Low-carbon Growth Links (China)

Lord Lilley Excerpts

Thursday 18th April 2013 Westminster Hall

[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]

We can certainly export to China the technical expertise that we have in the North sea, and we are doing so.

[Barry Gardiner]

What is wrong with the Select Committee report, then?

[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.

--- Later in debate ---

[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 Lilley]

May I intervene?

[Mr Yeo]

Sadly, I do not have time.

[Mr Lilley]

All my quotes were direct from the report.

[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.