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Lord Offord of Garvel
To move that this House takes note of the affordability of achieving the net-zero emissions target by 2050.
Lord Offord of Garvel (Con)
My Lords, how appropriate that this debate should be scheduled on the day after President Trump told the world to grow up, play fair, pay its own way and become self-reliant. The stark reality is that the UK cannot become self-reliant with the most expensive energy in the OECD, hence the title of this debate: that this House takes note of the affordability of achieving the net-zero emissions target by 2050.
I begin by illuminating your Lordships’ House on my personal position on net zero. First, I am not a climate change denier. In fact, in September 2015 I had the great pleasure of going to the North Pole with David Hempleman-Adams, where I witnessed for myself the polar ice cap melting. Secondly, I attended COP 26 in Glasgow in November 2021 as the Scotland Office Minister, where I advocated enthusiastically for net zero 2050 and the leading role the UK played. I pay tribute to my noble friend Lord Sharma, who is in his place today: when the UK took the presidency of COP 26 in 2019, 30% of the world had signed up to the concept of net zero, and when he handed over the role two years later, 90% had done so.
When I recently took on the Opposition Front-Bench role on energy, I had no particular ideology on energy. But, like any sensible business executive taking on a new role, I threw myself into the brief and went on a journey of discovery to learn from external stakeholders and experts what net zero really means for the UK. I shall share what I have found with your Lordships’ House.
Perhaps I should open with just two caveats. The first is from Dieter Helm, considered an expert in these matters and not particularly party aligned. He says that in the UK we have one of the most complicated energy systems in the world. The second caveat is that with the vast sums of money at stake here, there are vested interests which are very loud and very vocal. With those two caveats, let me give your Lordships an overview of what I found on net zero.
In 2004, the UK was energy independent: we could meet our internal demand with our own supply. In the last 20 years, both Governments have reduced their hydrocarbon production such that we now import 40% of our total energy needs, costing £40 billion a year. The result is that the UK now has the highest electricity prices in the OECD: ours are five times those in the US and seven times China’s for industrial usage, and three times the US’s for domestic usage. These exorbitant energy prices mean that the UK has deindustrialised, such that our economy and employment is today 80% services and 20% manufactured goods.
The concept of net zero was to set a target of 2050 whereby we would switch our energy dependence from 75% hydrocarbons to 25% hydrocarbons. Yet today, in 2025, we remain stubbornly dependent on hydrocarbons for 72% of our energy needs, with 40% imported. The reality is that our 20-year experiment with renewables, mostly windmills and solar, has failed because the add-on costs of subsidies, levies and grid upgrades have doubled household bills. Their intermittency means they can never provide reliable and consistent baseload and that we will always be dependent on gas as our reserve.
Meanwhile, renewable storage is impractical. Today in the UK, we have storage for only 30 minutes. Even accessing all the world’s combined storage today would give us only 12 hours. All the while, the upgrades to the grid required to distribute intermittent renewable energy from remote wind and solar farms has been costed by Aurora at £116 billion over the next 10 years. That amounts to £4,000 extra per household or £400 per annum, all of which means that the real cost of renewables is vastly higher than for gas, which can be distributed through our existing grid network, while also being unreliable. Finally, there has been no employment benefit to the UK because most of the capital equipment is manufactured offshore, mostly in China, and only 58% of our highly skilled hydrocarbon workforce is transitioning to renewables and at wages one-third lower, which explains why our highly skilled workforce is haemorrhaging abroad.
In answering numerous questions on this topic, the Minister insists that our energy prices are high because of international gas markets. This is a false narrative. The reality is that from 2008, household electricity prices began to diverge from wholesale prices of gas and electricity, which were broadly stable until 2021 and the Ukraine crisis, so why did household electricity prices accelerate away from wholesale prices faster in the UK than in the rest of Europe in the same period? Indeed, UK industrial electricity prices today are six times the price of wholesale gas, versus three times that in Germany and two-and-a-half times that in France.
Something other than the international wholesale price of gas must be driving higher electricity prices in the UK—and we now know the answer. It is all the subsidies, levies, curtailment payments and grid upgrades required by renewables, particularly offshore wind. Over the next five years, the total cost to households of renewable subsidies and levies is estimated by the OBR to be £95 billion. That is £3,400, or a staggering £680 per annum, per household.
I now turn to baseload. The simple reason why renewables will never be a reliable baseload in any energy system is their intermittency. Sadly, in the UK sometimes the sun does not shine and the wind does not blow. In the UK, gas is relied on as a reserve energy of last resort, or baseload, when the intermittency of renewables means that there is either no supply at peak demand or too much supply at reduced demand. This means that no matter how many wind farms we build, we can never switch off our gas reserve, which in turn results in massive duplication.
As a simple market mechanism, the market price will be determined by the marginal price of switching the gas reserve on and off, which has the grotesque outcome that windfarms are making huge profits based on the marginal gas price rather than on their own costs of production plus a margin. Instead of making our own homegrown gas production cleaner and more efficient, we have weighed it down with the associated cost of offshore wind, such that 50% of the fuel costs of gas power stations are in the form of carbon tax.
Moreover, our gas fleet dates from the 1990s and early 2000s, and is running at only 40% efficiency. Modern combined cycle gas turbines are the most carbon-efficient way to produce power through gas, with emissions at 45% of coal-fired power stations. At current prices, new CCGTs could produce electricity at £65 per megawatt hour, compared with new offshore wind at £90 to £120 per megawatt hour. Their capital cost is £500,000 per megawatt compared with offshore wind at £3 million per megawatt—one-sixth of the price. They also give 100% efficiency, versus 40% for wind. Meanwhile, nuclear remains the most emission-compliant baseload, which is why in France the cost of electricity is half that in the UK.
I turn now to energy security. The geopolitics of 2025 mean that energy is no longer just industrial policy; it is at the very heart of national defence. The UK now imports 70% of its gas, largely from Norway and the USA—thankfully, both friendly nations. Of peak UK gas, 20% comes through the Langeled pipeline between Norway and the UK. What havoc would be unleashed in the UK if that pipeline was ever sabotaged?
It begs the question of why we are shutting down domestic production of oil and gas—which supports an entire sector of 200,000 jobs, brings much-needed tax revenue to the Exchequer and contributes to our net-zero target—while importing gas from the same North Sea via Norway. Why should we put ourselves at the mercy of Chinese imports for offshore wind?
There is an opportunity to reset the geopolitics of Europe. German industry has also been hit by high energy prices, caused by divestment from nuclear and subsequent overreliance on Russian gas. If we want to deweaponise energy in Europe, surely Britain’s role as a clean and efficient homegrown oil and gas producer is crucial to our energy security.
I put it to noble Lords that it is time for a rethink and that 2025 is a good year to reassess net zero by 2050. COP 26, which I attended in Glasgow in November 2021, represented peak global enthusiasm for net zero. The UK led the way, with a commitment to switch from 75% to 25% hydrocarbon use. It is interesting to note that just two months ago, in February, out of the 195 countries party to the Paris climate agreement, only 10 submitted updated climate targets to the UN. Of these, only three G20 countries submitted an updated target, and only one country reaffirmed a 2050 target with a pathway—the UK.
How can it be credible to shut down our homegrown gas baseload, when we account for 1% of global emissions? China is opening one coal-fired power station per week and contributes 31% of global emissions. The fact is that the UK’s extortionate energy prices are damaging our economy, yet the gas both offshore and under our feet in the post-industrial heartlands of central Scotland, the north and the Midlands could generate an exciting new industrial revolution. As good citizens of the world, the UK can legitimately retain the ambition to have the cleanest energy system by 2050, but only if it produces cheaper energy which will increase the prosperity and security of our citizens.
