that at all—not at all—because if the right hon. Gentleman looks at marine life in the oceans, he will see what is happening in tropical coral reefs because of the changes in temperature in the oceans. Whole ecosystems are quite simply being destroyed by the changes in temperature in the oceans.
Mr Lilley
The hon. Gentleman said that we were living through the biggest extinction since perhaps the Palaeozoic era, and he implied that that was through climate change, but he has been unable to cite a single species that has been rendered extinct through climate change. I invite him to do so, or to give me a source where I could find that information.
Luciana Berger
I thank my hon. Friend for giving way. I was able to do some research on my iPad during those interventions, and I was able to identify just one such species—the Ecuadorian harlequin frog.
Luciana Berger
Forgive me. Well, I just found that first one; I will endeavour to find some more species during the course of our debate. That was the first one that came up in my Google search.
Barry Gardiner
I think that the right hon. Member for Hitchin and Harpenden will not dispute the fact that we are living through the greatest period of extinctions that has been known in the fossil record; he has not disputed that. What he has sought to dispute is whether it is in any way linked to a change in climate, and therefore whether it is in any way linked to the rise in the use of fossil fuels. He should look at the way in which species are migrating—he talked about a loss of habitat, but the reason why there is a loss of habitat in many parts of the world is, of course, because of the change in climate, which has actually destroyed the habitat that used to be there. I do not think that he can separate out, in the way that he seeks to, the effects of climate change from the effects of habitat destruction. To do so is precisely to ignore what is going on.
We have to understand that 50% of the GDP of the poorest people in the world is dependent on their immediate environment, and it is that immediate environment that is under such significant threat. In parts of Africa, we have seen whole habitats destroyed. I sometimes wonder why we spend millions of pounds protecting our vessels as they pass the coasts of Ethiopia and Somalia but never give a thought as to why the pirates that we are protecting them from are there in the first place. Of course, they are there in large part because of the desertification that has taken place in that part of Africa—because of the loss of agriculture and of economic opportunities there. Not to link what is happening with climate change to the sustainable development goals would be a serious error indeed.
Let us consider the Durban platform for enhanced action that has been established, and let us look at the way in which, by 2015, we are to try and arrive at an agreement between countries as to what will happen in 2020 in respect of the commitments made there. Many hon. Members have talked of the difficulty in securing those commitments and the difficulty of some countries agreeing their programme of action without certainty and knowledge of what other countries are prepared to do. Russia, Canada and Japan have been mentioned as examples. These are extremely difficult negotiations because, as the Committee’s report acknowledges, every country will act in its own national interest. During the negotiations, we have been true to form and have very often acted in our national interest as well.
I would challenge the Minister on some of the positions that our country has adopted in the negotiations. Let us consider the position that we have adopted with respect to Russia. We have been saying, “With all the hot air that they had after the demise of the Soviet Union, they have arrived in a much more fortunate position, and we want now to discount that.” But in that negotiation any Russian with common sense would say simply, “Look, our economy suffered an enormous transition—an enormous hit on our domestic economy. We’ve paid the price for being in the position that we are now in, with that hot air, with those emissions credits.”
The original intention of Kyoto was simply that we should see the reduction below 1990 levels. Perhaps due to the collapse of the old Soviet economy, Russia has achieved that reduction, but it has not achieved it without substantial cost. That is just one example of the way in which the negotiations that we believe we are entering into in good faith may be perceived by the other side as negotiations that are not being conducted in good faith. Sometimes we have to look much more carefully at the principles of equity when we consider how one reaches a just settlement in this area.
For example, in discussions that are often entered into about what is happening in China and India—we will debate China more specifically later—we often say, “These are the emerging economies and emerging powers and, of course, China is building so many more coal-fired power stations and its emissions are growing at a tremendous rate.” Yet somebody in India will say, “Yes, but let’s look at our population and let’s see what our emissions per capita are.” They will say that, in India, the emissions are approximately 2 tonnes per capita, whereas in this country they are well into double figures and in America they are probably 10 times what the average Indian would expend.
We have all entered into the negotiations at the UNFCCC from a position of national self-interest. Unless we understand that this is genuinely a boat in which we all either sink or float, we will not arrive at a resolution that is fair and has any chance of success.
David Mowat
I am interested in the hon. Gentleman’s analysis, particularly in respect of the national point and Russia. Some countries—how can I put this?—might benefit from climate change, including Russia, because there is a lot of tundra there. I wonder whether the COP might look at the possibility of globally taking advantage of that phenomenon, given that my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) may be right in saying that we are not going to stop coal being burned at the present rate.
Barry Gardiner
The hon. Gentleman makes an important point. I do point out that he has conceded that climate change is real, and that it will have a differential effect in different parts of the globe. It is difficult to predict what that differential effect will be, but one of the core predictions is that there is every expectation that parts of Russia that are now tundra and unfarmable will gradually be released as good agricultural land. Therefore, from the Russian point of view, climate change, if and when it happens, will not be a significant problem. However, the problem is that with the release of that land into farmable condition, a lot of methane will be released into the atmosphere, which will turbo-charge the process. But the hon. Gentleman is right to mention that.
The international negotiations must take on board the fact that although there are real downsides for some economies—indeed, small island states are in danger not just of their economy, but of their whole territory going down the pan—countries such as Canada and Russia may make substantial economic gains through this process. That is why we cannot simply go into the negotiations with the viewpoint that climate change is a universal disaster and we must stop it at all costs. We have to understand that some people expect to gain and some expect to lose. That makes these negotiations all the more intractable, and makes it more difficult to get a just resolution. I absolutely endorse the hon. Gentleman’s point.
David Mowat
It might be a more fertile route for the world to look at that interaction between those that are gaining and losing, rather than trying to stop what would appear to be the unstoppable, in terms of coal burning at scale.
Barry Gardiner
The negotiations absolutely have to consider where the balance of costs and benefit lies and take that into account. Without doing that, we will not get anywhere; I agree.
The funding of the climate negotiations process is critical. I congratulate the Government on the way in which our country has stepped up to the plate with the short-term funding committed in 2009 through to 2012. They have delivered that, if not 100%—it may be 100%—then pretty damn close to 99%. They have not just committed and delivered the funding, but ensured that 50% of it went to adaptation. Many countries that promised such start-up funding committed themselves to the principle of at least 50% going to adaptation but then did not deliver. It is absolutely vital that such commitments are honoured, because they are the ones that build trust into the negotiation. When countries see other nations commit funds and then deliver them in the way that has been promised, it builds trust into the whole process.
When Christiana Figueres, the executive secretary of the UNFCCC, came to London in January and spoke in the Locarno suite of the Foreign and Commonwealth Office, she made it clear that the only way in which we would achieve success on the Durban platform and see a resolution and a conclusion to the negotiations in 2015 was to build trust at national level. She made it clear that any agreement in 2015 would as much reflect what was going on at the national level—the legislation that was being passed and the regulations and policies that were being enacted by Governments—as it would define climate legislation into the future.
For many years, Governments across the world appeared to think that all we needed to do to solve the problem of climate was to get together and reach a legally binding agreement. Well, that was always a chimera; it was never going to be the case because, no matter what Governments agree to, it must be brought back and legislated on in their Parliaments. That legislation must then be implemented. Funds have to be voted to ensure that the legislation is implemented properly and fully, and the implementation must be monitored, audited and carried out.
That is why I refer to the study launched by Christiana Figueres in the Locarno suite—the GLOBE International climate legislation study—which focuses on climate legislation enacted in 33 countries. The study sets out the progress that each country is making on enacting its own legislation and regulation, and that builds trust into the whole system. Often countries ask, “Why should we act to the detriment of our own industry by enacting climate legislation? It will put us at a disadvantage to everyone else.” But actually, countries are not acting alone. Countries throughout the world are taking positive steps to enact legislation on climate because they perceive the problem. Such a study is perhaps the best way to show the sceptics that their country is not alone, to build trust and enable the negotiations to proceed in the way alluded to by Christiana Figueres.
Finally, since the Bali conference, REDD—reducing emissions from deforestation and forest degradation—and REDD+ have been one of the most important ways of advancing our aspirations for reducing emissions into the atmosphere. Emissions from deforestation and forest degradation amount to about 17% to 20% of emissions produced each year. I pay tribute to legislators in Brazil for the work that they have recently concluded on the forest code, and for reducing their own emissions so substantially over the past three years. I pay particular tribute to legislators in Mexico, who passed important REDD+ legislation to enable REDD funding to come through.
We often find that, in countries that are major forested domains, property rights are very difficult to establish because there are different layers and levels of rights, such as customary use rights, that sometimes make it impossible to disentangle who has the right to operate, to log or to use a piece of land in a particular way. By teasing those out and codifying all the issues, REDD+ will be enabled, as part of the international negotiations, to reduce really effectively the emissions from that most important sector.
Colleagues are keen to move on to the second part of our debate, so I will draw my remarks on the UNFCCC to a close. I believe that the process is worth while, but I recognise that it is not simply the international negotiations process, in which thousands of people come together every year, that will resolve the matter; it is by detailed work at national level, open to scrutiny by national Parliaments and enacted through national legislation, that we shall build the trust in the international community that will enable the executives, through the UNFCCC, to arrive at a negotiated agreement, we hope, in 2015.
