Net Zero: 2050 Target

Tuesday 6th June 2023 Westminster Hall

11:01

[Kwasi Kwarteng (Spelthorne) (Con)]

I beg to move,

That this House has considered Government policy on reaching Net Zero by 2050.

It is always good to see you in the Chair, Sir Christopher. This is the second time in about seven years that I have been able to introduce a Back-Bench debate, so I am very grateful for the opportunity.

I am pleased to be able to say that the net zero agenda—the energy transition—enjoys wider support across the House than practically any other area of policy. Yes, there are sceptics on both sides of the House, but it is extraordinary how widely shared the ambitions for net zero and decarbonisation are. I am grateful to organisations in my constituency and to my constituents. I thank Talking Tree, whose climate emergency centre has promoted decarbonisation in my constituency, and my constituent Hettie Quirke, who has raised these issues with me in constituency surgeries and provided me with my inspiration, or certainly my motivation, for requesting the debate.

This is a matter of great interest to me personally. I was fortunate to be appointed Energy Minister, the post that my right hon. Friend the Minister now ably fills, in July 2019, only a few weeks after we as a Government had passed the net zero Bill and enshrined the 2050 net zero target in law. That target was not simply plucked out of thin air. It is based on a scientific assessment of what we need to do as a global community to keep average temperature increases on this planet below 1.5° compared with 1990.

[Caroline Lucas (Brighton, Pavilion) (Green)]

Does the right hon. Gentleman recognise that at the time when the net zero by 2050 target was agreed, so was the principle of common but differentiated responsibilities? That means that countries such as the UK that can go further and faster must do that, so we should be looking at something much closer to real zero as soon as possible after 2030, not net zero by 2050.

[Kwasi Kwarteng]

As the hon. Lady well knows, she and I have very different views on this. I think that the Government have to carry the population with them, and it was interesting to hear what the unions were saying about oil and gas earlier this week. I would like to be able to press a button and say that we can get to absolute zero by 2030, but I do not think that is possible given the technological constraints and the financial and fiscal pressures. I do not think it is attainable, which is why I am happy to push the target of net zero by 2050.

I want to talk about our ability to reach that target. The hon. Lady is right that we could and should always try to do more, but we are constrained not only by technology but by fiscal necessities and, I might add, by what is going on in the rest of the world. The UK represents only 1% of global GDP, but we are an example and a leader, and we have to be able persuade partners across the G7 and the G20 and particularly in the developing world. As she will appreciate, that is not always easy.

[Jim Shannon (Strangford) (DUP)]

First, I commend the right hon. Gentleman for raising an important subject that we will all have to acknowledge and be involved with. It is clear that to achieve this ambitious goal, we will need more dedicated funding—I hate to say that, but it is the truth. The establishment of the net zero innovation portfolio is a good indication of the Government’s priority, but does he agree that enhanced funding must follow, and must be distributed to all regions, including to Northern Ireland, Scotland and Wales through Barnett consequentials?

[Kwasi Kwarteng]

I commend the hon. Gentleman for making that point, because he knows better than anybody how important Northern Ireland is to the transition. There are some great hydrogen businesses there, in particular. As Secretary of State for Business, Energy and Industrial Strategy I was privileged to visit Queen’s University Belfast, a world-leading academic institution in its focus on new technologies—not only energy technologies but cyber-security technologies and others. I am pleased that he has contributed so ably to this debate, as he always does.

I want to set out a few areas in which we have had successes, and then point out others where we have perhaps found the terrain heavier going and where there have been greater challenges. As I look at British energy policy, I see that some things are going very well and others could be improved.

First, as was mentioned in the previous debate, the biggest success in the net-zero space since I have been in the House has been power generation, including electricity and the grid. Even as late as 2012, 40% of electricity, such as the lights and everything we see around us, was derived essentially from burning coal, using a 19th century technology. Today, that figure is 1.5%. Across 11 years, we have essentially taken coal off the generating grid, which is a huge achievement. Many of us in this room will remember how important coal has been to the political and economic debate in this country. As we were growing up, there was never a day when we did not read about coal strikes, or industry-related issues around coal.

[Richard Foord (Tiverton and Honiton) (LD)]

Will the right hon. Gentleman give way?

[Kwasi Kwarteng]

I warn other Members that I will have to make progress, but I am happy to take this intervention.

[Richard Foord]

I am very grateful to the right hon. Member. On the point about comparing today with 2012, the UK’s draughty houses make up 14% of the UK’s carbon emissions. In 2012, we were insulating 2.3 million houses every year, whereas now we are insulating fewer than 100,000. Does the right hon. Member accept that the Government would have saved taxpayers millions of pounds on the energy price guarantee if they had only kept insulating homes at the rate they were in 2015?

[Kwasi Kwarteng]

Of course, that would have been at great cost, and it would have been brought forward. I do not know what the effect of Putin’s invasion of Ukraine or the sudden spike in gas prices at the end of 2021 would have been in that instance. The hon. Gentleman is right to notice that. If he permits me—I know Members are always enthusiastic to jump in—the insulation of homes and the decarbonisation of domestic heating are issues I will address squarely later in my speech.

Decarbonising power generation has been a relative success. Offshore wind installation has been hugely successful. The target of 50 GW by 2030 is hugely ambitious. The fact that we have already installed 13 GW or thereabouts is hugely significant. No other country, apart from China, has our capacity in offshore wind. As the hon. Member for Tiverton and Honiton (Richard Foord) observed, there are areas where we could do a lot better.

