Climate Change Committee Progress Report 2021

(Limited Text - Ministerial Extracts only)

Thursday 21st October 2021 Westminster Hall

[The Minister of State, Department for Business, Energy and Industrial Strategy (Greg Hands)]

Let me begin by thanking the Backbench Business Committee for nominating this important debate today, and I also thank my hon. Friend the Member for South Cambridgeshire (Anthony Browne) for his very able introduction to it. We were sitting in exactly these seats yesterday during his last Westminster Hall debate, which was on the interesting subject of carbon capture and storage, a subject that has also cropped up in today’s debate.

Of course it is vital that we focus on clean growth and the Government’s vision for transitioning to a net zero economy. This has been a very useful debate, with a very high degree of consensus, which of course the Government welcome.

First, the Government welcome the Climate Change Committee’s 2021 “Progress in reducing emissions” report, which highlights our successes in setting an ambitious climate mitigation agenda while also providing healthy challenge to our progress to net zero by 2050. The point of having this kind of Committee is for it to keep challenging the Government and to ensure that the Government are straining every possible muscle to get to that target and get there in good time.

The report correctly emphasises that the journey to net zero is not yet half-completed and that this decade is the decisive one for tackling climate change, which Britain must take a leading role in. Of course, that is why on Tuesday we published our net zero strategy, which has been referred to many times; I welcome the Opposition’s praise for my officials and my ministerial team for the work that they have put into it. I know that a lot of my team have been working very long hours to get the strategy out there and to do so on time.

The strategy delivers a comprehensive set of measures to support and capitalise on the UK’s transition to net zero by 2050. It outlines measures to transition to a green and sustainable future, and to help businesses and consumers to move to clean power, supporting hundreds of thousands of well-paid jobs and leveraging up to £90 billion worth of private investment by 2030.

We have already set out a lot about our journey to net zero. Over 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, most recently, our heat and buildings strategy.

[Dr Whitehead]

Would the Minister be able to provide us with some helpful guidance on the production of those documents, and set it against what the Climate Change Committee has been doing with its carbon budgets and so on? Does he consider that as a result of those documents being published and their contents, we are now on course to meet the terms of the sixth carbon budget?

--- Later in debate ---

[Greg Hands]

Our position on the sixth carbon budget is unchanged, as the hon. Gentleman knows. However, I am a believer in an active Government, and publishing a set of strategies does not necessarily mean that we have reached the point that we want to reach: it merely lays out the map and sets out the process, which I think is very helpful. In terms of delivery, obviously the onus to fulfil these objectives is on not only the Government, but every citizen of this country and, indeed, the whole world.

We have just unveiled a landmark commitment to decarbonise the UK’s electricity system by 2035, to help us build a secure home-grown energy sector that is not reliant on fossil fuels and exposure to volatile wholesale energy prices, which as we know are very much in the news at the moment. However, the science could not be clearer: by the middle of this century, the world needs to reduce emissions to as close to zero as possible, with the small amount remaining sucked up through natural carbon sinks such as forests and relatively new technologies such as carbon capture. We are proud to lead the world in ending our contribution to climate change, not just because it is the right thing to do, but because we are determined to seize the unprecedented economic opportunity it brings. We want to build back better from the pandemic by building back greener and levelling up our country with new high-skilled, high-wage, sustainable jobs in every part of the United Kingdom. Those jobs will be spread across the UK, with specialists in low-carbon fuels in Northern Ireland, low-carbon hydrogen in Sheffield, electric vehicle battery production in the north-east of England, green finance in London, more engineers in Wales, and offshore wind technicians in Scotland.

The strategy builds on all the progress that the UK has already made. In June 2021, the UK Government set the sixth carbon budget at 965 megatonnes of CO₂ equivalent, a world-leading target that will mean a 78% reduction in greenhouse gas emissions by 2035 compared with 1990 levels. This is in line with the latest science, as the level recommended by our expert advisers at the Climate Change Committee, and is consistent with the Paris agreement’s goal of limiting global warming to well below 2 °C and pursuing efforts to limit it to 1.5°. The target would achieve well over half of the required emissions reductions from now to 2050 in the next 15 years.