[Mr Clive Betts in the Chair]
Dr Alan Whitehead (Southampton, Test) (Lab)
I, too, will try to be brief, because I know that an important debate on China and the low-carbon economy will follow. That debate may shed light on some of our interesting diversions in this debate.
Fundamentally, we have been invited this afternoon to justify why the COP process is important. There are those who say that it is all a complete waste of time—we will burn all the fossil fuel that we can get our hands on—and ask why we are concerning ourselves with the process. Most simply, the Earth is very good at storing stuff and does not need over million of years to balance how it works as a planet. Humans, with the great gift of consciousness, are also very good at finding all that stuff, digging it up and burning it within a few hundred years, compared with the millions of years that the Earth has taken to store and balance it in the first place. I assume that the right hon. Member for Hitchin and Harpenden (Mr Lilley) also agrees with this, but if, over the next 100 years or so, clever humans find and burn all the fossil fuel, the outlook for the world would be very poor indeed.
The world simply cannot do that over the next 100 or 150 years. That seems to me to be a fairly self-evident fact, assuming that people agree that there is some relation between what we do—burning fossil fuels in particular, and human activity in general—and the state of the world’s atmosphere and the extent to which the Earth will warm up as result. Someone who thinks that there is no connection whatever would presumably not be concerned about finding all the fossil fuel in the world and burning it all. Someone who thinks that there is a connection, and an urgent one, would presumably wish to do something about it fairly urgently. Since climate change and, in particular, the results of the burning of fossil fuels know no boundaries, the only way that we can do something about the situation over the medium term is through interaction and discussion between states throughout the world about achieving an outcome that is not as disastrous as it would be if every country went its own way individually.
That seems to be the basic point about the COP process, and although I shall come to a caveat in a moment, that cannot be replicated by people doing what they feel like individually in different countries around the world, partly for the reasons that have been rehearsed this afternoon: people want to go their own way in how to develop their economies. Realising the extent to which that is not an option for any of us over the next 100 years or so is part of the process of recognition that international agreements are important. Indeed, under certain circumstances some consequences have been turned back by international agreements. The Montreal protocol and the action on chlorofluorocarbons was a global agreement to the disadvantage of certain places resulting in a substantial change; what would otherwise have been a difficult outcome for at least parts of our climate has apparently been substantially mitigated and possibly reversed. The COP process is important in that respect.
For the record, one of the immediate consequences of deciding to go off in a different direction can be seen in the 2013 Budget: the carbon floor price is a unilateral tax introduced in the UK, the operation of which does not directly save a single tonne of carbon. It was supposed to be introduced on the basis of a £1 rider on the EU ETS—an inter-country co-operation on carbon cap and trade—but that turned into a £4.94 rider on the ETS when it comes in this year. From next year, it will be £9.55 on top and, in 2015, £18.08 on top, compared with what would have been £7.28 and £9.86, respectively, under the original proposals. That is not mission creep but mission gallop, and often in an entirely different direction. The result is an £18 differential between a power station introducing energy to the UK from the Netherlands and a power station producing energy within the UK. A power station developer might now think, “I will go and put one up in The Hague now because, for my power station developments, that will save me £18 per tonne of CO2 over the next few years.”
As my hon. Friend the Member for Brent North (Barry Gardiner) outlined, the free money—not for new nuclear, but for existing nuclear—turns out to be not only for all the nuclear power stations in place, but for the two extensions agreed last year and this year. Calculations based on what the carbon floor price would have been when it was first introduced make that £44 billion over the life of the extensions for the four power stations; the new figures are about 30% more. Frankly, I will be surprised if EDF does not go ahead with a new power station on the back of that free money, although I know those are two slightly different things. My point is about the distorting effects of a one-country go at such a scheme, even if that was the intention, rather than its being a dash for money by the Treasury. That illustrates, as other things might not immediately, how important it is to go ahead with international negotiations and to get collective action. Everyone would then be in the same place and on the same level playing field.
David Mowat
The hon. Gentleman makes the argument for the money being used as a cross-subsidy. Unfortunately, EDF will not look at it that way; I would be happier if it did, because that would mean getting Hinkley Point, but I am concerned that that will not happen.
Dr Whitehead
The hon. Gentleman is absolutely right. EDF will probably use the money to shore up its dodgy international finances, rather than to develop new nuclear power stations. Nevertheless, the effect is there: a substantial subsidy, merely for continuing to do what it did, as a result of an instrument in one country alone. That is my point, not how EDF will use the money.
That is why the international COP process and, contributing to it, joint targets backed up by individual country targets are important. My hon. Friend the Member for Brent North mentioned the extent to which, almost under the radar internationally, countries are beginning to take the sort of action that we in this country have already taken with climate change legislation. One of the ongoing processes recorded in the Select Committee report is that countries, even those that might be advantaged by global warming, are undertaking their own climate change legislation.
It is vital the UK does everything that it can over the next few years to support countries to develop their own climate change targets and to join us in ours, so that progress towards a level playing field can be considerably advantaged as the negotiations take place. One thing that we should resolve today not to do is to indulge in any tinkering with our climate change targets, as we try to move towards international agreement on other people’s climate change targets, given that that would send a very bad signal indeed to other countries, some of which are beginning to take their climate change legislation directly from what we have done in the UK.
That is a call not for action, but for us to defend what this country has done. Our actions have not just made a contribution to what will subsequently be the international level playing field, but are a beacon that shows how these things can be done. Our duty now is not just to say, “We’ve done it, so you should do it, too,” but to stick with what we have done and to ensure that the process that we are working to is not revised away, wished away, downgraded or put in a cupboard by others, while some take what we consider a more appropriate direction on international agreements.
Of course, there is a whole range of other issues regarding COP 18 and beyond, but what I have just described is among the important emerging issues; indeed, it featured substantially at the Doha discussions. It may be a mark of our contribution over future years that the steps that I have described are among those that we take to move discussions forward in a way that produces international agreements, which are vital to any hope of ensuring that our planet lasts in a fit state for the next few hundred years. Of course, it will last, but perhaps not in a fit state for us, although it might be in a fit state for somebody else. Whether our planet will be in a fit state for us over the next few hundred years, however, will be very much determined by whether people from around the world gather to discuss these issues. The issue is whether we make the planet fit for purpose, fit for us and fit for the future; that is what we have to concentrate our minds on.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Betts. I thank the Chair of the Committee, the hon. Member for South Suffolk (Mr Yeo), for the way he introduced the debate and congratulate the Committee on producing its report.
We have heard some insightful speeches from my hon. Friends the Members for Glasgow North West (John Robertson), for Southampton, Test (Dr Whitehead) and for Brent North (Barry Gardiner). Members will not be surprised to hear that I do not necessarily share the views of the right hon. Member for Hitchin and Harpenden (Mr Lilley).
As the Chair of the Committee said, events have moved on somewhat since the report was produced, not least because COP 18 has taken place. During the conference, four Gulf states—Qatar, Saudi Arabia, Bahrain and the United Arab Emirates—announced that they were ready to submit emission reduction plans to the UNFCCC. I listened to what the right hon. Gentleman said about the developing world, but I am not sure whether he knows that, last month, the group of 49 least developed countries also announced they are now prepared to commit themselves to binding cuts in their greenhouse gas emissions.
While some progress has been made, many challenges remain. Canada, Japan and Russia have all said they will not be part of the extension of the Kyoto protocol, and yesterday the International Energy Agency warned that the continued global reliance on coal and the rapid development of emerging economies meant that despite
“a boom in renewable energy over the last decade, the average unit of energy produced today is basically as dirty as it was 20 years ago.”
In some ways, that is depressingly familiar, but it reinforces the point that any solution to climate change requires a global agreement that limits carbon emissions, as well as a rapid expansion of low-carbon energy generation. In that context, the main consensus on the proceedings at Doha was that they were a modest step forward.
Luciana Berger
During the Committee’s special evidence sitting following the conference, my hon. Friend the Member for Glasgow North West commented:
“If it was a road map, the car is still on the road”.
There was not the forward movement we hoped for. Only one country—the Dominican Republic—signed up to new carbon emission targets. Although I welcome the fact that four Gulf states made a commitment to submit reduction plans, that has yet to happen. The most important thing was that the conference agreed an extension of the Kyoto protocol and re-established a timetable for agreeing a global deal in 2015.
As to the substance of the report, Labour Front Benchers support many of the Committee’s recommendations. We have supported and will continue to support the Government’s efforts to secure a global, legally binding framework to cut CO2 emissions. We agree with the Committee and the Government that the UNFCCC is the forum that offers the best opportunity for securing such an agreement, and that there is a need for a single transparent accounting regime, but this is the point at which I want to hold the Government to account.
We also support an EU target of a 30% reduction in carbon emissions by 2020. Anyone reading the Government’s response to the Committee’s report would be led to believe that the Conservative party supports that as well, yet proposals to introduce a 30% target have come before the EU Parliament twice in the past two years, and have twice been defeated because Conservative MEPs voted against them. I hope that the Minister might share with us his thoughts on why they did that, or, more to the point, why the Prime Minster did not do anything to stop them.