Net zero 2050 is a laudable ambition that was passed through the House of Commons in 70 minutes in 2019, without any real assessment of its achievability. It has now become a straitjacket that is preventing the UK from resuming our place in this modern world as an industrial, technological and military powerhouse. In 2025, it is now clear to see that it is neither practical nor affordable, and it behoves all of us to think again. That is why I am proud that my party and my leader, Kemi Badenoch, has had the courage to grasp this thorny nettle. She made it clear in her keynote speech two weeks ago that net zero 2050 is unachievable. This requires our party in opposition to do some serious work to set out an alternative plan for the citizens and businesses of the UK—a plan that, at its heart, is affordable.
Baroness Curran (Lab)
My Lords and Ladies, I am delighted to speak in this debate this afternoon and to follow the noble Lord, Lord Offord. This is only my second speech in this House, and I am pleased to make it on such a vital subject. I look forward to the maiden speech of my noble friend later.
The specific focus on affordability is welcome, but it gives me cause for concern. I thought it would imply, but it clearly states, the objective that we cannot now afford our commitment to net-zero emissions by 2050. Of course, the most fundamental response to that is: we cannot afford not to. I am tempted to speculate that the shift of policy that the noble Lord refers to perhaps reflects some internal political considerations on behalf of the Conservative Party, but I do not intend to get into that temptation and indulge in any political discussion, because this is too serious and too urgent. We must maintain our focus on the realities of climate change and the necessity of delivering on our commitment to net-zero targets.
None the less, I accept the value of questioning the viability and the detail of targets, because we must guarantee that they are realistic and deliverable. My experience in Scotland is a case in point. The Scottish Government have chased headlines with targets ahead of the UK, without taking the necessary actions, as has been clear to all. Now, their targets are deemed unrealistic, following a damning assessment by the Climate Change Committee, thus undermining the credibility of those targets. Setting targets that cannot be met proves counterproductive and breeds cynicism.
I stand here as a hard-headed Glaswegian who has learned to be sceptical of unworkable, even if worthy, targets. I have lived through industrial and energy transitions that have blighted communities and have blighted generations, and I am on alert for leaders who promise change but do not put in place the means or resources to deliver fair and positive results. But I say to noble Lords and Ladies this afternoon that that is not an excuse for inaction. Yes, question the target and examine the evidence, but avoiding action for reasons of political expediency is unforgivable and is an abject failure of leadership.
In considering the evidence that I argue we should examine this afternoon, let me refer to the words of a Minister in the other place:
“Our latest estimates put the costs of net zero at under 2% of GDP—broadly similar to when we legislated for it … with scope for costs of low-carbon technologies to fall faster than expected”.—[Official Report, Commons, 7/9/21; col. 139.]
That was in 2021, and the Minister making that statement was none other than Kemi Badenoch. Her current repositioning has raised alarm across the political spectrum, not least from our former Prime Minister, the noble Baroness, Lady May, who stated that the target
“is supported by the scientific community and backed by the independent Climate Change Committee as being not just necessary but feasible and cost-effective”.
Moreover, no one should be permitted to make claims about the costs of achieving the net-zero target without factoring in the costs of doing nothing. As the OBR has recently stated,
“unmitigated climate change would ultimately have catastrophic economic and fiscal consequences for the UK”,
and that reality must be faced too. That is why clean energy is properly a central mission of this Government and helps us to maintain our commitment to net zero.
The CBI has said:
“Now is not the time to step back from the opportunities”
of green jobs, warm homes and energy security. It also found that the net zero economy is growing three times faster than the overall UK economy. As has been referenced, we must of course consider the future of the North Sea in all of this—and it is the clean energy mission that offers a hope for the future for the North Sea, with its incredible clean-energy potential.
We know that the North Sea is a maturing basin. Oil and gas production has seen a natural decline of 72% from 1999 to 2023. The industry has lost around one-third of its workforce over the past decade. Oil and gas will, of course, continue to play an important role for decades to come, but we must seize the opportunities of the clean energy transition, harnessing the North Sea’s unique strengths—offshore infrastructure, highly skilled engineers and deep supply chains, boosted enormously of course by the establishment of Great British Energy in Aberdeen.
As I say, I am that hard-headed Glaswegian, and I am clear that as Glaswegians we like to think that we see it as we find it and tell it as it is—and so we must. Of course, as the noble Lord said, we must face the stark realities, as he put it. The stark reality that we must face is climate change and what it will do to us; it is here and it will impact on all our lives. So let us galvanise around the clean energy mission and deliver the targets, because that is the future that our people need.
Lord Teverson (LD)
My Lords, I feel that I ought almost to congratulate the noble Baroness, Lady Curran, on her second speech to the House. I also look forward very much to the maiden speech of the noble Lord, Lord Rees.
I am almost embarrassed to admit that one of my first times as a Front-Bench spokesperson was during the consideration and passing of the Climate Change Bill in 2008, which came about largely because of the report The Economics of Climate Change, from the noble Lord, Lord Stern, which was of global significance. The great thing about that time was the unanimity and constructive nature not just of this House but of the other place as well. In this House, the Conservative Front Bench spokesperson was the noble Lord, Lord Taylor of Holbeach, and the never-to-be-forgotten and still very active the noble Lord, Lord Rooker, was Minister for Defra at that time, before DECC existed. There was unity on the idea that this was something that needed to be addressed.
We were the first globally to have such a comprehensive Act and set a net target of minus 60%, I think it was at that time, for emissions relative to 1990—later changed to 80% during the passage of the Bill. It went through with negligible opposition in both Houses, and since then that unity has continued to grow. As has been mentioned, the noble Baroness, Lady May, introduced and passed net zero for the Act in 2019. In a way, that was the high point of unity in this Parliament.
We then had Rishi Sunak as Prime Minister. To be honest, Mr Sunak was not really interested in this area at all. He took some persuasion to go to his first COP. He went in the end, but his heart was not there. After the by-election in Uxbridge, when Boris Johnson resigned, there was a feeling—mainly because of the ultra low emission zone argument going on—that this was the time to start to question net zero. Mr Sunak did three things; first, he delayed heat pumps; secondly, he delayed the ban on internal combustion engines; and thirdly, he took away some of the plans for energy efficiency on tenanted housing.
However, to give Mr Sunak his due, he unsuspectingly asked his former Energy Minister, Chris Skidmore, to produce a report on net zero independently. For the benefit of the Conservative Front Bench in particular, Chris Skidmore was no bleeding-heart liberal. He came up with these conclusions as part of his report, under the heading
“Net zero is the growth opportunity of the 21st century”:
first,
“The UK must act decisively to seize the economic opportunities”;
secondly,
“The benefits of investing in net zero today outweigh the costs”;
thirdly,
“Net zero can materially improve people’s lives—now and in 2050”;
and, lastly,
“Net zero by 2050 remains the right target for the UK: it is backed by the science”.
That was a former Conservative Front-Bencher—not anybody who would ever be a Liberal Democrat—yet those were his conclusions.
Mr Sunak paid little attention to that and stayed on his retreat. What was the result? He lost 251 seats in the House of Commons last year. I suspect that his move towards Reform was not particularly successful, and that that will continue to be the case.
We now have the leader of the Opposition, first, declaring herself a “net-zero sceptic” and, secondly and more recently, saying that net zero is “impossible” without “bankrupting” the nation. The consequences if we do nothing are, as the noble Baroness just said, far greater. To give two macro examples, the CBI reported a 10% growth in the green economy in 2024 whereas the rest of the economy stayed pretty well as it was. On the micro side, the Government expect the warm homes plan to save individual households £140 per household. That would be far more if we had a proper future homes standard.
The UN climate chief, Simon Stiell, said that climate breakdown
“is a recipe for permanent recession”.
