Jack Richardson is the Policy Coordinator at the Conservative Environment Network.
With a bit of luck, 2021 could be the year that 2020 was supposed to be: the year Global Britain truly arrived. Our role in the world continues to be one of diplomatic, security, scientific, and climate leadership, all of which will no doubt be central to the much anticipated Integrated Review.
During a recent parliamentary debate on the review Tom Tugendhat, Foreign Affairs Committee Chair, highlighted China’s domination of the battery industry. It’s one example of how our climate and security objectives may conflict. The solution to this challenge lies in clean trade with our allies.
The 5G debate taught us a crucial lesson. We must be careful not to let an increasingly hostile authoritarian state with superpower ambitions dominate the supply chains of a critical emerging industry. With more countries following our lead in starting the multi-decade mission to build net zero economies, it will be critical to secure the supply chains of low carbon industries like electric cars and green energy.
Take the example of electric cars. The UK will phase out new petrol and diesel car sales by 2030, but although many British car companies are committed to going electric, including recently Jaguar Land Rover, as things stand much of the EV supply chain is based overseas, particularly in China. With a large domestic market, it dominates the world’s production of electric motors. Furthermore, over 60 per cent of the world’s critical minerals supply is also under China’s control, beating the runner-up, the US, by fivefold.
It’s an unavoidable challenge for which the UK and its allies need to come up with a solution. We can’t reject these technologies, that’d be like foregoing 5G ‘because China’s good at it’. They’ll be vital not just for keeping the costs of reaching net zero down (hydrogen cars are significantly more expensive than battery electric ones, for example) and the environment, but also for maintaining the UK’s globally significant advanced manufacturing industries and the jobs they support. The solution is to make sure we diversify the global supply chains for the key ingredients of a low-carbon economy.
This is undoubtedly already on the Prime Minister’s mind. His ten point plan for a green industrial revolution has helped drive investment in new green industries in Britain. But another proposal of his could provide the other part of the solution. In light of the 5G debate, there were reports of him wanting to promote a new D10 group of leading democracies (the current G7 members, plus South Korea, India, and Australia) for addressing vulnerable supply chains.
All of those countries are signatories to the Paris Agreement; eight out of ten have net zero targets while Australia may be on the verge of joining the club, too. The D10 presents a significant opportunity for coordinating liberal democracies around the common goals of combating climate change while securing supply chains for the necessary industries. The UK should work to ensure climate action and clean free trade are central components of any new D10 grouping.
More broadly, free trade must be used in the fight against climate change, to make the cost of net zero cheaper for consumers, support jobs in the green industries we’re best at here in the UK, and diversify our supply lines for the ones our friends excel in. It provides the dissemination of goods and services around the world, and is a root cause of the global prosperity we’ve witnessed in particular since 1945. If deployed right, it can bring economic muscle to implementing the Paris Agreement too.
One way to embed climate action in the D10 could be through border carbon adjustments (BCAs), which are set to be discussed at the G7 after being backed by the leaders of the US and the EU. BCAs could, for example, raise the price of importing emission-intensive Chinese steel, or emission-intensive lithium-ion batteries, while enabling D10-based companies in these sectors, which face high carbon prices, to compete on a level-playing field and develop cleaner alternatives without being undercut.
Meanwhile, away from the D10, the UK could throw its weight behind the Agreement on Climate Change, Trade and Sustainability (ACCTS), a multilateral trade deal which primarily aims to slash red tape on the trade in environmentally-friendly products and services, which is being led by New Zealand – the depository state for the CPTPP. Were major economies to sign on, it could put sustainability at the heart of global free trade and provide developing countries with a climate-friendly alternative to the debt colonialism of the CCP.
This is not a call for breaking all links with China – that’s impossible. In the environment sphere specially, we need constructive engagement on global issues like climate change and biodiversity loss, although that doesn’t mean turning a blind eye to human rights abuses. This is rather about diversifying supply chains and prioritising clean trade as part of the free trade deals we’re negotiating with our allies at the moment.
Through the D10 and ACCTS, the Prime Minister can bring together Global Britain’s key objectives of climate leadership, liberal democratic renewal, and free trade. We should use our presidency of the G7 to champion this clean trade agenda.