Turning to the points raised during the debate, my hon. Friend the Member for South Cambridgeshire has pointed out that a parallel debate on COP26 is taking place in the main Chamber, so anybody watching the debate might wonder why there are not more Members here. The overlap has been considerable. He also rightly pointed out the UK’s huge success—in 2015, we emitted the lowest amount of CO₂ per annum since 1859—and then he got Opposition Members a little bit excited with his reference to the 1926 general strike. I do not think my hon. Friend thought of the 1926 general strike as something we would wish to emulate, but I noted from interventions and comments made by Opposition Members that they perhaps thought it was. It was very important that my hon. Friend quoted the 2019 figure, because emissions obviously went down quite a bit during the pandemic, so it is important that we look at a more robust figure, such as that from 2019. As he said, it was the biggest decline in the whole of the G20 since 1990: we emit less per person than the EU average, and less than Denmark or Norway. All of those were incredibly strong points.

I was thinking back to the 1990 benchmark for all those emissions. The nearest election to that time was the 1989 European elections, which were not memorable for anything other than the fact that they were the high point in the performance of the UK Green party. It was the year when the Green party got more than 10% of the vote overall. It ran on a manifesto that it was impossible to do anything to reduce emissions while still growing the economy. We had to reduce growth in the economy and reduce its size to do something about emissions.

As my hon. Friend the Member for South Cambridgeshire has pointed out, the incredible success in the 30 years since, during which the UK has grown the economy by 78% while reducing emissions by 44%, demolishes the case that was made at that time by the UK Green party and others. He also makes the good point that the hard work is yet to come. It gets more difficult and the low-hanging fruit has already been picked. Now we have the harder job ahead of us. He talked about carbon capture utilisation and storage and I refer, as in yesterday’s debate, to the fact that the Carbon Capture and Storage Association described Tuesday’s news as “amazing”. I will come back to the Scotland issue in just a moment.

On peatland, my hon. Friend rightly pointed out the Climate Change Committee’s recommendation to restore 67,000 hectares. Currently, only 32,000 hectares have been restored. We are committed to restoring 35,000 hectares by 2025 and 280,000 hectares by 2050. Other points included consumer choice and diet style and those also cropped up later in the debate, as well as the importance of nuclear power. I noticed that two Opposition MPs here today, the hon. Member for Southampton, Test (Dr Whitehead) and the hon. Member for Rochdale (Tony Lloyd), were first elected in 1997, running on a manifesto of ending new nuclear power plants in this country. It was part of the new Labour manifesto of 1997, which I think did so much damage to the nuclear industry in this country and effectively cost us a lost generation in nuclear capability.

I agree with my hon. Friend the Member for South Cambridgeshire that the decade of delivery has come.

[Alan Brown]

What is the Minister’s estimate of the capital cost of new nuclear that the Government are willing to commit the UK to?

[Greg Hands]

That is a slightly open-ended question, as the hon. Gentleman knows our commitment is to the existing Hinkley Point C facility. We are committed to bringing forward one further station for its investment case in this Parliament and on Tuesday we also allocated £120 million for a new nuclear innovation fund, which increases the optionality. What are the options for the UK in nuclear capability and capacity going forward? I just wish we had a more positive attitude on nuclear from the SNP. Scotland is part of this country’s nuclear heritage and it disappoints me continuously to see the SNP not seeing the opportunities available for Scotland in so many of our energy and climate change programmes.

[Alan Brown]

Will the Minister give way?

[Greg Hands]

I will make some progress.

On transport, the hon. Member for Rochdale makes some good points. Let me tell him what we are doing on transport: the zero-emission vehicle mandate, improving consumer choice; further funding of £620 million for zero-emission vehicle grants; allocating a further £350 million of our up to £1 billion automotive transformation fund to support the electrification of UK vehicles; £3 billion on integrated bus networks; and a £2 billion investment to enable half of journeys in towns and cities to be cycled or walked by 2030. Those are big commitments.

