Energy Infrastructure: Chinese Companies
(Limited Text - Ministerial Extracts only)
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Christine Jardine (Edinburgh West) (LD)
(Urgent Question): To ask the Secretary of State for Energy Security and Net Zero if he will make a statement on the potential security implications of the involvement of Chinese companies, including Mingyang, in energy infrastructure projects.
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Kerry McCarthy)
I thank the hon. Lady for bringing the urgent question to the House.
The protection and security of the energy sector is an absolute priority for this Government. We have a range of effective measures in place that give the Government powers to balance an open investment environment to facilitate growth with protecting the areas of our economy that are most sensitive to national security.
The Government firmly believe that the biggest risk to our energy system and energy security is remaining dependent on international fossil fuel markets, controlled by petrostates and dictators. That is why we have a mission to make Britain a clean energy superpower to end that dependence. We have a world-leading offshore wind industry in the UK and international investment plays a crucial role in supporting jobs across the country. As part of that mission, my Department engages in discussions with a wide range of investors, including those from other countries. We are also clear that alongside that, the growth of UK supply chains is critical. That is why we have set out plans for a clean industry bonus to drive investment in manufacturing, as well as setting up Great British Energy and the national wealth fund.
The Government will not hesitate to use our powers to protect national security whenever we identify concerns, and we will take a consistent, long-term and strategic approach to managing the UK’s relations with China, rooted in UK and global interests. The Government will co-operate with China where it can, compete where it needs to and challenge where it must.
Christine Jardine
I thank the Minister for her comments and general reassurances, but there are specific concerns at the moment. China can produce what is useful to us for the development of renewables, particularly in the North sea, and we can benefit from those investments. China also needs access to our markets. However, security issues involving companies working in offshore renewable development have become apparent in recent weeks and have been raised numerous times.
It has been reported that the Chinese company Mingyang is interested in producing turbines for a new project in the North sea. Around £60 million of Scottish Government funding has been earmarked for a wind turbine factory near Inverness, in addition to a potential £27 million for Orient Cable to provide subsea cables for island communities. That is despite the European Union bringing anti-trust cases against China and the Norwegian Government blocking Mingyang from its green infrastructure projects.
Will the Minister reassure the House that the Department will follow the same rigorous processes to assess those risks as the previous Government, which ultimately blocked Huawei from the 5G network? This must include an assessment of any opportunities for remote access to the turbines, as the software will normally remain in the control of the manufacturers even once commissioned, leaving them vulnerable to being switched off. We need local control.
Will the Department reassure the House that discussions are ongoing with the Scottish Government to ensure that no public money is invested before this risk assessment has taken place? How will Ministers work with the Scottish Government and Cabinet colleagues to ensure that offshore and undersea infrastructure is safe?
Kerry McCarthy
The hon. Lady raises important concerns that we are very much alive to. As I said in my first answer, energy security is critical to the Department’s work and that is why we have the clean power mission to end our dependency on fossil fuels. International investment is a crucial part of that and helps to support growth and jobs across the country. As part of that, we have discussions with a wide range of international investors, but we absolutely recognise that this needs to be balanced against national security implications. We work on that constantly across Government with input from a number of Departments, and I am pleased to see my hon. Friend the Minister for Security from the Home Office here for the urgent question.
The Government have to consider both those aspects together: the need for investment and for greater capacity in our supply chains, and the security risk. While I cannot get into the details of the individual case, given the nature of the ongoing discussions, I reassure the hon. Lady that we are taking these factors into account. We do want to make sure that the most robust processes are followed as we look at the details of this particular issue.
Bill Esterson (Sefton Central) (Lab)
I was pleased to hear the Minister confirm the importance of our energy security, in contrast to what we saw under the previous Government. [Interruption.] Opposition Members can groan all they want, but that is the reality of what was inherited in July last year.
As we extend energy infrastructure in this country, can my hon. Friend the Minister confirm how this Government will ensure that we have control of the operation of that infrastructure? Does she agree it is vital that through the industrial strategy we see a renaissance in our manufacturing and greater resilience in our supply chain, all of which adds to the energy security of this country?
Kerry McCarthy
My hon. Friend is absolutely right that dealing with capacity issues in our supply chain is a crucial part of getting this investment into infrastructure. It is one of the reasons why, through the national wealth fund, we invested in lithium in Cornwall last week. Through the critical minerals strategy, we want to maximise the natural resources that we have, where we can. As I have said, we want to make absolutely sure that security concerns are addressed as well when we look at which investors invest in our new economy.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
The indication that Mingyang will get the green light from the Treasury to supply wind turbine technology to the Green Volt wind farm in the North sea is concerning. Indeed, alarm bells have been sounded by officials in the Minister’s Department and in the Ministry of Defence. This green revolution will come with a “made in China” label. The Government, in collusion with the Scottish National party in Holyrood, are determined to see Chinese companies reap the economic reward.