It has been very difficult to land a scheme than can effectively decarbonise domestic heating. Some 90% of the roughly 30 million homes in the United Kingdom rely on burning fossil fuels for heating: broadly 85% gas, and 5% oil. For that reason, it was always obvious to me that one of the quickest and easiest ways we can decarbonise domestic heating is through research and driving hydrogen. Hydrogen can be a substitute for natural gas. We obviously need to do that in a safe way—[Interruption.] I will give way one more time, but I need to finish the speech.

[Mr Jonathan Lord (Woking) (Con)]

I am grateful to my right hon. Friend for giving way. Will he also touch on nuclear? That is an area where we have not made as much progress over recent years as we could or should have done. It is effectively carbon efficient, as well.

[Kwasi Kwarteng]

My hon. Friend will remember my three years as a Minister in the Department for Business, Energy and Industrial Strategy. I was always a passionate advocate for nuclear, because one of the first things I was made aware of was that we need a balanced power generation system with lots of different technologies. In energy, there is no silver bullet, as I am sure my hon. Friend appreciates. We have to rely on a range of technologies in order to provide resilience to the system. Three metrics of any energy system are the “SAS” of security, affordability and sustainability. Those are the three watchwords I recall when I consider this important subject.

As far as I am concerned, and certainly as far as the Government are concerned, unless they have changed their policy in the past few months—this was the case when I was in government—nuclear has to be part of the answer. There is a debate to be had as to what sort of nuclear we need, be it small modular reactors or the large-scale approach. Our view until recently has been that we need a mix of both. I believe that is still the Government’s position, but the Minister can answer on that.

I wish to touch broadly on a couple of areas where, supportive as I am of the Government, they need to be wary and deliberate in their approach. Taxes have been increased, with the windfall taxes and the electricity generator levy, or whatever one wants to call them. I fully understand the political need for them, but we should not be discouraging investment in key technologies. The Government should examine the capital allowance regime and ensure there is more incentive to invest in decarbonisation technologies, not less.

One issue that has bedevilled our power generation system is the grid. I cannot see any colleagues from Norfolk and the east coast, but one issue that they have relates to the connectors, the landing stations and the substations for electricity generated by offshore wind in the North sea. We need to see how we can more intelligently and efficiently create an offshore network that can land this electricity in one point. I would like more Government engagement on that; it has been considerable but the point is important.

I realise that I am running out of time, because others wish to take part in the debate, but I wish to mention buildings, which were touched on by the hon. Member for Tiverton and Honiton. This has been the most difficult nut to crack in the whole decarbonisation space, as we see when we look at various other sectors. I have mentioned the power generation sector, where we have decreased considerably our dependence on fossil fuels, gas burning and coal burning. In the transport sector, electric vehicles have really taken off in the UK. We need more take-up of them, but the transport sector is an area where there has been success. I saw my first EV in Israel 10 years ago, in 2013, at a time when we had zero EVs. As late as 2016 we had very few, and there has now been quite an impressive take-up. If we go down that route, we can imagine a world where we have decarbonised transport to a considerable extent. However, this area of domestic heating and how we decarbonise our housing stock has proved the most challenging.

There are two issues with our domestic housing stock. First, the buildings themselves are not very energy-efficient; we have the oldest housing stock in Europe. Secondly, as I have said, 90% of those houses are rely on the burning of fossil fuels. So there are two criteria on which we are not doing very well. First, as the hon. Member for Tiverton and Honiton said, we have to make sure that we can retrofit and improve the housing stock. Secondly, we have to be smart about how we heat those homes once they have been improved and what the power sources will be. As I have said, there is a big challenge there.

Given the huge reliance on natural gas in our system domestically, hydrogen has to be part of the answer, as we see when we look at where the Germans are. They have a huge dependence on natural gas for industrial purposes, and Putin’s invasion of Ukraine set the cat among the pigeons. German Ministers, including Energy Ministers, and other politicians are focused on how to substitute other forms of power for the gas they imported from Russia. They have ruled out nuclear power and focused on liquefied natural gas and, particularly, on hydrogen, which is a source of energy that the Government could look at again in order to accelerate its deployment.

Briefly, I want to mention what the United States is doing. Since I started at BEIS, one of the biggest changes has been the introduction of the US Inflation Reduction Act. Industrial players in the sector say there is a huge pull to the United States because of the subsidies and support it is giving to green technologies, in a naked and unembarrassed way. As energy Minister, Secretary of State for BEIS and, briefly, Chancellor, I was very keen that we had something to say on this, because it is not just a huge challenge to us but to the European industrial base. Having been in his position, I know that the Minister will not be able to talk about Treasury affairs, but I would be interested to hear the Department’s thinking on the US IRA development.

This is an introductory debate about a subject I am very passionate about, as are many Members here, but finally I want to thank the House and the many varied organisations that have sent me great notes and briefings, which show me that this is one of the most important issues any Government will face in the next 20 or 30 years. I have brought this debate, other MPs will secure further debates before the end of this Parliament, and I am convinced we will revisit the subject in the next Parliament. Many issues that we debate are of largely ephemeral interest, but this matter will affect our children and generations to come, so I am honoured to be able to introduce this short debate today. It is not the first, but one of the very many debates we will have, and should have, about this crucial issue.

[Sir Christopher Chope (in the Chair)]

Before I call Barry Gardiner, I remind hon. Members that we have the wind-up speeches at 5.10 pm at the latest, so each contribution should be a maximum of five minutes.