If we follow the Conservative Party down the route it is taking then that is where we are heading. I suggest to the noble Lord, Lord Offord, that he reads his colleague Chris Skidmore’s report to really get how this works.
Lord Stern of Brentford (CB)
My Lords, the road to net zero is indeed the growth story of the 21st century. The noble Lord, Lord Teverson, rightly reminded us that that was the conclusion of Chris Skidmore’s report. I and many others have argued the same.
The clean is cheaper than the dirty across much of the economy. There is rapid innovation in the new technologies. Better energy efficiency is higher productivity. Cities where you can move and breathe more easily are more productive than those where you cannot. Air pollution kills around 35,000 people a year in the UK and maims and disables many more.
The strong and fruitful investment necessary to realise these gains will itself drive growth and productivity. Our economy desperately needs such investment and the increase in productivity it will bring. With good public policy, most of that investment will be in the private sector. There is no horserace between tackling climate change and generating growth. On the contrary, the former drives the latter.
Let us look at some specifics for the British consumer and dispose of the nonsense that the green transition drives up energy bills. I do not recognise the description given by the noble Lord, Lord Offord. For detail of a more serious analysis, I refer him to the outstanding work of the Energy Transitions Commission, chaired by the noble Lord, Lord Turner, who is here today. All the numbers I use will be referenced from tomorrow on the website of the Grantham Research Institute at the LSE.
An average household today spends around £4,000 a year on energy bills and car running costs. Net-zero measures could save between a quarter and a third of this. Allowing for capital costs, a driver could save up to £400 a year by switching from petrol or diesel to an electric vehicle, an average household could save up to £550 a year through energy efficiency, and installing solar panels could save £300 or so a year. Further, there is substantial scope to cut electricity prices by reducing the overwhelming role of gas in pricing, by spreading transition costs over a longer period and shifting them on to gas, where they should be, and by making markets work better over space and time. The issues here concern affordable finance, facilitating the practicalities of change and lowering the price of electricity as lower-carbon and lower-cost options play an ever-increasing role. These will require clear and strong public policy, but staying with the dirty and costly makes no sense.
Let us look at the job opportunities. Currently, the UK’s low-carbon economy generates more than £80 billion in gross value added per year—close to 3% of GDP. It is projected to grow at 10% year on year, as the noble Lord, Lord Teverson, reminded us, and will likely overtake the important creative and financial services sectors within the next 10 to 15 years. It is a big deal. It already generates around a million jobs, with hotspots in Scotland, Hartlepool, Nottingham, and Redcar and Cleveland. Low-cost, low-carbon energy will be crucial to our future in AI and our competitiveness more generally.
Let us look at energy security and resilience. The UK’s dependence on fossil fuels involves great risk. The 2022 invasion of Ukraine triggered a dramatic spike in natural gas prices, household energy bills more than doubled and many were pushed into poverty. It cost the UK Exchequer around £56 billion in emergency support—close to 2% of GDP. A UK fuelled by wind, solar, hydro and nuclear will have cheaper energy and be much more economically and energy secure.
Let us remember why we must go for net zero. On current policies, the world is heading towards global average temperature increases of 2.5 or 3 degrees centigrade. We are fast approaching 1.5 degrees centigrade and the possibility of tipping points which could make climate change unmanageable. Continuing in this way would likely make many large, heavily populated parts of the world uninhabitable through inundation, intolerable heat, desertification, extreme weather events and disease. We have to keep the science right at the forefront. Hundreds of millions, probably billions, would have to move or perish. We would destroy much of the biodiversity and natural capital on which we depend. The effects would be devastating. Delay is deeply dangerous.
Let us also remember that the UK matters. Although we contribute less than 1% of global emissions, we are rightly seen as a leader. Indeed, we were the first G7 country to commit to net zero by 2050 under Prime Minister Theresa May in 2019. COP 26 in Glasgow—I have been to all the COPs since 2006—in December 2021, under a Conservative Government and led splendidly by the noble Lord, Lord Sharma, who is here today, was a landmark. The Liberal Democrats have long championed the issue and I wrote the Stern review for the UK Treasury 20 years ago as a civil servant under a Labour Government. If we fracture or fail, other countries may back off. Let us not lose the cross-party commitment which is critical for investor confidence and the sustainable prosperity we seek.
The world cannot afford the risks that delay would bring. That is the opposite of realism. The UK cannot afford to pass up the tremendous opportunities that lie in the new growth story of the 21st century.
The Lord Bishop of Southwark
My Lords, this is a timely debate. I am very glad to be able to speak in it. I am reminded that the preacher in the Book of Ecclesiastes says:
“To everything there is a season, and a time to every purpose under heaven”,
including—I dare to mention in your Lordships’ House—a time to speak and a time to keep silence.
For the Church, increased costs have a material effect on what we can do, but I am as reluctant as anyone else to tilt at windmills or turbines. Not only the scientific consensus about human activity and climate but the dramatic changes of one’s lifetime—expanding deserts, retreating glaciers, rising sea temperature, extreme weather events—lead me to believe that this is a situation where the option is not “when”, or even “what”, but “how”. As with other great crises, we must shoulder the burden, and it is a challenge to our political leadership to share this task. In the Church of England, we have an exceptionally challenging target set by General Synod of achieving net zero by 2030. The national Church has ring-fenced £190 million to support its churches and clergy housing towards this goal.
In the diocese of Southwark where I serve, and the borough of Southwark, our share of national Church funding has seen 18 of our churches embarking on co-funded projects that will directly reduce our CO2 emissions. Further, 42 of our highest-emitting churches across the diocese have been offered a free energy audit and a starter grant from the Church of England to begin to take action to reduce emissions. We have, in addition, selected two churches—St Bartholomew’s in Horley and St Paul’s in Herne Hill—as demonstrator churches to provide an evidence base to demonstrate that rapid transition is possible.
That said, the need and the investment bring tangible benefits, as we have heard from other noble Lords. Churches and church schools around the country report significant savings in their energy bills as a result. In a wider context, the Energy and Climate Intelligence Unit has reported that the UK’s net-zero sector grew by over 10% between 2023 and 2024, and generates—no pun intended—£83.1 billion in gross value added. The growth in employment in the sector is four times that of the economy as a whole. The lifetime cost of electricity generation for new solar panels, as of 2021, is 11% lower than the cheapest form of new fossil fuel generator, and onshore wind is 39% cheaper.
To continue along this path will mitigate the otherwise fearful future ahead of us. The Office for Budget Responsibility last year calculated that severe weather could cost the UK economy 8% in GDP by 2050. The impact on poorer regions of the world, some of whose Anglican dioceses are linked to my own, will be dramatically greater and will cause a consequent upheaval and movement of populations. That will have major impacts on countries such as ours.
Yet if we pursue net zero by 2050 with the spirit, ingenuity and imagination at our command, and cherish the creation given us, we may yet begin to restore some of the damage our species has done. John Keats wrote:
“O what can ail thee, knight-at-arms,
Alone and palely loitering?
The sedge has withered from the lake,
And no birds sing”.
Little did he realise that his poetry heralded the perils we face if we abandon our vigilance. The challenges of net zero are hard, but they are not unaffordable. The price of hesitation, though, will be irreversible. The time is now.
Baroness Jones of Moulsecoomb (GP)
My Lords, I signed up to this debate out of a sense of duty, because as a Green—I point out to the noble Lord, Lord Stern, that Greens have been saying this for 50 years—I felt I had to put forward the interests of the planet and people, but now I have to follow four excellent speeches that I wish I had made myself. Nevertheless, I feel much less weary about this debate. A lot of us here, I think, know that the question is not about whether net zero will cost the UK money, because we all know that cheaper renewable energy and better insulation will pay us back over time. It is about who pays for the transformation to a green economy, who benefits from the switch away from fossil fuels and how much it will cost everyone if we do not do all we can to stop climate change getting worse.
