Writing in The Guardian ahead of the visit, Miliband said: “The only way to respond to [the climate crisis] is with decisive action at home and abroad… climate action at home without pushing larger countries to do their fair share would not protect current and future generations. Emissions know no borders, and we will only protect our farmers, our pensioners and our children if we get other countries of the world to play their part.”

On Monday 17 March, Ed Miliband met with Chinese Vice Premier Ding Xuexiang in Beijing. The two sides agreed to enhance cooperation in jointly addressing climate change. Ding, also a member of the Standing Committee of the Political Bureau of the Communist Party of China Central Committee, noted that China is ready to work with the UK to earnestly implement the important consensus reached by the leaders of both countries, consolidate the momentum for improvement and development of bilateral ties, deepen cooperation in areas such as financial services, trade and investment and low-carbon development, and jointly address climate change to better benefit the people of both countries and the world.

Miliband and China’s National Energy Administrator Minister, Wang Hongzhi, also co-hosted the 8th China-UK Energy Dialogue in Beijing on 17 March. The two sides exchanged views on topics including clean energy technologies, energy transition, energy security and global energy governance. Following the dialogue, Miliband and Minister Wang signed a Memorandum of Understanding on the China-UK Clean Energy Partnership, which identifies priorities for collaboration, including power market reform, power grids, battery storage, offshore wind energy, carbon capture, utilisation and storage (CCUS), clean low-carbon and renewable hydrogen.

Earlier, on Saturday, 15 March, Miliband met with China’s Ecology and Environment Minister, Huang Runqiu, and held in-depth discussions on topics including cooperation in climate change. Minister Huang outlined China’s policies, actions, and achievements in combating climate change, expressing China’s willingness further to deepen policy dialogue and practical cooperation with the UK in areas such as carbon markets, climate investment and financing, and climate adaptation. He emphasised that such collaboration would contribute positively to global climate governance.

The Energy Secretary will refresh the 10-year-old UK Clean Energy Partnership with China – which will now provide clarity on areas where the UK government can securely collaborate with China on areas of mutual benefit – such as new emerging technologies, including hydrogen and carbon capture and storage. The UK will also share expertise on phasing out coal, having closed its last coal-fired power station last year.

Ed Miliband said:  

“We can only keep future generations safe from climate change if all major emitters act. It is simply an act of negligence to today’s and future generations not to engage China on how it can play its part in taking action on climate. 

That is why I will be meeting Chinese ministers for frank conversations about how both countries can fulfil the aims of the Paris Climate Agreement, to which both countries are signed up.  

Our Plan for Change and clean energy superpower mission is about energy security, lower bills, good jobs and growth for the British people. It is with this mission that we can also influence climate action on a global stage, fight for our way of life and keep our planet safe for our children and grandchildren.”

Coinciding with Miliband’s visit to China, CBBC, in partnership with the British Embassy and the British Chamber of Commerce in China, hosted the UK-China Clean Energy Reception in Beijing. The event brought together nearly 200 guests, including representatives from the UK government, Chinese companies and UK businesses, providing a valuable platform for business and government stakeholders to network and explore collaboration opportunities in the sector. 

CBBC’s Chief Executive Peter Burnett, who is visiting China, attended the event alongside Tom Simpson, CBBC’s Managing Director for China.

Speaking at the event, CBBC’s Chief Executive Peter Burnett said:

“There are important shared objectives between businesses in the UK and China, including tackling climate change, promoting sustainability, and developing clean, efficient, and safe energy solutions. For businesses, this dialogue is incredibly important. All successful businesses mitigate as much risk from their operations as they can. Managing climate-related risks has become an essential business objective, particularly as we have seen the significant impact of climate change worldwide. At CBBC, we will continue to prioritise this issue. Addressing climate change is not just necessary – it also supports economic growth, prosperity, and job creation.”

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The potential for Sino-Scottish collaboration in renewable energy is vast. China, already the world’s largest producer of solar panels and wind turbines, is projected to account for 60% of global renewable energy generation by 2028. Meanwhile, Scotland, with its ambitious climate targets and abundant natural resources, is positioning itself as a hub for green energy innovation. Together, these two nations have the tools, talent and vision to accelerate the global transition to a sustainable future.

The Chinese advantage: Scale, technology, and investment

China’s dominance in renewable energy is no accident. Decades of strategic investment in clean energy technologies have made it the world’s largest producer of solar photovoltaic (PV) panels, wind turbines, and battery storage systems. The country’s industrial might is unparalleled, with its factories churning out the components needed for large-scale renewable energy projects at a pace and cost that few other nations can match. For the UK, which is striving to meet its Net Zero targets by 2050, tapping into China’s manufacturing capabilities and technological expertise is not just an option – it’s a necessity.