16:47

[Barry Gardiner (Brent North) (Lab)]

Sir Christopher, under your guidance, I will try to speak swiftly. I congratulate the right hon. Member for Spelthorne (Kwasi Kwarteng) on introducing the debate; I welcome much that he said. We are debating the Government policy on reaching net zero by 2050, but perhaps it would be more appropriate to think about the Government’s barriers to reaching net zero by 2050, because the truth is that we are not on a path to net zero.

Not all is bad. Under the Climate Change Act 2008 and the Environment Act 2021, the UK created a strong legal framework for achieving net zero emissions by 2050. We, on both sides of the House, should be proud of that. However, legal promises alone cannot stand. They must be accompanied by consequential and transformational political action. The question is not what we have committed ourselves to, but how we are implementing the steps that are required to get there.

The Government know that. The 2021 net zero strategy clearly outlines the fact that achieving net zero

“will require the transformation of every sector of the global economy.”

In the 2023 environmental principles policy statement, the Government commit themselves to

“a system that places environmental considerations at the heart of policymaking across government.”

Again, I welcome the language, but the net zero growth plan does not follow that vision. Instead, it sets out a vision for a market led and technology driven net zero transition. A technology centred, market led approach is Government-speak for a voluntarist business-as-usual approach. This is too important to get wrong.

Rooting our net zero approach in technological developments blinkers us to the essential unity of the twin crises of climate and the environment and ignores the very nature-based solutions that the UK Government have rightly championed internationally. It shows a fundamental incoherence in the Government’s philosophical approach. We will neither achieve our environmental goals nor reap the benefits of the economic opportunities of the 21st century if we leave it to the market to lead. The Climate Change Committee has pointed out that while currently more than 31,000 people across the UK are employed in offshore wind alone, that is set to rise to 97,000 by 2030. This is a huge opportunity.

I welcome some of the investment that the Government have committed to achieving net zero, with £30 billion of public investment for a green industrial revolution, £36 billion of funding for improvements in energy efficiency, £20 billion for carbon capture and storage and a billion for low-carbon technologies. The Government appear to remain perfectly convinced that their approach will catalyse around—they say—£100 billion of private investment in developing those new industries and new carbon technologies, such as offshore wind and carbon capture and storage. That is a combined total of £187 billion.

By contrast, the Climate Change Committee has made it clear that we need between £300 billion and £430 billion of investment to achieve our goals. More importantly, it is clear that a strategic programme is required to reform the regulatory frameworks and to remove those barriers to the planning and construction of renewable energy infrastructure. It is not just about money; it is about the whole regulatory framework. The 2022 Climate Change Committee report points out that that has not been done; there is no adequate policy framework for catalysing the large-scale transformations necessary to achieve the established net zero targets by 2050. It is concerned that there does not seem to be any urgency on the part of the Government to do so.

I welcome the independent review conducted by the right hon. Member for Kingswood (Chris Skidmore). He recognised the barriers that remain in place. His review said that the Government should take immediate action, and it recommended 25 short-term policies that the Government should achieve by 2025. The review called those policies “25 by 2025”. The idea was both to remove barriers that prevented business and industries from supporting the net zero ambition and to provide an immediate signal of intent to the private sector that the Government were serious about delivering their net zero target.

We were disappointed on the Environmental Audit Committee when the Secretary of State for Energy Security and Net Zero, the right hon. Member for Welwyn Hatfield (Grant Shapps), responded to questions in our most recent hearing. When asked about wood pellet biomass at the Drax power station—a technology that emits 18% more carbon than coal, yet still remains a critical part of the Government’s net zero agenda—the Secretary of State said that he hoped he might be able to say more in a future session. Well, we all hope that, because we have been eagerly awaiting the Government’s biomass strategy, which was due to be published last year and has still not made it into the public domain. His response on hydrogen, supposedly a key part in the Government’s plan, was equally disappointing. The Secretary of State—

[Sir Christopher Chope (in the Chair)]

Order. We have limited time and the hon. Gentleman has now gone over his time limit. I call Virginia Crosbie.

16:53

[Virginia Crosbie (Ynys Môn) (Con)]

It is an absolute pleasure to serve under your chairmanship, Sir Christopher, and I thank my right hon. Friend the Member for Spelthorne (Kwasi Kwarteng) for calling this important debate. A McKinsey report has stated that the global net zero transition could be worth a trillion pounds to the UK and support just under half a million UK jobs by 2030. It has been described as the economic opportunity of the 21st century. It is recognised that the fastest and most reliable way for the UK to achieve net zero and energy security is to pursue a programme of new nuclear build.

I entered the House in 2019 to represent the constituents of Ynys Môn. They have lived with nuclear power at Wylfa since the 1960s. I stood on a mandate to do everything I could to bring new nuclear to Wylfa. The majority of my constituents support nuclear. They know it is clean, they know it is safe and they know it brings jobs. But Wylfa is being decommissioned, as other nuclear plants have been across the UK. Despite 30 years of promises and the good will of local people, it has yet to be replaced.

Anglesey is known as “energy island”. We have wind, wave, solar, tidal and hydrogen—and, hopefully, new nuclear if I have anything to do with it. Geographically, Wylfa is probably the best new nuclear site in the UK, if not Europe. My constituents in the surrounding area, including Cemlyn, Tregele, Cemaes and Amlwch, and right across Anglesey, desperately need the employment it would offer and give the site that all-important social licence.

