Net Zero Strategy and Heat and Buildings Strategy
(3 years, 1 month ago)
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The Minister of State, Department for Business, Energy and Industrial Strategy (Greg Hands)
With permission, Mr Speaker, I will make a statement on the net zero strategy and the heat and buildings strategy—but first, if I may, I will congratulate my right hon. Friend the Business Secretary and his wife Harriet on the birth of their daughter on Friday. I can report to the House that both mother and baby are healthy and doing well, as is the Secretary of State. I am sure that the whole House will join me in offering our congratulations. [Hon. Members: “Hear, hear.”]
The statement is all about future generations as well, because we know that we must act now on climate change. The activities of our economies, communities and societies are changing our environment. If we do not take action now, we will continue to see the worst effects of climate change.
We have already travelled a significant way down the path to net zero. Between 1990 and 2019, we grew our economy by 78% and cut our emissions by 44%, decarbonising faster than any other G7 country. Since 2010, the UK has quadrupled its renewable electricity generation and reduced carbon emissions in the power generation sector by some 70%. In the past year alone, we have published the Prime Minister’s 10-point plan for a green industrial revolution, the energy White Paper, the North sea transition deal, the industrial decarbonisation strategy, the transport decarbonisation plan, the hydrogen strategy and more. Earlier this month, we unveiled a landmark commitment to decarbonise the UK’s electricity system by 2035.
But there is still a substantial length of road to travel. We must continue to take decisive action if we are to meet our net zero goal, so today I am pleased to announce two major Government initiatives: the net zero strategy and the heat and buildings strategy. This is not just an environmental transition; it also represents an important economic change, echoing even the explosion in industry and exports in the first industrial revolution more than 250 years ago.
We will fully embrace this new, green industrial revolution, helping the UK to level up as we build back better and get to the front of the global race to go green. We need to capitalise on it to ensure that British industries and workers benefit. I can therefore announce that the strategy will support up to 440,000 jobs across sectors and across all parts of the UK in 2030. There will be more specialists in low-carbon fuels in Northern Ireland and low-carbon hydrogen in Sheffield, electric vehicle battery production in the north-east of England, engineers in Wales, green finance in London and offshore wind technicians in Scotland.
The strategy will harness the power of the private sector, giving businesses and industry the certainty they need to invest and grow in the UK and make the UK home to new, ambitious projects. The policies and spending brought forward in the strategy, along with regulations, will leverage up to £90 billion of private investment by 2030, levelling up our former industrial heartlands.
The strategy also clearly highlights the steps that the Government are taking to work with industry to bring down the costs of key technologies, from electric vehicles to heat pumps—just as we did with offshore wind, in which we are now the world leader. Those steps will give the UK a competitive edge and get us to the head of the race.
We have spoken often in this place of late about the importance of protecting consumers, and consumers are indeed at the heart of the strategy. Making green changes such as boosting the energy efficiency of our homes will help to cut the cost of bills for consumers across the UK. Switching to cleaner sources of energy will reduce our reliance on fossil fuels and, again, bring down costs down the line.
This plan is also our best route to overcoming current challenges. The current price spikes in gas show the need to reduce our reliance on volatile imported fossil fuels rapidly. Although there is a role for gas as a transition fuel, moving away from imports quickly is in the best interests of bill payers. With our ambitious set of policies, the strategy sets out how we meet carbon budgets 4 and 5 and our nationally determined contribution. It puts us on the path for carbon budget 6 and ultimately on course for net zero by 2050.
We are now setting up the industrial decarbonisation and hydrogen revenue support scheme to fund these business models and enable the first commercial-scale deployment of low-carbon hydrogen production and industrial carbon capture. We have also announced the HyNet and East Coast clusters as track 1 economic hubs for green jobs.
We have previously announced that we will end the sale of all new non zero emission road vehicles from 2040, and the sale of new petrol and diesel cars from 2030. The strategy explains that we will also introduce a zero emission vehicle mandate that will deliver on our 2030 commitment to end the sale of new petrol and diesel cars and vans.
To increase the size of our carbon sinks, we will treble the rate at which we are planting new trees in England by the end of the current Parliament. We will be a global leader in developing and deploying the green technologies of the future. The strategy announces a £1.5 billion fund to support net zero innovation projects, which provides finance for low-carbon technologies across the areas of the Prime Minister’s “Ten Point Plan”.
We have also published our heat and buildings strategy, which sets out our plans to significantly cut carbon emissions from the UK’s 30 million homes and workplaces in a simple way that remains affordable and fair for British households. We will gradually move away from fossil fuel heating and improve the energy performance of our buildings through measures such as grants of up to £5,000 towards the costs of heat pumps, a further £800 million for the social housing decarbonisation fund to upgrade social housing, and a further £950 million for a home upgrade grant scheme to improve and decarbonise low-income homes off the gas grid.
The year 2021 is a vital year for action on climate change. In just two weeks’ time, the UK Government will host the crucial United Nations COP26 conference in Glasgow. As the Prime Minister has said, it needs to be a “turning point for humanity”, the point at which we pull together—and pull our socks up—to keep 1.5 °C in reach. Hosting COP26 will also give the UK a huge opportunity to showcase our world-leading climate credentials and set an example to other countries to raise their own ambitions. The net zero strategy will take centre stage in our display, setting out our vision for a UK that is cleaner, greener, and more innovative.
Mr Speaker, we are ready for Glasgow, and I commend this statement to the House.
Edward Miliband (Doncaster North) (Lab)
I thank the Minister for his statement, and send my warmest congratulations—as I have already done directly—to the Secretary of State on the birth of his new baby.
Let me start by saying that it is good that tackling the climate crisis is a shared national objective across the House, and that we want the Government to succeed at COP26 in just ten days’ time. However, there are two central questions about the strategy that has been published today: does it finally close the yawning gap between Government promises and delivery, and will it make the public investment which is essential to ensure that the green transition is fair and creates jobs? I am afraid that the answer to both questions, despite what the Minister said, is no. The plan falls short on delivery, and while there is modest short-term investment, there is nothing like the commitment that we believe is required—and we know why. When asked at the weekend about the Treasury’s approach to these issues, a source from the Department for Business, Energy and Industrial Strategy said:
“They are not climate change deniers but they are emphasising the short-term risks, rather than long-term needs”.