The hon. Gentleman talked about homes and the boiler upgrade scheme. It is exciting, but slightly buried in all the news about net zero overnight, that one of the energy companies—it is Octopus Energy, but I expect others are either there or will follow—said that it is confident that by April next year, the installation price of a new heat pump will be equivalent to the price of a natural gas boiler. This is one of the important points about what the Government can do. The Government will not come round to everybody’s home, across the whole UK, and install a heat pump. That would be impractical and it would potentially be beyond the means of the Government and the taxpayer to do that. What we are doing is kick-starting a market and kick-starting private sector innovation to come along and do it, and we are already having an impact in what we are doing on heat pumps.

[Alan Brown]

The Minister is citing Octopus again, but can he tell me, then, what he thinks the installation price of an air source heat pump will be in a year’s time? Did he listen to the points that I made about all the other installation costs that need to accompany an air source pump? Can he give an estimate of what the total cost of that installation would be?

[Greg Hands]

I will not go further down the road of making price or market predictions. What the Government need to be in the business of doing is kick-starting the market, stimulating the market, and getting it going. I do not think it is in my interest to set out predictions of what I think supply, demand or pricing might be in a year’s time.

[Tony Lloyd]

I am genuinely grateful to the Minister for giving way. By the way, I was first elected in 1983 on what was euphemistically called “the longest suicide note in history”, so there are many examples that we can quote.

On the issue of heat pumps, I would put it to the Minister that to give the public confidence in the installation of heat pumps, they first need to know the technical specifications, that they are sound and that there are qualified installers. That means training, which we have discussed already today, but it also means something else. Heat pumps do not work very well unless we have well insulated properties. A combination of things are required in order to make that real difference. I hope that the Minister will address not the ’83 question, but the question of how we deliver heat pumps that work.

[Greg Hands]

The hon. Gentleman makes a very good point. I will come on to the point about installation. He also makes a very good point about insulation and the importance of well insulated homes, which I think nobody denies. But let me just return to the points that he made in his speech.

Local government and local delivery are incredibly important. It is very important that local leadership is seen on climate change. I see it from Mayors such as Andy Street and Ben Houchen and also some Labour Mayors. I think Andy Burnham, the hon. Gentleman’s local Mayor, has been quite good in this space as well. It is important that we all see climate change and taking action on climate change as a cross-party issue involving all the tiers of government and all the available parts of government across the whole United Kingdom.

On energy usage, the hon. Member for Rochdale asked what more the Government can do to address consumption and reduce emissions. The heat and buildings strategy addresses consumption in homes. For example, we provide increased support for low-income households through the home upgrade grant. We are committed to upgrading fuel-poor homes to energy performance certificate band C by 2030 where reasonably practicable. And there is our social housing decarbonisation fund, with £800 million provided. I think that the hon. Gentleman also asked about hydrogen investment. The net zero strategy confirms the industrial decarbonisation and hydrogen revenue support scheme, supporting blue and green H₂ production. It could lead to 1.5 GW of new capacity.

The hon. Member for Bristol East (Kerry McCarthy) asked about quite a number of things, some of which are familiar themes. I just remind her that Cambo has already been licensed as a field, in 2001 and 2004.

I could fill the remaining time on airport expansion. Mrs Murray, you will remember that I resigned from the Government in 2018 over airport expansion at Heathrow. I note that, since I resigned, that airport expansion has not happened and I am not seeing any sign of it happening anytime soon.

The hon. Lady asked about trade agreements.

[Kerry McCarthy]

Would the Minister like to advise us as to whether, if proposals to expand Heathrow are resurrected—obviously, over the last couple of years there has been the pandemic, which has hit aviation—he will resign again?

[Greg Hands]

Again, that is a temptation down a particular road, but let me say this. The Government are absolutely clear that all further airport expansions must be consistent with our climate change obligations. Government policy is absolutely clear on that.

[Dr Whitehead]

Will the Minister give way?

[Greg Hands]

I will make a bit more progress.

