Joint efforts seen as best way forward

Updated: 2013-10-18 08:54

By Cecily Liu and Zhang Chunyan (China Daily Europe)

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 Joint efforts seen as best way forward

Ed Davey says Chinese companies face no restrictions to invest in the UK's nuclear power industry even as majority investors. Provided to China Daily

UK keen on Chinese investment in nuclear, offshore wind and other energy sectors, says Minister

Britain's energy and climate change secretary Ed Davey sees great potential for cooperation between China and the UK in nuclear, offshore wind energy, pollution control and other energy sectors, and says no political barriers should come in the way.

During a recent weeklong visit to China, Davey signed a memorandum of understanding on offshore wind power with Wu Xinxiong, head of China's National Energy Administration. The agreement is the first of its kind China has signed with another country.

Davey also held talks with several Chinese nuclear power companies on potential partnerships, including State Nuclear Power Technology Corporation, China National Nuclear Corporation and China Guangdong Nuclear Power Corporation.

"What was clear from all our meeting is the huge areas we are already cooperating and the potential for even greater partnership, in terms of our governments and our businesses," Davey says.

Indeed cooperation between the two countries on energy has blossomed in recent years.

Notable inward Chinese investments include China Investment Corporation's purchase of an 8.68 percent stake in Thames Water last year and the Chinese billionaire Li Ka-shing's Cheung Kong Infrastructure Holdings' consortium buying Northumbrian Water Group in 2011.

But Chinese companies' interest in the UK's nuclear power energy sector is controversial and it has been reported that the British government has security concerns about Chinese companies taking majority control in British nuclear projects.

CGN is in talks to share costs of the French company EDF's planned power station at Hinkley Point, in Southwest England, which has an estimate cost of 14 billion pounds ($22 billion).

The Financial Times reported that CGN's request to have greater operational control of the project has raised national security concerns from the British government.

Mark Pritchard, an MP, who is also a member of the national security committee, says Chinese companies should take only a "minor" role in sensitive sectors of the economy such as energy, the FT reported.

But Davey says Chinese companies face no restrictions to invest in the UK's nuclear power industry even as majority investors in projects.

"Britain is the most open economy in the world, and that goes for our energy markets as well. So there is absolutely no reason why Chinese companies can't enter our markets. I couldn't be clearer than that."

Pritchard's views do not represent those of the British government, he says, because he does not hold any governmental office.

Davey says that the British government will have no objection to whatever commercial arrangements CGN and EDF decide on, even if CGN becomes the majority partner in the consortium.

"Ultimately these are commercial matters, and in our energy market, which is very much private, the government isn't able to tell companies how to manage relationships with other companies. So it will be a decision between EDF and CGN, and (whatever) they decide to do, the government doesn't have any objections," Davey says.

At the same time, Davey says that he is impressed by China's progress in nuclear power. "We recognize the strong credentials of the Chinese nuclear industry and its established track record of delivering safe nuclear power over the past 30 years," he says.

British and Chinese companies' cooperation should not be limited to the UK and China, but should be extended to third world markets.

However, China does not yet have any investment in the UK's nuclear industry. Last year China National Nuclear Corporation and China Guangdong Nuclear Power Corporation bid in two separate consortiums against each other for a stake in the UK nuclear project Horizon.

But both CNNC and CGNPC later withdrew their interest, without public explanation of their motives.

China currently has 17 reactors in operation and 28. The UK currently has 16 nuclear reactors generating 18 percent of its electricity.

As all but one of these will be retired by 2023, the country is under great pressure to attract investment for its next generation of nuclear power.

Davey says he is excited about the potential China and the UK can achieve on offshore wind, and hopes the newly signed agreement will help remove the technological and market barriers for both countries to accelerate wind power development.

Cooperation could involve both technological sharing and financial investment, he says. Both countries have also agreed to cooperate more closely in their policy development, technology transfer, and personnel training for offshore wind energy.

China is the world's third largest offshore wind power installer after the UK and Denmark, but its target to increase offshore wind capacity to 30 gigawatt by 2020 will make it the largest global offshore wind market.

The UK is also increasingly growing its reliance on offshore wind energy. The country has more than 1,000 turbines with a combined capacity of about 3.6-gigawatt.

According to the government, the industry will require 7 billion pounds of investment by 2020, which opens up more opportunities for Chinese investment.

"Britain at the moment is the world's leader in offshore wind power. However, it's quite likely that China may end up overtaking us," Davey says.

"I think we can both work together, learning and sharing with each other the challenges of putting huge wind turbines in the sea."

He says he is impressed by the progress China has already made in some renewable energy sectors, solar being an example.

"I noticed, in renewable energies, when the Chinese government and Chinese companies and Chinese people put their mind to it, they can do things no other country can do.

"Thanks to Chinese production and economies of scale, the cost of solar power has dramatically come down. I think that's one of China's green gifts to the world. I think you could see similar things in offshore wind energy as well."

During his visit to China, Davey spent some time in Chongqing and Shanghai, speaking to government representatives and businesses about bilateral cooperation in green buildings, carbon trading, and strategies to tackle climate change.

In Chongqing, Davey visited an urban planning exhibition to find out about the city's development. He also toured a new green technology building, which had inputs from British engineering consultancy Arup and is rated gold by the green building standard LEED.

Davey says cooperation between the UK and China on energy and green technology all fit into the context of the urgency to address global climate change for both countries.

"Increasingly we see the links between climate change and the environment more generally, particularly on things like air pollution."

Davey says that he is impressed by the way the Chinese government is committed to tackling climate change and ensuring economic growth and better living standards for its citizens.

Davey also says he shared with his Chinese hosts during the visit Britain's historical experiences in tackling air pollution, a problem China now faces.

The Chinese government is right to implement policies to encourage the use of public transport and reduce coal use in tacking air pollution, he says.

"The Chinese government is doing a lot of the right things. It is investing heavily in public transport and making some very bold moves in reducing the amount of coal in electricity generation."

"We had a very good dialogue with the Chinese government and companies on the climate change agenda, on the link between air pollution and climate change, and I think that would be the backdrop for a very successful discussion on low-carbon technologies."

But he also says tackling air pollution and climate change is not just a matter of technology, because a "strong political will" is also required if investment and changes are to be made in the right areas.

"So the Chinese government is doing all the right things. We still have challenges, we still have air pollution in the UK, so we have to work together."

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(China Daily European Weekly 10/18/2013 page8)