The Green Transition: New energy at the net zero dept. and another Bric in the wall?
Weekly analysis of the shift towards a new economy.
Dear Reader,
Happy Friday. Jonny Ball here, associate editor of Spotlight, the New Statesman’s policy section. As ever, you can find our policy coverage here.
Welcome to the Green Transition, bringing you your weekly dose of net-zeronomics (what do you think? Have we coined a great new term here? Answers in the comments, please). And, of course, previous editions of the Green Transition can be found here.
It’s exciting times in the net zero world. For as of yesterday, we have a new Energy Security and Net Zero Secretary. It’s Claire Coutinho, the first of the 2019 intake of MPs to be promoted to the cabinet. The former investment banker, KPMG manager, and SpAd to one Rishi Sunak, replaces Grant Shapps (aka Michael Green), who is off to work his, er, magic at the Ministry of Defence. Megan Kenyon, Spotlight’s new sustainability reporter (who joined us from the Local Government Chronicle this week, welcome Megan!), tells us what we can expect from the new DESNZ secretary here.
Anyway, we wish Coutinho well. But today we’re looking beyond Westminster, with news from the Brics (that’s Brazil, Russia, India, China and South Africa, for those who didn’t know), and exclusive comments from the former Treasury Minister and Brics originator Jim O’Neill.
Enjoy!
Jonny Ball
All in all, it’s just another Bric in the wall
In 2001, when Chinese economic output was worth around $1.3tr (less than the UK’s GDP), the Goldman Sachs economist Jim O’Neill wrote a briefing note: Building Better Economic Brics. In it, he predicted the growing importance of emerging markets in Brazil, Russia, India and China (South Africa was added in later). Today, Chinese economic output is worth around $18tr, or about five and a half times UK GDP. Now, as China’s economy slows, India is outpacing it with phenomenal rates of growth (around 7.8 per cent last year).
In 2009, the Brics went from being a handy acronym to a formal organisation. Last week, they announced the admission of six new members: Iran, Saudi Arabia, Egypt, Ethiopia, Argentina, and the UAE. The move was heralded as “historic” by the Chinese premier Xi Jinping. Some even declared the beginnings of a “Brics world order”.
O’Neill, for one, is unconvinced. Speaking to Green Transition, he says: “I don't think [the Brics] have really achieved much in their first fourteen years as a political entity.” Nor is he optimistic about the expanded set of members: “I don't really see the purpose beyond symbolism”.
In their joint declaration, the Brics Plus (as they are now called) promised “multilateral cooperation” to ensure “a just, affordable and sustainable transition to a low carbon and low-emission economy”. Eyebrows were raised at the inclusion of Saudi Arabia and UAE in the new members’ list; the Brics Plus now encompasses forty-five per cent of the world’s oil production.
There’s little in concrete shared policy between the members – this isn’t a free trade agreement like Nafta, or a transnational common currency bloc like the eurozone, nor is it a military alliance like Nato. There’s no binding Cop21-style cross-governmental agreements on topics such as climate change, either. The choice of new members is odd too, the former Treasury minister adds, because they don’t share any common characteristics, other than all wanting to join.
But the Brics expansion does have consequences, even if they are symbolic. The US is consciously attempting to “decouple” its economy from China’s. O’Neill points me towards figures suggesting that “decoupling” is reducing US trade with China while upping trade with third countries, which themselves are trading more with China. This makes the trade adjustment less a “decouple” and more an increasingly polygamous arrangement. Part of that process began with Trump’s protectionist tariffs, but much centres around the big-ticket industrial strategy policies of the Biden administration, including the Inflation Reduction Act (IRA).
There’s just one problem: China currently owns the supply chain for the key green industries that the IRA subsidises to the tune of billions of dollars. Research shows that Beijing controls 53 per cent of the raw materials, 89 per cent of the components, and 70 per cent of the production and manufacturing capacity for solar. For wind energy, its share is 54 per cent, 56 per cent, and 58 per cent, respectively. Its control over the lithium-ion battery market (essential for EVs and more), has been estimated as high as 80 per cent, and China is now the world’s number one electric vehicle exporter.
If Brics expansion is partly about sometimes oil-rich nations placing their bets with the Chinese, even if initially only symbolically, then they could do worse than siding with the principal technological and financing leader for the coming green transition. This group will continue trading in fossil fuels for as long as they see fit – but when it comes to intensifying trade wars and geopolitical stand-offs, they’re less likely to side with the former US hegemon than ever before.
In Brief
Ella’s Law: Spotlight’s very own Harry Clarke-Ezzidio has this powerful profile interview coinciding with this week’s expansion of the Ultra-Low Emissions Zone across Greater London. Rosamund Kissi-Debrah is the prominent anti-air pollution campaigner whose daughter, Ella, became the first person in the world to have air pollution listed as her cause of death.
Ulez expanding… to Bogota: If you thought the Ultra-Low Emissions rules being applied right up to the Hertfordshire border was excessive, it’s now being trialled for rollout in Colombia (this isn’t the same scheme, obviously, just another version of a clean air/anti-pollution proposal). Sarah Dawood has this great explainer with exclusive comments from the mayor of the South American capital, Claudia López.
Summer’s over… if you want it: The dream is dead. The nights are drawing in. But we can still think on to next year’s summer heatwaves, which, Mansoor Soomro, a future of work scholar at Teesside University, tells us, will require new policies and interventions from employers. There’s even talk of maximum working temperatures – onwards, to June 2024!
The one that got away: Childcare insiders tell Megan Kenyon that Claire Coutinho, the UK’s new energy secretary “got it” when it came to her former brief. Another says that, given Coutinho’s positive engagement with the issues “there was hope she would be the one who stayed” after years of churn. Hopefully all good karma for the net zero portfolio.
Thank you for reading, and please send any news or comments to: jonathan.Ball@newstatesman.co.uk
See you next week.
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