The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
First, I join others in congratulating the noble Lord, Lord Teverson, on securing this debate this afternoon. We have had some excellent contributions from all parts of the House, highlighting what is one of the most important issues of our time. Of course, while we presently find ourselves in the middle of a health pandemic which has to be our top priority, we also need to give this issue all the attention that it so dearly warrants. The Government absolutely accept and are determined that the UK will play its part in upholding the Paris Agreement and driving down our greenhouse gas emissions. Despite the considerable challenges we face, we can leverage our strengths to deliver a better and greener economy and go further and faster to accelerate the transition to net zero greenhouse gas emissions by 2050.
We need look only at what has happened with coal and wind in the last few decades, or the political consensus that has formed around reducing our emissions, to see that this is something that the whole nation is embracing. We were the first major economy in the world to set a legally binding target to reach net zero across our economy by 2050. As many noble Lords have pointed out, today marks another important step forward as we lay legislation for the UK’s sixth carbon budget, proposing a target which would reduce greenhouse gas emissions by 78% by 2035 compared to 1990 levels.
To respond directly to the challenge from the noble Baroness, Lady Bennett of Manor Castle, on where the UK is leading on action, I am sure she has noticed that we are achieving extremely rapid progress on decarbonisation. We have shown that it is possible alongside a thriving economy. Our emissions are down by almost 44% across the past 30 years, and our economy has grown by 78% in the same period.
Under the Climate Change Act 2008, we have made significant progress in meeting our climate targets. We confidently met our first two carbon budgets and we are projected to meet the third out to 2022. We exceeded the required emissions reduction in the first carbon budget by 1.2% and in the second by nearly 14%. Now is the time to double down and decrease our emissions further and faster.
To do this, the Prime Minister has set out his 10-point plan for the UK to lead the world into a new green industrial revolution. This innovative programme sets out ambitious policies backed by £12 billion of government investment. The plan will support up to 250,000 highly skilled green jobs across the UK, accelerate our path to achieving net zero by 2050 and lay the foundations for building back greener.
The 10-point plan will also help to develop the cutting-edge technologies that will be needed to drive down emissions in industry across the UK, such as through our significant investment into hydrogen and carbon capture technologies through our £1 billion Net Zero Innovation Portfolio. This will provide support to sectors which are some of the toughest to decarbonise. The Government recognise the significant advantages that the net-zero transition can bring in addition to the essential benefit of ending our contribution to global warming.
In response to my noble friend Lady Altmann and the noble Lord, Lord Oates, I can say that ahead of COP 26 we will bring forward an ambitious net-zero strategy to cut emissions and create new jobs and industries across the whole country. This will go further and faster towards building a stronger, more resilient future and protecting our planet for this generation and those to come. It will build on today’s announcement on the level of carbon budget 6 and ambitious plans across key sectors of the economy, including the energy White Paper, the transport decarbonisation plan and the heat and buildings strategy. The strategy will set out more clearly our plans and proposals for delivering the historic commitments that we have made.
The noble Lords, Lord Teverson, Lord Shipley and Lord Oates, and my noble friend Lady Altmann, all drew attention to the importance of government working closely with local government to help deliver net zero. It is fair to point out that a significant amount of support has already been made available to councils to act on climate change, from heat networks to cycle paths to flood defences. Councils are uniquely positioned to align local needs, local opportunities and local resources to deliver strategic intervention at all scales.
For those who recognise the urgency of the climate crisis, a great deal of funding is available. In the current financial year, the Government have provided several targeted funding schemes, including the £1 billion public sector decarbonisation fund. BEIS and the Government more widely also work with local authorities across a broad range of net-zero policies. For many of these policies, such as heat networks, EV charging and retrofit, local authorities are some of our key delivery partners. As part of developing these projects, BEIS will consult stakeholders either formally or informally, and ideally both. Local authorities and community groups are important stakeholders and, as such, we have a local energy contact group specifically set up to discuss policy with them. Furthermore, the BEIS local energy programme, set up in 2017, provides capacity and capability support to local authorities through the five local energy hubs.
In his introduction, the noble Lord, Lord Teverson, asked whether the Government would consider a road map for working with local authorities towards net zero. The net-zero strategy will indeed look at this issue further. It will specifically include a focus on place-based approaches and we will continue to stay closely engaged with local partners through forums such as the ADEPT Energy Working Group and the Core Cities sustainability sub-group, and of course the LGA itself, as we develop this strategy.
Further on local authorities, my noble friend Lady Altmann and the noble Lord, Lord Shipley, spoke about plans to decarbonise local authority pension fund assets. The Ministry of Housing, Communities and Local Government will consult later this year on requiring the Local Government Pension Scheme fund to manage and to report on climate risks. On private sector pensions, Parliament has now approved the Pension Schemes Act to allow us to require more effective governance of climate risk and disclosure in line with the task force on climate-related financial disclosures.
The noble Lord, Lord Whitty, asked about plans for integrating policy across Whitehall. He was right to point out that it is a considerable challenge; I think the noble Lord, Lord Oates, also highlighted some of the difficulties that we face in working with some other government departments. The Government aim to take a whole-systems approach to reaching net zero by 2050. This means considering policy areas and economic sectors as part of an interconnected system where changes to one area directly or indirectly impact others.