The previous Government held back progress in a shameful way, and I am very concerned that this Government too are not as focused as they could be on the solutions that are more practical than the ones they propose. Climate chaos will hit our economy hard, whether we reach net zero or not. Global warming is already with us; the increase in the scale of wildfires and flash floods are just the first—quite mild—symptoms. We might focus on the increased energy of an individual hurricane season sucking up energy from the warming air, but it is the growing shift in temperature ranges and droughts that should really concern us. The changes to agricultural productivity around the globe will mean scarcity, inflation, famines and movements of people that could impact very seriously on other areas.
Some Governments will collapse. A country that rebuilds and bounces back from one major catastrophe will eventually collapse if that one-in-a-thousand climate event is repeated year after year. California is one of the most affluent places on earth, yet whole areas have been abandoned by private insurance, and people cannot afford either to rebuild after the wildfires or to move away because no one will buy their house. That is the new normal all over the world. Our economy is part of a global economy, and when parts of that international trade start to collapse, there will be far bigger impacts than Donald Trump’s tariffs.
If we want to know where all the objections to net zero have come from, we have to follow the money. The Conservative Party leader has abandoned net zero by 2050 because she is in the pay of the climate deniers in Tufton Street. She made the announcement immediately after receiving donations from the Global Warming Policy Foundation and the linked pressure group Net Zero Watch. At least four members of Kemi Badenoch’s shadow Cabinet—including her shadow Net Zero Secretary, Claire Coutinho—have also received donations from funders of the group. It was the same under the previous Government, with the fossil fuel lobby writing this country’s laws. The right-wing think tank Policy Exchange got money from American oil giant ExxonMobil. Policy Exchange then advised Prime Minister Sunak on drawing up new laws to clamp down on protesters such as Just Stop Oil. That is two-tier democracy: the people with the big money get access to the Prime Minister to create draconian laws aimed at silencing the people with not very much money.
That is how modern Parliament works. It is systematically corrupt and biased in favour of those with fat wallets. It starts with the fossil fuel industry making money out of killing the planet and ends with Ministers colluding with that destruction by dishing out new licences and tax breaks for North Sea oil and gas. Those who object, even if they do so peacefully and non-violently, are arrested and convicted for just planning a protest—as we saw at the Quaker meeting house just last week.
I am sure that Labour Peers still see themselves as good people—despite all the cuts and the thousands of children thrown into poverty—but the Government are happy for the police to use the draconian law that the previous Government introduced. Labour spoke against it but sat on its hands and let it pass, and now it is not rescinding or repealing it. This Government obviously have some responsibility for the arrests and police behaviour last week. If they think the police did something they should not have done, and if they do not think the police were right, they really ought to start thinking about repealing those draconian powers.
The Green Party wants an end to government by cheque book. We would get rid of all the vested interests that promote the expansion of Heathrow and Luton and the growing number of private jets. We would stop money being wasted on expensive climate cons such as the Drax power station, new nuclear, and carbon capture and storage. The noble Lord, Lord Offord, mentioned something about this; it was so irritating that I had to write it down. He said that “renewable storage is impractical”. Well, so is carbon capture and storage. He should get some more information about that; it is absolutely failing.
We should put solar panels on schools and new homes—all of them, not just token changes for the sake of a photo opportunity. The Green Party would make sure that all new homes become energy producers and that communities, rather than corporations, benefit from the renewable power in their part of the country. This is the way to get people on side with a green new deal—not changing the planning rules, threatening newts and sending in the bulldozers.
Lord Berkeley (Lab)
My Lords, it gives me great pleasure to take part in this debate. I fully support my noble friend’s policy on trying to achieve net zero. We have heard many noble Lords speak about the need to do it—most noble Lords anyway. I would just like to say a few words about how to achieve it, because the issues relate to—as we have heard some noble Lords already mention—cost and reliability. Does the technology work or is it something in the dim, distant future? How is the energy distributed, what fuel does it replace, how it is produced? Of course, there is also security.
I will give two examples. The first is a pump storage scheme, which I worked on—it must be 50 years ago, I am so old now—on the River Severn. The great thing about pump storage—which has now come up again in people’s ideas—is that you can predict when it can produce energy, because you know when the tides are going to come in and out. It is quite simple. The key is to get a good place and planning and the right energy to make that work and produce low-cost energy at a reliable time.
I spoke about my second example briefly in the debates on the energy Bill. I have to declare an interest: I am one of 4 million people who live in a house in the country which does not have gas, and therefore we have to burn oil or use electric. There are a lot of—some 25,000—people working in this industry and it is quite a well-developed source of energy, which avoids you having to convert to air or ground source heating, which, as noble Lords will know, will probably cost between £15,000 and £30,000, and is actually quite beyond most people’s means. The main question is: where does the source of the fuel come from? The answer is it comes from second-hand cooking oil and things such as that.
It also needs distributing. It is worth looking at the way energy needs, assuming they are going to go down the wires in the future, will get distributed around many parts of the country which do not have it at the moment—we cannot see it at the moment.
My noble friend spoke about what is happening in Scotland, and I am told that the cost of increasing the amount of power needed to change the infrastructure in Scotland is somewhere between £900 and £1,300 per home. That is a lot of homes in Scotland. We have to look at the cheapest and easiest way of achieving this without having to change your boiler or having to keep the electric switched on.
This is why the Governments of Scotland, Northern Ireland and the Republic of Ireland have all committed to using these new fuels as a key part of their decarbonisation strategies. I rather worry that some members of our Government seem to be more keen to build a third runway at Heathrow and use second-hand cooking oil to fuel all the planes that may need it. I hope that is not serious, because there is a greater need of this material for other things, besides enabling you to get to Guatemala rather more quickly.
I have two requests for my noble friend the Minister. First, will he acknowledge the needs of the rural, off-grid households within the forthcoming warm homes plan? If not, the Government will not have fully recognised the issues that these households are facing, and it is a serious issue for people who cannot afford it. I imagine that it applies to churches as well, because we do not want to be shivering either in churches or at home.
Secondly, we have the primary legislation in place via the Energy Act 2023 to create the necessary obligation mechanism, which would give the necessary market signals and certainty to the industry to roll out these fuels for home heating and reduce cost to the consumer. It does not need a public subsidy, grants or even Treasury money. All we need, I am told, is the Secretary of State to activate Section 159(3) of that Act and launch a public consultation to gather the views of the stakeholders involved. Will my noble friend commit to that when he responds to the debate?
In the meantime, I congratulate all noble Lords who have spoken in favour of net zero, and let us hope we keep at it.
Lord Howell of Guildford (Con)
My Lords, I am certainly not a climate denier. I believe that world emissions are continuing to rise quickly, despite all our efforts and all the warnings of the noble Lord, Lord Stern, and many others, and the difficulties of controlling the climate seem to be growing rather than decreasing. I am not even against having targets of a kind. Ambitions and targets are all right for Governments to have, as long as people are not misled into thinking that if they spend enough money it will all work when it does not. I am certainly not against John Keats and many of his associates as well; that is a lovely world we all aspire to. But I want it to work for a modern economy and a modern society of social stability rather than bitterness, division and real suffering by millions of people.
There are two gigantic question marks over the present path of our policy. I do not want to get into partisan points, but you can say the pathway was set in the past, but it seems it is being followed with zest at present. These worry me a lot. We are fooling ourselves if we ignore the real problems of these two gigantic questions.