The Chancellor’s fingerprints are all over these documents, and not in a good way.
We have waited months for the heat and buildings strategy, but it is a massive let-down. We are in the midst of an energy price crisis caused by a decade of inaction. Emissions from buildings are higher than they were in 2015. The biggest single programme that could make a difference is a 10-year house-by-house, street-by-street retrofit plan to cut bills and emissions and ensure energy security. There are 19 million homes below EPC band C, but according to the best estimates of today’s proposals, they will help just a tiny fraction of that number. Indeed, there is not even a replacement for the ill-fated green homes grant for homeowners. Can the Minister explain where the long-term retrofit plan is? Did BEIS argue for it and get turned down by the Treasury, or did he not make the case?
According to the Government’s own target, we need 600,000 homes a year to be installing heat pumps by 2028, but the Government are funding just 30,000 a year, helping just one in 250 households on the gas grid. Why does the Minister’s plan on heat pumps fall so far short of what is required? As for transport, we agree with the transition to electric cars—and I support and welcome the zero emissions mandate—but we need to make it fair to consumers. We should at the very least have had long-term zero-interest loans to cut the costs of purchasing electric cars. What is the plan to make them accessible to all, and not just the richest? Will the Minister tell us that in his reply? On nuclear, I was surprised, given the advance publicity, that the word did not even cross the Minister’s lips. We have seen a decade of inaction and delay on this issue, so can he tell us why there is still no decision on new nuclear?
The failure to invest affects not just whether this transition is fair for consumers but workers in existing industries. Take steel: it will cost £6 billion for the steel industry to get to net zero over the next 15 years. If we want a steel industry—as we do across the House—we will need to share the costs with the private sector. However, there is nothing for steel in this document, and a £250 million clean steel fund some way down the road will not cut it. Can he give us his estimates of the needs of the steel industry and how he thinks they can be met?
The same is true of investing in new industries such as hydrogen. There is a global race in these areas and I am afraid that the UK is not powering ahead but falling behind. Germany is offering €9 billion for a new hydrogen strategy; the UK is offering £240 million, and we are putting off decisions until later in the decade. We see the same pattern across the board, including on land use, industry and transport, and because of this failure to invest, there remains a chasm between promises and delivery.
Finally, it was noticeable that the Minister did not say that the plan would meet the target for the 2035 sixth carbon budget, but surely that is a basic prerequisite of the strategy to 2050. At less than halfway to net zero, do the policies in this document meet the target, or fall short of it? Despite hundreds of pages of plans, strategies and hot air, there is still a chasm between the Government’s rhetoric and the reality? My fear is that the plan will not deliver the fair, prosperous transition that we need and that is equal to the scale of the emergency we face.
Greg Hands
I thank the right hon. Gentleman for his warm words of congratulation to the Secretary of State and for his intention to join us in showing real leadership. I agree with him that this should not be a particularly partisan matter. The UK as a whole country expects to see our politicians working together, particularly in the run-up to our hosting the vital COP26. I will deal with his various points in turn.
On power, it is worth pointing out the success that we have had on renewables. The right hon. Gentleman was Secretary of State for Energy and Climate Change up to 2010. When he left office, renewables were only about 10% of our power mix; now the figure is around 43%. Offshore wind costs have come down by two thirds. He mentioned nuclear, but I am just about old enough to remember the 1997 new Labour manifesto, which stated that there would be no new nuclear projects. It took Labour 10 years to do anything at all on nuclear.
The right hon. Gentleman called our investment in heat and buildings a modest one, but it is £4 billion. The difference between us is that we want to go with the natural choices that families make and to work with businesses, finding the natural point at which a homeowner needs to replace his or her boiler and to incentivise the take-up of a greener choice. He says that the £450 million investment is somehow inadequate, but I think that it will kick-start demand. Octopus Energy and others have said overnight that they think that they can make heat pumps at an equivalent cost to natural gas boilers by April 2022. I have confidence in the ability of British industry and British energy companies to innovate.
On energy-intensive industries, we have our £350 million industry energy transformation fund and we are speaking continually with the sector. We will keep the House informed on that. On nuclear, I have said that new money has been announced. There is the £120 million future nuclear enabling fund for optionality for future advanced modular reactors. Of course we are sticking to our commitment for a final investment decision on a further nuclear power station to be taken in this Parliament.
On hydrogen, the right hon. Gentleman is right to say that the German Government have done good work, through my good friend Peter Altmaier, the German industry and trade Minister, but the UK also has a world-leading hydrogen strategy, which was launched in August. We are aiming for 5 GW of low-carbon hydrogen generation capacity by the year 2030.
On the right hon. Gentleman’s final comment about 2030, our commitment is unchanged, but let us look at his commitment for a moment. [Hon. Members: “It was 2035.”] His leader, the right hon. and learned Member for Holborn and St Pancras (Keir Starmer), backed a 2019 manifesto commitment to go to net zero by 2030. Such a commitment would cripple the hard-won economic growth that we have achieved over the past 30 years through our steady approach of growing the economy and reducing emissions at the same time. Even the GMB has said:
“Nobody thinks 2030 is a remotely achievable deadline.”
The CBI has said that there is no credible plan to achieving net zero by 2030. This Government have the right ambition. This is a transition, and it is full of opportunities for jobs and low and zero carbon growth across the UK. The right hon. Gentleman should be backing it in full in the lead-up to Glasgow.
John Redwood (Wokingham) (Con)
If heat pumps and electric cars are going to help, we will need to generate all our electricity from green sources, so when will the Government commission the very large amounts of new generating capacity we will need to make them work when the wind does not blow and the sun does not shine?
Greg Hands
I thank my right hon. Friend for, as always, putting his question very directly, which I have appreciated over many years in the House. I have mentioned our commitment to nuclear and our commitment to the gas sector as a transition fuel. Fortunately, at the moment, we are dependent largely on domestic gas production, in that 50% of our gas usage comes from the UK continental shelf while 30% comes from Norway. The point here is to ramp up our commitment to low and zero carbon fuels. That makes sense for the environment, for our economic security and for our diversification.