Will the Minister also tell us why this week 21 Conservative MEPs voted against attempts to rescue the EU ETS by back-loading 900 million carbon allowances that were due to be auctioned later this year? That was despite the fact that the Secretary of State told the Select Committee:
“We have the proposal for back-loading on the table. We do not think it is ambitious enough. We think we want to see both back-loading and cancelling, because that could make a significant difference to increasing EU ambition almost in one leap.”
Given that the Secretary of State clearly stated that the Government support back-loading, why did Conservative MEPs actively scupper the proposals?
The UK is responsible for 2% of the world’s carbon emissions. We have a responsibility to reduce them, for all manner of reasons, but on our own we cannot solve the problem of global climate change. Part of the leadership role that we can play in international climate negotiations will be as part of an EU bloc, so why are the Minister and the Prime Minister allowing the UK’s credibility to be undermined by Conservative MEPs? I know from previous exchanges on such matters that the Minister has a habit of dismissing anything that he does not want to hear, or that highlights the shortcomings of the Government, as partisan rhetoric, but it is not partisan to point out that the view of the UK as a climate change leader on the international stage is diminishing. As my hon. Friend the Member for Glasgow North West said during the Committee’s hearing following Doha, the message that he heard from our European partners was that they felt the UK was backing off from the leadership it had shown in the past.
In an ideal world, between now and 2015 the Prime Minster would go around Europe and the rest of the world championing Britain’s low-carbon progress, but we know that he cannot do that. He can try, and I hope he will. He can go to China, the United States and our European neighbours, and I am sure they will listen politely to his spiel about how the Government are the greenest Government ever, and nod as he tells them how personally committed he is to combating climate change. I am equally sure that they will then disregard what he says, because they read newspapers, too, and they know the Government’s record as well as we do. They know that under this Government investment in renewable energy has halved, and that the Prime Minister barely talks about climate change any more—he has not yet attended an international conference on the matter, and cannot get his own MEPs to support an increase in carbon reduction, let alone ask them to do more. No matter what the Prime Minster says, he cannot change the reality.
Things do not have to stay that way, however. The Government should act now to improve their record and give the UK a stronger negotiating position in the run-up to 2015.
David Mowat
From the tone of the hon. Lady’s remarks it would seem as if the UK were among the higher producers of carbon in the EU, whereas, according to EU figures, we produce 8.8 tonnes per capita. That is among the lowest in the EU and 30% lower than countries such as Germany, Holland, Ireland and Poland. I find her remarks odd in that context.
Luciana Berger
I am not sure how that point relates to mine about our responsibility to continue in our leadership role on the international stage—a role for which, in the past, we have been held in high esteem and taken seriously—and about remarks recorded in the report that show a diminishing in our standing, and therefore our effectiveness, on that international stage. As I said, 2% of global emissions come from the UK. We have a responsibility, domestically, to reduce them, but we cannot solve the problem alone.
John Robertson
Does my hon. Friend agree that leadership from this country is important in the international arena, mainly because we were the country that set the pace, with the first ever Bill that had climate change in it?
Luciana Berger
We were, proudly, the first country in the world to do that, when we passed the Climate Change Act 2008, with a view to reducing our emissions by 2015 in relation to 1990 levels. The Act is held in high regard in countries that I have visited, but legislation is not enough if it is not acted on and if the Government’s actions do not match it. That is why it is important that the Government do all they can to live up to their ambition to be the greenest Government ever, and not slip behind. Then they would be held in high esteem on the international stage.
Mr Lilley
The hon. Lady’s party has abandoned unilateralism in nuclear weapons on the ground that setting an example would not stop other countries following a policy of obtaining nuclear weapons, so why does she favour unilateralism in this sphere and argue that inflicting pain and damage on the British economy will encourage other countries to do likewise?
Luciana Berger
We were the first country to introduce a climate change Act, but other countries, such as Mexico, have followed suit, and many others are considering how to reduce their carbon emissions. I agree with the Chancellor’s comments back in 2007, when he said that investment in low carbon could go hand in hand with growth and support our economy. We have seen global trade in low carbon surpass growth in all other fields. Without domestic investment in low carbon in the UK, our national growth figures last year would have been much worse. I believe the two go hand in hand.
What should the Government do? First, they should back the cross-party amendment proposed by the Chair of the Select Committee and my hon. Friend the Member for Brent North, which would put an explicit target for decarbonising the UK energy sector by 2030 in the Energy Bill. That would give businesses the confidence and certainty they are crying out for to invest in low-carbon and renewable generation, and would signal to other nations that we were serious about meeting our climate change targets and moving to a low-carbon economy.
Secondly, the Prime Minister should get a grip on his MEPs and force them to vote in the European Parliament in accordance with the UK Government’s position. That is the only way to regain our lost credibility in the eyes of our EU neighbours. Thirdly, the UK should renew its role as an international political leader on climate change.
David Mowat
The hon. Lady refers to lack of credibility with our EU neighbours. I could accept that if our carbon emissions were higher than those of our EU neighbours, but, with the exception of France, they are significantly lower. Surely actions drive the issue, not words.
Luciana Berger
I thank the hon. Gentleman for his intervention. I referred first and foremost to the actions of Conservative MEPs in the European Parliament who have twice contradicted and been in conflict with British Government policy. There has been a reduction in our emissions, but we must ensure that we meet our ambitious emissions reduction target in the long term. We have made significant progress in the short term, but we must make significant investment in the short and medium term to ensure that we meet the long-term targets.
This month, Lord Stern, author of the world famous Stern report, said that the only thing missing in the efforts to tackle climate change “is the political will”. There are signs that that is beginning to change. In his second inaugural address, President Obama reaffirmed his commitment to tackling climate change. Even emerging economies such as China—we will discuss this in more detail in our next debate—are making progress.
We must seize this opportunity for our planet and for the jobs and growth that it will create. It is time for Minsters, especially the Prime Minister, to stop talking about showing leadership and get on and do it. I hope the Minister will take note of my suggestions, and I look forward to hearing his explanation of the vote by his party’s MEPs this week.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
I thank my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) because I thought this might be a slightly dry debate with the usual suspects in violent agreement, but it has been much more rigorous, thoughtful and lively. The real thanks for the debate must go to my hon. Friend the Member for South Suffolk (Mr Yeo), the Chair of the Select Committee. I thought at the outset that this is a strange time in the calendar for a debate on the United Nations framework convention on climate change, because the reality of seasonality in such matters is that negotiators do not start to clear their throats and focus on COP until the second half of the year. The debate has shown that there is a great deal to discuss, and some important points have come out.
I do not share all the analysis of my hon. Friend the Member for South Suffolk, particularly of the carbon floor price, but I share his view and take on board some of the criticism from the shadow Minister about the need for a strong emissions trading scheme and a uniform price signal on carbon throughout the European Union. It would negate the need for a carbon floor price here in the UK and for a unilateral policy. We consider the impact on British industry’s competitiveness in every policy. We take that extremely seriously, and that is why the Government broke with previous policy and introduced a substantial package of measures to help energy-intensive industries to deal with the cost impact on their businesses of supporting renewables.
The hon. Member for Glasgow North West (John Robertson) made a sensible speech, and I listened carefully to his points about members of the Select Committee and GLOBE attending COP last year and before then. When I first attended as a Minister, I was struck by the lack of support, hospitality and information-sharing with parliamentarians at those important negotiations. In the past couple of years, I have tried to go out of my way to make parliamentarians feel more part of team GB and certainly to make available more of the facilities. However, we can go further, and the hon. Gentleman is right that we should co-ordinate more closely. I am happy to consider whether there is a possibility of including them in the delegation.
I am not making a commitment, because clearly there is a difference between the Executive, who speak for Her Majesty’s Government, and the House of Commons, which challenges and scrutinises the Government. We would not expect it to have the Government’s role, but the hon. Gentleman and the hon. Member for Brent North (Barry Gardiner) are absolutely right that, because of the reputation of GLOBE UK and Parliament, they can bring a lot to the party. The issue does not involve partisan politics, but there may be some subtleties about the legislature and the Executive. I will look at the example that the hon. Members raised, and perhaps return to it at a meeting here or in the Department.
Perhaps the liveliest part of the debate was the speech and interventions from my right hon. Friend the Member for Hitchin and Harpenden. However, I fear that his whole thesis was to drag us down into the climate and energy politics of either/or when we are trying to develop, both here and globally, a pluralistic approach to energy. We do not want either/or—fossil fuels or renewables—but gas and wind. There will be a need for coal, but also for biomass. We want solar and hydro. We want large-scale solutions deployed, as well as distributed generation. We want industrial-scale generation and consumer generation. The 21st century calls for plurality of energy supply, sources and technology, as opposed to a monolithic, one-size, fossil-fits-all model at home and abroad. That will be good for security as well as value and climate.
Glyn Davies (Montgomeryshire) (Con)
I am particularly interested in plurality and retaining public support. As a political institution, Parliament can act only with public support. Does the Minister accept that, whatever avenue the Government go down that impacts on our climate change policy, public support is important? We have a disconnect growing between the people and the Government. Eventually, the Government’s policy will fail.