The first is cost. The costs for net zero range widely. The official figure, from the Committee on Climate Change, is £1.4 trillion; it is £3 trillion, according to National Grid; figures of £6 trillion to £10 trillion are batted about as well—Net Zero Watch has those very high numbers; and the Energy Technologies Institute has said that the cost of decarbonising housing alone could be up to £2 trillion. So we are talking about the most enormous resources, and it is irresponsible not to ask in detail where on earth they are going to come from and who is going to pay. I am looking at the capital side—I have not come to consumers.
The Government do not have any money—they say that all the time. We all want a lot more. There are endless demands; there is a huge defence bill looming. The financing of this whole gigantic transition will have to be predominantly from private sources, private capital, working in new forms of co-operation with public capital. There is a whole area of thinking on this, which was addressed very interestingly in the New Statesman about two weeks ago, on how new forms of co-operation can be developed between government and the private sector—there is plenty of money in the private sector around the world, ready to invest in Britain—and how that can be done with entirely new thinking, getting away from the old, stale ideological debates about state and markets. I would love to hear a lot more of that coming out than we hear at present. Not much thinking seems to be going on in that area: too much old ideology, not enough new ideas. That is the first question.
The second question is: where is the clean electricity coming from to replace the whole negativism, the whole abolition of oil and gas, that is hoped for and will of course take many years—perhaps until 2030, 2035 or even 2050? That has to happen if we are serious about a form of net zero and decarbonisation. People are very reluctant to give an answer.
The official line is that we are going to need about 200 gigawatts in all, against our present figure of 65 or 70, of which half, on average throughout the year, comes from renewables at present. Of course, it will be much more in the future. The snag is that for 3,000 hours throughout the year, which is about one-third of the year, there is no wind around the entire British Isles. There is a major intermittency problem, and it has to be addressed. An intermittency fulfilment by generating enough electricity at the rate which I think is coming—about 300 gigawatts or 350 gigawatts—is very expensive, for the simple reason that it cannot be used to earn profits all the time. It sits there idle, and someone has to pay.
We know what the answer is. We know that we must let our much-diminished nuclear system, which was run right down, be restored. There are some huge decisions to be taken: some for SMRs, which are the small, new technologies, and others—I look on this with great reluctance—for still plodding along with the old white elephant giant technologies. Those are full of risk, with investors reluctant to go near them and demanding enormous government input of resources, and, of course, charges on consumers.
There is a proposition I find incredible, following Hinkley, and which is in deep trouble. The chairman of the managing body, EDF, has just been sacked by the French Government and it has been advised not to invest further in foreign areas and to concentrate on cheap electricity for the French. The proposition is to replicate this very bad example at Sizewell. It seems absolute madness and the wrong direction. We should be going for SMRs; the order books are filling up. Other nations are ordering SMRs on every side, and we will be late in the queue. We should get on with it now.
That is the necessity and, unless we face it, we can order new combined cycle gas stations—indeed, we are doing so, because we can see that the so-called decarbonisation by 2030 is going to involve more gas, not less—but the carbon from them will have to be captured by new schemes, of which one, I think, has been commissioned. In fact, we need about 10 or 15 of them, but we have not started on that. The hope of getting there by 2030, however much we spend, is very remote and thin indeed. It is a delusion, and a very dangerous one, which the public will turn on angrily when they realise they have been misled.
It is possible to get a cleaner, better society and an energy transition. In the past, it has happened through markets; this time we are trying to make it happen through the activities of government itself, which is much more difficult, but possible. Whatever we call it, honesty and reality will have to be faced on an unprecedented scale, and that should be a matter for extreme concern in the minds of the governing party.
Lord Freyberg (CB)
I thank the noble Lord, Lord Offord, for initiating this debate. I am looking forward to the maiden speech of the noble Lord, Lord Rees of Easton, whom I warmly welcome to the House.
The need to dramatically reduce carbon emissions to prevent climate catastrophe is clear. As the noble Lords, Lord Teverson and Lord Stern, have said, the Climate Change Committee has established a scientifically sound pathway to achieve net zero by 2050. Our challenge now is ensuring that we reach this target while stimulating economic growth.
The clean energy transition is already under way, with solar and wind offering the cheapest forms of energy generation. This cost advantage is likely to improve further as gas and electricity prices decouple. Households and businesses embracing decarbonisation will see significant financial benefits in the near term. Crucially, we already possess many of the technologies needed to decarbonise. Renewable energy, electric vehicles, heat pumps and energy-efficient buildings are not futuristic concepts; they are scalable, increasingly affordable and often outcompete fossil fuel alternatives.
The construction sector illustrates this opportunity perfectly. Currently, one-third of UK construction materials is sourced internationally, making the sector vulnerable to global price volatility and supply chain disruptions, as exemplified by today’s US tariffs. A smarter strategy would be to develop a robust domestic supply chain using renewable bio-based materials such as hemp, timber and mycelium. This approach would reduce embodied carbon in buildings, strengthen the UK’s industrial base, support rural economies and improve our trade balance. Natural materials also promote healthier environments and enable safer construction practices.
The wider transition to net zero holds similarly transformative economic potential. Green industries offer a platform for revitalising UK competitiveness and fostering regional economic renewal. The path to net zero is not a cost but an investment in future prosperity. However, as the noble Lord, Lord Berkeley, said, this transition must be fair, protecting low-income households and ensuring that regions historically reliant on carbon-intensive industries are not left behind. Government policy has a critical role through targeted subsidies, retraining programmes and smart regulation. Private capital must also have its part, as the noble Lord, Lord Howell, said. With predictable regulation, stable carbon pricing and ambitious procurement policies, we can unleash green investment. The financial sector is already awakening to climate risk. We must encourage a proactive pivot towards opportunity.
Thanks to clear objectives set by Theresa May in 2019, the UK has led the world in attracting foreign direct investment in the renewables sector, excelling in both capital expenditure and job creation. Foreign investors in renewables have committed more to the UK than to the US, Germany, France, India and China combined. In 2022 alone, £55.1 billion was invested, compared with just £0.6 billion in France and £10.1 billion in Germany. The evidence speaks for itself: the net-zero sector is growing three times faster than the overall UK economy.
As the noble Lords, Lord Stern and Lord Teverson, have mentioned, CBI analysis shows that the sector grew by 10.1% between 2023 and 2024, compared with 3.2% for the overall economy. Forward-thinking businesses with ambitious ESG strategies are accessing exclusive financial opportunities. The London School of Economics analysis has found that while reaching net zero initially requires annual investments of 1-2% of GDP, it will generate savings by approximately 2040. While this figure is not insignificant, it is crucial to understand this in context. These investments represent a re-direction of existing capital flows rather than wholly new expenditures.
Let us consider the alternative—the costs of inaction. It was a pleasure to hear the speech of the noble Lord, Lord Stern, earlier. His report and subsequent analyses have made it clear that the economic damage from unmitigated climate change will far outstrip the investment needed for transition. Delaying action only compounds these costs. The Office for Budget Responsibility’s analysis concludes:
“From 2040 onwards, net operating savings are projected to outweigh investment costs. And by 2050, the CCC projects a £19 billion annual saving”.
The same report warned that:
“Unmitigated climate change would ultimately have catastrophic economic and fiscal consequences for the UK”.
The question of whether we can afford net zero is the wrong question. The real question is whether we can afford to continue our high-carbon status quo. The answer is no. The costs of delay are too great and the benefits of action are too numerous. Net zero is beneficial for business, essential for the economy and necessary for our environment.
Lord Sharma (Con)
My Lords, my noble friend Lord Offord noted that, under the UK’s leadership of COP 26, we went from less than 30% of the global economy covered by a net-zero target to nigh on 90%. That would not have been possible without the then Conservative Government showing domestic leadership and ambition—first, in our 2030 emissions reduction targets and then by having enshrined into legislation net zero by 2050. Why did countries sign up to net zero? Why did they sign up to the Glasgow climate pact? Why did they decide that it was time to tackle and take action against climate change?