Nothing in a trade agreement prevents our ability to regulate environmentally or prevents the UK fulfilling its climate change obligations. The hon. Lady asked about COP26 leaders, and I can give her an update. We have a stellar array of world leaders coming for COP26, including President Biden and the four Ms—Prime Minister Modi, Prime Minister Scott Morrison of Australia, President Macron and Chancellor Merkel. We have leaders of medium-sized economies who will be really important. I spoke earlier today with the Vietnamese Energy Minister Dien and the Vietnamese Prime Minister Chinh is coming. Vietnam is an important player, as well as an important ally and friend to the UK. Its current plans are to double coal usage over the next decade, which will not set the right tone at COP26. We are looking forward to welcoming a wide variety of leaders, some of which are close friends and allies of the UK, and developing economies, of which Vietnam is just one, are also coming.

In terms of the carbon border adjustment mechanism, we watch all the proposals very closely. We need to make sure they are World Trade Organisation compatible, that they are not a disguised form of protectionism and that they do not discriminate unnecessarily against developing countries. Departmental policy decisions are consistent with net zero. We have established two Cabinet Committees dedicated to climate change. The Environment Bill requires the Government to reflect environmental issues in national policy making through consideration of the five environmental principles.

Where are the two EV buses? We have delivered the national bus strategy, investing £12 billion in local transport systems over the current Parliament and delivering 4,000 new zero-emission buses.

The hon. Member for Leeds North West (Alex Sobel) spoke of a scenario where one person on a street puts in solar panels and everybody else says, “I want a piece of the action.” That is a great example of the Government simulating demand. It does not mean that the Government should come down the road and install everybody’s solar panels, though. It shows the effectiveness of Government policy in getting people to sit up, take notice and want to take advantage of something. That is what the role of the Government can be. Heat pumps will be exactly the same.

[Alex Sobel]

To complete that programme, the local authority and housing associations need a payment mechanism. Would the Government not consider using feed-in tariffs just for councils and social housing, not for the private housing sector?

[Greg Hands]

I have already outlined the support we are giving to the housing sector overall. If the hon. Gentleman or any other hon. Member wants to write to me with a specific proposal, I am happy to look at it. I have to say, I was not entirely sure about his recent history—he mentioned COP21 in relation to the election of Donald Trump, which of course came after that, but I may be misremembering his speech, so I will not go down that road.

How many people have been trained in heat pumps so far? We want more to be trained. The figure is around 3,000 and we require 35,000, so that is definitely a challenging position. We have set out Government policy and the direction of travel on heat pumps very clearly and we are waiting for the market to respond.

[Dr Whitehead]

Will the Minister give way?

[Greg Hands]

I am going to make progress. On Germany’s net-zero strategy, I shared a platform with the German ambassador last night, and both of our countries are very supportive of each other’s policies on net zero and the environment. We consider ourselves to be world leaders in this space. On retrofitting, we are committed to supporting businesses and households to upgrade energy efficiency in buildings.

[Dr Whitehead]

Will the Minister give way?

[Greg Hands]

I am going to make a bit more progress. We intend to upgrade as many homes as possible to energy performance certificate band C by 2035.

The hon. Member for Kilmarnock and Loudoun (Alan Brown) talked about the heat pump grant scheme. I am amazed by that. It is a devolved matter, but there have been discussions with the Scottish Government about the Scottish Government joining up with us and participating in this scheme; but if I understand the situation correctly, they have refused. The irony is that the Ofgem team that will be administering the England and Wales scheme will be based in Glasgow, with more than 100 new members of staff. Unless they have a very long commute, they will not be able to benefit from the scheme that they are helping to administer, due to the fact that the Scottish Government have said that they will not be joining the UK Government in the scheme. That is a great pity.

[Alan Brown]

Will the Minister give way?

[Greg Hands]

If the hon. Gentleman has some hot news from the Scottish Government, over to him.

[Alan Brown]

I have not had time to get on the hotline to them. On the point about the additional members of Ofgem working in Glasgow, that is very welcome and I hope they will not have a long commute—that would not be good for climate change overall. The more serious point is about what funding is coming to the Scottish Government to run their own scheme.