The Minister’s party says again and again that the transition to renewable energy will reduce our reliance on hostile regimes. Chinese-controlled technology embedded in our critical energy infrastructure is evidently a threat to our security. Can the Minister assure us that she is taking this threat seriously? Can she explain how using wind turbines made by Mingyang reduces our reliance on foreign states?
Just last week I, along with many MPs in the Minister’s party, was briefed by the Royal Navy on the vulnerability of our subsea communications and energy infrastructure. We have seen a pervasive rise in sabotage attacks on subsea cables in the Baltic, affecting our Scandinavian allies. If Chinese-manufactured turbines are installed, security experts have warned that sensors could spy on British seas, defence submarine programmes and the layout of our energy infrastructure. We would be reliant on Chinese equipment and software, and on Chinese suppliers for updates and maintenance, handing Beijing significant opportunity for interference. In the current international climate, it is unthinkable to disregard the security implications of this decision.
Can the Minister confirm that the Government have scrapped the GIGA—green industries growth accelerator —scheme that we launched to build British supply chains in energy technologies? What discussions has she had with the Ministry of Defence about its concerns over our ability to ensure the security of our energy system? What safeguards will be in place to prevent Chinese maintenance ships accessing the turbines for repairs? What guarantees has she had, if any, from our defence and security agencies that this investment will pose no threat to our national security? If such assurances are not forthcoming, will she revisit this decision and put a halt to the madness of allowing the People’s Republic of China to have such a significant stake in our energy system?
Kerry McCarthy
When the Minister—[Interruption.] Sorry, I am the Minister now. [Laughter.] The shadow Minister mentioned revisiting this decision, but, as yet, no decision has been made. We are undergoing rigorous processes to consider the role of China in our supply chain and in the investment in our critical infrastructure.
Having been in my position, the hon. Gentleman will know why it is so important that I do not provide a running commentary on individual cases, but I have made it clear that we are taking into account the national security considerations as well as our need for investment in the supply chain. Let me touch on the legacy that we were left by the previous Minister: he was perfectly happy to leave our energy system exposed, with the British people paying the price. The retreat—the “under new management” line that he was parroting earlier this week—would leave us even more exposed to those petrostates and dictators. We are getting on with our clean power mission to end our energy insecurity, and I shall take no lessons from the shadow Minister on energy security given his Government’s record.
Ms Polly Billington (East Thanet) (Lab)
I am glad to hear the Minister point out that, when it comes to green investment over the past 14 years, the legacy that we were left with was of an absolutely vacant industrial strategy. I urge her to explain further how we might be able to develop the skills and competencies in this country to make sure that we have good, strong and ethical supply chains.
Kerry McCarthy
I thank my hon. Friend for her question. We have launched the clean industry bonus, which will be crucial in protecting our supply chain. We are investing through GB Energy and the national wealth fund—I have already mentioned lithium in Cornwall. Through the global clean power alliance, which we launched at the end of last year, we will bring together our counterparts from other countries, including at the International Energy Agency conference in April, to look at a supply chain mission to deal with these issues. These issues do not just affect us in this country. As other countries seek to decarbonise and increase the role of renewables, we will all need to co-operate and deal with the capacity issues across the supply chain.
Pippa Heylings (South Cambridgeshire) (LD)
I thank my hon. Friend the Member for Edinburgh West (Christine Jardine) for securing this important urgent question. Since the Russian invasion of Ukraine, as the Minister has rightly said, “energy security” has been a key term in this Chamber. There are two ways of looking at energy security. First, it is about generating our own renewable energy to avoid price volatility and exposure to authoritarian regimes, ensuring that we have the jobs here at home for design and construction. Secondly, it is about the national security issues around our energy infrastructure, which is also a form of energy security. A former MI6 chief has warned of the vulnerabilities, either deliberate or inadvertent, posed by foreign-controlled software embedded in our energy infrastructure. Given those serious concerns, can the Minister guarantee that any further investment in Scotland will increase both our energy and our national security?
Kerry McCarthy
As I have said, we are going through the robust processes to try to make absolutely sure that our national security is not compromised by investment from overseas, and we will continue to do that.