Gregory Barker
There is an important balance to be struck. Of course, we are here to listen to and represent our constituents, but we also have a leadership role. If ever we were reminded of the importance of not bending to public opinion in the short term, but aiming for the right long-term solution, it was this week, with the funeral of Lady Thatcher, who understood that being unpopular in the short term and not listening to the crowd can often not only be the sensible and right thing to do, but pay dividends in the long term.
On the issue of Lady Thatcher, perhaps because of the week of that extraordinary and very moving funeral, it is worth remembering that it was Mrs Thatcher, as she was then—a scientist by training and a Conservative by conviction—who more than any other world leader acted to put climate change on the international agenda. At the Royal Society, of which she was a fellow—one of the very small band of Conservative MP scientists—she said:
“For generations, we have assumed that the efforts of mankind would leave the fundamental equilibrium of the world’s systems and atmosphere stable. But it is possible that with all these enormous changes—population, agricultural, use of fossil fuels—concentrated into such a short period of time, we have unwittingly begun a massive experiment with the system of this planet itself.”
That was said in 1988, which shows extraordinary foresight.
Pursuing that line of inquiry—Lady Thatcher did not just make one speech on climate change, but several important interventions—she went to the United Nations the following year, in 1989, and crystallised her thinking. More than 20 years later, what she said then is relevant to this debate today:
“the problem of global climate change is one that affects us all and action will only be effective if it is taken at the international level.”
Lady Thatcher’s actions led, in large part, to the Rio Earth summit of 1992 and to the UNFCCC process that continues today.
The process continues with all its imperfections. There have been huge setbacks to date, not least at Copenhagen in 2009. Having participated on behalf of the Government in three COPs now and their subsidiary meetings, I am under no illusions about the difficulty of negotiating a global treaty. However, I must tell the Chamber that having returned last week from the Major Economies Forum on Energy and Climate, which meets during the year to consider action in the UNFCCC, I detect movements of the tectonic plates. I am not suggesting that we are back to where we were in 2008, when we were all expecting global cap and trade, but we are seeing significant policy shifts—or at least the consideration of policy shifts—between what is now termed the G2, or the key players, which are China and the USA. That will not come overnight. A lot more is still to be delivered, but we are seeing the signs of a recognition that they have to deal with the problem. It cannot be ducked.
Part of the reason why we are seeing politicians show, at national leadership level, a willingness to return to the subject from which President Obama and the Chinese leadership were severely scorched—from the experience of Copenhagen in 2009—is that they are driven not only by the science, but by the economic reality of the imperative of diversifying energy sources away from fossil fuels and the recognition that the low-carbon goods and services sector globally is now worth more than $3 trillion, and is growing.
As the hon. Member for Liverpool, Wavertree (Luciana Berger) pointed out, here in the UK, that is a sizable factor in our growth, not only in terms of the narrow subsection of wind or subsidised renewable energy, as the low-carbon sector runs much more broadly than that and includes energy efficiency and a range of innovation of products and services. That is why, this year, in recommitting the coalition to being the greenest Government ever, our Prime Minister said that not only are we in a global race, but the countries and economies that will win the global race are those that are most efficient, and the most efficient will be those that drive after energy efficiency and renewable energy.
The Government’s clear ambition is to be a leader, not because we are on a moral mission at the expense of our national prospects, but because we recognise that it is a massive economic opportunity. That is why we think that we can seek not to disadvantage industry, but to obtain a first-mover advantage. My right hon. Friend the Member for Hitchin and Harpenden is out of step with the CBI and with a whole range of smaller businesses, which make that argument strongly to the Government.
Barry Gardiner
I wholeheartedly agree with the point that the Minister is making. Is he aware of research now being conducted that seems to suggest that countries that have legislated on climate are attracting most of the international investment in this area?
Gregory Barker
There is certainly a strong correlation between regulatory certainty and investor certainty, and lower cost of capital and the flowing of funds into those high-growth sectors. However, another canard that I have to shoot down is the idea that we live in an era of cheap fossil fuels and expensive renewables. Certainly, in the developing world, that is not true. I simply draw the attention of my right hon. Friend the Member for Hitchin and Harpenden to the fact that, between 2011 and 2014, India will spend $14.267 billion subsidising kerosene, LPG and natural gas. That is one of the largest elements in its national budget; it is largely responsible for the massive calls for structural reform in India, and it is seen as a brake on growth, because the country is subsidising not renewables, but fossil fuels. It is simply wrong to argue anything other, but nor is it an either/or choice.
Mr Lilley
The Minister is making an ineffective debating point. The Indians want their consumers to have cheap fuel at the point of purchase. That may be a misguided policy; it would not be one of the British Government’s, but they choose to subsidise the products that are already the cheapest, not those that are initially the most expensive. If wind and sun were cheaper, perhaps they would subsidise them, but the Minister cannot really pretend that wind is therefore cheaper, because they are subsidising other things.
Gregory Barker
No, but my right hon. Friend will know that last year, the wholesale cost of gas rose by 35%. The cost of renewables is consistently coming down. He will know that the cost of solar crashed in the past two years, and that in many cases, with high irradiation, such as in the developing world—
Gregory Barker
No, I am not. I am responding to my right hon. Friend’s point. The cost of fossil fuels in the developing world in the past two years has largely increased—in some cases, very substantially. The cost of renewables is coming down. That is why India has launched its national solar mission and why it is investing in wind. It is using the subsidy not simply to subsidise consumers for a product that they cannot afford, but as an investment to bring down the cost to the point that they can afford it. When the counterfactual is distributed diesel generators, often no subsidy at all is needed.
Small-scale generation is not some piffling irrelevance, as my right hon. Friend seemed to imply, but it is the reality for hundreds of millions of people in the developing world. Hundreds of millions in Africa and about 400 million in India do not have access to the grid and are not likely to get it any time soon. That is not just an economic imperative; it is a moral one as well. They are not sitting there wanting American-style fridge-freezers and huge cars; for them, a luxury is a light at night or a laptop, so that their kids can have an education or the most rudimentary internet access.
My right hon. Friend seems to think that the American economic model for shale gas is easily replicable in the rest of the world. It is not. If there is cheap gas to be had, we want it here, but it is not a binary world of black and white choices between renewables and fossil fuels.
Mr Lilley
I am overwhelmed by my right hon. Friend’s eloquence and verbosity. If he is saying that renewables are more economic than fossil fuels, that is wonderful—let us leave it to the market, and they will be adopted—but he cannot simultaneously say that we ought to be subsidising them and that they are already as cheap as or cheaper than fossil fuels.
Gregory Barker
Let me explain it one more time. Fossil fuels have been around for centuries. They have had plenty of time to develop, as I think my right hon. Friend will agree. I think that he may have worked, as I have, in the oil and gas industry before coming into politics. The fact is that continuing to supply oil and gas, LPG, petroleum and kerosene at scale to the Indian population requires a structural subsidy. We are not proposing a structural subsidy for renewables; subsidy is justifiable only in any circumstance if there is a chance of getting to a non-subsidised point. We should not subsidise any technology, whether renewable or fossil fuel, if all we are doing is pouring good money after bad. Subsidy for renewables can only be a short-term or at best a medium-term strategy.
Barry Gardiner
Perhaps a common point of agreement between the Minister, the right hon. Member for Hitchin and Harpenden (Mr Lilley) and myself is that any subsidy should be in place only because of a market failure. It is almost impossible to justify a subsidy on that basis to fossil fuels, which have had more than enough time to establish themselves, whereas there is a failure in the renewables market. We need to get renewables to the point where they become a full-scale technology and are able to operate at only marginal cost. I presume that the Minister, the right hon. Gentleman and I would all agree that, at that point, subsidies should be withdrawn from them also.
Gregory Barker
The hon. Gentleman makes that point far better than I did. I am not in favour of subsidies. They are a short-term means to an end, and they certainly should not be in place if there is no prospect of getting rid of them in the longer term. I have tried hon. Members too much with my tirade on that.
Let me turn to the COP negotiations, particularly the UK Government’s position and our priorities in respect of getting a global deal. Before I do so, I remind the House what we agreed in Doha. The 17th COP in Durban in 2011 was another step in the development of the UNFCCC, as was the Cancun conference the year before, but it was also a significant turning point. At that point, all the countries committed to agree a new global deal by 2015 and increase efforts to reduce emissions. Last year’s conference in Doha was the next step to make progress on both those issues.
The annual conferences should be seen not as major breakthrough points, but as steps forward. Even the annual conference in 2015, where we hope to agree the new global deal, will also include ongoing implementation decisions and perhaps further steps in the period to 2020 on how the new global deal will be implemented in detail. In that regard, our objectives at the Doha conference last year were largely achieved. We agreed a high-level work plan to negotiate the new agreement by 2015, and we rationalised the negotiation process to give space to deliver the work plan and take forward work to increase the emissions reduction effort in the meantime. Hon. Members might think that that sounds like process. It is. To negotiate a new global deal with 194 countries in three years, the process must be right. It is a challenge, but it is what we are doing.