[Greg Hands]

The Barnett consequentials will of course be enacted in the usual way as we would expect, but why not join with a scheme that has been very well received, that I think will be a market leader and that will, ironically, be administered out of Glasgow? It makes perfect sense for the Scottish Government to come on board with us.

We have made huge investments in offshore wind and other renewables in Scotland. The hon. Member for Kilmarnock and Loudoun mentioned the 5 GW target for hydrogen being less than in Germany. It is the same as Germany’s target—they have exactly the same target. On wave and tidal, we have already put down more than £175 million in innovation funding across this country, with 10 MW already deployed. In many senses, they are still pre-commercial technologies, but we are making the investment to increase the optionality that will be available in wave and tidal.

I welcome the hon. Gentleman’s overall support for the UK’s targets and ambitions. He mentioned reforms to the electricity market. We recently published a call for evidence on actions to align capacity markets with net zero and actions to encourage the participation of more low-carbon capacity. We are committed to accelerating the deployment of low-cost renewable generation through the contracts for difference regime and by undertaking the review of the frequency of CfD options.

The hon. Member for Southampton, Test, in a comprehensive speech, congratulated us on our success in decarbonising electricity generation. I go back to the commitment given to complete that process by 2035. He said that we are ignoring other areas. I do not think that is fair and I do not think that is the case. He talked about adaptation. We are currently developing a national adaptation programme, which is due in 2023. DEFRA published the response to the Climate Change Committee’s adaptation report, which goes into more detail on our progress on adapting to climate change.

On fossil fuels and net zero, of course net zero does not necessarily mean zero residual emissions in all sectors of the economy. It is, after all, a net zero figure. In aviation, agriculture and industry it may not be feasible, practical or cost-effective to eliminate all emissions.

I thank the hon. Member for Southampton, Test for his praise for the hard work put in by my officials on producing the reports.

The hon. Member for Kilmarnock and Loudoun asked, “Where is the Treasury review of the cost of net zero?” I have news for him—I emailed it to him about 15 minutes ago. It was published on Monday night. It is entitled, “Net Zero Review: Analysis exploring the key issues”. There are 135 pages for him to digest before I see him next, when he can ask me questions about it. It was published at the same time as, or just before, the net zero strategy.

In the past few years, the Government have gone further than ever before to ensure that the climate is at the heart of our decision making. We have taken new approaches to embed net zero in spending decisions, including requiring Departments to include greenhouse gas emissions in their spending review bids and their impact on meeting carbon budgets and net zero. As I already said, we have established two Cabinet Committees. The integrated review reflects that and ensures that it is the Government’s No. 1 international priority. We are also using the Environment Bill to require the Government to reflect all these issues in national policy.

We are committed to taking a whole-system approach to the net zero challenge, ensuring that we understand and can navigate the complex ways that our climate goals will interact with other priorities for the country. As I mentioned, we published the heat and buildings strategy, which sets out the required actions to decarbonise buildings over the next decade, helping meet near-term carbon budgets and getting us on track for net zero by 2050.

[Dr Whitehead]

Now that he has almost finished, will the right hon. Gentleman give way?

[Greg Hands]

I will finish, as I have been speaking for almost half an hour. The net zero strategy sets out clear principles on how we will engage the public and support them to make green choices. We will explore how to enhance public-facing climate content and advice on gov.uk and our Simple Energy Advice service to provide homeowners with advice for decarbonising their homes, including tailored retrofit advice in local areas.

I thank the CCC once again for its expertise and advice in producing its annual report. The Government are committed to delivering a net zero economy, and we welcome the committee’s contribution to this obligation. The net zero strategy sets out a roadmap to cut emissions and create new jobs across the whole country. It comes as the UK prepares to host the UN COP26 summit next week, where the Prime Minister will lead by example and call on other world economies to set out their own domestic plans for cutting emissions. Through the strategy, we are accelerating towards more resilient futures, towards our green recovery and towards protecting our planet for this generation and those to come.