Chen Xiaomeng, CEO of Redrock Renewables, a company with significant operations in Scotland, has seen firsthand the benefits of combining Chinese technology with Scottish innovation. His company’s Inch Cape offshore wind project, set to power one million homes, is a prime example of what can be achieved when these two nations work together. “China has become a testing ground for scaling new technologies, particularly in hydrogen,” Chen noted. “The UK, with its advanced regulatory frameworks and expertise in offshore wind is an ideal partner for deploying these technologies in the West.”

However, the partnership is not without its challenges. Chinese companies investing in the UK often face hurdles, including lengthy consent processes, policy uncertainty, and a skills shortage exacerbated by rapid industry growth. CNOOC, one of China’s largest energy companies, re-entered the renewables sector after a hiatus, but its representatives have pointed out that the fiscal regime in the North Sea is no longer as competitive as it once was. This makes it difficult to invest in speculative renewable projects, though opportunities with clear synergies remain attractive.

Sinopec and PetroChina, two other major Chinese energy players, have also expressed interest in the UK market, citing its connectivity to global energy giants like BP and Shell as a key draw. However, they too have highlighted the complexities of navigating the UK’s regulatory environment and the need for stable, long-term policy frameworks to encourage investment.

Bridging the skills gap: A shared challenge

One of the most pressing challenges facing the renewable energy sector – both in the UK and globally – is the skills gap. As the industry grows, so too does the demand for a workforce equipped with the technical expertise to design, build, and maintain renewable energy infrastructure. This is where collaboration between Chinese and Scottish educational institutions and training organisations can play a transformative role.

OPITO, a non-profit organisation that has long provided training for the oil and gas industry, is now leading efforts to support the transition to renewables. Its North Sea Transition Deal includes a people and skills programme aimed at ensuring an equitable transition for workers moving from fossil fuels to clean energy. Standardised training, OPITO argues, is essential to bridge the skills gap and ensure that the workforce is prepared for the challenges of the green economy.

In Scotland, educational institutions like North East Scotland College are also stepping up. The college has established a Green Energy Skills Hub, working with industry leaders like Shell and Robert Gordon University to provide transition courses for hundreds of students. “We are shifting our focus towards the renewable sector,” said Iain Cocker from the college. “Collaboration between academia and industry is key to equipping the next generation with the skills they need.”

Skills Development Scotland has also emphasised the importance of inspiring young people to pursue careers in renewable energy. Work-based learning and apprenticeships, they argue, will be crucial in building the workforce of the future. This is a challenge that China is also grappling with, as it seeks to standardise qualifications and training to support the development and deployment of hydrogen technologies and other emerging sectors.

Innovation and collaboration: The key to success

Innovation is at the heart of the renewable energy transition, and nowhere is this more evident than in Aberdeen’s Energy Transition Zone (ETZ). This ambitious initiative aims to create an integrated energy cluster that will support the transition to renewables over the next two decades. With a project pipeline that includes 17GW of floating offshore wind near Aberdeen, the ETZ is attracting significant investment and fostering collaboration between industry, academia, and government.

Logan Energy, a company focused on driving down costs in the renewable energy sector, has highlighted the importance of diversifying the supply chain. By working with developers and generators to reduce costs and improve efficiency, Logan Energy is demonstrating how international collaboration can lead to tangible benefits. “International standardisation is key to achieving our goals,” a representative noted. This sentiment is echoed by companies like Proserv, which is open to joint ventures with Chinese firms to provide the secure, local content required to meet concerns around inward investment.

The role of academia and policy

The University of Aberdeen, with its long-standing links to China, is playing a pivotal role in fostering collaboration. Established in 1495, the university has a rich history of working with Chinese institutions, including the Aberdeen Institute of Data Science and AI and the Confucius Institute. Professor Peter Edwards, a prominent academic at the university, has emphasised the importance of building on these historical ties to drive innovation in renewable energy. “Our notable alumni, including James Cantlay, James Legge, and Thomas Sutherland, have played a significant role in building bridges between our two nations,” he said. “Today, we are continuing that tradition through research partnerships and cultural exchanges.”

Policy support is also critical to the success of Sino-Scottish collaboration. Great British Energy, a venture launched in Aberdeen, aims to provide finance to projects where the private sector is unable to de-risk them. This is particularly important for oil and gas majors transitioning to renewables. By engaging with initiatives like Great British Energy, Chinese developers can explore new opportunities for collaboration and investment.

A bright future for collaboration

The potential for Sino-Scottish collaboration in renewable energy is immense. With 90% of oil and gas skills transferable to renewables, Aberdeen is well-positioned to lead the transition. By combining the talent pool and know-how of both nations, the challenges of the energy transition can be overcome. As the world moves towards a greener future, the spirit of collaboration between China and Scotland will be key to achieving global energy security and sustainability.

China’s industrial might, combined with Scotland’s innovative spirit and energy expertise, creates a powerful partnership that can drive the renewable energy revolution forward. By working together, these two nations can ensure a sustainable future for generations to come. As Lord Provost Dr Cameron aptly put it, “The combination of our expertise can help ensure a more sustainable future globally.” In the race to Net Zero, Sino-Scottish collaboration is not just an opportunity, it’s a necessity.

