Research and analysis

China: energy and climate cooperation

Published 25 June 2014

0.1 Summary

China’s top energy policy makers and 20 leading global energy companies worth over $400 billion agree unprecedented cooperation at UK-China Summit and Energy Dialogue. Raft of government and commercial deals signed including civil nuclear agreement and a £12 billion LNG deal between BP and CNOOC. Four UK Ministers push forward policy cooperation in nuclear, oil and gas, and renewables. UK becomes only the second country to have a Climate Change Joint Statement with China. UK engagement is driving wider climate change objectives to accelerate China’s shift away from coal and paving the way for low carbon alternatives.

0.2 Detail

On 18th June DECC Secretary of State Ed Davey hosted the third UK-China Energy Dialogue. This was part of a three day programme led by Ministers from DECC and BIS, to push forward bilateral energy policy and commercial cooperation.

Ambition was unprecedented from both sides. China sent 12 of their top Energy policy makers and 100 representatives from leading companies. This included the oil and gas giants, Sinopec, CNOOC and CNPC; the big three Chinese nuclear companies, CGN, CNNC, and SNPTC; and some of the largest renewable companies in the world.

In 11 Ministerial bilateral meetings with Chinese energy companies, DECC and BIS Ministers set out the UK stall for energy investment in the UK. The Ministers also pushed for increased policy cooperation on nuclear, gas, and renewables to accelerate China’s low carbon transition.

Energy and climate change featured heavily in the UK-China Summit. For the first time, the UK and China agreed a ground-breaking Joint Statement on Climate Change. We signed a civil nuclear fuel-cycle agreement that could be worth hundreds of millions of pounds to the UK supply chain over several years. BP and CNOOC signed a £12 billion agreement to supply China with 1.5 million tonnes of LNG per year, over 20 years starting in 2019. These agreements support China’s move away from coal to cleaner energy sources.

China’s Minister of Energy highlighted the ‘historic opportunity on energy’ to Secretary of State Ed Davey. He called for increased cooperation on LNG, reform of gas markets and renewables. Our Energy Dialogue agreed the strategy for our policy cooperation in the next year in a number of areas. Minister Greg Barker and the CEO of Trina Solar - the world’s fourth largest manufacturer of solar panels- made a strong commitment for cooperation to develop solar in Africa.

A visit to the London array – the world’s largest offshore wind farm - left a deep impression on China’s energy minister and CEOs from world-leading renewables companies. China restated that the UK is the ‘partner of choice on offshore wind’. China’s top offshore wind investors met UKTI and DECC to better understand the UK investment environment and with developers to explore specific deals. Ahead of the Summit, UK media highlighted energy’s prominence in our bilateral relationship with China. There was also positive Chinese media coverage of the Energy Dialogue and Climate Joint Statement. Reports of the event reached at least 17 million people.

0.3 Comment

The Summit and Energy Dialogue have pushed our energy relationship with China to new levels. Cooperation in this area is increasingly at the core of the bilateral relationship. Ed Davey’s visit later in the year will provide an opportunity to build on progress, with a focus on reaching the next stage of nuclear agreements. HMG’s extensive work to help accelerate China’s transition away from coal and towards renewables is helping to achieve our climate change objectives. It is also helping to create the conditions for significant commercial wins in nuclear, gas and renewables.

0.4 Disclaimer

The purpose of the FCO Country Update(s) for Business (”the Report”) prepared by UK Trade & Investment (UKTI) is to provide information and related comment to help recipients form their own judgments about making business decisions as to whether to invest or operate in a particular country. The Report’s contents were believed (at the time that the Report was prepared) to be reliable, but no representations or warranties, express or implied, are made or given by UKTI or its parent Departments (the Foreign and Commonwealth Office (FCO) and the Department for Business, Innovation and Skills (BIS)) as to the accuracy of the Report, its completeness or its suitability for any purpose. In particular, none of the Report’s contents should be construed as advice or solicitation to purchase or sell securities, commodities or any other form of financial instrument. No liability is accepted by UKTI, the FCO or BIS for any loss or damage (whether consequential or otherwise) which may arise out of or in connection with the Report.