First—and a number of noble Lords have noted this—countries acknowledged the science that human activity is unequivocally responsible for rising temperatures. Secondly, countries recognised the negative impact of a changing climate on lives, livelihoods and infrastructure in their own countries, and the growing economic and human cost of inaction. I have to say that many of those economic estimates for inaction that have been put forward recently are stark. Unless the world is prepared to act collectively, we will be heading into economic and environmental planetary insolvency. I do not think that that is putting it too strongly.
Thirdly, countries and businesses recognise that the drive to net zero offers enormous economic opportunities for jobs, growth and inward investment. Yes, we have seen some recent geopolitical headwinds, but the reality is that many countries and companies—not least in Asia, where I was a few weeks ago—are sticking with their climate commitments and continuing to invest in clean energy, electric vehicles, hydrogen, SMRs and energy efficiency. They are building their economies for tomorrow.
I agree with noble Lords who have talked about the G20, the biggest emitters, having to step up and do more, but the reality is that every country needs to play its part. Nearly a third of global emissions come from countries like ours whose individual territorial emissions are 1% or less of the global total. It is vital that we all act.
I turn to the cost of net zero in the UK. The Climate Change Committee brought out a report a few weeks ago on the seventh carbon budget and it said that the net cost of net zero will be around 0.2% of GDP per year, on average. The CCC expects that upfront investments will lead to savings during the seventh carbon budget period, and much of this investment is expected to come from the private sector. It is also worth emphasising that the CCC’s net cost estimates have been falling significantly: the estimate was between 1% and 2% of GDP in 2008, it was less than 1% in 2019 and it is 0.2% of GDP today. This is driven by cheaper and more efficient green energy and technologies. I welcome the earlier comments from the noble Lord, Lord Stern, on clean energy.
As there is for the rest of the world, for our country there is a big cost of inaction on net zero. A number of noble Lords, including the noble Baroness, Lady Curran, referenced the OBR’s fiscal risks report. She talked about the 2021 report, but the most recent one has climate change in the top three long-term pressures on the public purse. That report is clear that rising temperatures impact productivity, agricultural output, energy costs and, ultimately, people’s lives and livelihoods.
On the flip side of that coin, there is a big economic opportunity, which a number of colleagues have talked about, in pursuing net zero. The private sector absolutely gets this. Colleagues have referenced the CBI report showing the 10% increase of growth in the net zero sector last year; it is now generating more than £83 billion in gross valued added and supporting almost 1 million jobs in our country. That number is growing, and private investment has driven that growth. I agree that it is key to get more private sector money flowing.
At this point, I want to refer the House to my entry in the register of interests, particularly my chairmanship of the City of London’s Transition Finance Council. The council’s aim is to leverage the UK’s existing strengths to become the best place in the world to raise transition finance in support of the UK’s and the world’s net-zero ambitions. As part of the Transition Finance Council, we will play our part to try to get more private sector money flowing.
Then there is the issue of cross-party consensus. I think that it is cross-party consensus on net zero over the past two decades, which many of us in this House have striven to maintain, which has given the private sector confidence to invest in the UK. I personally believe that a go-slow on net zero will have seriously negative economic, environmental and reputational impacts for the United Kingdom and, frankly, could end up costing the British taxpayer a lot more than keeping on track.
I want to end, as a good Conservative, with the words that Margaret Thatcher said in 1989 at the United Nations:
“The environmental challenge that confronts the whole world demands an equivalent response from the whole world. Every country will be affected and no one can opt out”.
Those are the wisest of words, which every political party should take heed of.
Lord Ashcombe (Con)
My Lords, it is a pleasure to follow my noble friend Lord Sharma. I agree with his last statement, but maybe not everything else. I am grateful to my noble friend Lord Offord for bringing this important debate before the House today, and I look forward to the maiden speech of the noble Lord, Lord Rees of Easton.
The debate is particularly timely given the economic challenges that the UK faces. Growth forecasts have been halved by the OBR and the Bank of England. Economic growth depends on affordable and plentiful energy supply, but energy in the UK is certainly not cheap. Before I continue, I should declare my interest as an insurance broker for the energy industry, predominantly in America.
The UK accounts for only 0.81% of global emissions, as we have heard, according to the International Energy Agency. In contrast, the top three emitters—China, the USA and India—are responsible for over 50% of the world’s emissions yet show little interest in reducing them. China is rapidly building coal-fired power stations, while the US has a clear stance on prioritising oil and gas production over environmental concerns.
The UK’s industrial electricity prices are 62% higher than Germany’s and more than four times the cost of electricity in the USA. This is putting real strain on our economy.
The UK’s energy mix still relies heavily on hydrocarbons, at 72%, with only 8% coming from renewables such as wind, solar and hydro. Nuclear contributes 7% and biomass, for which I have no great love at all, 13%. The goal of achieving net zero is admirable, but at what cost? There is growing concern that the renewable energy sector is receiving a near-unlimited budget while the hydrocarbons sector is increasingly penalised.
How many truly understand their domestic electricity breakdown? It includes the wholesale cost of electricity, network costs and charges for environmental and social programmes. For April to June, the breakdown is wholesale costs of £387, network costs of £544, and environmental and social costs of £168. The domestic customer will be paying a 43% surcharge on the wholesale price to help meet climate change targets.
When combined, according to the OBR, the green levies for all domestic and industrial users are expected to raise £12 billion in 2024-25, £12.9 billion in 2025-26 and £15.2 billion in 2026-27. These are vast sums, yet green energy accounts for only 8% of our country’s energy usage and 37% of the electricity generated.
Lazard’s Levelized Cost of Energy shows that the lowest-cost sources of energy are onshore wind and solar, and combined cycle gas generation. All face significant challenges. Wind is intermittent, the sun does not always shine and geographical and planning constraints limit its potential. Meanwhile, any further licensing of offshore hydrocarbon production is currently under review. There has of course been significant offshore wind expansion, but it has come at significant cost.
North Sea hydrocarbon production is rapidly declining. The NSTA predicts it will halve by 2030. However, estimates by OEUK suggest that 12.5 billion barrels of oil equivalent may remain. The UK oil and gas demand is anticipated to be 13.5 billion to 15 billion barrels of oil equivalent until 2050. In addition, the massive onshore gas potential in the Gainsborough Trough could have a similar impact to shale in the US, increasing tax revenue and reducing import reliance. Importing gas, especially LNG, is far more polluting than producing our own hydrocarbons, as LNG emissions are more than three times higher than domestically produced gas. Some our remaining heavy industries, such as Grangemouth and Scunthorpe steelworks, are under threat. While it may be too late to save some, acting now to encourage the use of our own resources could prevent further damage and even foster advanced industries, such as the energy-hungry AI sector.
It is good that the UK has been an absolute trailblazer in reducing emissions, but it is clear that leading alone is insufficient when the top polluters are unwilling to act. The UK economy is experiencing stagnation, but there is a way forward. We must reduce costs, cut emissions and provide an opportunity for the country to grow, while creating a sense of optimism and prosperity. The key is leveraging our own resources and finding a balanced, practical approach to energy policy that allows for both environmental progress and economic growth.
Lord Turner of Ecchinswell (CB)
My Lords, I declare my interest recorded in the register, which relates to a battery-manufacturing company. Our debate today asks us to take note of the affordability of getting to net-zero emissions, but of course we know that the background is that the leader of the Conservative Party has asserted that getting there is unaffordable, and indeed impossible without a serious drop in living standards. She has also declared that the UK has foolishly committed to achieve net-zero emissions without any plan in place for how to get there.