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The news that the UK saw its warmest year on record in 2022 – and the prediction that this year could be even hotter – is yet another reminder of the need to enable a low-carbon future. A global response to climate change is urgently needed, especially since some recent studies have suggested that the planet could warm by 2°C by 2050 even if emissions are reduced in line with the recommendations of the Sixth Assessment Report by the UN Intergovernmental Panel on Climate Change (IPCC). This will have catastrophic consequences for the world as we know it.

It is clear that the entire global community must pull together and every nation must stretch itself to make the biggest contribution it can. That being the case, what potential is there for the UK and Chinese business communities to support and invest in each other as part of this effort?

The two countries are in quite different positions as they each face up to the challenges ahead. KPMG’s Net Zero Readiness Index – published in October 2021 and comparing the likelihood of 32 major economies reaching Net Zero by 2050 – places the UK at number two, while China is further back at number 20. This is because the two economies are at different stages of development, with China having to accelerate its industrialisation phase and at huge scale.

The UK, which accounts for under 1% of global emissions, has already enshrined in law its commitment to achieving Net Zero by 2050. To enable this, it has further set what the government describes as “the world’s most ambitious climate change target” of cutting emissions by 78% by 2035 compared to levels in 1990. This would take the UK more than three-quarters of the way towards hitting Net Zero by 2050. The UK’s major achievement to date is the decarbonisation of its power sector and the simultaneous shift to renewables. The carbon intensity of the power sector has fallen from 481g of CO2 per kWh in 2010, to 181g of CO2 per kWh in 2020; while renewables’ share of power generation has risen from around 7% to over 40% in the same period.

China, meanwhile, has a population about 25 times the size of the UK and accounts for around 30% of global carbon emissions. However, its carbon usage per head of population is around half that of the United States and is also considerably lower than that of some other Western economies. While its fossil fuel usage is still growing, China has pledged that this will peak in 2030 and then decline, with a Net Zero target of 2060. It is backing this up with real action – already being the world’s largest producer of renewable energy. In 2020, it had solar power capacity of 254,355 megawatts, far ahead of the US in second at 75,572, and it had triple the wind power installations of any other country too. China hopes that a quarter of its energy will be produced from non-fossil fuel sources by 2030 – and many analysts believe it may hit that target early.

It is clear that the UK and China have made considerable progress towards their net zero commitments. Below, we review some of the key progress that has been made by both countries in several areas of the fight against climate change.

China’s transition towards a zero-carbon future is critical for the global climate effort. And it is a transition which offers an immense opportunity for UK business — Andrew Seaton, CBBC Chief Executive

The urban energy transition

Climate change is forcing cities and regions around the world to face up to an inevitable energy transition. Nowhere is the need for this more evident than in what might be described as ‘Energy Cities’, whose economic fabric has for decades relied heavily upon growth in conventional thermal energy sources such as coal and oil. They are often among the most carbon-intensive regions of the world, and where the greatest savings and reductions can be made. The UK and China have several regions of this nature, and the ability to facilitate their transition to more sustainable models of economic activity is a priority for both local and central governments.

An April 2021 report by global renewable energy community REN21 found that 106 cities in the UK had set renewable energy targets or policies, and many have begun taking concrete measures. For example, in August 2021, Oxford launched its first Zero Emission Zone, which applies a variable daily charge to vehicles within the zone between the hours of 7am-7pm, depending on the emissions the vehicle produces.

In China, 25 cities had renewable energy targets or policies, covering an impressive 38% of the urban population in China. Notable policies include specific targets for hydrogen use in transport and fuel cells in Foshan, and bans on the use of fossil fuels in buildings in Handan and Taiyuan.

The role of tech

Technology is emerging as a key enabler in the path to net zero, with the tech sector playing a critical role both in CO2 emissions and in mitigating the long-term impact of climate change. The internet of things, 5G networks, big data, AI and quantum computing all have a critical role to play in addressing the global climate emergency.

It is not only the algorithms and devices of tech giants that are crucial to achieving net zero, but also the companies themselves. The data centres needed to power cloud storage and apps like Facebook and WeChat consume 1% of global electricity demand, according to the International Energy Agency, accounting for 0.3% of all global CO2 emissions. In January 2021, Tencent announced that it would work towards achieving carbon neutrality by 2060 in line with the Chinese government, emphasising measures such as using liquid cooling technology to bring power usage effectiveness down to 1.06 (the closer to one, the higher the efficiency) at one of its data centres in Guangdong.

Electric vehicles and clean transportation

As the world moves towards cleaner transport, the pressure is on for manufacturers to come up with solutions, and this is perhaps most obvious in the automotive market. The challenges that will need to be overcome to meet ambitious government targets are numerous. These are not just limited to how to harness new energy sources affordably and practically, but also include requirements for new materials, adaptation of the supply chain, product life cycle and even new ownership models.