I have seen many steps on the way to new nuclear at Wylfa: the British energy security strategy, which specifically mentions Wylfa; the launch of the £120 million future nuclear enabling fund at Wylfa by my right hon. Friend the Member for Spelthorne (Kwasi Kwarteng), who is sitting beside me; and the Nuclear Energy (Financing) Bill. However, we have yet to see the spades in the ground that the people of Ynys Môn and the UK need.

Building nuclear plants takes years. Just going through development consent takes years. In the building of Hinkley C and Sizewell C, we are developing a new generation of nuclear skills that we will lose if there is nothing for them to move on to. We need a plan for how and when we will roll out the Government’s goal of a one gigawatt nuclear reactor going to financial investment decision in this Parliament and two going to financial investment decisions in the next Parliament. We currently produce 3.9 GW of energy from nuclear. That is forecast to decline to 3.2 GW by 2030, with all but one of our nuclear power stations going off line in the next decade.

As chair of the all-party parliamentary group on small nuclear reactors, I welcome the SMR competition announced by the Chancellor in the spring Budget. I am looking forward to the launch of Great British Nuclear and it is brilliant news that for the first time we have a nuclear Minister. Other countries are taking bold and ambitious steps on investment and action in the move to net zero. Without a similar response, we risk losing out on new opportunities and potential economic gains. We have shown that as a Government we can move at speed when we face a crisis. In the Minister’s summing up, I want to hear—given that we are just 27 years away from 2050, we are in a crisis—the Government’s plan to grasp the opportunity and to build new nuclear at Wylfa. Diolch yn fawr.

16:57

[Caroline Lucas (Brighton, Pavilion) (Green)]

It is a pleasure to serve under your chairship, Sir Christopher. I welcome this debate on Government policy on reaching net zero by 2050 and I congratulate the right hon. Member for Spelthorne (Kwasi Kwarteng) on securing it.

I would like to start by setting out the context for the debate. Ministers are very fond of pointing out that the UK’s emissions have almost halved since 1990. However, when we are, in the words of the UN Secretary General,

“on a highway to climate hell with our foot on the accelerator,”

relying on past progress is not enough. Secondly, that figure ignores emissions from imports, focusing only on emissions from the things we produce domestically. Frankly, if we outsource most of our manufacturing, it is not surprising that our emissions go down. We have just outsourced them to countries like China. But we cannot outsource that responsibility and we must not. If we take a consumption-based approach, the UK has only actually reduced its emissions by 23% since 1990. That is equivalent to an average cumulative reduction of just 0.7% a year. That is hardly transformational.

In the short time I have, I want to focus on what is at the heart of the climate crisis, which is our seemingly insatiable addiction to fossil fuels. Frankly, it does not matter how many good things we do or how many renewables we bring on line if, at the same time, we continue to pump yet more filthy oil and gas, and continue to license more oil and gas fields, as the Government plan to do. Let me just make three quick points.

First, new oil and gas will not bring down bills. The right hon. Member for Spelthorne himself noted in February last year:

“The situation we are facing is a price issue, not a security of supply issue…Additional UK production won’t materially affect the wholesale market price.”

Well, I could not agree with him more. He gets to the nub of the issue: we have an energy affordability crisis, not an energy supply crisis. Fossil fuels are not only heating our shared and only home, but are so expensive that they have plunged millions of UK households into fuel poverty, all while oil and gas companies have raked in obscene, record-breaking profits. Our dependence on oil and gas is the very reason for high energy bills. It is somewhat perverse, therefore, that anyone would suggest that they can also be the solution.

We know by now that the way to bring down energy bills is to unleash truly abundant renewables, alongside storage and batteries, and to properly insulate homes to keep them warm over the winter months. It really is not that complicated. It should shock us all that energy bills are now a staggering £9.8 billion higher than they would have been had Government Ministers not “cut the green crap” a decade ago.

Secondly, new licences will not improve energy security, contrary to Ministers’ claims, because it is not our oil and gas—it is owned by private companies, who sell it on global markets to the highest bidder. In fact, the UK’s gas exports increased following Russia’s illegal invasion of Ukraine in response to high European demand. Even if it did belong to us, the majority of fossil fuel projects in the pipeline are for oil, not gas, and we already export around 80% of the oil that we extract because it is not the type used in UK refineries.

That is before we even talk about the fact that despite disingenuous protestations, no one is talking about turning off the taps tomorrow. We are saying that there should be no new licences for projects, which would not come online for many years to come. I refer the right hon. Member for Spelthorne to Lord Deben, the chair of the CCC, who has said how much he supports the policy position of no new licensing of oil and gas. He is a prominent member of the right hon. Member’s own party.

Finally, let us put to bed the idea that, somehow, producing oil and gas domestically is better for our planet. It is commonly asserted that the oil and gas extracted from the North sea than has lower emissions than imports. Although that is certainly the case for liquefied natural gas, imports of which have undoubtedly increased in the last year, it is not the case for Norwegian oil and gas, where the majority of our imports typically come from. In fact, the UK’s production is two-and-a-half times more polluting than Norway’s because the UK uses practices such as flaring and venting, which have been banned in Norway since the 1970s.

Furthermore, the Government maintain that new extraction is entirely in line with delivering net zero, but that is only because they have washed their hands of emissions produced when the oil and gas are burned—otherwise known as scope 3 emissions. Surely those have to be taken into account if we are truly to understand the impact of fossil fuels produced in the UK. The Climate Change Committee has been clear that extra oil and gas extracted in the UK will

“support a larger…market overall.”

When the International Energy Agency and so many other experts say loudly and clearly that it is simply not compatible with our climate change objectives to be pursuing new oil and gas, we simply should not do it.