We also made progress in further building and implementing the key elements of the UNFCCC regime, including on climate finance. I must say to the hon. Member for Liverpool, Wavertree that, far from trailing, the UK has a strong reputation on climate change, and our international reputation as a leader is rising, particularly in relation to private sector finance and investment, adaptation, technology and the rules set to measure, report and verify countries’ emissions. Getting the process right and continually building elements are vital to tackling a global problem of the scale of climate change, which is why each annual conference is a step forward.
David Mowat
I am listening carefully to what the Minister is saying about the COP process. One of my thoughts is that some of the time would be better spent considering abatement, as well as deals. We talked earlier about the fact that many millions of square kilometres in Russia might become usable as a result of climate change. Should we not be thinking about that globally as well?
Gregory Barker
We absolutely need to draw on such issues. One thing that we know for certain is that there is no silver bullet for the agenda, and we cannot afford to ignore any strand. This week, I had hoped to be in Delhi for the clean energy ministerial, which considers a range of technological solutions outside the constraints of the UNFCCC negotiating process and, to my mind, is becoming an increasingly important forum for driving the technological innovation that we need and giving the agenda much more positive spin—forgive the word. People can see tangible things to invest in that are themselves a natural good. Abatement falls into the category of things that we need to do more to consider. I do not suggest for a moment that the UNFCCC is a universal panacea, nor that risks do not attach to it, but it is our best hope of getting an overarching international framework, which in turn is our best hope of driving progress at a global level.
I said that the UK is an internationally renowned leader in climate finance. In Doha, the UK demonstrated that it was on track to deliver our £1.5 billion fast-start pledge by the end of 2012, and as the hon. Member for Brent North said, we have delivered it. We also set out for our developing country partners what the UK climate finance contribution will be in the period to 2015.
However, the key thing—we are good at this globally, and we have a strong representation—is to make the point that public finance can only go so far. We cannot push British taxpayers—or, come to that, any other taxpayers—to keep increasing the amount of public contribution. Public finance, like subsidy, is there to catalyse private sector interventions. We are seeing increasing private sector interest in scaling up investments, so I think there is a realistic possibility of meeting the pledge made at Copenhagen to mobilise the $100 billion a year from developed economies into climate measures in developing economies, not principally from the public sector or the pockets of taxpayers in developed economies, but from mobilised private sector sources that see the opportunity to make returns on attractive clean energy and climate mitigation solutions. On that point, I bring my speech to a close and thank the Committee for its report.
Low-carbon Growth Links (China)
(11 years, 8 months ago)
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Mr Tim Yeo (South Suffolk) (Con)
It is a great pleasure to introduce the debate under your chairmanship, Mr Betts. The Committee welcomes the opportunity to debate the report, and indeed the Government’s response.
The Committee has closely engaged with China over the past two or three years, and not only in writing the report. We invited staff from the Guangdong province development and reform commission back to the UK and Europe to discuss the design of their emissions trading pilot scheme. They visited the UK in May and I followed up the Committee’s visit to China with two further visits of my own, in October and earlier this month.
The Committee believes that China’s response to the challenge of climate change is crucial for the whole world. Having been a regular visitor to China over the past few years, I am extremely impressed and encouraged by the greater engagement it has shown over climate change and the efforts it is making to transform its economy to a low-carbon one, though we all understand that it has a long way to go. The 12th five-year plan, which is soon to be at its midpoint, contains a wide range of measures designed to accelerate the introduction of low-carbon technology.
With regard to the Committee’s key recommendations, we argued that low-carbon leadership in the UK would encourage major emitters, such as China, to move down the low-carbon pathway. We also believe that low-carbon growth in China provides new markets and business opportunities for Britain. Every assistance should be offered to the Chinese to develop their emissions trading scheme. The type of system they are choosing is rather more complex than the EU one, but they start with the benefit of fewer, and perhaps less accurate, data than we and most EU countries enjoyed at the outset of our schemes, which are reasons to be more helpful, rather than less.
The UK should offer assistance on the measurement of data and the design of a legal infrastructure for emissions trading—areas in which the UK has a lot of expertise. That is applicable to China nationally and at a provincial and city level.
It is also possible to assist with the integration of pilot emissions trading systems with broader national systems. Emissions trading will face a crisis as a result partly of the vote in the European Parliament, which was referred to in the previous debate, and partly of the collapse of the price in the EU ETS, so it is worth mentioning at this point the fact that the concept has traction around the world. Not only is China seriously piloting such schemes, but California’s state ETS started operating in January this year, and it is clear that the governor, his staff and the state are committed to its success.
For the benefit of those readers of Hansard who will not read the previous debate, I once again draw attention to my entry in the Register of Members’ Financial Interests and declare an interest in a number of energy and transport companies.
If Britain is to capitalise on China’s low-carbon ambitions, we need to maintain our own commitment to low-carbon growth, so that our companies can continue to develop expertise and remain competitive internationally. We on the Committee were encouraged by the work already being carried out by our officials in China, but we were disappointed that the intention is to cut the rather limited project funding there. The UK Government need to set high-level objectives for co-operation with China on low carbon. Decisions about the design and delivery of programmes are best made by staff on the ground with an understanding of the Chinese context. I commend the Foreign and Commonwealth Office for continuing its commitment in several Chinese cities, notably Beijing, Guangzhou, Chongqing and Shanghai. We have had contact with them all about climate change.
The Committee concluded that there is scope for better alignment of funding opportunities and joint research ventures. We hope the Government will maximise their resources by looking for opportunities to provide match funding alongside other organisations, including research organisations. It is important that the UK delivers on the promises it has already made, in particular on carbon capture and storage. British expertise is not perhaps as widely recognised as it might be and I hope that the Government will take a strategic approach to such projects.
In general terms, I am concerned that Britain risks losing out to other countries in its general efforts in China. It is noticeable that Germany has made a strong commitment of time and to visits at the highest possible level. Although there is a temporary obstacle to ministerial visits from this country, I hope that it will be lifted before long, because it is extremely important that they resume as quickly as possible.
It is noticeable how regular contact with key individuals is the route to closer relationships and greater influence in China, perhaps to a greater extent than in other countries. It is not enough to go once or twice; we need to be seen on the ground regularly. I commend the work of GLOBE International. Its engagement with the EU-UK-China agenda is admirable, and I am glad to have had the opportunity from time to time to take part.
There are more detailed aspects of our report, but I will not go into them all. We recommended that UK Trade & Investment co-ordinates a British sustainable buildings project, as a platform for engagement between UK companies and Chinese developers working on low-carbon cities. The urbanisation programme in China, which is the biggest the world has ever seen, provides opportunities on that score.
The Committee was glad that the Government response agreed with our assessment that the Chinese low-carbon growth model is central to the success of global efforts to tackle climate change and that the UK should be an active and strategic leader of climate change policy internationally, offering the chance to punch above our weight in influencing China. We were also glad to have the Government’s agreement that a successful and compatible ETS in China is key for global efforts. We welcome the Government’s support for our recommendation that the UK should help China with the design of its emissions trading systems, including the detailed aspects. We have an opportunity in China that would enable us to punch well above our weight. Expertise in the UK can be deployed usefully in a country that is addressing low-carbon issues as urgently as China.
There were areas of disagreement between the Government and the Committee over our recommendations. I shall not dwell on those in too much detail because I want to allow my colleagues the chance to take part in the debate. The Committee is particularly concerned about CCS. That technology is vital the world over, but particularly in China. Despite the fact that coal will represent a declining proportion of China’s energy mix, it will remain substantial in absolute terms, so, without CCS, it is difficult to see how progress towards the long-term emissions reductions targets can be achieved. We recommended that CCS be added to the list of UKTI high-value opportunities, and I think that that Committee would want me to reiterate that recommendation.
We also recommended a dialogue on the development of gas and highlighted the opportunity for us presented by shale gas. I hope that Britain will exploit its shale gas resources and develop its expertise, which could be shared with the Chinese in due course. There is a conscious desire in China for collaboration with us on a number of renewable technologies, including offshore wind and other marine technologies. There are great opportunities in that.
The process is not entirely one way, and we should look at the progress China is making on the introduction of smart grids. I was talking only last week to the state grid in China, the customer base of which is a small matter of 1 billion people—twice the number of people in the European Union. Some of the work that it is undertaking, which will produce greater efficiency in the use of energy through smart grids, is worthy of examination.
I hope, too, that we can consider developing common standards, whether in the building industry, the vehicle industry or other appliance industries. If there were a common standard between Britain, or preferably the EU, and China, which would cover almost a third of the world’s population and a substantial proportion of GDP, that might give businesses in the EU, and in Britain in particular, a head start, and set an example that the Americans felt the need to follow.
There is great concern in China about pollution—in particular, air quality. China looks with interest at the progress that London has made in improving air quality and wishes to share our experiences. I think that the new Chinese leadership will be extremely focused on that. One of its officials was recently quoted as saying that
“pollution is so serious, if we don’t do something about it, the public won’t agree and heaven won’t accept it”.