China is well-positioned to meet these challenges. It is already home to nearly 50% of the world’s electric passenger vehicles, driven by subsidies of around RMB 14,400 (£1,600) for buyers (although those subsidies are now being phased out). Sales of new energy vehicles from homegrown Chinese brands such as Nio, XPeng and BYD have rebounded quickly following a dip during the pandemic in 2020.

Green finance

The UK’s finance sector has been well-positioned to grasp the multiple opportunities that China’s dynamic financial services sector has thrown open in recent years, where there has been a surge in activity around models of green finance and its use as an enabler of green growth.

This year saw China become the global leader in the issuance of green bonds as it rolled out funding to support clean and renewable infrastructure projects. In the first three months of 2021, Chinese issuers sold $15.7 billion (£11.3 billion) of bonds, almost four times higher than a year earlier, and exceeding the approximately $15 billion of bonds sold in the US.

The UK financial sector, for its part, has played a world-leading role in developing such instruments from their inception and is well-placed to work together with Chinese partners in pursuing common goals. Budget 2021 laid out ambitious commitments, including two Green Gilt issuances in 2021 totalling a minimum of £15 billion, which will be used to finance clean transportation, renewable energy, energy efficiency, pollution prevention and control, living and natural resources, and climate change adaptation.

Nature-based solutions

The world is facing the twin threats of climate change and biodiversity loss, and one cannot be solved without addressing the other. Agriculture, forestry, and other land use account for nearly a quarter of global greenhouse gas emissions. They also support global food security and millions of jobs. As such, it’s crucial that countries include nature-based solutions in their climate plans, and for businesses to do the same.

Recent solutions have ranged from the adoption of the latest Chinese technologies in the protection of native species, sustainable cities that incorporate agriculture into their infrastructure, and climate-positive spirits distilled using green hydrogen power.

Click here to read CBBC’s report, Targeting Net Zero: The Role of UK-China Business

The post How close are the UK and China to reaching Net Zero? appeared first on Focus - China Britain Business Council.

As concern about climate change increases, a growing number of countries have pledged to reduce carbon emissions by implementing one of the most cost-effective solutions, an emissions trading system (ETS). So far, jurisdictions accounting for 55% of global GDP are using emissions trading.

China’s recently established national ETS has drawn tremendous attention worldwide. It is expected to serve as China’s primary tool to meet its ‘dual carbon’ targets of CO2 peaking before 2030 and carbon neutrality before 2060. The largest ETS globally, it accounts for 40% of China’s emissions and more than 10% of worldwide emissions, with the potential to double in size once industrial sectors are added to the already-covered energy sector. It is also the first nationwide ETS in a large developing country.

How does China’s ETS work?

• China’s national emissions trading system (ETS) gives each covered company the right to emit a certain amount of CO2.
• The amount is based on an emission intensity benchmark and the company’s level of output.
• If a company then emits less than its allocated allowance, it can sell the excess on the market.
• If more, it must purchase allowances or offsets from the market.
• Thus, companies are incentivised to reduce emissions from production activities.

How successful has China’s ETS been to date?

July 2022 saw the first anniversary of trading under China’s ETS, by which time 194 million tonnes of carbon emissions allowances worth over $1 billion had been traded on the market. The first compliance cycle saw over 99% compliance out of 2,162 power companies.

Despite these achievements, there are some key roadblocks. At the top of this list is data quality and integrity.

In July 2021, a power plant in Inner Mongolia was found to have falsified its emissions report by doctoring the date of carbon content testing of the coal it was burning, affecting at least 1 million tonnes of emissions allowances worth $7 million. Additional cases were also found and the Ministry of Ecology and Environment (MEE) issued a notice requiring provincial environment departments to comprehensively examine data quality. If data was found to be false, they should make adjustments and impose sanctions, stated the notice.

Some observers blamed the fraudulent behaviour on a December 2019 announcement of an extremely high default value for the carbon content of coal used in the first compliance cycle. This high value was intended to encourage companies to submit actual testing data rather than using the default. But it came too late to drive more testing for 2019, and instead tempted companies to risk faking test reports.

At a broader level, multiple factors have increased the risk of this type of event.

Firstly, sanctions: the fine for fraud, at $3,000 to $4,500, is insignificant compared to the potential gain from fraud. The boundaries of responsibility for data quality are insufficiently clear among different participants, including companies, verification agencies, testing agencies and consultancies.

Secondly, verification: provincial governments are responsible for selecting verification agencies and tend to prefer local ones. This can rule out more experienced and better qualified agencies from other provinces. Moreover, provincial governments have allocated limited funds for paying for verification, and there are not yet settled qualification requirements for verifiers.

Thirdly, monitoring and reporting: the regulations and guidelines are not sufficiently clear or detailed. For example, in detecting coal carbon content, there appears to be room for tampering with coal samples during collection and preparation.