Alan Brown (Kilmarnock and Loudoun) (SNP)
The key point in the announcement today is the fact that Peterhead has once again been betrayed. All along, warm words have been paid to the Scottish cluster, but we have been stabbed in the back again. Classing the Scottish cluster as a reserve is an even bigger insult. What representations has the Minister had from the Scottish Secretary of State about what is happening to Peterhead? Can he also confirm that this is a political decision rather than a technical one, given that the Scottish cluster ticks all the boxes and would have contributed to the hydrogen production target?
The Minister keeps going on about nuclear, but the reality is that, at £23 billion, Hinkley is the most expensive power station in the world. Its strike rate is £92.50 per megawatt-hour, compared with offshore wind at less than £40 per megawatt-hour. What is the capital cost in billions of pounds that the Government are willing to commit to, given that it could be better spent elsewhere? What funding is coming to Scotland on the back of the announcement of the social housing decarbonisation fund and the home upgrade grant schemes?
If we look at Scotland in the round, we see that it has contributed £350 billion in oil and gas revenues over the years. Where is the UK Government’s match funding for the £500 million just transition fund that the Scottish Government have committed to the north-east of Scotland? The Minister talks about levelling up, but his levelling up does not include Scotland. We have the highest electricity grid charges in Europe, which puts renewable energy in Scotland at risk, as it is 20% more expensive than in the south-east of England. That also affects the UK’s net zero trajectory. Scottish energy consumers are now made to pay for their nuclear, which we do not want, and Peterhead has been sacrificed for the red wall constituencies. When it comes to Scotland, the UK Government are not helping us tackle climate change but are instead adopting a scorched earth policy as we head towards independence.
Greg Hands
I spent significant time in Aberdeen last week, and I did not meet a lot of people who share the hon. Gentleman’s doom and gloom approach to all things when it comes to energy. I had meetings with Oil & Gas UK, Robert Gordon University, Harbour Energy, CHC Helicopter and Jim Milne of Balmoral Group, and I found a region and a city that are enthusiastic about the energy transition and our North sea transition deal.
I have already mentioned nuclear and the new funding that is available, and I am disappointed that the SNP remains resolutely anti-nuclear, which I think it will regret. I think the Scottish people do not agree with the SNP.
Today’s announcement on carbon clusters is for track 1, and it is not the end of the story—far from it. We have always been clear that we will have two industrial clusters by the mid-2020s, and four by 2030 at the latest. We have announced the Acorn cluster as a reserve. It met the eligibility criteria and performed to a good standard against the evaluation criteria, and we will continue to engage with it throughout phase 2 of the sequencing process to ensure it can continue its development and planning. We remain committed to track 2. This morning the Carbon Capture and Storage Association welcomed today’s announcement as “amazing news” for carbon capture and storage.
The hon. Gentleman asked about home grants. Of course, a lot of these policy areas are devolved. He might have a word with his SNP colleagues in Edinburgh and perhaps get them to participate, as they will get Barnett consequentials. Ironically, the heat pumps scheme for England and Wales will be administered by Ofgem out of its office in Glasgow. Those administering the scheme will not be eligible for it themselves unless the Scottish Government take action to match what the UK Government have said.
Finally, on the North sea transition, energy in Scotland and the move to net zero, I urge the hon. Gentleman for once to take a more positive approach and get with us, particularly as we prepare to host the world in Glasgow in just two weeks’ time.
Mr Mark Harper (Forest of Dean) (Con)
Levelling up is very important, and it means all parts of the country, including rural areas, having the ability to become net zero. In constituencies like mine, many homes are not capable of being brought up to very high levels of energy efficiency and are not on the gas grid. What is the solution to make sure owners of those homes, who are perhaps not on the highest of incomes, can decarbonise their heat at an affordable price?
Greg Hands
My right hon. Friend is right to highlight off-grid properties and the importance of making sure that the overall Government agenda, including levelling up, reaches those people. On top of my announcement, we have already committed £2.5 billion to off-grid properties through the home upgrade grant and will explore extending it to 2030.
Darren Jones (Bristol North West) (Lab)
I thank the Minister for giving me an advance copy of his statement this morning.
People across the country will want to know whether the promises made today will actually be delivered or whether they will, once again, result in failure. Will the Minister set out how the voucher schemes announced today will be delivered differently from the failed schemes of the past, such as the green homes grant?
Greg Hands
The hon. Gentleman asks a reasonable question with a rather unreasonable preamble, if he does not mind my saying so. I do not think there have been failures of Government policy in this area. Actually, our overall record—not just this Government’s record but the record of the country as a whole over the past 30 years in reducing emissions while achieving economic growth—is one of success.
Of course we are learning from previous schemes, and we are making sure that this new scheme goes with the flow and is simpler and easier to administer. We will also make sure that the parameters are set very clearly in the lead-up to the launch next April.
Andy Carter (Warrington South) (Con)
I welcome the Government’s support for the HyNet cluster, which is a huge vote of confidence in north-west businesses. Does my right hon. Friend agree that this announcement will put the north-west and the UK at the cutting edge of hydrogen technology and will help to secure thousands of jobs in the north-west, including in Warrington?
Greg Hands
I concur with my hon. Friend, who is a tireless champion for his Warrington constituents. We are delighted with today’s announcement. Carbon capture, utilisation and storage is a huge opportunity for the UK. When I talk to the industry, it makes strong points about how the UK is geologically, geographically and economically well suited to make sure that carbon capture, utilisation and storage is a big part of our low-carbon future, and I commend him for his support for the HyNet cluster in the north-west of England and across into north Wales.
Clive Lewis (Norwich South) (Lab)
There are two problems with the Government’s net zero strategy: “net” and “zero”. The latter because it is not zero—we know there are sectors, such as aviation, that will be pumping out millions of tonnes of emissions into the atmosphere beyond 2050—and the former because we know the Government are relying on negative emissions technologies that, frankly, are based on science fiction and for which there is no prospect of mass roll-out. We are banking on this to rescue us from the climate crisis, but it is a “burn now, pay later” strategy that is not fit for purpose.