Nothing could be further from the truth. There are very clear plans set out in the immensely detailed reports of the Climate Change Committee that have been accepted by Governments, both Labour and Conservative, over the past 17 years. The latest CCC report estimates that the overall cost of getting to net zero could amount to around £4 billion per annum over the next 25 years, which would be about 0.2% of GDP over that period. Let me be absolutely clear: that includes incredibly detailed analysis of the costs of the storage and flexibility assets required to offset the intermittency of wind and solar, which is absolutely technologically possible.
I would note, in response to the comments of the noble Lords, Lord Offord and Lord Howell, that there is a tendency for many people to mention intermittency as if they were the first person to think about it and nobody had looked at it before. In fact, it is an issue on which the CCC was focused right from the point in March 2008 when I became the first chair. It has been analysed in detail by many people and is achievable.
Of course, it is possible to debate any of the numerous specific assumptions that the CCC makes. If you look back at old CCC reports, you will find that they have often been dramatically wrong—and most dramatically wrong when I was chair of the CCC back in 2008. But, crucially, all the big errors that we made reflected overpessimism, not overoptimism, about the costs of key technologies.
In 2008, we estimated that the cost of solar PV panels might fall by 25% between then and now. We thought we were being pretty wild, but the cost has fallen by over 95%. In 2011, we believed that the cost of offshore wind in the early 2020s would still be above £150 per megawatt hour, but it is now well below £100. We assumed that battery pack costs, which in 2010 were about $1,000 per kilowatt hour, might reach $320 by 2020; in fact, they reached $150 by 2020 and are going below $100 today.
All of that explains the point that the noble Lord, Lord Sharma, made: the reasonable estimates of the cost of getting to net zero have relentlessly come down, not gone up. Given these cost reductions, it is reasonable to believe that the costs of achieving net zero will be roughly as the CCC estimates. I do feel that anybody who argues against that should tell us which specific assumptions in the CCC reports they consider overoptimistic—but that is not something I have heard in any one instance from the leader of the Conservative Party, nor, I must say, from the noble Lord, Lord Offord, today.
The CCC’s 0.2% of GDP figure adds together investments in the new clean energy system and subsequent operating cost reductions. It is important to recognise what is clearly set out in figure 4.1 of the latest report: because investment comes before operating cost savings, the net cost is higher in the earlier years—a bit over 1% or so of GDP for a decade, but delivering lower costs for the whole economy and consumers from 2040 onwards. That captures the essence of the UK’s net-zero commitment: a small but not zero investment by today’s generation for the benefit of future generations in the UK and across the world.
In 2019, when the CCC recommended a 100% net-zero target, there was close to unanimous support in both Houses and in all major parties for accepting the need for that small but not zero investment. What has changed since then is not reasonable estimates of the cost. It is not that those cost estimates have increased, but we now have political voices who believe that around 1% of GDP is too much for today’s generation to invest on behalf of future generations. That is quite a legitimate argument to make; people can differ in their view of what this generation owes to future generations. But, if you want to make that argument, it should be made explicitly and openly, rather than on the basis of unfounded assertions that the costs are much higher than those that the CCC has estimated.
Lord Fuller (Con)
My Lords, several months ago, as a new Member of your Lordships’ House, I made a proposal for a special investigation committee to try to get consensus around the various numbers that have been bandied around today. My intent was not to rerun the debate about whether net zero is a good thing, but to have a mechanism whereby we could have an honest reckoning with the public about the expense of reaching these targets. At some stage the public need to be helped to see the reality of the situation that applies to them personally, in terms of their finances, comfort and mobility. They need to see the reality of the world as it is, not through the starry-eyed rhetoric of 2007, when 2050 seemed such a long time away. The longer we leave this reckoning, the more expensive it will be, not only in cost but in public support, and the mountain we have to climb will be steeper.
The need for candour is urgent, because we are starting to see the cumulative real-life consequences of all the well-meaning initiatives promoted in the name of net zero. This month, 1,100 people lost their jobs at the Luton van plant, and more besides. The exploration industry has been exported from these shores—an industry where we had global leadership, particularly in my home town of Great Yarmouth. They have all decamped, taking their investment, expertise and tax revenues with them.
We have seen the taxing of glass bottles, which not only reduces the pleasure of opening a bottle of wine but has hammered the local pub. New green airfares make it more expensive to take the family abroad to escape the economic gloom, and we now have the dismal prospect of GB Energy trying to find uses for carbon capture and storage. I never believed for a moment that I would agree with the noble Baroness, Lady Jones of Moulsecoomb, but she and I are as one on that issue.
I do not believe in wasting energy; it is bad for business, for the taxpayer and for our children. In my own business, scope 1 and scope 2 emissions are down by 30% in a year. As a council leader, I reduced our emissions by 70%, to the extent that we disconnected the gas heating from our office, so efficient had we made it. That can be done, but there is a long-term energy transition problem to be solved and we cannot ignore that we are paying twice for every kilowatt—once for the renewables and once again for the back-up. We have the highest energy prices out of 25 countries and our electricity costs are four times that of gas on a kilowatt hour basis. Far from reducing energy costs by £300, the energy price cap has risen by 18% since July. That is unaffordable.
Governments trumpet reductions in emissions but we are all paying the price by deindustrialising. I want to spend a moment thinking about the net-zero systems that count emissions in the UK only. That leads to the insanity of allowing Drax to present itself as a green power station while cutting down American forests and transporting them across continents and oceans, to be burned in North Yorkshire. If a steel plant shuts down in Scunthorpe and we start importing steel from India that counts as a British carbon win, even if that steel is produced using Russian oil or the most polluting Chinese coal. That leads me to the madness of CBAM, the emissions trading scheme and the free carbon allowances, which are tariffs by any other name. These are astonishingly bureaucratic, expensive and complicated schemes that seek to address carbon leakage, but the effect of which is to export British jobs to other parts of the world with weaker standards.
We have ended up in a situation where the primary production of ammonia has been chased from our shores to less efficient places, which does nothing to reduce global emissions. Amazingly, our Government’s CBAM proposals fail to reward factories that somehow reuse and recycle carbon into other industrial processes, while allowing the most polluting producers to fall back on less onerous default mechanisms. By this insanity, we are introducing fiscal incentives to use the most polluting coal-fired ammonia production over the most efficient gas-fired factories closer to home. That is the reality of the rhetoric.
You can still be in favour of net zero while recognising that the accounting systems are taking us down the wrong path. We have sleepwalked into an insane, synthetic economic accounting model that lives only in the minds of Treasury wonks—not in the real world—but whose victims are British steelworkers, glassworkers, ceramicists and car workers: precisely the people the Labour Party was established to represent. We are not going to fix these problems by building a high-cost inflationary tariff wall around our economy, using smoke-and-mirrors accountancy techniques, for the longer we take to get real on the actual costs and consequences of net zero, the longer this accounting insanity will continue. I will give your Lordships an example: Defra recently did an analysis of carbon accounting techniques used on British farms and found that there were 86 competing measurement tools. It is crazy.
We are nearly half way there. Now is the time to pivot from simply wishing for net zero to focus on the real life numbers and valuation methods to test the affordability, at a family level, of the path we have set ourselves out on. We owe it to ourselves to stop the transition of a proud, global trading Great Britain into a deindustrialised, virtue signalling little Britain, sanctimoniously standing alone while everyone else digs and drills, and British industrial jobs are destroyed on the altar of decarbonisation.
Lord Rees of Easton (Lab)
Thank you, my Lords. I begin by extending my thanks to Black Rod and her officers for their support and guidance during my first few weeks. Their warmth and efficiency are a real testament to the high standards of this House, and I am grateful for how welcome they made me, my family and my guests feel.