Data quality and integrity have been high on the government’s agenda. Improved reporting guidelines were published in December 2021 and March 2022; verifiers found guilty of misconduct have been named and shamed; the extremely high default value of carbon content in coal has been replaced; and ETS legislation has been included in this year’s State Council legislative work plan, which would provide the stricter penalties for non-compliance that the ETS needs.

Improving data quality will be the main priority of the MEE in 2022 and 2023, including accelerating further amendments to monitoring, reporting and verification (MRV) guidelines; enhancing emissions data supervision by regular checks at national, provincial and municipal levels; increasing information disclosure; building a system to classify organisations according to their compliance history and supervising them accordingly; and increasing the penalties for violations.

China should look again at best practices in South Korea and the European Union’s ETS

These are big steps in the right direction. However, it appears that China’s priorities on zero-Covid and economic recovery may be complicating efforts to address integrity issues. For example, in view of these priorities, the MEE issued a notice in June 2022 to adjust Measurement, Reporting and Verification (MRV) requirements during the second compliance cycle. It stated that companies with three or more months of carbon content test results per year can use the average of these results to calculate emissions for any months that have no test results, instead of using a high default value under the previous requirements. This adjustment appears to leave room for companies to test during months when they are using coal with a lower carbon content.

A fundamental necessity for China’s National ETS is a robust MRV system. This needs to be supported by efficient IT systems, strong security measures, and effective sanctions for non-compliance. This will promote market participants’ confidence, sectoral expansion, and international support and credibility.

China is making progress in improving the integrity of its MRV system, but more work is urgently needed. The ETS law at the State Council level needs to be adopted; a strong accreditation system for verification agencies needs to be established to ensure consistent and high-quality verification across provinces; fees for verification should be sufficient to do a thorough job; and MRV regulations and guidelines need to be clearer and more detailed.

China should look again at MRV best practices in the European Union’s ETS and the MRV system in the South Korean ETS, the frontrunner in Asia. At the same time, the system’s integrity should be protected from being compromised by other policy drivers.

China is not alone in facing integrity issues in the early stages of an ETS. There were some major fraud cases during the initial phases of the EU ETS. However, lessons were learned quickly and effective controls were established. China must also overcome these challenges quickly to pave the way for its ETS to expand to the industrial sectors, achieve significant greenhouse gas emissions reductions, and realise its potential in helping the country achieve its dual carbon targets cost-effectively.

This article was originally published on China Dialogue under the Creative Commons BY NC ND licence.

Call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC’s market research services can help you build knowledge and understanding of the Chinese market prior to investment.

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As cities evolve, regenerate and modernise into futuristic high-rise and smart-enabled urban landscapes, it’s vital that developers and urban planners do not lose sight of the importance of preserving a city’s unique cultural heritage. Shougang Park in Beijing’s Shijingshan District (pictured in the lead image above) is a prime example of urban regeneration in action.

The UK and China maintain a high degree of complementarity and collaboration within the built environment sector. China’s rapid rise to become a world leader in green energy, the 14th Five Year Plan’s drive for sustained green growth and urbanisation, as well as China’s climate change commitments – notably its recent 2060 Net Zero target goal – offer UK companies opportunities within the environmental, infrastructure, and energy sectors. UK companies are highly respected in the Chinese construction sector and offer a wide range of expertise in priority areas, including the design and construction of green buildings, urban renewal programmes, green finance, low-carbon design, and eco-city development.

The UK’s strategy for carbon neutrality in the urban environment is focused on:

• Industrial decarbonisation: Construction of greener buildings, including industrial factories, office buildings, and domestic homes; developing advanced R&D in carbon capture, usage, and storage; and an overall net reduction of carbon footprint throughout the ecosystem.
• Renewable energy: Adopting cleaner nuclear energy and pursuing advances in materials for power generation.
• Clean transportation: Accelerating the transition towards zero-emission vehicles, low carbon charging infrastructure, R&D in clean Hydrogen fuel cell technologies and alternative biofuels.

CBBC, together with the UK’s energy, environment and infrastructure sector, which includes Aedas, Arup, Atkins, BRE, Foster + Partners, Savills, Mott MacDonald, RIBA, Wood, Zaha Hadid and ZEDfactory – are champions of sustainable collaboration in this area.

CBBC’s partnerships and programmes with national and regional government, free trade zones, business parks, new cities and technological development clusters continue to offer opportunities for UK companies to plug into key projects and share their experience and track record in regenerating and shaping urban landscapes.

Several key Chinese landmarks and infrastructure projects carry the hallmark of UK excellence in design and construction whether you are admiring the Guangzhou Tower or travelling through either of Beijing’s international airports.

How the UK is supporting sustainable development throughout China’s economic development zones (EDZs)

China continues to accelerate the development of forward-thinking policies across the business environment to attract businesses that deploy green and zero-carbon methods. This is not only applicable to inward investment targets for zones, but also draws in expertise from the UK to ensure the development of low carbon and green solutions at the heart of their concept.