On the question of progress in China, emissions are obviously rising because of the growth in the economy, but the goal that it has set to reduce the carbon intensity of its economy is having an impact in slowing down the growth of emissions. In 2012, the growth was down to only 3.2%, compared with 9.3% in the previous year. Last year, the carbon intensity of the Chinese economy appeared to decline by at least 4%. The 12th five-year plan has a target to reduce carbon intensity by 17%, and during my recent visit it was interesting to find senior advisers to the Chinese Government talking openly not only about the prospect of setting an absolute target for carbon emissions by 2020, but about expecting it to be a declining target as soon as possible thereafter. I do not think that advisers would have been heard making such recommendations four or five years ago.
The pilot emissions trading system is clearly still in its infancy. During the next three years, we expect to see the pilots operating on a small scale, with the first one probably in Shenzhen. Their scope is significant; they cover about a quarter of China’s GDP across six energy-intensive industries and some of the country’s most important provinces and cities. There is potentially a big prize—not just for Britain, but for the world—if we can encourage China’s engagement in the low-carbon agenda. I am confident that the new Chinese leadership will be at least as committed to progress as its predecessors. China does not, perhaps, have the same obstacles to land use planning decisions that occur in democracies, particularly in crowded countries such as the UK. The Chinese decide to do something and can get on and do it in a way that we might sometimes envy. The energy and transport infrastructure roll-out in China is sometimes breathtaking in its scope and speed, and we might have some lessons to learn there.
In the interests of allowing my colleagues to take part in the debate, I shall finish by commending the report to the House.
Mr Clive Betts (in the Chair)
Order. The debate can go on until 5.6 pm. I will call the Front-Bench spokespeople at 4.46 pm, and I think that three other hon. Members want to speak, so that gives them about seven minutes each if they split the time.
Barry Gardiner (Brent North) (Lab)
I am delighted to speak on this important matter under your chairmanship, Mr Betts, and I heartily endorse all that the Chair of the Select Committee, the hon. Member for South Suffolk (Mr Yeo), has said, particularly about the very positive engagement between our Foreign and Commonwealth Office and China.
I address my remarks to the Minister in particular, as this is an area in which the Government need to do more. The Government now have a strong link and positive engagement with India, and they need to step up to the mark in the same way in China, reinforcing their commitment there. That would prove tremendously positive, not just for climate change and climate change negotiations, but for our own productive economy, including our exports.
At the GLOBE summit of legislators that took place a month before COP 15 in Copenhagen, Chairman Wang Guangtao and Congressman Ed Markey put their heads together. That was an extraordinary engagement, in that legislators from the two countries that have been seen, in some respects, as the key blockers to an international agreement came together and agreed a set of legislative principles upon which climate negotiations could advance. It is really in my capacity as chairman of the board of GLOBE International that I want to cast my perspective on the Select Committee report, and I should declare my entry in that regard in the Register of Members’ Financial Interests, even though it is a non-pecuniary interest.
The International Energy Agency estimates that China will account for half the growth in energy-related emissions to 2030. For almost a decade, that is the sort of fact that has been used to vilify China, painting it as the villain of the piece, and politicians have sometimes used it as an excuse for inaction. Indeed, the fact that China produces so many emissions is one of the most trenchant arguments used, as we heard earlier, in the US Senate for taking no action on climate change. The Chinese economy will, of course, remain one of the most powerful engines of climate change for the next two decades, but at the same time the scale of its own ambition for decarbonisation will, I think, be a turning point in global efforts to halt the pace of climate change. China’s approach, although much of it based on domestic political reasons, because of the problems with pollution in its own cities, is driving China to take really positive steps to increase not the decarbonisation but the carbon productivity of its economy, at the same time as making great advances on renewables.
The International Energy Agency’s “World Energy Outlook 2012” estimates that by 2035 China will have increased its windpower capacity to 330 GW. That is 40% greater than the global wind capacity in 2011, which gives some sense of the scale at which China is moving. I have mentioned Chairman Wang Guangtao. He became the first president of GLOBE China when it was formed, but the relationship with China goes much deeper than that. The relationship is also with Minister Xie Zhenhua, who has, despite the recent changes in China, been reconfirmed, I am pleased to say, in his position as Minister for the next period—there was a question mark over what position he would end up with. The engagement that international legislators have been able to have with the Minister, and with Su Wei, who is one of the central figures under the Minister as the key negotiator and formulator of China’s policy in this area, has been extraordinary.
In October 2011, Minister Xie came to London as part of a delegation hosted by GLOBE. He met senior political figures from all three major UK parties—including Cabinet Office Ministers, the then Secretary of State for Energy and Climate Change and the Leader of the Opposition—as well as senior Members of the European Parliament, and it was agreed that a regular second track to negotiations should be established.
In Venice in September 2012, that second track took off when the Chinese delegation—led by Su Wei, the director general of the Department of Climate Change in the National Development and Reform Commission—agreed the approach now being carried forward by China and GLOBE in Europe. As we speak, the unlikely team of Lord Prescott and Lord Deben is in China with a delegation of legislators from France and other parts of Europe to negotiate with the Chinese on an initiative about how the UK and China can work together to reduce carbon emissions through product standards.
My time is at an end, so I will sit down, although I could say much more on this subject. I believe that engagement with China is critical for the Government and the future of the negotiations.
Mr Peter Lilley (Hitchin and Harpenden) (Con)
Criminologists have observed that the victims of confidence tricksters are often willing—indeed, eager—to believe the story to which they fall victim, and the more absurd, fantastic or fabulous the story, the more willing they are to believe it. The report is an example of a confidence trick that has been willingly absorbed by the Government and members of the Committee. It contains all the characteristics necessary for the sort of fairy tale in which one wants to believe: it has a faraway country, mysterious powers that we attribute to ourselves, and pots of gold—green gold—at the end of the rainbow.
The first delusion affirmed by the report is the delusion of power. It is a strange hangover from liberal imperialism that the British intellectual classes believe that they can still dominate the world—that the world is anxious to hear from them, and will jump to attention at their every word and follow their every command. Take the opening words of the report:
“China is central to global efforts to tackle climate change”—
true, but it continues, and I ask Members to savour these words—
“and should be at the heart of HMG’s climate change mitigation strategy.”
What imperialist arrogance and what delusions of grandeur that the United Kingdom, a nation of 65 million people off the coast of Europe, could somehow direct, guide or in any substantive way influence the policies of the largest nation in the world, with 1.3 billion people, on the other side of the globe.
How are we to achieve that remarkable feat? The summary refers to
“our leadership role in China”.
Members should also savour those words. I read about the change of leadership in China last year, but I did not realise that that involved the replacement of Xi Jin Ping by “Greg Bar Ker” and “Ed Da Vey”—they apparently now have a leadership role in China to which the Chinese are now anxious to respond. The report states that, sadly, our
“leadership role in China is being undermined by our ‘image’…The UK’s image is also tarnished by the reputation of being ‘all talk and no action’.”
I wish it were all talk and no action in this country. When people who do not like windmills—I quite like them—look across our countryside and find that they blight the horizon, they wish there was more talk and less action. When people pay their household bills, they wish there was more talk and less action. Abroad, however, the word has apparently got out that we do not really mean what we say. I do not know how that has happened, but it will apparently be made worse if we do not inflict more problems on ourselves, because the report states:
“Slowing the pace of decarbonisation at home could undermine…the credibility of UK leadership on climate change.”
The second delusion is about China’s decarbonisation policy. The British intelligentsia has always been capable of convincing itself that China is a paragon of whatever is the current fashionable virtue. When I was at Cambridge, Professor Joan Robinson used to dress in a Mao suit and teach us that China had shown us a new economic model that we could all follow. Now it is doing the same on climate change. The report states:
“China has set out some of the most ambitious decarbonisation plans in the world.”
Yet, it also states that,
“half the growth in energy-related emissions from now until 2030 will come from China.”
Half that growth will come from the country that is pursuing the most ambitious decarbonisation policy in the world, and by 2030
“China could account for half of the world’s emissions.”
I submit that those two views are incompatible. Either China is pursuing the most ambitious decarbonisation policy in the world, in which case one assumes that it will decarbonise—or at least match our skills in reducing, or preventing the growth in, carbon emissions—or it will not.
Why is that rosy view of China’s emissions policies peddled? The British public have to be convinced that China’s emissions are under control. The report admits:
“The UK’s emissions reduction efforts are negligible compared with emissions increases elsewhere.”
In 2011, the increase in emissions from China exceeded the UK’s total emissions by 200 million tonnes. The device used in the report to convince us all that the Chinese are pursuing an ambitious decarbonisation policy is, first, to glide from talking about reducing emissions to talking about reducing emissions growth, which is not quite the same thing, and, secondly, to equate reduction in carbon intensity with cutting carbon emissions, which is not the same thing at all.
Like any sensible country, China of course wants more economic output from every tonne of fuel or joule of energy used. It enjoyed steady reductions in carbon intensity until the beginning of this century—not that it had any particular plan for CO2 reductions; it just used energy more efficiently each year—but for some reason that stopped early in this century, and it now has plans to return to the same path of increasing energy efficiency each year. Despite such increasing energy efficiency, however, it will experience major rises in energy use and carbon emissions.