The National Audit Office has acknowledged that there has been significant progress on net-zero governance and that this reflects the high priority the Government give to the issue. That includes two Cabinet committees dedicated to climate change—one focused on strategy, chaired by the Prime Minister, and the other on implementation, chaired by the president of COP 26.
My noble friend Lord Caithness, and the noble Lords, Lord Grantchester and Lord Redesdale, all asked whether there should be a dedicated Minister for the climate and biodiversity. It is not unusual for government agendas to span many departments. The answer is rarely to move it all into the Cabinet Office or to make all departments have similar responsibilities. The Prime Minister has shown his commitment to net zero by taking the chair of the CAS. The Cabinet committees hold Secretaries of State to collective responsibility for delivery. The focus on net zero is borne out by results of government action, including of course the 10-point plan.
My noble friend Lord Caithness asked how often these committees have met. I am afraid I can tell my noble friend only that Cabinet committees meet as and when required. He will be aware from his time that there is a long-standing convention that the frequency, attendance list and minutes of Cabinet and its committees are not made public. The release of that information could undermine the principle of collective agreement and the ability of Ministers to openly debate policy in a confidential manner.
The noble Lords, Lord Teverson and Lord Grantchester, and the noble Baroness, Lady Hayman, all asked for an update on the net-zero task force announced through the 10-point plan. I can tell noble Lords that a further announcement will be made in due course.
The noble Baroness, Lady Sheehan, and the noble Lords, Lord Stunell and Lord Shipley, asked, correctly, about plans to decarbonise the built environment in the light of developments that noble Lords will be aware of regarding the green homes grant voucher scheme. I can tell the Committee that we are firmly committed to decarbonising the UK’s homes and buildings, and that emissions from public buildings have come down by 42% since 1990. As has been stated, meeting our net-zero target will require virtually all heated buildings to be decarbonised.
The Deputy Chairman of Committees (Baroness Barker) (LD)
My Lords, there is a Division in the Chamber. The Committee will adjourn for five minutes.
The Deputy Chairman of Committees (Baroness Barker) (LD)
My Lords, the Grand Committee is resumed. Lord Callanan?
Lord Callanan (Con)
The Government are planning to publish a heat and buildings strategy in due course. This will set out the immediate actions that we will take to reduce emissions from buildings. These actions will include the deployment of energy-efficiency measures and low-carbon heating, as part of an ambitious programme of work required to enable key strategic decisions on how we achieve the mass transition to low-carbon heat, setting us on a path to decarbonising all homes and buildings.
The green homes grant voucher scheme, referred to by many noble Lords, made significant strides—although not enough—with over 49,000 vouchers worth £208 million issued. To ensure that we continue to deliver on our net-zero ambitions, the Government have expanded their commitment to the green homes grant local authority delivery scheme and the social housing decarbonisation fund, with an extra £300 million of additional funding delivered across these schemes in 2021-22. That will bring the total spending on energy- efficiency measures to £1.3 billion, exceeding the Government’s manifesto commitment of £1 billion.
The noble Lord, Lord Shipley, asked about the decarbonising of the transport system. The Government recognise the urgency of stepping up the pace of progress to ensure that the transport sector plays its part in supporting the delivery of the UK’s emissions reduction targets. We have recently announced that the UK is embarking on a comprehensive transport decarbonisation plan, which will be a bold and ambitious programme of co-ordinated action needed to end the UK’s transport greenhouse gas emissions by 2050 and at the same time ensure that the transport sector plays its part in delivering our legally binding carbon budgets. The plan will think in terms not only of modes of transport but of technology and places. Part 1 of this plan was published in March 2020, with part 2, containing policies and proposals, expected shortly.
The noble Lord, Lord Knight of Weymouth, described an aversion to green spending. The outcome of the 2020 spending review counters this impression: in order to ensure that net zero remained a priority within a one-year spending review, the Treasury made exceptions on measures that are critical to meeting net zero by providing some multiyear settlements. SR20 committed £12 billion to green measures, boosting the UK’s global leadership on green infrastructure and technologies, ahead of COP 26 next year.
The noble Baroness, Lady Sheehan, asked about the alignment between revenue and net zero. Government cannot simply spend its way to net zero, not only because bearing the cost alone is simply unaffordable for current and future taxpayers but because spending is often not the most effective way to reduce emissions. It also risks crowding out private investment in the green industries of tomorrow: for example, while the 10-point plan will mobilise £12 billion of government funding directly, it will potentially drive three times as much from the private sector to create and support up to 250,000 green jobs.
The noble Lord, Lord Grantchester, asked about the Treasury’s net-zero review. The Government have announced that the review report will be published in spring this year, instead of its originally intended target date of autumn 2020. In the meantime, Her Majesty’s Treasury published an interim report this autumn, which sets out our approach to the review and analysis, which will inform the final report.