ZEDfactory has, at the project design phase, provided zero carbon and green architectural and product design solutions to a growing portfolio of clients in China, including the Datong Industrial Park, the Qinglingtan Industrial Park, and the Jingdezhen Wentao Cultural Exchange Centre, conceptualising solutions that ensure the workspaces and surrounding areas are cool and well air-conditioned during the hot summer months.

This has included orienting buildings in a way that reduces direct exposure to the sun and installation of photovoltaic hoods and roofs to help with ventilation. Other proposed solutions have included building parking lots designed to be inclusive for photovoltaic vehicles and bicycles, using breathable insulation on the walls, installing low-speed cooling fans, and integrating a smart natural ventilation system, A++ rated equipment and LED lighting.

UK companies leading innovations in green leisure and lifestyle

BREEAM is the world’s foremost and most widely applied environmental assessment method and rating system for buildings, with close to 600,000 buildings certified with BREEAM assessment ratings and over 2,310,000 registered for assessment since it was first launched by BRE in 1990.

As a globally recognised third-party certification, BREEAM not only encourages and supports the sustainable improvement of buildings but also helps investors understand their asset conditions and improve the resilience of assets in a more efficient way. At present, BREEAM certification has been applied to thousands of assets in several countries to benchmark, improve and certify its performance, and to demonstrate to the public the high standard of environmental and social governance of its enterprises. In China, high profile projects have included Club Med Joyview Qiandao Lake Resort and Ikea’s Jing’an Store. Ikea also decided to use the BREEAM sustainable building certification to advance the company’s efforts in championing sustainability, setting the following goals for the construction of their Jing’an Store to meet the BREEAM standard.

For example, by adopting BREEAM at the heart of its construction, the Club Med Joyview Qiandao Lake Resort has maximised the preservation of the site’s ecological characteristics while maintaining synergy between nature, architecture, and people.

Making an impact through internationally recognised education and qualifications

China has a rich talent pool of architects, and the Royal Institute of British Architects and the Chartered Institute of Building ensure that they have access to world-class professional development from the UK and enhanced career opportunities.

The Royal Institute of British Architects (RIBA) recently launched its International Talents Hub and is pursuing a comprehensive international strategic cooperation with the Lin Gang Special New Area in Shanghai: enriching partnerships that they have been developing across China; opening access to opportunities for aspiring architects; and aligning with China’s infrastructure and regional development policy goals.

Furthering the UK-China partnership

These examples highlight the UK’s track record as China’s long-term partner and highlight why our respective countries should continue to collaborate on regenerating urban landscapes; enhancing low carbon construction in the built environment; advancing green manufacturing; adopting renewable energy; and enabling access to first-class professional qualifications.

For further case studies and insights, please visit the links to access ‘In The Zone’ and ‘Targeting Net Zero’. These two reports present the role of UK-China business working in tandem to complement each other’s competitive advantages.

Whether you are a British or Chinese company working in the built environment sector, or an ETDZ seeking further collaboration with the UK, please contact our Industrial Economy sector leads Mark Xu (China) and James Brodie (UK).

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Rising energy costs are probably one of the most pressing issues in current UK politics. And while the spike in electricity and heating bills is probably temporary, electricity prices might well play a much larger role in economic growth in the coming years and decades. 

The main reason for this is climate change and the global race for net zero targets and technologies. A little-known feature of the transition from fossil fuels to renewable energies and carbon neutral industries is that a lot of the changes will require more, not less electricity. 

Consequently, cheap power might well be the most important variable determining not only the success of a clean energy transition, but also which countries are best placed to benefit from the opportunities of the net zero economy. 

This brief looks at the importance of electricity for businesses in the coming decades, in particular focusing on the prospects in both China and the UK. 

Background 

The net zero goals that were adopted at last year’s COP26 Summit in Glasgow will have far-reaching consequences, the most crucial of which might well be the growing importance of electricity costs for businesses. 

Take the steel industry for instance. Reducing carbon emissions – for example by switching from blast furnaces (burning iron ore) to environmentally friendlier electric arc furnaces (which use scrap metal) – would require up to five times the amount of electricity currently used. 

According to a study by McKinsey, electricity demand in the UK could jump from the current 300 terawatt hours to 590 terawatt hours. So, while overall energy consumption would drop by 34%, electricity consumption could rise by a staggering 97%. The International Energy Agency (IEA) comes to a similar conclusion, predicting that international industrial electricity consumption will more than double between 2020 and 2050.

In a globalised world, this also means that electricity costs will be a key factor for determining where green technologies and businesses can thrive – and where they can’t. In a world where China is seen as a ‘systemic competitor’ – according to the now widely accepted notion put forward in last year’s Integrated Review — the key metric could be electrification rather than computerisation. 

China’s rise and the role of cheap electricity 

Looking back at four decades of Reform and Opening Up, the ability to provide cheap electricity to businesses and households has been one of the major reasons for China’s rapid economic rise. According to the World Bank’s 2020 Ease of Doing Business report, electricity costs as a proportion of GDP per capita were almost zero. 