The third delusion is the prospect of green jobs in the UK resulting from exports to China. That prospect depends on the UK inflicting on itself severe and ambitious measures to decarbonise the UK economy. The report states:
“Slowing the pace of decarbonisation at home could undermine our low-carbon businesses and the export opportunities for this sector”.
What are the opportunities? The report states that the
“inquiry identified three sectors where…the UK has an established lead”.
What are they? The first is the oil and gas sector. It is true that we have expertise in oil and gas, but I would not have thought of it as a typical green sector. Indeed, the report states that,
“British expertise could help to ensure that”
Chinese resources are used
“in the most sustainable way possible. The UK’s own emissions profile has been improved by the ‘switch to gas’ and…a similar switch could be achieved in China, reducing emissions between 50% and 70%. Significant potential for gas development lies in the exploitation of unconventional resources.”
The report mentions shale gas in China, but not much encouragement has been given to that in this country, where we have had an 18-month moratorium and no drilling so far. None the less, the Committee’s report, which the Government have endorsed, believes:
“UK skills in the emerging market for unconventional ‘shale’ gas could help China to diversify its energy mix away from coal.”
Anything further from reality than the suggestion that we, who have held back shale gas development in this country and who—as we are told by the Committee, which has carried out an investigation—lack the expertise and will take a long time to develop our own resources, if they are there, can nevertheless help the Chinese to do so and then count that as a green export, would seem to me to be pretty bizarre.
The second sector is low-carbon buildings, primarily their design. That is fair enough. Let us send a few designers and architects over there and get the Chinese to pay their fees, but it will not revolutionise the British economy.
Interestingly, the third sector is carbon capture and storage. We are actually paying the Chinese to help them to develop the technology, and the report says that they already have a plant up and running. The idea that somehow the result is going to be us exporting carbon capture and storage technology to them when we are helping them develop a technology in which they are already further ahead than we are is bizarre.
Barry Gardiner
Am I right in thinking that the right hon. Gentleman genuinely believes that the expertise that this country has built up both from the North sea oilfields and in drilling in that technology is not something that we can export to China in helping them to develop shale gas?
Mr Lilley
What is wrong with it is that such expertise has nothing to do with green exports. It is a delusion, and a deliberate delusion, to portray exports of expertise in oil and gas development as a green export. If the hon. Gentleman cannot see that, it takes my breath away.
Have we got the expertise in shale gas? We have not developed any shale gas in this country, onshore or offshore. So if we have expertise, it comes from operating in other countries and we may be able to transfer that to China, but again, it would not be a green export—although I can see that the Minister is about to tell me otherwise.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
My right hon. Friend must take great credit for the fact that he presided over one of the largest single factors in Britain’s being able to meet its decarbonising targets, because he was in the Government during the dash for gas, and I would say that the single biggest factor that we could hope for in shifting China from its current carbon intensity is to shift it off coal and on to more gas. That would have a transformational impact in the way that the Government of which he was such an important part did here in the UK in the ’90s—[Interruption.] And it is a green export.
Mr Lilley
In following the previous Chairman’s admonition to us to keep interventions short, I have cut short the Minister’s intervention. The suggestion that we need to pursue at home policies to decarbonise our industry, in order to persuade the Chinese to use our expertise in oil and gas, defies all logic and I find it completely breathtaking. The argument seems to be that if we are to get these green jobs—the Minister has now reclassified exporting oil and gas expertise as a green job—we have to discourage the use of oil and gas at home. The mind boggles. The sheer, passionate desire of the Minister and, I am afraid, of some members of the Committee, not to face up to reality but to come up with every kind of spurious defence for a policy that simply does not hold water baffles me.
The truth is that we are, by imposing on our business high energy costs in the UK, driving business abroad, some of it to China. By subsidising the investment in solar panels and wind turbines, we are creating opportunities for China to export to the UK and we are probably creating green jobs in China. But let us not pretend that we are creating any green jobs for ourselves, or any opportunities to export to China, that would not exist if we simply abandoned all our climate change commitments in this country.
Mr Clive Betts (in the Chair)
Do the Front-Bench speakers think that eight minutes is sufficient time for their winding-up speeches? [Interruption.] Okay. Dr Whitehead has four minutes.
Dr Alan Whitehead (Southampton, Test) (Lab)
I do not want to detain hon. Members for long; indeed, I cannot, because I have only four minutes. Just as an aside, I draw hon. Members’ attention to an Asterix comic of a long time ago, entitled “La Zizanie”, which was about a person who went into Asterix’s camp and annoyed everyone so much, setting people against each other, that they lost track of what it was they were trying to talk about. I merely want to leave that on the table.
The Select Committee report is not about whether Britain has an imperialistic relationship with China and wishes to influence the whole of Chinese development. It is a modest effort to look at how the UK’s climate change and energy considerations might be attached to relations with the largest emitter of CO2 in the world. I am talking about a country that is developing rapidly economically, and changing equally rapidly its position as regards its stance on climate change. The report tried to consider how those two things might be matched. Unless we do not believe that there is any merit whatever in having any sort of international dialogue with anybody, we should take that Select Committee view at face value and welcome it for what it is.
The report is not a view that all is rosy in the world of China, but a timely reminder that China is changing its view on climate change. A number of things are happening in China that underline that view. Indeed, just yesterday, the Minister in charge of climate policies, Xie Zhenhua, indicated that the aim for the Chinese economy now is a reduction in the 2011 levels of carbon intensity by 40% to 45% by 2020. It also wants to boost its non-fossil fuel use to 15% of energy consumption by 2020. He talked about the beginning of the carbon market in Shenzhen in June and then later in the year in Shanghai. Significantly, he said that instruments will be included in the Shanghai carbon trading market that will take credits off the market when supplies are too high and prices are too low. He said that China would learn from the difficulties that are taking place in Europe and that it was committed to the development of a carbon trading market. In the 11th five-year plan, China had attempted to reach some targets. Among other things, it closed down factories for a number of weeks towards the end of the five-year period for each region to reach its target.
China understands the situation now and has developed its way of doing things enormously, so that its measures on carbon trading arrangements begin to coincide with other countries around the world. Therefore, there could be international co-operation on these matters, built on the basis of everyone following similar practices. We should not dismiss that on the grounds that the UK has a population of 65 million or 70 million and that China has a population of many billions, thus making us insignificant. Actually, we have a role to play in this matter and in a dialogue with China, along with other countries in the EU and across the world. That takes us back to that multilateral discussion that we were concerned about in the previous debate. This is not about Britain being imperialistic and trying to tell China what to do; it is a question of the UK’s contribution to a country that appears to be changing many of its assumptions about its own growth and how it goes forward.
Whatever we may think about elements of the political and economic situation in China and how they are dealt with, it is worth while collaborating with China to a far greater extent for the greater good, not only of China or this country but of the wider world. If the Committee’s report has been able to emphasise and underpin that process, it has achieved a good purpose. However, hon. Members should not read into the report something that is not there. It is an honest attempt to consider how UK advances and UK positions may be aligned more closely with other countries and with China in particular. China is indeed changing its stance on climate change—it is not a delusion to say that—and for its own purposes, as well as for international purposes, beginning to make substantial changes in how it goes about its economic activity, and it is important that we do likewise—
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
This afternoon’s debate has been very lively and informative. Once again, I commend the hon. Member for South Suffolk (Mr Yeo), the Chairman of the Select Committee, for how he introduced the debate, and I thank all the members of the Committee for the work that they have done in producing another excellent report.
As many hon. Members have noted in their contributions, China is key to the fight against climate change. China’s carbon emissions have risen rapidly during the past decade; they are up by more than 171% since 2000, growing to be 48% larger than the USA’s output of carbon emissions. As China is now responsible for 29% of the world’s carbon emissions and, on current trajectories, is predicted to become responsible for 50% of global emissions by 2030, it is clear that no effort to tackle climate change will be successful without its engagement. Therefore, as the Chairman of the Committee alluded to, it is welcome that China’s latest five-year plan is the greenest yet.
My hon. Friends the Members for Brent North (Barry Gardiner) and for Southampton, Test (Dr Whitehead) gave a number of examples that showed the investment and support that China is extending to its wind power sector, as well as its general commitment to increase renewable generation, which is happening alongside plans to draft a new climate law and to trial a carbon trading scheme.
The Committee’s report highlights the huge opportunities that this Chinese low-carbon transition could provide for British business. According to the latest report from the Department for Business, Innovation and Skills on this sector, “Low Carbon and Environmental Goods and Services”, UK exports to China are currently worth £795 million, which makes China by far our largest export market in this sector; it can be compared with our next largest export market in the sector, Hong Kong, which is currently worth £595 million.
I do not know whether the Minister has had an opportunity to read the Committee’s report in full. It argues that there is a huge opportunity to increase trade links, but says that that opportunity could be missed because of the Government’s current inaction. One of the major criticisms that the report made was that a lack of progress on the low-carbon agenda here at home was damaging our reputation abroad. The exact phrase that the Chairman of the Committee used at the time of the report’s publication was:
“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.”