17:02

[Selaine Saxby (North Devon) (Con)]

It is a privilege to serve with you in the Chair, Sir Christopher. Many thanks to my right hon. Friend the Member for Spelthorne (Kwasi Kwarteng)—it is a pleasure to be back discussing floating offshore wind with him. As chair of the all-party parliamentary group for the Celtic sea, both he and the Minister have spoken to me at length on this issue.

I fully support the UK Government’s commitment to ensuring that floating offshore wind makes up 5 GW of energy by 2030, but everyone will recall that the Celtic wind blows the other way to the wind in the North sea, which is why it is vital that this project goes ahead. The recent administrative strike price in the allocation round for contracts for difference did not, unfortunately, take into account the unprecedented global economic pressures that have led to costs rising by 20%.

An already challenging picture in the Celtic sea has been exacerbated by delays in leasing rounds for projects by the Crown Estate, as well as the lengthy amount of time that key strategic ports have had to wait for the Government to announce the much welcomed floating offshore wind manufacturing investment scheme, which is essential to the funding to deliver port infrastructure. I fear that, at this pace, we will miss the opportunities of flow in the Celtic sea by 2030, and potentially deter much needed international investment into the Celtic sea.

I agree with my right hon. Friend on buildings, but I have a particular concern as a very rural MP. Some decisions around rurality and how we change our housing need to be looked at differently. That is why I supported the ten-minute rule Bill of my right hon. Friend the Member for Camborne and Redruth (George Eustice) on hydrotreated vegetable oil as an alternative for oil fired, which is used in 25% of off-grid properties.

I would like to come to biomass. I declare an interest as chair of the all-party parliamentary group for the wood panel industry, which is not the stuff on the walls but basically kitchens and the like. I thank the Minister for his engagement on this matter. In my mind, burning wood for energy is a short-sighted and environmentally damaging endeavour. Wood is too valuable a resource to simply burn, given it is the best way to sequester carbon and avoids the use of environmentally damaging materials in the economy. Wood-dependent industries are struggling to get the wood supply they need. Addressing that should be a focus of policymakers. We need to change direction.

We cannot rely on bioenergy with carbon capture and storage for energy security under net zero scenarios. We are fooling ourselves if we think that we can. Proponents argue that BECCS will help to contribute to energy security, but that is inaccurate. BECCS comes with an energy penalty, as it requires energy to power the CCS unit and to provide power to the grid. Because of that, BECCS can either maximise power generation or CO₂ capture. It cannot do both. Given that it was previously reported by the Financial Times that the regulator had appointed a Drax consultant, Black and Veatch, to carry out an assurance audit into the company, I hope that the formal investigation recently announced by Ofgem will be carried out independently, thoroughly and transparently. It should not be a desk-based inquiry, as has been the case before. As we look to these new technologies, it is vital that they really are sustainable and that we are on the right road towards net zero.

We have not touched much on transport. As an active travel champion, I am concerned that tomorrow’s National Audit Office report will again show that we are not meeting the goals to achieve our active travel measures and that we need to do more to decarbonise every different element of our society. The transition to net zero is a multifaceted mission that needs a robust and well-calculated response, with each part fully calculating its energy contribution and all its carbon costs, including transportation. Those need to be properly analysed along with their financial contributions in generating the energy that we fundamentally rely on. The new Exeter University EC simulator, which I visited last week, may well be a step towards independent analysis of different projects as we continue the challenging but vital work of moving towards net zero.

17:06

[Gavin Newlands (Paisley and Renfrewshire North) (SNP)]

It is a pleasure to serve with you in the Chair, Sir Christopher. I admire the chutzpah of the right hon. Member for Spelthorne (Kwasi Kwarteng) in bringing forward the debate. Not only did he make questionable decisions as Secretary of State for Business, Energy and Industrial Strategy with regard to Scotland’s net zero ambitions, but he was then responsible—along with the previous Prime Minister—for crashing the economy and making net zero far more expensive for this Government, as well as everyone else, due to the soaring cost of borrowing for capital investment.

The right hon. Member spoke about nuclear energy; we really need to move away from the nuclear obsession. Hinkley will now cost £33 billion and it is years late. Sizewell C, which will invariably cost upwards of £40 billion, is located on a site subject to coastal erosion and climate change sea rises. SMRs are not the answer, either. There is no approved design, they have an estimated cost of £2 billion each and Rolls-Royce is hoping for an initial order of up to 15. That is £30 billion of commitment better spent on energy-efficiency measures, storage and the electrification of heating. Nuclear is also inflexible and not a good accompaniment for intermittent renewables. Yet further investment in storage is therefore required.

The right hon. Member described pumped-storage hydro as a Scottish technology. The First Minister recently wrote to the Prime Minister urging him to agree a cap and floor mechanism that will get Coire Glas, the Cruachan extension and other pumped-storage hydro schemes up and running. They cost a fraction of what nuclear does and need only the revenue mechanism to release private capital investment.

Contracts for difference have been a success in delivering the deployment of renewables. However, in the Tories’ typical penny-wise, pound-foolish attitude, their lowest cost obsession has seen a major failure to develop UK supply chains properly. It is Tory procurement processes that have prevented Scotland from properly becoming the Saudi Arabia of wind. It is crystal-clear that a coherent industrial strategy is required. That said, I am pretty sure that we had one, and we all know what happened to it lately. The failure to invest—[Interruption.]

[Sir Christopher Chope (in the Chair)]

Does the right hon. Member for Spelthorne (Kwasi Kwarteng) seek to intervene?