Based on one estimate, Chinese electricity costs for businesses in December 2021 were £0.078 per kWh – nearly three times less than in the UK, where the cost for the same amount of electricity was £0.216. Unsurprisingly, China has emerged as a global leader not just for attracting power-intensive industries, such as aluminium, but also green technologies like EVs and renewable energies. Domestically, China is set to sell six million EVs this year, roughly the same number sold last year … worldwide.

Average electricity costs for businesses in December 2021 (£/kWh)

China has also emerged as one of the world’s largest investors in green energy. Last year, its investment in green energy projects accounted for over 30% of global spending on renewable energy sources. By comparison, both Europe and the US spent far less, according to the International Energy Agency.

But despite being a poster child for renewable energy and still having one of the lowest electricity costs among major economies, China too is worried about the increasing dependency on cheap power. As Peng Wensheng of China International Capital Corporation (CICC) – a Chinese investment financial services company – recently wrote in Caixin, the energy crisis in Europe, and especially in its industrial powerhouse Germany, has underscored the importance of stable prices for China’s own manufacturing sector.

To be fair, Chinese electricity prices have remained remarkably stable compared to Europe. Prices for businesses in Beijing were around £0.099/kWh, only 27% higher than the national average from last December, according to data aggregator CEIC. 

China’s energy imports are also more diversified than Europe’s. Australia, China’s largest source of natural gas, only accounted for 25% of its external supply in 2021; Russia for only 5%. Europe, on the other hand, imported nearly a third of its gas from Russia. 

But even so, China faces its own dilemmas. First of all, Beijing also wants to achieve net zero. In a televised speech at the UN General Assembly in 2020, Chinese President Xi Jinping declared that China wants to reach a peak in greenhouse gas emissions by 2030 and carbon neutrality by 2060. These ‘double targets’ require a fundamental transformation in the country’s energy mix. 

In 2020, 64% of the country’s electricity still came from coal-firing plants. But that is not all. The second largest source – hydropower, accounting for roughly 17% of China’s power generation in 2020 – has proven to be problematic, too. Hotter, drier summers and weaker rainfall have forced hydropower stations to curb output, leading to several power cuts in southern and central China. 

Low water levels might also affect nuclear power plants — another green energy source. These plants rely on access to fresh water to cool their reactors. But with water getting scarcer during the summer months, it’s likely that they will also need to be shut down temporarily. France, for example, had to halt several reactors due to the current high temperature in adjacent rivers. China, too, wants to expand its nuclear power sector with at least three reactors planned near crucial waterways in southern China. But with the consequences of climate change becoming ever more apparent, these plans might have to be revised.

Sources of electricity in China (2019)

Additionally, China has undertaken several steps to reform its electricity pricing system which, in the short term, could increase the cost of electricity. Obviously, the main objective of the reform – which aims to replace the current fixed tariff-based system with a market-driven one – is to make energy costs more responsive to fluctuation in demand and to create incentives to save electricity and invest in energy-saving technologies. It also wants to make polluting energy sources such as coal more costly compared to renewable alternatives such as wind and solar. 

While the reform is both necessary and well-intended, it could pose a risk to China’s own net-zero timetable. The dilemma between market driven electricity prices and the growing demand for cheap and reliable electricity might force policy makers to make difficult choices. 

The CBBC View 

As the consequences of climate change become clear, the need to provide stable and affordable electricity will be a major challenge for policymakers around the globe. Countries like China, that have managed to attract businesses with cheap electricity costs, face similar challenges as those with more expensive costs. 

Some effects of global warming, such as hotter and drier summers, have also exposed the vulnerabilities of power sources relying on sufficient water supply, notably hydro and nuclear power. Expanding water-neutral renewable energy sources and expanding grid and storage technologies which allow electricity to be delivered across long distances will be one of the top priorities for governments with large industries. 

Cheap electricity has helped China become a leader in the expansion of renewable energies and green technologies, but the extreme reliance on coal and water power poses its own risks for the country’s race towards net zero. Fixing these problems will be crucial, not just for the green transformation of the Chinese economy, but also for the chance for other industrialised economies to meet their own targets.

If you are a British company working in the energy sector, call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC’s market research and analysis services could help your business thrive in China.

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China — as the world’s second-largest economy — will play a crucial role in the negotiations. The UK and Chinese governments have set themselves ambitious targets to reach “net zero” by 2050 and 2060 respectively. 

With less than two months to go before the critical climate change conference, COP26 President-Designate (and British MP) Alok Sharma recently completed a series of meetings with Special Representative for Climate Change Affairs of China, Xie Zhenhua, in Tianjin, emphasising the need to take urgent action to keep the global rise in temperature at or below 1.5℃. They discussed President Xi Jinping’s commitment to achieving peak emissions before 2030 and reducing the country’s use of coal, as well as how China can build on its position as the largest investor in renewable energy and the largest domestic market for zero-emission vehicles. 