We know from independent analysis by Bloomberg New Energy Finance that investment in renewable energy has fallen by half since this Government came to power, and figures published in November 2012 by Ernst and Young on attractiveness for investment in renewable energy showed that the UK has fallen to sixth place, slipping below France, which, as has been pointed out in the two debates this afternoon, is a country that generates nearly 80% of its electricity from nuclear.
In the earlier debate, I spoke about the incredible frustration that is felt about the fact that the Government are refusing to include an explicit commitment in the Energy Bill to decarbonise our power sector by 2030 that would provide businesses with the certainty and confidence in the Government’s green agenda that they are crying out for. That reluctance to commit resources and support at home is, as the report identifies, damaging our reputation abroad. The report notes:
“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.”
So, while it is welcome to note in the Government’s response to the Committee’s report that the UK’s presence in China has increased, those efforts will be undermined if the Government do not rapidly improve their performance at home.
The report also raised concerns that the UK Trade & Investment team’s efforts on the ground in China could be better targeted. The Committee was not convinced that the UKTI arm of BIS is currently focusing on the right areas to deliver high-value opportunities for British business. The report’s summary says:
“There are too many projects, focusing on too many different areas, rather than a coordinated effort to achieve key objectives.”
The report says that the UK Government should instead focus on a smaller number of “strategic interventions” and that
“Projects should be tailored to appeal to Chinese priorities and to build on UK strengths. For policy, this means a focus on…carbon pricing and accounting, where the UK has experience to offer.”
The Committee calls on the Government to undertake a systematic assessment of the sectors where the UK could have such an advantage. One of the ways that the report suggests the Government’s focus could be improved is to
“adopt a clearer set of high-level objectives”—
high-level cross-Whitehall objectives and actions—
“with regard to low-carbon cooperation with China”.
That was recommendation 9 of the report. On that, the Government said:
“We agree with the committee that strategic coordination across Whitehall is important”,
but then they go on to reject the Committee’s recommendation that a formal cross-departmental Committee should be set up to develop this strategy. The impression that I took from that was that, in effect, nothing will change. Will the Minster tell us in detail what action has been taken since the Committee’s report to develop cross-Whitehall objectives for low-carbon co-operation with China?
I will draw my remarks to a close. The Committee’s report underlines the key strategic importance of China in efforts to reduce global carbon emissions. It reminds us of the importance of China as Britain’s largest overseas market for low-carbon goods and services, and it highlights the numerous opportunities that China’s low-carbon transition presents for the UK to develop these links further. However, the report warns that, as a result of the Government’s lack of progress in securing investment in this country and in progressing towards our carbon reduction commitments, these opportunities may slip away from us. The Committee recommends that to prevent that from happening the Government’s work in China needs to improve its strategic focus, as well as shifting its attention to areas where Britain has experience to offer, such as carbon capture and storage and carbon pricing and accounting. The report makes sensible and practical suggestions that I hope the Government will act on, and I look forward to hearing the Minister’s response to the debate.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
This has been a much shorter debate than the previous one. Nevertheless, it has been extremely useful and I thank my hon. Friend the Member for South Suffolk (Mr Yeo) and the rest of the Energy and Climate Change Committee for producing this important report, following the Committee’s inquiry on co-operation with China on low-carbon development.
I welcome the report, and this debate, like the earlier one, has been enlivened and made much more dynamic by the challenging interventions of my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley). He began with rather a theatrical flourish, almost using pantomime language, but I am afraid that his attack slightly faltered and became less Dandini and rather more Wishy Washy as he progressed, because the fact of the matter is that the UK, as the hon. Member for Southampton, Test (Dr Whitehead) suggested, is not seeking to make some bold post-imperial or neo-imperial play in China. We have a modest role to play in China, but there is a role for us and we can leverage our influence to some effect. Given the extraordinary transformations that are going on in China, even a modest impact from our modest interventions can have a profound effect and, as a result, mitigate the net amounts of carbon being produced.
Fundamentally, the real drive behind China’s emissions growth is urbanisation, which is continuing apace. It will reach a peak, however, and there will inevitably be emissions growth while that extraordinary—indeed, unprecedented—urbanisation happens. However, the key point is that China can put in place the policies that will enable its emissions to peak and fall, and our technical policy co-operation, however modest, is playing a part, even if it is small, in helping that process in areas such as emissions trading, gas market regulation, low-carbon product policy standards and so on.
I am constantly reminded by colleagues in this place, quite rightly, that the UK accounts for a tiny proportion of global emissions. It is right that we remember that, but we can, by our example, play an important role, and by sharing our expertise and skill sets—particularly the technical expertise of the terrific, cutting-edge British companies—we can make a modest impact on that important country.
We can help build, as the report makes clear, a greater share for the UK of the market for low-carbon goods and services in China, which is the second biggest UK market for those things and getting closer to a value of £1 billion a year. That involves not only services. I am reminded that among the successful contracts won by UK firms is one for the David Brown company, a distinguished engineering company, which has won a contract for the design and production of wind turbine gear boxes and marine tidal devices. This is not just about a small suite of service companies. Real high-tech manufacturing and engineering jobs increasingly depend on that important market.
I want to mention the low-carbon challenge, the UK’s action to address the challenge and the future of UK co-operation on low carbon. The low-carbon challenge, as we heard in the earlier debate, is a significant challenge to deliver an ambitious 2015 global agreement and additional emissions reductions before 2020. Achieving that is critical to meeting the goal of limiting global temperature increase and keeping below 2° C, and the UK is playing its part in that. Our strategy to achieve this includes working across Whitehall and through our global network of climate and energy attachés to help to encourage greater ambition, and collaborating and sharing our experience to encourage low-carbon development.
I get positive feedback when I engage with members of the Chinese Government, as I did last week in Washington, when I had a good conversation with some of those people, who appreciate the role that we play. As the Committee’s report observed, China is central to global efforts to tackle climate change. The challenge is huge. We believe that, working with our Chinese colleagues, we can accelerate both our own and their transition to a low-carbon growth pattern, however modestly.
I draw attention to our shared interests in energy, including security of supply, energy pricing and energy efficiency, as well as development of low-carbon energy technologies. We have a bilateral energy dialogue, supported by a memorandum of understanding between DECC and China’s national energy administration. As the Committee has flagged up—I am afraid that I disagree with my right hon. Friend the Member for Hitchin and Harpenden—gas exploitation is an important element to consider and is likely to be discussed at the next energy dialogue, which we hope will take place later this year.
Our embassy is working closely with the Chinese national energy administration on gas pricing and regulations, including funding a new project to identify necessary policies and regulations to enable timely yet responsible development of shale gas in China.
The Committee, like hon. Members in the debate, recognises the importance of carbon capture and storage as a technology that is critical to meeting our climate change goals, particularly in the longer term. Although the technology faces significant challenges in China around cost and energy penalties, there are encouraging signs that China may be taking a more proactive stance. For example, the Ministry of Science and Technology has recently issued its 12th five-year plan, which lays out its priorities for research, development and demonstration of CCS use and storage. The UK will continue to share its experience with China and to use our influential climate financing to advance that agenda, given how critical it is for the delivery of our climate change objectives.
The International Climate Fund is giving £35 million to support an Asian Development Bank programme, developing CCS in countries including China. In addition, Research Councils UK has put £3 million of co-funding into joint CCS research, and a Foreign and Commonwealth Office-funded study stimulating interest in taking forward CCS in the Guangdong region may result in new offshore demonstration programmes. We will not fund those programmes or projects, but we must not undervalue the long-term commercial benefit of being associated with their early development. That is a sensible use of taxpayers’ seedcorn in a global industry that could, in a very few years, be worth billions of pounds and where the UK will be seen to have a leadership role.
We appreciate that there is a lot more that we can do. I take on board the Committee’s urging a more coherent approach across Whitehall, as the hon. Member for Liverpool, Wavertree (Luciana Berger) also said. I confirm that a review is under way, looking at how we can do that more effectively. We expect that review to finish in the summer.
Mr Yeo
With the leave of the House, I thank all my colleagues for contributing so constructively to this brief but important debate. There were moments when I wondered whether my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) had been reading the Committee’s report. I do not want to suggest—
Mr Yeo
I will check Hansard in detail. My right hon. Friend also said that, at Cambridge university in the 1960s, China was held up as a model that Britain should follow. I also attended Cambridge university in the 1960s, but I do not recall anyone at the university suggesting that at any time.
I deeply regret my right hon. Friend’s low opinion of the expertise of British business. He obviously assumes—I am sad to hear this from a former Trade and Industry Secretary—that German, French and Italian business is so superior to British business that it is not worth our making any effort at all to try to capture a tiny segment of the business in the largest and one of the most rapidly growing markets in the world. I deplore that pessimism and do not share it, and I am delighted that the rest of the Committee actually visited China. I would be interested to know when my right hon. Friend last went there, because if he had visited in the past year or two he would have seen a picture very different from that which he painted.
I am grateful to everyone for taking part in the debate and I am sure we will return to the subject. We should vigorously pursue opportunities for sharing our expertise, including in the important area of emissions trading, where we are among the leaders in the world. I welcome the support for that aim from those on both Front Benches.
Question put and agreed to.