Brian Leishman (Alloa and Grangemouth) (Lab)
The Grangemouth refinery is a vital piece of Scottish infrastructure, and its economic contribution to the Scottish economy is worth more than £400 million every year. The Grangemouth refinery is also a joint venture between PetroChina, owned by the Chinese state, and INEOS, a multinational conglomerate. Together, they are Petroineos. The refinery is due to close, with thousands of jobs being lost, an unjust transition and Scotland having to rely on importing oil, all at a time of great global volatility. Why are this Government allowing a foreign Government and private capital dictate Scotland’s industrial capacity, its ability to produce oil and, overall, our national security?
Kerry McCarthy
We are not allowing anyone to dictate to us. I know my hon. Friend has been deep in conversation for some time with the Minister for Energy over Grangemouth’s future. To reiterate, we absolutely need to attract investment to meet our clean power mission, to secure our future energy security and, in the long run, to bring down bills for the British people. We need to balance national security concerns in tandem with that, and neither one takes priority. We need to tackle those challenges together, and that is what we will do.
Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)
Whatever the question about energy is, China is not the answer. First, we know the Ministry of Defence and the Department for Energy Security and Net Zero have raised objections about the Treasury’s push to bring Mingyang Smart Energy into the circuit to bid for this. Secondly, China is determined to involve slave labour in its products. We are investing under this Government in solar arrays, which use a huge amount of slave labour in producing polysilicon. Do the Government not recognise that their tilt towards China to get it to invest runs the real risk of utter dependency on China and serious threats to our security, which have been highlighted endlessly by the security services, and will they now stop?
Kerry McCarthy
I recognise that the right hon. Member has long-standing concerns about the role of China and its investment in our economy. He has been a great champion of raising concerns about forced labour, and he is right to do so. We have set up the solar taskforce, as I am sure he is aware, to look at whether there is forced labour in our solar supply chains. As I have said, a supply chain mission will be launched as part of the global clean power alliance. This is not something that one country can tackle by itself; we all need to be alert to the risks of slave labour. I know that an amendment was passed in the House of Lords last night that means the issue will come back to this Chamber soon, and I look forward to the discussion then.
Amanda Martin (Portsmouth North) (Lab)
Does the Minister agree that developing our economic and trading relationships with other nations is one lever of many that the Government are using to drive growth and investment, alongside planning reforms, public investment and a proper industrial strategy for the people not only of the UK, but my city? At the same time, our work across Departments must always have our nation’s security at its core.
Kerry McCarthy
My hon. Friend is absolutely right, and we are using a number of levers. The growth mission and the clean power mission work hand in hand to ensure that energy security and the decarbonisation of our power system contribute to growth in this country, and that means contributing to job creation and, in some cases, overseas investment. We have set up Great British Energy, and we have the national wealth fund and the clean industry bonus, all of which will help us achieve those objectives.
Bradley Thomas (Bromsgrove) (Con)
Have Ministers or officials in the Ministry of Defence, the Home Office or the security services raised any concerns with the Department over the possibility of offshore structures in British waters being used for Chinese intelligence-gathering technology? If there are sensitive matters that cannot be discussed in the House, will she commit to holding a private briefing for Members on the security implications of energy infrastructure from China?
Kerry McCarthy
I cannot comment on the extent of conversations, other than to reassure the hon. Member that, of course, those conversations are taking place and will be ongoing and that we are going through robust processes. Again, because it is not my specific role, I cannot say whether that information could be shared. I do not think that it can be shared on a day-to-day basis, but I will investigate whether we could arrange a briefing with Members to give some reassurance as to the general approach.
Melanie Onn (Great Grimsby and Cleethorpes) (Lab)
I am surprised that Conservative Members seem to have forgotten the time when they were pushing the golden era of the relationship between the UK and China. Some of this is a legacy of their time in government, so they should be careful about how they approach this conversation.
I point out to the Minister the role that Grimsby plays in servicing and supporting operations of offshore wind, not only around UK waters but as far as Taiwan. Those skills, competencies and capabilities exist here in the country, so what additional support will be given to expand those capabilities and support for skills in this country?
Kerry McCarthy
My hon. Friend has been a real champion for Grimsby, and I was glad to see her returned at the recent election, so that she can carry on championing all the potential that Grimsby has to offer, not least in the wind sector. It is important that we link up skills and capacity—that is one of the obstacles. We talk often about how grid capacity and planning issues can hold up the roll-out of clean power, but we have to have the skills base as well. We are working with the Department for Education on how we can train and develop capacity within the existing workforce through things like the growth and skills levy to work on these exciting new projects.