But what concrete steps have both countries taken to achieve this in the run-up to COP26? As an ongoing CBBC webinar series explores, actions taken fall into a number of categories, including urban energy transition and green finance.

The urban energy transition

Climate change is forcing cities and regions around the world to face up to an inevitable energy transition. Nowhere is the need for this more evident than in what might be described as ‘Energy Cities’, whose economic fabric has for decades relied heavily upon growth in conventional thermal energy sources such as coal and oil. They are often among the most carbon-intensive regions of the world, and where the greatest savings and reductions can be made. The UK and China have several regions of this nature, and the ability to facilitate their transition to more sustainable models of economic activity is a priority for both local and central government.

An April 2021 report by global renewable energy community REN21 found that 106 cities in the UK had set renewable energy targets or policies, and many have begun taking concrete measures. For example, in August 2021, Oxford launched its first Zero Emission Zone, which applies a variable daily charge to vehicles within the zone between the hours of 7am-7pm, depending on the emissions the vehicle produces.

In China, 25 cities had renewable energy targets or policies, covering an impressive 38% of the urban population in China. Notable policies include specific targets for hydrogen use in transport and fuel cells in Foshan, and bans on the use of fossil fuels in buildings in Handan and Taiyuan.

The role of tech

Technology is emerging as a key enabler in the path to net zero, with the tech sector playing a critical role both in CO2 emissions and in mitigating the long-term impact of climate change. The internet of things, 5G networks, big data, AI and quantum computing all have a critical role to play in addressing the global climate emergency.

It is not only the algorithms and devices of tech giants that are crucial to achieving net zero, but also the companies themselves. The data centres needed to power cloud storage and apps like Facebook and WeChat consume 1% of global electricity demand, according to the International Energy Agency, accounting for 0.3% of all global CO2 emissions. In January 2021, Tencent announced that it would work towards achieving carbon neutrality by 2060 in line with the Chinese government, emphasising measures such as using liquid cooling technology to bring power usage effectiveness down to 1.06 (the closer to one, the higher the efficiency) at one of its data centres in Guangdong.

The data centres needed to power cloud storage and apps like Facebook and WeChat consume 1% of global electricity demand, according to the International Energy Agency, accounting for 0.3% of all global CO2 emissions

Electric vehicles and clean transportation

As the world moves towards cleaner transport, the pressure is on for manufacturers to come up with solutions, and this is perhaps most obvious in the automotive market. The challenges that will need to be overcome to meet ambitious government targets are numerous. These are not just limited to how to harness new energy sources affordably and practically, but also include requirements for new materials, adaptation of the supply chain, product life cycle and even new ownership models.

China is well-positioned to meet these challenges. It is already home to nearly 50% of the world’s electric passenger vehicles, driven by subsidies of around RMB 14,400 (£1,600) for buyers (although those subsidies are set to be phased out by 2022). Sales of new energy vehicles from homegrown Chinese brands such as Nio, XPeng and BYD have rebounded quickly following a dip during the pandemic in 2020.

Green finance

The UK’s finance sector has been well-positioned to grasp the multiple opportunities that China’s dynamic financial services sector has thrown open in recent years, where there has been a surge in activity around models of green finance and its use as an enabler of green growth.

This year saw China become the global leader in the issuance of green bonds as it rolled out funding to support clean and renewable infrastructure projects. In the first three months of 2021, Chinese issuers sold $15.7 billion (£11.3 billion) of bonds, almost four times higher than a year earlier, and exceeding the approximately $15 billion of bonds sold in the US.

The UK financial sector, for its part, has played a world leading role in developing such instruments from their inception, and is well placed to work together with Chinese partners in pursing common goals. Budget 2021 laid out ambitions commitments, including two Green Gilt issuances in 2021 totalling a minimum of £15 billion, which will be used to finance clean transportation, renewable energy, energy efficiency, pollution prevention and control, living and natural resources, and climate change adaptation.

Nature-based solutions

The world is facing the twin threats of climate change and biodiversity loss, and one cannot be solved without addressing the other. Agriculture, forestry, and other land use account for nearly a quarter of global greenhouse gas emissions. They also support global food security and millions of jobs. As such, it’s crucial that countries include nature-based solutions in their climate plans, and for businesses to do the same.

Recent solutions have ranged from the adoption of the latest Chinese technologies in the protection of native species, sustainable cities that incorporate agriculture into their infrastructure, and climate-positive spirits distilled using green hydrogen power.

Targeting Net Zero Webinar Series

CBBC is delighted to present a webinar series in the run-up to COP26, exploring the role that UK and Chinese businesses can play in support of carbon neutrality targets, with a particular focus on multilateral cooperation.

The webinar series is ongoing throughout September and October, with the next session, Adaptation and Resilience: UK-China Tech Collaboration and the Path to Net Zero, taking place on 22 September.

Click here to find out more about the webinars and to register to attend. 

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