Greg Hands
That is sort of a question, for which I thank the hon. Gentleman. He might be a proponent of the Labour party’s net zero by 2030 policy. I am not sure whether the shadow Secretary of State supports that policy, which I think was ratified at the Labour party conference.
We have already talked about carbon capture, utilisation and storage, which is a sound technology in which the UK will look to be a world leader. The Climate Change Committee itself has said that it will not be possible for every single part of the UK economy to be net zero. That is the importance of the word “net” in all of this. It is about making sure that we get to net zero by 2050, so it does not have to apply across all sectors. Of course we want it to apply across all sectors, and the North Sea transition deal for the oil and gas sector has a commitment to go to net zero, but overall it is about making sure the country gets to net zero by 2050.
Graham Stuart (Beverley and Holderness) (Con)
I congratulate the Minister on today’s announcement. We will be celebrating the decision to increase the home upgrade grant and, of course, the excellent decision to make the east coast cluster one of the two carbon capture projects in the initial stage. Does he agree that we must make sure that, following the success of our offshore wind deployment, we build industrial capability in carbon capture and storage and in hydrogen so that we can be an export superpower in these areas over the years ahead?
Greg Hands
My hon. Friend and I spent many happy, productive years working together in the Department for International Trade to market our technological breakthroughs in clean energy, particularly in offshore wind. He makes an extremely strong point about CCUS. When I talk to people in the sector, one of the points they make most frequently is about the UK’s ability to be an early mover, to get in quickly and to take advantage of export capabilities. I completely agree and commend my hon. Friend for the work he did over quite some time as our exports Minister.
Nick Smith (Blaenau Gwent) (Lab)
The steel industry’s transition to net zero requires £6 billion of investment, yet the clean steel fund provides only 4% of that. Does the Minister really think that is enough?
Greg Hands
We are in constant dialogue with the steel sector, and the hon. Gentleman and I both know that half of steel production and half the jobs in the sector were lost under the last Labour Government. Steel has been facing worldwide pressure for some years, but we are strongly supportive of the UK steel sector. The Secretary of State and the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for North East Derbyshire (Lee Rowley), who now has responsibility for steel, frequently engage with the sector. We continually speak to the sector and will keep the House informed. Personally, I think our £350 million industrial energy transformation fund is a considerable commitment to the sector.
Virginia Crosbie (Ynys Môn) (Con)
I welcome the steps set out by my right hon. Friend to unleash the potential of our whole country. Can he reassure my Ynys Môn constituents that they will benefit from the 440,000 net zero jobs being created by 2030 and the £90 billion of private investment? Will he accept my invitation to visit Wylfa Newydd and see at first hand why the Prime Minister is such a fervent supporter?
Greg Hands
I thank my hon. Friend, who is a tireless advocate for Ynys Môn, particularly on the economy and jobs. Of course, Ynys Môn, the whole of Wales and north Wales will benefit from the new green jobs that this net zero strategy will help to foster. The new money announced today for the future nuclear enabling fund is for optionality for the future, so that we can make future decisions based on good information on nuclear. Obviously, that includes potential for sites such as Wylfa.
Neale Hanvey (Kirkcaldy and Cowdenbeath) (Alba)
The Minister talks, in effect, of crumbs for Scotland, the renewable energy capital of Europe, with a few jobs as technicians offshore, whereas my constituency is the fourth most impacted by the cuts to working tax credit and universal credit. We can couple that with the escalation of fuel prices, so I want to know: why do the UK Government insist on levying connection charges not to France or the Nordic countries, but uniquely to Scotland, driving away investment, jobs and ambitions for our green future and for an end to fuel poverty in Scotland?
Greg Hands
I did not quite understand the hon. Gentleman’s point about connectivity, but what I will say to him is this: Scotland is vital for the UK’s energy needs, both currently and in the future. On oil and gas, 50% of the gas currently consumed in this country comes from the UK continental shelf, and Scotland is vital for that. It is also vital for our future offshore wind capabilities, and other low-carbon and renewable energies. That is exactly the technology, capability and capacity that I saw last week in Aberdeen. Perhaps he might get a little more optimistic about Scotland’s future when it comes to energy, because I certainly am.
Jo Gideon (Stoke-on-Trent Central) (Con)
I welcome my right hon. Friend’s statement and the Government’s commitment to helping all industrial clusters to decarbonise as we transition to net zero by 2050. As an energy-intensive sector, the decarbonisation of the ceramics industry will play a crucial role in this transition, which is why I am delighted to back the British Ceramic Confederation’s plans for a virtual ceramics sustainability hub, based in Stoke-on-Trent, to develop new decarbonisation technology, including carbon capture and storage. Does the Minister agree that Government support is vital to help the ceramic industry decarbonise by 2050? Will he meet me and other Stoke colleagues to discuss these ambitious plans for the creation of a virtual ceramics sustainability hub?
Greg Hands
I am always ready to meet our three brilliant Conservative Members of Parliament for Stoke. I have met them over the years on a host of different topics, often in relation to ceramics and with the BCC. I remind my hon. Friend about the £350 million industry energy transformation fund and the fact that we will be in continuous dialogue with the three MPs and with the sector, and of course I would be very happy to meet her and her colleagues.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
Once again, we hear warm words, big headlines and big figures from the Government, but too little detail, as the Public Accounts Committee has repeatedly highlighted. So I hope the Minister will make sure that there are repeated and meaningful reports to Parliament on these figures, good or bad, so that we can keep a track on this. Will he also look at the issue of people’s behaviour? As others have highlighted, there is a challenge on not just the money but the hassle factor, for example, in greening homes that are very challenging to insulate. How is the Department looking at that? Will he commit to do so?
Greg Hands
The hon. Lady asks a set of very reasonable questions. First, I commend her for saying that the Government have announced big figures, because her Front-Bench colleague, the right hon. Member for Doncaster North (Edward Miliband), seemed to think they were very small figures. I agree with her that these are very, very big figures of Government money being committed.
The hon. Lady asked a reasonable question on people’s behaviour. Of course we want to make things as straightforward, simple and transparent for consumers as possible. We want people to be making the change—to be incentivised—and the Government are putting in the financial incentives. We want people to feel incentivised to make the right choices. That can be something as simple as making the scheme straightforward and easy to understand. That is where we will be moving on the replacement boiler programme, making sure that it is as easy as possible for people to understand when it starts next April.