[Kwasi Kwarteng]

I would be happy to do so.

[Gavin Newlands]

I would be delighted to give way.

[Kwasi Kwarteng]

Of course, the hon. Member is quite right that I, with the then Chancellor, suppressed the industrial strategy, but what we have done—[Interruption.] Thank you very much—I thought we had stringent rules about phones and calls and that sort of thing, but it seems to me that every time I speak, someone has got their phone on.

Anyway, we have got an innovation strategy and an energy security strategy. We have tons and tons of strategy, and that more than fills the gap of what was a woolly and ill-defined industrial strategy.

[Gavin Newlands]

I thank the former Secretary of State and Chancellor for his intervention, but I profoundly disagree with his take on this. I will go on to talk about this at the end of my speech, but the strategies he mentions do not have much in them. If we look under the bonnet, there is nothing there. For him to say that those strategies more than make up for the loss of the industrial strategy is for the birds, to be quite honest.

The failure to invest in upgrading the transmission system between England and Scotland has resulted in nearly £5 billion-worth of constraint payments—money that could and should have been invested in grid upgrades. Developers in Scottish waters are now having to connect to the grid in the north-east of England, bypassing Scotland altogether. That said, it is one way to avoid the utterly ridiculous and outrageous additional grid charges that penalise developers in Scotland. The right hon. Member was also in post for the further betrayal of Acorn CCS, which is the most advanced project and the one with most delivery certainty, but it is still waiting for Government support. That belies the Tory commitment to net zero.

My hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown) and I have visited several businesses and projects in the highlands, Orkney and Aberdeen that are hugely important to reaching our net zero targets. Storegga, of the Acorn Scottish cluster, was one, and another was the hugely impressive European Marine Energy Centre in Orkney—the real energy island in the UK.

Not content with providing innovators the platform with which to test tidal energy, EMEC has come up with solutions to add value to the energy produced, including an electrolyser complemented by storage batteries producing green hydrogen, which in turn is to power other projects such as a combined heat and power unit at Kirkwall airport and a hydrogen fuel cell at Kirkwall harbour to provide clean shore power to ships tied up there. I say “is to”, because delivery of the hydrogen is an issue. Apparently, due to Maritime and Coastguard Agency regulations, the hydrogen can only be delivered if there is no freight and fewer than 25 passengers on the ferry. Those regulations seriously curtail EMEC’s good efforts.

Come to think of it, where is the Government’s coherent strategy on delivering hydrogen, full stop? They talk hydrogen up often enough, but those who are producing it struggle to deliver it. You could not make it up, Sir Christopher. It is obvious that tidal stream needs a bigger ringfence than it currently has. As is often the case, we lead on innovation, research and development in this country but, just at the point where a new sector needs public sector investment to ensure that we retain that lead and the supply chain benefits that flow from it, the UK once again prevaricates and allows someone else to reap the economic benefits.

To conclude, there is a big risk that allocation round 5 will be a complete failure, like last year’s Spanish auction, with strike rates now too low due to inflation and rising costs, as mentioned previously. Again, the Government—more specifically, the Treasury—are tone-deaf, as they are in their attitude to the Inflation Reduction Act in the United States, which is causing investors to rebalance their portfolios across the Atlantic. The Government are now taking credit for work undertaken by the Scottish Government; whether it is tree planting or zero-emission buses, they have subsumed the Scottish targets into UK targets to hide their own failures. No doubt active travel will be next.

The Tories’ record on net zero is a litany of failure; when we look under the bonnet, there is no mechanism nor the required investment for delivery. Scotland is doing so much more, but with one arm tied behind its back. As in so many other areas, Westminster is holding Scotland back.

17:12

[Kerry McCarthy (Bristol East) (Lab)]

It is a pleasure to see you in the Chair, Sir Christopher.

I congratulate the right hon. Member for Spelthorne (Kwasi Kwarteng) on securing this debate. I am pleased to see that he is still pursuing an interest in net zero. I agree with some of what he said, but there were some points I would have liked him to cover. For example, when he talked about the grid, as the hon. Member for Paisley and Renfrewshire North (Gavin Newlands) has just said, the biggest problem is not the question where the pylons go in east Anglia, but the lack of grid connectivity, which is a massive obstacle to economic growth. That is something we need to solve as we move towards greater use of electricity in our industrial sector.

Three former Business Secretaries, from the Lib Dems, Conservatives and Labour, have all come together today to bemoan the lack of an industrial strategy, so I do not agree with the right hon. Member for Spelthorne on that. He talked about retrofitting homes, which is obviously important, but it would help if we stopped building homes that do not meet energy performance certificate C standard. We are compounding the problem, having built more than 1 million homes since the zero carbon homes pledge was dropped that do not meet that standard.

The right hon. Member for Spelthorne mentioned green levies and incentives for decarbonisation. It would have been interesting to hear his thoughts on the hydrogen levy. We were in the Energy Bill Committee earlier today and it must be said that, based on Second Reading of that Bill, there is a lot of unhappiness on both sides of the House. We will oppose the hydrogen levy on bills, and I would welcome his support on that, because I do not think we should be putting the burden on consumers when it is mostly industry that will benefit.

[Kwasi Kwarteng]

Just to clarify, is Labour opposing the hydrogen levy on bills, or its removal?