Sir Alec Shelbrooke (Wetherby and Easingwold) (Con)
The Minister speaks about being reliant on the petrochemical states and dictatorships that supplied the fuel needed for our energy system, and yet the vast majority of the processed materials needed—whether we construct things here or not—come from China. We recognise that some of those countries are dictatorships, but will the Minister confirm at the Dispatch Box that a country that uses slave labour, has carried out the most horrendous crimes against the Uyghur population and has sanctioned our own parliamentarians is as much a dictatorship as the countries that she says we want to no longer be reliant on?
Kerry McCarthy
If we followed the approach suggested by the Opposition Front Bench, we would be firmly back in the hands of the petrostates and the dictators. As for our relationship with China, as I have said, we will co-operate where we can, compete where we need to and absolutely challenge if we must. We have been clear that no company in the UK should have forced labour in its supply chain. That is why we have set up the solar taskforce and are going through robust processes ahead of the decision that we are talking about. I will take no lessons from the right hon. Member because we have had 14 years of being exposed to a volatile energy market, and we are trying to recreate our energy security through this investment.
Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)
Does the Minister agree that, after the real neglect of our energy infrastructure for the past 14 years, setting up GB Energy to help UK ownership of energy production can only be a good thing, and that our investment in critical minerals, particularly in Cornwall, and in the supply chain for floating offshore wind will be crucial for our national security?
Kerry McCarthy
On the one hand, Conservative Members raise concerns about critical minerals being imported from abroad. On the other, when my hon. Friend, who is a real champion for her area, praises the investment that we have put into lithium extraction in Cornwall, they start jeering. We will continue to invest through GB Energy and the national wealth fund.
Claire Young (Thornbury and Yate) (LD)
To have true energy security, we need home-grown capability at all stages of the development of renewable energy infrastructure, from the earliest research to maintenance and decommissioning. What steps is the Minister taking to ensure that we have that home-grown full-lifecycle capability?
Kerry McCarthy
From the hon. Member’s question, she may be talking about community energy—I am not quite sure.
Kerry McCarthy
In that case, I will say that it is important that any investment is place-based, and we need to look at developing the capability, such as the skills and the capacity of the local authorities—that is where community energy comes in. We also need to ensure that the finance goes where the investment is needed. If I have not understood the hon. Member’s question, I would be happy to take it up with her afterwards.
Tom Collins (Worcester) (Lab)
I welcome the Minister’s engagement on this topic. To have meaningful and serious discussions with other major economies is vital for our success. Does the Minister agree that those discussions are key to not only securing our economic aims, but tackling the climate and nature crisis and achieving our wider international objectives?
Kerry McCarthy
Yes, that international co-operation is absolutely crucial. It means talking to countries with which we share a great deal in common and which are signed up to the same objectives, but it also means talking to other countries to bring them with us. That is why we are hosting the International Energy Agency summit in London in April, why we have set up the global clean power alliance, and why the Prime Minister went to the COP climate change talks in Baku last autumn and showed international leadership, which was very much lacking from UK Governments of previous years.
Bob Blackman (Harrow East) (Con)
Clearly, national security concerns are being expressed across the House. Will the Minister ensure that the construction, maintenance and access to software will be carried out by British workers in British shops, and will not be subcontracted to foreign powers?
Kerry McCarthy
As I have said, I cannot comment on individual cases, but there are processes to ensure that our national security is protected as we look ahead.
Tony Vaughan (Folkestone and Hythe) (Lab)
I welcome the Minister’s reassurance about the Government’s rigorous scrutiny of energy projects involving Chinese technologies. I understand the argument that, at the current stage of our transition to net zero, we may need to look further afield to meet our domestic energy needs, but does she agree that the long-term plan ought to be to reduce reliance on Chinese technology in the UK energy sector and to use British-made green technology, about which there can be no national security or ethical supply chain concerns?
Kerry McCarthy
I agree. That is why we are doing all we can to increase capacity through initiatives such as the clean industry bonus, investment from the national wealth fund, the role of GB Energy, and all the other measures that we will take through our industrial strategy to ensure that we keep and create jobs in the UK.
Dave Doogan (Angus and Perthshire Glens) (SNP)
The Minister is all over the place on this. In her opening remarks, she said that the United Kingdom has a world-leading renewable energy industry. If we did, we would not be having this discussion about foreign imported infrastructure. Notwithstanding the Tories’ total failure over 14 years to invest in the industrial base for renewable energy manufacturing across the United Kingdom, what is the Government’s strategy to get in front of this, not just in manufacturing but in resource supply, enterprise resource planning and intellectual property? What is the big shift that the Government have planned? I just hear jibber-jabber.