Mr Steve Baker (Wycombe) (Con)
The cost-effectiveness of heat pumps is critically dependent on the cost of electricity, and there is good reason to think that the overall of cost of renewables to the bill payer is still extremely high, including subsidies. So will the Minister subject his assumptions on his heat pump strategy to a comprehensive audit of the price of renewable electricity?
Greg Hands
My hon. Friend is tireless in his ability and desire to get to the bottom of what lies behind Government figures. Perhaps I might commit to meet him, as, having taken on this brief four weeks ago, I know he takes a strong interest in all aspects of energy and climate change. Perhaps I might agree to meet him to discuss his concerns first, before committing to a new, huge audit of anything.
Wera Hobhouse (Bath) (LD)
I welcome the Government’s setting an end date for the use of gas boilers, but of course switching to electricity for heating our homes makes sense only if the electricity used is not derived from fossil fuels. Because of the Lib Dems in government, the renewables sector has made big strides, but it is by no means accelerating in the way it should be. So will the Government take the opportunity before COP26 to announce an end date for using fossil fuels in the production of electricity?
Greg Hands
We already have, as I mentioned in the statement, our commitment to a decarbonisation of our electricity system by 2035. However, may I take issue with her about renewables because we have had a massive amount of success, particularly since 2015? The cost of offshore wind, for example, has been reduced by two thirds since 2015, when there was a sole Conservative Government. We also have the commitment to have a really big increase in renewables. We currently have the world’s largest installed offshore wind capacity, at about 10 GW. We are committed to not resting on our laurels and to quadrupling that capacity in the next 10 years, to 40 GW.
Duncan Baker (North Norfolk) (Con)
The UK Government should be roundly applauded: we continue to be one of the nations in the world that decarbonises at one of the fastest rates, as my right hon. Friend has said. Operational carbon is just one of the pieces of the jigsaw, as is embodied carbon. What assessment has he made of regulating embodied carbon in the construction sector?
Greg Hands
My hon. Friend makes a good point on the importance of the construction sector. Obviously, there has to be a read-across between Government policies, our commitment to infrastructure, our commitment to new homes and so on. So I will happily meet him to discuss the construction sector and its carbon footprint. On decarbonising the fastest in the G7, I thank him for his words of support. This has been a huge UK success story, particularly over the past 30 years. In the first half of my adult life, we have done really well as a country overall. I recall that in 1989 the Green party ran on a manifesto that said we could take action on global warming only if we either froze or reduced the size of the economy. This country, with its 78% increase in the size of the economy, while reducing emissions by 44% in the first half of my adult life, has shown the world the way forward to reaching net zero at the end of—well, I hope not at the end of the second half of my adult life, but in the second half of my adult life to come.
Hilary Benn (Leeds Central) (Lab)
There are about a quarter of a million homes in Leeds with gas boilers. I have many constituents, as all Members have, who are struggling to pay the gas bill at the moment, let alone face the prospect of paying between £6,000 and £15,000 for a new heat pump, notwithstanding the grants that the Minister has announced today or the hope, which we all share, that the cost of heat pumps will fall. What is the Government’s plan for ensuring that all households in our communities are able to make the transition to a zero-carbon future, which we know must happen?
Greg Hands
We remain absolutely committed to our existing target of 600,000 homes per annum having a heat pump by 2028, and the scheme announced today shows that direction of travel. We are not saying that the scheme will provide a heat pump for every house; it will kick-start the market. We have already seen really positive reactions. I mentioned the reaction of, among others in the sector, Octopus Energy, which said overnight that it thinks it can deliver an equivalent price—we will watch such commitments closely—by as early as April next year. That is where the opportunity lies for the right hon. Gentleman’s constituents and mine: not in the Government’s coming along and replacing everybody’s gas boiler, but by the Government’s sending a signal to kick-start the market and show that we want the private sector to respond positively.
Mark Pawsey (Rugby) (Con)
Rugby is at the heart of National Grid’s gas pipeline network, which runs across the country from one side to the other. In the summer, I visited National Grid’s Churchover site, which is a substantial national asset. We know that harmful emissions from gas can be reduced in the short term by putting hydrogen up to 20% in the existing natural gas network, and in the longer term we can move to 100% hydrogen. Will the Minister confirm that, although we hear about stopping the installation of gas boilers, a substantial future for gas in our energy supply remains?
Greg Hands
My hon. Friend makes a good point. Of course, gas has a substantial future in our energy supply, certainly in the short term. Currently, 50% of our gas comes from the UK continental shelf, so it is very important for us, notwithstanding high international wholesale gas prices. The Climate Change Committee has itself said that it is not inconsistent with net zero for there to be a contribution from the oil and gas sector, even in 2050. It is now a question of working with the sector, which is why we have done the North sea transition deal. We are working with the industry, in partnership with the Oil and Gas Authority, to make sure that we make the necessary transformation. A lot of the skills in the oil and gas sector are transferable to, for example, offshore wind.
Alex Cunningham (Stockton North) (Lab)
As chair of the all-party parliamentary group on CCUS, I am delighted by today’s announcement that the Tees, along with our Humber colleagues, will lead the way on CCUS and hydrogen production. In the past, we have had several false starts, with the Government withdrawing funding, so I hope we get it over the line this time. How will the Minister ensure that Teesside workers will get the jobs and skills to develop the new industries and that the people of Teesside get a real dividend?
Greg Hands
I welcome the hon. Gentleman’s warm congratulation on that decision. Perhaps he might have a word with some of his colleagues near him on the Opposition Benches. He makes a good point about Teesside. We will work closely with Teesside Members of Parliament and with the Tees Valley Mayor, Ben Houchen, with whom I had an excellent conversation on this subject just a couple of weeks ago, to make sure that the skills base in Teesside improves and continues to be trained to make sure that it can continue to meet the challenges of the low-carbon future. When I was up in Hartlepool in Teesside just a few weeks ago, I was incredibly impressed to see the new investment in, for example, cabling by an offshore wind company. That company was adamant that there were good skills there, but we must keep working to improve those skills as we go forward.
