Why the UK reducing its climate diplomacy may not be all bad for green industry
This post first appeared on BusinessGreen.
The government’s Industrial Strategy consultation closed on Easter Monday. But before we had chance to draw breath, a snap election was called, moving the political agenda on again.
The future for industrial strategy
What will this mean for industrial strategy? If Theresa May remains prime minister there are strong indications it will remain a priority. In an interview on Radio Four’s Today programme, she said the government’s work on industrial strategy was top of her list of reasons that voters should trust the direction she is taking the country. Second, there is her vision of a ‘global Britain’, where trade brings jobs and prosperity to all parts of the UK; it depends on the Industrial Strategy leading to more productive UK businesses at home which are more competitive and can export more to international markets.
Whoever is in power on 9 June will have to weigh up not only productivity issues at home but also the way international markets are changing and how we access them. Two bits of information came to light recently that might signal our direction of travel.
Different directions, or two sides of the same coin?
The first was the Department for International Trade’s leaked speech notes which indicated the increased focus of British embassies on trade and, specifically, that they should spend less time on climate change diplomacy and the illegal wildlife trade. Second, a major study commissioned by the Foreign and Commonwealth Office into opportunities in the low carbon infrastructure market. At first glance they seem to point in different directions, reducing diplomatic resources on climate at the same time as identifying low carbon opportunities, but I would argue they can be seen as two sides of the same coin.
Before Green Alliance I worked at the FCO as a climate attaché, doing climate diplomacy work (ie what will be scaled down), and as a prosperity officer, building partnerships and trade relationships (which is targeted to be scaled up). I can understand why plans to refocus resources might cause concern but, based on my experience on climate at least, it seems like the right approach.
Business relationships are critical to deliver low carbon solutions
The FCO were pivotal in brokering a hugely important climate deal at Paris but the emphasis now has to move to delivery, at home and overseas, and that requires business relationships more than diplomatic ones. For developing countries which are building the low carbon infrastructure needed for their rapidly urbanising populations, public transport consultancies and urban planners are a lot more useful than foreign office diplomats versed in the ins and outs of UNFCCC negotiations. Climate diplomacy will continue to be important but we will fail to achieve our climate goals if we don’t mobilise the ‘animal instincts’ of business and investors to innovate and compete on the most efficient and effective ways of delivering low carbon solutions.
The critical factor for me, and one we should all keep a close eye on, is that FCO staff are focused on creating partnerships for the industries of the future. They need to be building trade relationships in low carbon energy, water, waste and resources. First, because they are the urgent infrastructure priorities of our partners, and how they will fulfil their Paris commitments, but also because they represent the growing markets we need to compete in.
Opportunities for the UK in the low carbon infrastructure market
Which brings me back to that second piece of information: the FCO study of low carbon infrastructure opportunities in emerging markets. It covered China and India of course, but also markets in South and South East Asia, Sub Saharan Africa and Latin America; it estimates they could be worth up to £16bn by 2030 to the UK. This is a significant sum, especially if we compare it to the UK’s £38bn trade deficit in 2015 (made up of £88bn surplus on services and a £126bn deficit on goods).
The report clearly shows businesses’ view of how the UK has built competitive advantage in infrastructure services. By grasping the nettle, and particularly by taking a market approach to generating investable propositions in low carbon energy, the UK has developed expertise everyone else wants to learn from. That reflects OECD analysis that an increasing proportion of trade deals include provisions for enhancing co-operation on environmental matters, up from 22 per cent to 67 per cent between 2007 and 2012. High environmental standards and policy leadership, far from being a disadvantage, are increasing the expertise our trading partners want to access.
And domestic delivery underpins trade success. The Committee on Climate Change has shown how to decarbonise our energy, transport, water and waste infrastructure cost effectively, and we should be looking for opportunities to share the expertise and experience we’ve gained with the rest of the world. Businesses get this. Green Alliance’s recent collection of insights from business leaders, academics and unions shows that the UK needs coherent, low carbon, resource efficient growth they can invest in.
The election may have changed the focus of the conversation for the time being, but I hope industrial strategy will still figure somewhere in the debate. Increasing our competitiveness, and bringing jobs to all parts of Britain, will depend on translating our reputation for climate change leadership in diplomacy into productive business activity, and the industrial strategy is the place to start.