Low-carbon Growth Links (China)

Lord Barker of Battle Excerpts

Thursday 18th April 2013 Westminster Hall

[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.

--- Later in 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.