[Kerry McCarthy]

The House of Lords voted against the hydrogen levy

on bills on the basis that it is a regressive measure and we should not be adding to the burden on consumers. We support that position; the Government think that it should go on bills, where it is the industry that benefits. There have been reports that the Secretary of State is due to U-turn on that position very soon, so the right hon. Member might want to be ahead of the curve and jump the right way before the Secretary of State does.

[Kwasi Kwarteng]

I am sure that the Secretary of State does not need my encouragement, or otherwise, to come to the right decision.

[Kerry McCarthy]

I am sure that the right hon. Member would be a very persuasive voice.

The Government’s commitment to a net zero target is to be welcomed, but a target for a date set far into the future—2050—is pretty meaningless unless it is backed up by a comprehensive road map as to how we are going to get there. We know that the majority of that journey needs to be done in the very early years, with just the hard-to-decarbonise sectors following at the end, so we need to know how much ground we are going to cover and when. The Government were taken to court on this issue last year, with the High Court ruling that they had provided insufficient detail. There was a big hype about “green day” at the end of March; eventually, the Government decided that it was not quite green enough and changed its name to something else, but what we got was a plan that—even in terms of our 2030 nationally determined contribution—only sets out how we would deliver 92% of that. We are still way off track.

Net zero is not a slogan or a mere box-ticking exercise: it is a whole paradigm shift that we must instigate, as a country and as a global community. Scientists are warning that we are likely to breach the 1.5° threshold in the next four years. We are running out of time, and we need to do everything as fast as we can. There has been a lot of negativity in recent days about net zero, with people pushing back against Labour’s announcement that we would not support any new oil and gas licences. Again, people have been repeating that old trope that it is too expensive to reach net zero, when we know that renewables are far cheaper now.

The Government do not seem to grasp that this is a huge challenge for the country, but as has been said, it is also an enormous opportunity. The right hon. Member for Kingswood (Chris Skidmore), who authored the recent net zero review, said that it is

“the economic opportunity of the decade—if not the century”

to create a new economy. As the right hon. Member for Spelthorne mentioned, President Biden has not only recognised that opportunity, but seized it with the Inflation Reduction Act, and the EU has responded with its green deal industrial plan. The Chancellor has said that he will come up with a response in the autumn, which is at least better than the response from the Energy Secretary, who tells us that the UK is already decades ahead of the USA. The Minister has said that the rest of the world is “playing catch-up” with us. We do have 22% of the world’s offshore wind installations, as I suspect the Minister will tell us, but we have only 2% of global wind industry jobs—that is just one example. A country such as Denmark, which recognises the export opportunities, has over eight times as many jobs as the UK for the equivalent wind energy capacity.

Businesses I meet now are describing the Inflation Reduction Act as a game changer, and are warning that they will transfer investments to the US. There have been occasional success stories—the news that Jaguar Land Rover is set to establish a gigafactory in the south-west, in Bridgwater, is very welcome—but that comes with a sense of relief that that company has made that announcement, rather than real confidence that there is a coherent industrial strategy that will deliver the 10 gigafactories that the Faraday Institution predicts we need. I would dispute the Minister’s suggestion that we are decades ahead: we need to have a coherent industrial strategy, a response to the Inflation Reduction Act sooner rather than later, and a revised net zero strategy that shows that we really are on course to meet that goal.

17:19

[The Minister for Energy Security and Net Zero (Graham Stuart)]

It is a great pleasure to serve under your chairmanship, Sir Christopher, and to listen to this excellent and important debate. I begin by congratulating my right hon. Friend the Member for Spelthorne (Kwasi Kwarteng) on securing it. Of course, I come to this debate with some trepidation, as I am facing someone who did my job previously and then, unlike me—yet, anyway—went on to be Secretary of State at what was then the Department for Business, Energy and Industrial Strategy. He made immense progress on our path to net zero and energy security

I would not normally be rude, but I hope that the hon. Member for Paisley and Renfrewshire North (Gavin Newlands) can perhaps move on, as we debate more often, from a rather adolescent approach to one that more genuinely engages with the substance. His was not a particularly brilliant contribution to this debate in comparison with those made by other Members, which I thought actually had some substance.

My right hon. Friend the Member for Spelthorne oversaw the publication of the landmark, world-leading net zero strategy. The independent Climate Change Committee described it as

“an ambitious and comprehensive strategy that marks a significant step forward for UK climate policy”

and as

“the world’s most comprehensive plan to reach net zero”.

It is worth highlighting a couple of points. When we came to power in 2010, just 7% of this country’s electricity came from renewables; now it is well over 40%. The issue of insulation and the number of houses being insulated was also raised. I do not know why the Liberal Democrat member who raised it, the hon. Member for Tiverton and Honiton (Richard Foord), is no longer here for the winding-up speeches, but anyway—he raised it before leaving the Chamber. It is worth noting that in 2010 the figure was just 14% and by the end of this year I expect that 50% of homes will have reached energy performance certificate level C or above, which is a huge—indeed, transformative—change, albeit one that needs to go much further and faster.

My right hon. Friend the Member for Spelthorne oversaw COP26, which was the biggest summit that this country has ever hosted. It brought together 120 world leaders and over 38,000 key figures from Governments, civil society, businesses, youth and more, in order to tackle the urgent challenge of climate change. It is also worth noting that we have met all our carbon budgets to date and that we are the first major economy to legislate for net zero—done under this Government. So this country is more on track than almost any other country and certainly more than any major economy on earth. That is the context that people could be forgiven for not realising was in fact the case from the rather adolescent contribution of the Scottish National party spokesman. I will leave to one side any comments that the chairman of the Climate Change Committee has made about the Scottish Government’s performance in meeting their climate targets, because doing otherwise would be to descend to the level that the SNP spokesman stayed at throughout his speech.