The noble Lord, Lord Knight of Weymouth, asked about our plans for the public sector. I can tell him that phase 2 of the public sector decarbonisation scheme has now been launched and has a stronger focus on heat decarbonisation, as this is what we need to reduce direct emissions from public sector buildings. Phase 2 of the scheme supports the transition to low-carbon heating in public buildings by providing funding to replace end-of-life fossil fuel systems, such as gas boilers, with low-carbon heat sources. The funding can be used to deliver projects that combine low-carbon heating measures, such as heat pumps, with energy-efficiency measures, such as insulation and LED lighting. Phase 2 of the public sector decarbonisation scheme has now closed to applications, and those that we received are being assessed.
The noble Baroness, Lady Altmann, raised the interesting issue of the Government’s plans for bitcoin and other cryptocurrencies. As always, the Government stand ready to respond to emerging risks or changes in the market and will continue to monitor how cryptoassets are being used in the UK, specifically with regard to the emissions that they create. This is an important point, but it is also vital to consider this in the context of the UK’s success in decarbonising the power sector. Between 1990 and 2019, the sector saw a reduction of emissions of 71%.
The noble Lord, Lord Redesdale, made some good points and asked about the potential to include a requirement for companies that fall within streamlined energy and carbon reporting to include an outline of their net-zero plans. It is important to note that, for most organisations in scope, this will be the first time that they will be reporting this information in company reports on a mandatory basis. We will therefore keep under review whether to mandate other types of disclosures, such as those that address the net-zero target, as we continue to evaluate the impact of these regulations and how the new reporting practices are being embedded.
In response to points made by the noble Lord, Lord Lea of Crondall, I can say that the Government already publish estimates of historic and projected UK emissions annually. Later this year, we will publish a net-zero strategy that will consider what metrics are needed to monitor delivery of our emissions targets, and will take the noble Lord’s helpful suggestion into account.
The noble Lord, Lord Knight of Weymouth, asked how the Government could elicit the behaviour change necessary to meet net zero. Reaching net zero requires not only changes to our energy systems and substantial new low-carbon infrastructure, but shifts in how we, as individuals, travel, what we buy and how we use energy in our homes. In many areas, delivering net zero will require the uptake of new lower-carbon technologies, such as electric vehicles or heat pumps. The Government are supporting people to adapt to these new technologies, with initiatives such as Go Ultra Low and the Simple Energy Advice service. We are also exploring how we could go further and support individuals to make green choices, as part of the development of our net- zero strategy.
In response to the question from the noble Baroness, Lady Hayman, regarding the Climate Assembly UK, I can tell her that the right honourable Alok Sharma as BEIS Secretary of State spoke at the report launch and welcomed the report. Its findings will help to shape the work that the Government are doing over the next year in the run-up to COP 26 and as we develop our plans for reaching net-zero emissions by 2050.
In response to the points made by the noble Baroness, Lady Sheehan, I can say that the Government have committed to issuing their first sovereign green bond. Subject to market conditions, this will be done this summer. Reflecting our long-term commitment to the green finance sector, we intend to follow up with a further issuance in 2021 to start to build out a green gilt yield curve.
On how to finance local authorities, the UK Infrastructure Bank has £4 billion set aside for local authority lending at very favourable rates. Furthermore, the Government launched the Green Finance Institute in July 2019, alongside the City of London Corporation. The GFI’s overarching mission is to accelerate the domestic and global transition to a clean, resilient and environmentally sustainable economy through accelerating UK leadership in green finance. Since its inception, the GFI has progressed significantly with initiatives and coalitions established on the built environment, transport, supply chains, and using finance to deliver nature-based solutions.
The noble Baroness, Lady Altmann, asked what could be done to encourage sustainable investments. Our new and ambitious UK ETS came into force on 1 January and will promote cost-effective decarbonisation in industry, power and aviation, allowing businesses to cut carbon where it is cheapest to do so. It will help to mobilise the scale of capital investment necessary, deploy clean energy technologies and capture new trade opportunities on the back of the energy transition.
In response to the points made by the noble Baroness, Lady Bennett of Manor Castle, I can tell her that the Government are currently consulting on a bottle deposit return scheme for England, Wales and Northern Ireland. With regard to the UK shared prosperity fund, a point raised by the noble Baroness, Lady Sheehan, I can say that the 2020 spending review sets out the main strategic elements of the UK SPF in the heads of terms, and the Government will shortly publish a UK-wide investment framework later this year and confirm the multiyear spending profiles at the next spending review.
As we develop our plans for reaching net-zero emissions by 2050, we will of course continue to engage with local authorities, devolved Administrations, businesses and the public on the changes needed to develop our ambitions to reach net zero. I know that I can speak for my right honourable friend the Secretary of State when I say that significant work is under way to engage with stakeholders across society at pace to understand how the transition can best work for the whole country.
This year we find ourselves in the extremely privileged position of being both president of the G7 and host of COP 26, and we are determined to use both those key international moments to promote ambitious action to deliver the transformational change required by the Paris agreement. Ahead of COP 26, we will bring forward further bold proposals, including a net-zero strategy to cut emissions and create new jobs and industries across the whole country, going further and faster towards building a stronger, more resilient future and protecting our planet for this generation and those to come.