Derek Thomas
I welcome the Minister’s statement and the strategy itself, which says that 80% of fossil-fuel-heated off-grid homes could accommodate a low-temperature heating system. The potential to develop the most fuel-poor homes, many of which are in my constituency, is enormous. The Minister is right to mention the development and affordability of heating units themselves as things progress, but to fit such a unit, a person needs to insulate their home well and increase the size of their radiators. They may even need to increase the supply of energy to their home, as I found out in my own case. Will the Minister give careful thought to the up-front cost of fitting such a unit for a fuel-poor home, and all the other costs that make a home the home that people deserve?
Greg Hands
My hon. Friend makes some excellent points. I spent part of my childhood in Cornwall and I thought that where I lived then was pretty far from here, but his constituency is yet further, so I know some of the challenges that face his St Ives constituents. We want to keep the scheme as simple, straightforward, transparent and easy-to-understand as possible, but my hon. Friend’s points about insulation and energy efficiency in homes are well met. I will continue to talk with him and other Cornish MPs, and with MPs from other parts of the country, as we move forward.
Deidre Brock (Edinburgh North and Leith) (SNP)
The north-east of Scotland is the home of the offshore industry and the obvious location for a carbon-capture project. Years ago, the Tories pulled the plug on the carbon capture and storage competitions before Peterhead won through, and it is now clear that the UK Government have put the holding of seats in the red wall of northern England ahead of saving jobs in Aberdeen and the north-east. How can the Government say they are delivering a just transition if the Tories put pork barrel politics ahead of supporting the ideal location for CCUS at St Fergus?
Greg Hands
I get tired of the politics of division that we hear from the SNP all the time. It is the politics of pitting Scotland against, in this case, the north of England. We are a Government for the whole United Kingdom and I bitterly regret the hon. Lady’s language and her accusation that we have somehow put the north of England in a privileged position relative to other parts of the UK. We have been clear that in track 1 there will be at least two industrial clusters by the mid-2020s and four by 2030 at the latest. We have the Acorn cluster as a reserve. As I said earlier, it met the eligibility criteria and performed to a good standard. We will continue to engage with the sector so that it can continue its development and planning.
David Duguid
On behalf of Cornwall—no, I rise to speak on behalf of my constituency of Banff and Buchan, to which I shall turn in a moment. First, I thank my right hon. Friend the Minister for his visit last week to Aberdeen, where he expressed the Government’s ongoing and continuous support for the oil and gas sector and its valuable role in the energy transition to net zero. The North sea transition deal includes carbon capture and storage; far be it from me to correct the hon. Member for Kilmarnock and Loudoun (Alan Brown), but the hon. Member for Edinburgh North and Leith (Deidre Brock) got it right: it is St Fergus, not Peterhead. Is it not entirely predictable from SNP Members? They have been practising their script since before the bids even came in—they gleefully declare betrayal.
Given the fact that the Government have already expended £31 million in the Scottish cluster, will my right hon. Friend meet me to discuss the Government’s plans to help the Scottish cluster to develop and plan not only as a reserve but certainly for the next track of negotiations?
Greg Hands
I will of course meet my hon. Friend to discuss that. I thank him for taking a strong interest in my visit to Aberdeen last week. He is right that the oil and gas sector is in transition, welcomes the North sea transition deal and wants to work closely with the Government, the OGA, Oil & Gas UK and so on in continuing to make a massive contribution to Scotland and the whole of the United Kingdom.
On carbon capture, utilisation and storage, this is not the end of the story, as I said. We need to make a decision and make progress, but Acorn is the first reserve. If Members look at the rest of our policy, they will see that there is potential to expand our commitment yet further in advance of 2030.
Ruth Cadbury (Brentford and Isleworth) (Lab)
The delivery of a target of 600,000 new heat pumps by 2028 requires significant resource; otherwise, only the very well-off will be able to afford the cost of both the heat pump and the additional insulation that most homes would need to make the pumps cost-effective. As the hon. Member for St Ives (Derek Thomas) said, many homes will need additional power supplies. Will the Government therefore extend their ambition and link the programme for adequate insulation with adequate funding for heat pumps, such that more people than just the very well-off will be able to deliver the changes according to the Government’s strategy?
Greg Hands
The hon. Lady underestimates our commitment, because it is not 600,000 new heat pumps, but 600,000 new heat pumps per annum by 2028. This is a huge commitment, but it is a commitment that is best met largely by the private sector. That is why we strongly believe that the announcement that we made today on the grants of up to £5,000 will kickstart the private sector in providing these heat pumps. I have already pointed overnight to the welcome of this announcement by the energy companies, which think that they can get the price of those heat pumps down. That is the right strategy, rather than having the Government pay for everything to meet that commitment. I think it is about working with the private sector. The ball is now partly in the energy companies’ court to see whether they can get the price of those heat pumps down.
James Wild (North West Norfolk) (Con)
Many people in villages in North West Norfolk live in poorly insulated homes. Can my right hon. Friend ensure that the home upgrade scheme and other schemes in this strategy help my rural constituents to live in warmer, more efficient homes?
Greg Hands
The comments that I made in relation to Cornwall earlier probably also apply to parts of north Norfolk. Of course I will commit to making sure that households that are in fuel poverty and that have poor insulation, including those in remote areas, will get the support that they need and deserve.
Andy McDonald (Middlesbrough) (Lab)
Many of us on the Labour Benches, including my right hon. Friend the Member for Doncaster North (Edward Miliband) and my hon. Friend the Member for Stockton North (Alex Cunningham), have been articulating the case for carbon capture, usage and storage for many years. Despite the shortcomings of the statement, including any clarity on whether the net zero strategy will meet the 2035 sixth carbon budget, the east coast cluster announcement is most welcome. Will the Minister ensure that the collective voice of working people, through their trade unions, is heard, and that all stakeholders, including Ben Houchen, the mayor, part company with the anti-trade union rhetoric and work in an inclusive and co-operative manner to ensure that the economic and employment opportunities are fully delivered for working people in my Middlesbrough constituency and across Teesside?