Kerry McCarthy
That is not very polite of the hon. Member. As I have said, we are doing all we can to attract investment into the UK, so that we can be as reliant as possible on our own resources—that means our own supply chain and attracting investment and so on. We are doing that through the national wealth fund and through GB Energy. I do not know to what extent he took part in debate on the Great British Energy Bill, but there was much discussion then. As I have said, this issue must be solved on an international level. We are doing a lot of work with our colleagues to make the North sea the green power plant of Europe through the North Seas Energy Co-operation council, and we have set up the global clean power alliance. We cannot act alone—although I know that the Scottish National party prefers that approach. We are working in co-operation but also in the best interests of the British economy.
Alex Ballinger (Halesowen) (Lab)
Can the Minister confirm that her Department’s work is entirely consistent with the Government’s approach to China: co-operate where we can, compete where we need to and challenge where we must?
Kerry McCarthy
That is exactly our approach, and it is the right approach. Perhaps the Opposition Front Benchers would advocate not co-operating with China, but it is an incredibly important player on the world stage, and we gain nothing from completely turning our back on it and not engaging in dialogue.
Mr Andrew Snowden (Fylde) (Con)
Following its illegal invasion of Ukraine, we saw how Russia responded in the global tarrifs sanctions market: it tried to use its dominance in the nuclear fuel market to put pressure on Ukraine’s allies. We see the vulnerability in our energy supply chain when our enemies, and allies of those enemies, want to use it against us. Former head of MI6 Sir Richard Dearlove says that the Government’s target of decarbonising the grid hands power to Beijing. We have enough oil and gas in the UK not to have to rely on dictator states, so why do we not just get drilling and get our own oil and gas out of the ground? I suspect that, in their mad dash to decarbonise the grid, the Government will not do that, but have they undertaken a risk assessment of the strategic vulnerability of our national security in our increasing reliance on Chinese rare earth minerals and battery production?
Kerry McCarthy
I think I have made it clear that there are ongoing conversations about that, and that we take national security incredibly seriously when we consider investment decisions. On what the hon. Member said about producing more oil and gas here for our own use, I think he needs a lesson in how the energy markets work—there is no guarantee that it would be used here.
Harriet Cross (Gordon and Buchan) (Con)
The issue is the Labour Government’s rush to decarbonise by 2030, which means that this country does not have the capabilities to fulfil all the requirements to deliver on these projects. Until we do, we will always be reliant on overseas powers and people, such as the Chinese Government and Chinese manufacturers, to deliver what we need in order to decarbonise. Are the Government prepared and happy to sacrifice our national security and our energy security to reach that 2030 target?
Kerry McCarthy
It sounds very much like the hon. Member is making the case for an industrial strategy that ensures that we can match demand with supply. That approach was particularly missing from the previous Government.
Sammy Wilson (East Antrim) (DUP)
Almost on a weekly basis, we are lectured by the net zero-obsessed Secretary of State that the race for renewables is necessary in order to give this country a secure future supply of energy. Yet the renewables industry is increasingly dependent on Chinese technology, and on rare earth metals, of which the Chinese control 70%, so we are placing our future energy supply in the hands of a dictatorship that has proved itself willing to use such infrastructure to blackmail the countries in which it is based. Should we not consider the supply of fossil fuels in this country—decades of oil and gas—which we could use without interference from others?
Kerry McCarthy
We believe that the best route to energy security is through our clean power by 2030 mission and further investment in renewables. That remains our stance.
Jim Shannon (Strangford) (DUP)
The Minister will be aware that the costly environmental obligations that the Government impose on home-manufactured goods are not adhered to by many other nations, which often prevents UK manufacturers from being able to compete. Does the Minister agree that those considerations, as well as the routine human rights breaches of Chinese business against the Uyghurs, Falun Gong, Christians and other ethnic minorities, should be equally weighted with costs? Human rights and Chinese production will never add up; that must inform any contract offered by this nation of ours.
Kerry McCarthy
The hon. Member has frequently raised almost every issue that one could think of, but he and I have taken part in many debates about human rights in countries of concern over the years, and he is absolutely right to flag those concerns. As I have said, we have the solar taskforce and the supply chain mission with the global clean power alliance. We are very much alert to those matters. We do not want to see forced labour or any form of modern slavery in our supply chains. We are determined to take action on that.