The Foreign Office’s chief climate change official has urged Britain’s private sector to use China as an ‘incubator’ for clean-technology development.
Speaking on his return from an official visit to the country, John Ashton, the Foreign Secretary’s Special Representative on Climate Change, also warned that western countries need to increase their levels of innovation, investment and political energy if they want to take advantage of Beijing’s low carbon drive.
Ashton told RTCC that the country’s high capital deployment and economic growth means it is an ideal place to test new technologies in a cost-effective manner.
This is relevant in a world economy spooked by an increasingly bleak outlook. Figures released at the end of last month showed that global investment in the clean energy sector for the first quarter in 2012 were the lowest since 2009.
“You can drive innovation more cheaply and deploy more technologies to scale more cheaply in China than you can pretty much anywhere else,” he said.
“There are big opportunities to partner with Chinese companies and pioneer new technologies in the Chinese market – that will cost you less and get your prices down the cost curve – the learning curve, faster than it would elsewhere.
“Also – not to be underestimated are the opportunities for attracting Chinese investment – we’re looking for capital to come into Britain and the EU to help build the low carbon economy – and China is potentially a very important source of capital for that.”
Scale of ambition
Research by UK think tank IPPR backs up the theory that increased engagement with China would result in higher levels of innovation and production at home – revealing that Chinese import competition accounted for 15% of technology upgrading in the EU between 2000-2007.
British business needs every boost it can get, after recent news that the economy has entered a double-dip recession. But while banks in the UK and EU are apparently reluctant to invest heavily in the green sector – the same cannot be said for China.
As UK Foreign Secretary William Hague pointed out in an article last month for the Huffington Post, Beijing is overseeing a $1.7 Trillion programme of investment over the next five years.
This can only be good news for countries with advanced clean energy technologies to trade. The Pew Environment Group’s recent report: “Who’s Winning the Clean Energy Race” highlighted the success of aggressive Chinese policies designed to attract investment from abroad and expand domestic capacity.
Wind energy is of particular interest – with Pew reporting that of the $45.5 billion clean energy investments in China during 2011 – $29 billion went to wind power, taking overall capacity to 64GW – the equivalent of 128 conventional coal fired power stations.
New power grids, rapid investment in electric cars and the erection of 36 wind turbines a day are testament to this drive. Equally it’s fairly clear that hard-headed economics are behind this policy change rather than a wish to present a greener image. As PwC’s Allan Zhang told RTCC in February, the world’s second largest economy is heading towards a resource crisis.
China is a net importer of oil and coal, faces a diminishing supply of metals and minerals, and is contending with increasing levels of natural disasters due to climate change, affecting critical crops such as wheat.
Ashton said talks with officials left him in no doubt that they feel their ‘wasteful non-resilient’ growth model is facing the ‘edge of a cliff’, hence these rapid steps to develop a more effective economic framework.
“In terms of political energy as well as in terms of investment, there’s a more sustained, coherent and strategic effort to shift the growth model in that way going on in China than there is pretty much anywhere else,” he said.
“So I think we all need to be paying attention to that because the Chinese footprint on the global economy is so great. China is deploying capital, building infrastructure and setting new technology standards faster than any economy ever has.”
Winds of change
Emissions targets in China’s 12th Five-Year Plan, published in March 2011, aim to reduce the carbon intensity of its GDP by 40-45% from 2005 levels by 2020.
Allied to the introduction of solar feed-in tariffs and a proposed carbon trading scheme this gives backing to the belief that the country is slowly but surely embarking on a long-term transition.
It’s a steady revolution that Ashton believes we would be foolish to ignore. Despite reports of a new coal-fired power station coming online in China every ten days – he maintains this is a country that is changing – and fast.
“The point I take away is that two years ago the conventional wisdom in China was we must not go too fast because otherwise we will lose competitive advantage in relation to America, Europe and Japan. Now that has changed – that’s yesterday’s position”, he said.
“The new position is our strategic interest – our competitive interest in our economy is to be the pioneer. We can lay the foundation of the global economy and that’s to our benefit if we do it.”