Greg Hands
I absolutely agree with the hon. Gentleman on working with workforces. The commitment to net zero is a huge, country-wide endeavour and we must carry everybody with us. May I perhaps suggest that he has a word with the trade unions, because they have been extremely critical of Labour’s official policy, which is to get to net zero by 2030? As I have mentioned, the GMB has said that nobody thinks that 2030 is a “remotely achievable deadline”. Another said that it would be a huge upheaval, leading to job losses in the industry. I agree with what he has to say, but perhaps he might have a word with those on his Front Bench as well.
Richard Fuller (North East Bedfordshire) (Con)
The transition to net zero emboldens politicians to use ambitious rhetoric, but they cross their fingers that the reality of implementation will be as planned. That is because, as my right hon. Friend knows, he is dealing with tremendous amounts of uncertainty over the fact that chosen technologies may not work or may be superseded, that anticipated unit cost reductions may not be achieved and that the first-mover advantage may result in heavy costs but illusory or temporary sources of competitive advantage. Can he advise me on what his Department is doing to calibrate correctly the extent of the use of taxpayers’ money, the extent of additional levies on business and the extent of additional burdens on householders in the achievement of his strategy?
Greg Hands
Mr Speaker, as a former Chief Secretary to the Treasury, you can imagine that I take a strong and ongoing interest in exactly that sort of question. We at BEIS have those discussions with the Treasury and the whole of Government all of the time to make sure that the plan here is both achievable and affordable and that it will be realised to enable us to meet all of those targets that we have set ourselves. I am looking forward to interacting with my hon. Friend on any specific concerns that he may have going forward, but his question and his points are the sorts of things that are very much on our minds.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
Obviously, £450 million for heat pumps across England and Wales is a good thing, but it is set to benefit only 0.3% of Welsh households, while the future generations commissioner calculates that the cost of decarbonising Wales’s housing stock stands at £14.75 billion. The Treasury has resisted every step on the road to COP26. Our economy, our environment and our communities need Treasury funding to step up to the mark to lead the transformational investment. That will give the private sector confidence. How confident is the Minister that this news will reach us within the next 10 days?
Greg Hands
A very substantial amount of Government money is going into the heat and building strategy—I think it is in the region of £4 billion. I will correct the right hon. Lady. On this heat pump scheme that we have introduced, the idea is that it kickstarts the market and gets the private sector providing solutions. We have already seen a really good response to our signals from the private sector. That is exactly right, because the solutions to issues such as home heating will lie principally with the private sector.
Jack Brereton (Stoke-on-Trent South) (Con)
Further to the points made by my hon. Friend the Member for Stoke-on-Trent Central (Jo Gideon) earlier, the ceramics sector in Stoke-on-Trent has faced significant energy price volatility recently. It does want to transition, but it cannot do so on its own while continuing to be competitive internationally. Will my right hon. Friend ensure that we have our fair share of the additional R&D money that this Government are committed to investing in the UK?
Greg Hands
I am absolutely committed to that. My BEIS colleagues who look after research and development are absolutely committed to making sure that British ceramics are not sold short when it comes to R&D. We have a huge commitment to the sector overall, which my hon. Friend will know from the many years that we have worked together, particularly on trade issues as they affect the ceramics sector, including trying to break down trade barriers to make sure not only that our industry flourishes here in the UK, but that our exports do as well. I commend the work that he and all of the Stoke Conservative MPs have been doing for the sector for some years now.
Rachael Maskell (York Central) (Lab/Co-op)
Missing from the plan is the retrofit skills strategy. The City of York Council has a backlog of more than 6,000 maintenance and retrofit jobs to do. How does the Minister expect those skills to come forward and how will people be trained? Why has he left it so late to upskill the workforce?
Greg Hands
I agree with some of the points that the hon. Lady makes about the importance of skills, but I do not think that it is about our delivering the message late. This Government’s commitment to skills and to reskilling if necessary has been absolutely clear. It can be seen right the way across Government in the very close work being done together by BEIS and the Department for Education. I see it in so many sectors. I will mention again my visit to Aberdeen last week. I appreciate that Aberdeen is some distance from her constituency, but the sector there has to be able to reskill a lot of people from offshore oil and gas to offshore wind. It is that kind of thing that we need to see on a transition and a long-term basis. It is exactly this idea of making sure that we can retrain and reclassify people from today’s skills to fit the skills for tomorrow. That is absolutely part of our commitment.
Gavin Newlands (Paisley and Renfrewshire North) (SNP)
The Minister talks about ending the sale of petrol and diesel cars by 2030. To do so, we will need drivers to switch to zero-emission vehicles over the next decade. Despite the upfront costs of electric cars still being significantly higher, the financial incentives to switch continue to be diluted. I welcome the shadow Secretary of State’s support for the SNP Scottish Government’s interest-free loan scheme for new and used zero-emission cars, but the Government’s zero-emission vehicle mandate will not even be legislated on until 2024. Nearly half the decade will be behind us when the mandate comes in. Why are the Government moving this policy forward in first gear?
Greg Hands
I disagree with the hon. Gentleman. The transport section in the net zero strategy is very comprehensive on this and very extensive on how we get more people to switch to electric vehicles. In terms of some of the details, I invite him to ask my right hon. Friend the Secretary of State for Transport who leads on this at the next Transport questions.
Mr Clive Betts (Sheffield South East) (Lab)
The other week, Lord Deben, the chair of the Climate Change Committee, speaking at the Housing, Communities and Local Government Committee, indicated that, if we are to hit the Committee’s targets, local government has an incredibly important role to play in the retrofitting of existing homes, the building of new homes, local planning policies and local transport policies. Is it therefore not disappointing that there is not one single mention of the role of local government in the Minister’s announcement today? What has the Minister to say about that?
Greg Hands
I refer the hon. Gentleman to the annex of the net zero strategy, which sets out in some detail our response to Lord Deben’s annual report earlier this year. I think he will find in the annex a lot of the good mentions of local government for which he has been looking.
Kerry McCarthy (Bristol East) (Lab)
The zero-emissions vehicle mandate is welcome, although, as the hon. Member for Paisley and Renfrewshire North (Gavin Newlands) said, the Government do need to get a move on. They have been cutting plug-in grants year on year, and there are now reports that the Chancellor wants to axe them all together. What in this strategy will actually help to make the purchase of electric vehicles more affordable for the average consumer?