[Barry Gardiner]

When the Minister says that this country is “more on track”, does that mean that we are “on track” or that we are just closer to being “on track” than anybody else?

[Graham Stuart]

That is an excellent question—we have exceeded every carbon budget to date. We not only have the net zero strategy but we had the net zero plan on 30 March, setting out how we will do it. Of course that stretches through to 2037. Not every aspect of the way in which we will fulfil that aim has been set out to date—people would not expect them to be 14 years before that date—but we are on track. What we have to do is make sure we stay on track. I would not try to represent to the House today anything other than the fact that it is an extremely challenging business to ensure that we continue on track. That is what we are working on flat-out.

My right hon. Friend the Member for Spelthorne oversaw the publication of the British energy security strategy, which raised greatly the ambition set out in the net zero strategy, and since those documents came out the Government have continued to progress. In March, we published the Powering Up Britain package, which demonstrates that we are on track to reach net zero, and in the net zero growth plan we are bolstering delivery. That plan responds to the expert recommendations made in Mission Zero, the independent review of net zero, to which there has been reference in the debate, which explored how we can achieve net zero in the most pro-growth, pro-business way.

Our net zero ambition needs strong public and private partnership, and we are forging these links in a number of ways. Government policy and funding commitments are already leading to real outcomes, and we are leading the world in so many ways, not just on offshore wind.

The Government are committed to accelerating renewable electricity deployment. The Powering Up Britain package sets out our delivery plans for meeting those ambitions. It includes important announcements on a range of technologies, including up to £160 million of new funding to kick-start our investment in port infrastructure to deliver on our floating offshore wind ambitions, which were referred to earlier, and a new solar taskforce to drive deployment of that important technology as we seek to increase that fivefold by 2035. We launched the taskforce on 25 May, getting key players from Government, industry, regulatory organisations and other relevant organisations round the table to drive forward the actions required to deliver that ambition of deploying 70 GW of domestic and industrial rooftop and ground-mounted solar by 2035, all while cutting installation costs, boosting British skills and jobs, and improving grid access to support a solar power revolution.

[Barry Gardiner]

The Minister rightly refers to the need to improve our electricity supply from solar. Has he looked at the interconnection that is proposed from Morocco to come in at the Hinkley juncture? Are he and the Department now considering a contract for difference, which would enable that contract to go ahead?

[Graham Stuart]

I thank the hon. Gentleman for his question. We are looking at the Xlinks project. We have set up a team to look at it with no further commitment other than to make an assessment. It will be reporting to me shortly on that. We will look at the outline business case going forward. We are looking at it; I do not want to go further—positively or negatively—than saying that.

[Gavin Newlands]

I realise it is a stretch for the Minister to try to portray himself as the adult in the room with his contribution, but he mentioned good access. Will he therefore tell us what will happen with the grid constraints across the border, even in Orkney where all the energy it produces cannot actually be fed into the grid? When will that be resolved?

[Graham Stuart]

I thank the hon. Member for that question. It is a good question because the grid constraints, transmission and local connection are the biggest barriers standing in the way of decarbonising our electricity system by 2035. That is why the networks commissioner was asked to investigate that and will be reporting to us this month. That is why the Prime Minister appointed for the first time a Minister for Nuclear and Networks, my hon. Friend the Member for West Aberdeenshire and Kincardine (Andrew Bowie), who is working on that. The hon. Member for Paisley and Renfrewshire North is absolutely right to point out that the transformation we have seen in renewables, the change in our generation system and the requirement to grow our electricity capacity going forward puts enormous strain on that and creates not only supply chain, financing and deployment challenges in that space, but political ones because of the infrastructure impact on communities. A lot of work is going on in that space, and I am working closely with Scottish Government colleagues and other colleagues to try to ensure that we work in the most coherent manner possible.

We have heard mention in the debate of the need to improve the energy performance of homes across the country. Notwithstanding the transformation we have brought about—it is not enough—that is why we have established a new energy efficiency taskforce to drive forward improvements. That is why we are spending £12.6 billion over this Parliament and up to 2028 to support and provide long-term funding and certainty, supporting the growth of supply chains and ensuring that we can scale up delivery over time. Only yesterday I visited Octopus Energy’s centre, looking at how that company is trying to design heat pumps to be cheaper to install and more efficient, so they can drive the cost down and speed up the time it takes to install them, thus making the decarbonisation of heat in homes, which is a thorny and challenging subject, more realistic and deliverable.

The delivery of net zero relies on strong business action. That is why we brought together senior business and finance leaders into a new strategic net zero council co-chaired, alongside myself, by Co-op Group CEO Shirine Khoury-Haq. It includes Carl Ennis, CEO of Siemens; Ian Stuart, UK CEO of HSBC; Chris Hulatt, the co-founder of Octopus Investments, and others from UK business. The full membership reflects the cross-cutting nature of our net zero challenge. The next meeting is planned to be held in No. 10. We are mapping all the various business and sectoral organisations focused on net zero, looking to ensure that we have the most coherent architecture and that we can develop road maps for each sector, so that we can take the cross-cutting nature of Government in other policies and put it into something that people in particular sectors can more easily adjust to and adapt and that investors can invest in. The green jobs delivery group was formed after the publication of the net zero strategy and followed work by my right hon. Friend—

17:30

Motion lapsed, and sitting adjourned without Question put (Standing Order No. 10(14)).