Greg Hands
Nobody should doubt the Government’s commitment to getting a switch to electric vehicles. I certainly hope that the shadow Secretary of State has been taking an interest in that in recent times—
Greg Hands
He is nodding in the affirmative, so that is one more.
Like the overall commitment, this commitment is very much on an ongoing basis. I refer the hon. Lady to the transport section of the net zero strategy and to the annex regarding the Climate Change Committee’s report.
Anna McMorrin (Cardiff North) (Lab)
The Minister says that he wants to work collaboratively, yet he did not reach out to the Welsh Labour Government or share plans, despite saying that he was going to. Of course, plans on net zero are welcome, but this is greenwash wrapped up with a great big green bow. Only the most well off will benefit from the heat pumps, and the Government have not made clear the new measures that householders will also need, including insulation, water storage and new radiators. The Government are also still building truly awful, inefficient homes. When are they going to step up and really take the action needed to meet the zero carbon commitment?
Greg Hands
The hon. Lady has packed a lot into that question, but let me come back to her with two points. First of all, we have shared an advance copy of the plans with the Welsh Government and I spoke to the Welsh Government Minister yesterday on this very topic.
Secondly, the hon. Lady says that only the well off will benefit. Our target is 600,000 homes per annum; that will reach down very far into the homes in this country. I am absolutely confident of that, particularly given the commitments being made by different energy companies to make heat pumps cheaper. I mentioned earlier the commitment from one company overnight to make a heat pump of equivalent price to a gas boiler. That gives rise to good optimism about the affordability of this new technology.
Jack Dromey (Birmingham, Erdington) (Lab)
That we move to warm homes fuelled by heat pumps is welcome, but warm words are not enough. What guarantee can the Minister provide that the Government will use taxpayers’ money to invest in heat pumps made in Britain, creating jobs here in Britain and supporting British business?
Greg Hands
Part of this announcement is of taxpayers’ money exactly for this sector. My understanding is that the UK is a real leader in heat pump technology, but if the hon. Gentleman wants me to commit to us becoming a sort of protectionist nirvana for the future of the UK in the sector—absolutely not. We need to ensure that we are an open market; we need to be exporting our technology. Earlier, a lot of my colleagues asked about export opportunities. It is difficult to have export opportunities if we are closing down imports at the same time. Yes, there is key British technology in the sector. We need to ensure that it is affordable for consumers, and that we take advantage of export opportunities for a lot of that key technology.
Clive Efford (Eltham) (Lab)
I expected to hear more in the Minister’s statement about partnership with local government. Local authorities up and down the country are trying to innovate and to pilot schemes to decarbonise homes. My own local authority is investigating the possibility of using green open space to have a district ground source heat pump scheme that would engage with private homes in the area; that is engaging with the private sector as well. Without local government, the Minister’s strategy is not going to work, so what is he going to do further to engage local government?
Greg Hands
I welcome the hon. Gentleman’s approach. As I said earlier, this strategy is going to need all of us—central Government, our key city and regional Mayors, the devolved Administrations, businesses, local government and others—to work together to get to net zero. I would be delighted to work with the local government sector. My right hon. Friend the Secretary of State for local government—the Secretary of State for Levelling Up, Housing and Communities—takes a keen interest in this agenda. I am sure that we will work together to ensure that local government plays an important and crucial role in getting to net zero by 2050.
Geraint Davies (Swansea West) (Lab/Co-op)
The Minister knows that steel made in Wales and the rest of the UK is half as carbon-intensive as undercutting steel from China. Moreover, our carbon footprint, although low on production at 4.8 tonnes per person is a much bigger 8 tonnes on consumption, because we now subcontract a lot of our manufacturing. Will he look carefully at pursuing a carbon border tax, so that we can play on an even playing field, support local jobs in manufacturing and steel, and help to tackle climate change? Will he announce and suggest that at COP26?
Greg Hands
The chair designate of COP26 says that carbon border adjustment mechanisms will not be part of the discussions at COP26, but the UK is closely watching that debate. We are looking at the European Union proposals. Of course, we need to ensure that they are World Trade Organisation-compatible and that they do not discriminate against the developing world, particularly much less developed countries. The CBAMs debate is very much alive and we continue to study it very closely indeed.
Jim Shannon (Strangford) (DUP)
I thank the Minister for his announcement and his clear commitment to all regions of the United Kingdom, particularly to Northern Ireland. I welcome the strategy and the decision to end the sale of gas boilers by 2035. What incentives can the Minister offer to builders currently developing to make those changes to new builds now, not to wait until 2034 to change that skills base and ability? Is upskilling part of the Government’s agenda?
Greg Hands
Upskilling is very much part of the Government’s agenda. On how the heat pump ready programme will be operating, if I understand it correctly, that is a Northern Ireland-only scheme, but we have seen that scheme in operation and it will help to inform the England and Wales scheme. The scheme will also support the Government’s target of 600,000 installations a year by 2028, which also covers Northern Ireland.
Stephen Flynn (Aberdeen South) (SNP)
In 2015, the UK Government pulled the plug on £1 billion of carbon capture and storage investment in Peterhead. Today, they have repeated that same mistake—a betrayal of the north-east of Scotland—by pulling the rug out from underneath the Acorn Project. The Minister knows that Scotland cannot meet its net zero ambitions without carbon capture and underground storage, so why is he shafting Scotland?
Greg Hands
The hon. Gentleman might have been here at the beginning of the statement; if a Member wishes to participate in a statement, it is common practice to be here at the start. As he was not here at the beginning, he missed me explaining the basis behind the decision. Government policy has always been clear that there would be two industrial clusters by the mid-2020s, but four by 2030 at the latest. We have announced the Acorn cluster as a reserve. I praise the scheme for meeting the eligibility criteria. It also performed to a good standard against the evaluation criteria. We remain absolutely committed to track 2.
Mr Deputy Speaker (Mr Nigel Evans)
I thank the Minister for his statement and for answering questions for over an hour. I do not like the words that you used, Mr Flynn. We have talked about a kinder, gentler politics, and that certainly was not it.