I also thank the noble Lords, Lord Boateng and Lord Woolley, who introduced me. They have long been an inspiration. There are those who have supported me on my journey as well, including the noble Lord, Lord Hastings, and the noble Baroness, Lady Royall. I also thank my noble friends, the Leader and the Chief Whip, for the leadership they have provided since my arrival.
I would like to take this opportunity to extend my thanks very publicly to His Majesty the King. I have been told that I may be the first person who has benefited from the Prince’s Trust to be raised to the House of Lords—unless anyone knows anything different. At two very important junctions in my life journey I had financial support from the Prince’s Trust. I was able to say to the King that they were not large sums of money, but they were the right sums at the right time. They got me through a door that gave me access to a whole new set of opportunities. That support is one of the factors that made my journey from there to here possible.
When I share who I am, I have to speak of those who went before me. It is a privilege to be able to honour them in this place today. My Jamaican great-great-great-great-grandfather, Samuel Richardson, was hanged by the British in 1865 for participating in the Morant Bay rebellion. I have often wondered what he would have thought or felt as he stood on the gallows and whether my standing here today would have brought him any peace in that moment.
Then there is my Welsh grandfather, John Rees, who was born in Merthyr Tydfil in 1914 to my great-grandfather, a miner known as Tali Essin, and my great-grandmother, Elizabeth Barry, an Irish migrant to south Wales. My grandad was too poor to go to university. He was a brilliant man who never managed to live out the fullness of his potential. At my graduation from Swansea University, my nan told me that he lived his dreams through me. That was a moment of great sadness, but also great joy for me.
I was born the mixed-race child of an unmarried, working-class white woman. I use that blunt language to communicate the various social factors and categories I have lived across. As a young man, I wrestled with identity and belonging. I grew up in the race and class fractures of 1970s and 1980s Britain. I was chased down the street by grown men telling me to go back to my own country. I would return home to my primary caring family, who were white. At the same time, some of my black peers in school would question my blackness and my loyalty. I was illegitimate, we were poor and I wondered where I fit.
That is one of the reasons why, when I speak about identity and belonging, I stress complexity, interdependence and dynamism. I reject simplistic binary options, particularly when we are talking about who is in and who is out. I have often wished that the insights of those of us who have lived across identity frontiers—national, racial, ethnic, cultural or religious identities—could be scaled up to inform and frame the way we have national conversations around identity, belonging and, dare I say, migration. I put it like this: being English does not make me less Jamaican. Being Jamaican does not make me less Welsh. When I found out my great-grandmother was from Ireland, it just made me more me. I wonder if that kind of dynamism can make us, as a country, more us.
I have had a varied—you might say chaotic—career, but I am probably best known for serving as Mayor of Bristol from 2016 to 2024. When I was elected, the noble Lord, Lord Woolley, told me that I was probably—highly likely—the first person of black African heritage to be elected mayor of any major European city.
It was an interesting time to be in local government. We had five Prime Ministers, eight Secretaries of State, Brexit, austerity, the cost of living crisis, the pandemic, social upheaval accelerated by social media, a growing awareness of the climate and ecological crises, and the rise of influencers and authoritarian predatory politicians. During this time I held numerous national and international leadership positions, including with Core Cities UK, the LGA’s city regions board, the Global Parliament of Mayors, the Mayors Migration Council and the Commonwealth Local Government Forum.
It is from these experiences as a city leader that I will share two reflections. First, it is impossible to lead a city and work for its good without shaping the national and international context within which it exists. Secondly, the national and the international challenges we face—climate, migration, health and inequality—cannot be met without the leadership of local government in general and cities in particular. These two are inseparable, and I hope, while I am in this place, to be a voice and an advocate for local and regional government and cities, and to advocate for a maturing of the relationship between the centre and our cities and regions.
It is from that perspective that I come to this debate on net zero, as one of a number of ex and current city leaders who have been incredibly frustrated with the national and international mechanisms through which we have tried to deliver the change the world so desperately needs. Noble Lords may remember the open letter written in November last year off the back of COP, which pointed to a process that was fantastic at getting policy frameworks and declarations but not good at getting delivery—and, ultimately, change will come through delivery.
Noble Lords have made some excellent points on the cost of inaction, so I will not go over those numbers, but suffice it to say that, during the middle of Covid, one of the reflections we shared in Bristol was that we have had a taste of what happens when the natural world asserts its ultimate authority over our human systems. We were able to get out of that, but there is the potential for crossing a line, after which there is no end in sight to the chaos—and the closure of our economy—that is visited upon us.
The second reflection is that there are solutions, and I declare an interest here because I have an ongoing relationship with one of the companies we worked with in Bristol. We did a deal in Bristol called Bristol City Leap, which has unlocked £1 billion of inward investment to decarbonise our energy system over the next 20 years, involving local supply chains and £60 million of social value. Look at London EDGE, a £100 million fund for the decarbonisation of buildings, energy systems and transport networks.
My point here is that it is not all about the national level. So many of the conversations are about what nations are doing, but, at the sub-national level, leadership is happening. Even in the United States, US cities are still looking to do the deals to get the decarbonisation done—for both national and international goals, but for the benefit of their own citizens. In Bristol, we started getting ready for a hotter city. We have warm banks in Bristol at the moment, and we will be looking for cool banks in the future because the city is so hot for its residents. If we solve that, it is a social solution as well as an environmental one, tackling the cost-of-living crisis, improving population health and reducing the demand on public services.
I want to focus our minds on some immediate opportunities coming up. London Climate Action Week is on its way, and I urge us to really think about how we can support UK cities to be on the front line of that, not just standing up and making declarations and commitments but helping to broker the financial deals that those cities need to get done to deliver the futures they want to deliver for their populations. If we can do that in the UK, I believe it has a number of benefits. One is that it can bring that inward investment into our cities that we so urgently need. But it evidences our leadership and extends our soft power. As we look at the sequence of global gatherings leading up to COP that urgently need the voice of cities, I believe that we in this country can set a global standard. But, if we are going to take this as an opportunity, we need to get ahead of it and shape it, not react to it.
Baroness Hayman (CB)
My Lords, it is always a privilege to follow a maiden speaker in your Lordships’ House, but this was more than a privilege: it was a pleasure and a very moving experience for all of us to hear the maiden speech of the noble Lord, Lord Rees of Easton. At one point, he said his background was chaotic. The speech he made about his early life—his experiences and how an intervention from the Prince’s Trust could make an enormous difference and end up being one of the factors that brought him to your Lordships’ House—told me how much we will benefit here from the breadth of experience that he brings.
I think we knew of the noble Lord as Mayor of Bristol; he comes as a Bristolian, and I am sure that that city’s interests will be well represented in your Lordships’ House. But the dimension that he talked about afterwards, how cities are important in the governance of nations and governance globally, is an essential point for all of us concerned with tackling not just the climate issues we are debating today but the social issues we will all face in one way or another. The noble Lord has an enormous amount to contribute to your Lordships’ House, and we all look forward to hearing more from him in future.
Turning to my own contribution to this debate, I declare my interest as chair of Peers for the Planet. I put on record at the outset, because the point has been made by others, how much I regret the crumbling of the cross-party consensus that has served this country so well in our efforts to combat climate change, and which has given us such soft power globally and allowed us to lead so effectively on the international stage. The noble Lord, Lord Offord, has done the House a service in initiating this debate, allowing us to hear some extraordinarily powerful contributions. It is always invidious to name names, but I shall continue by doing so. We have heard from the noble Lords, Lord Sharma, Lord Turner and Lord Stern, people who have huge authority in this area. I hope that the noble Lord, Lord Offord, might share the relevant Hansard with the leader of his party, so she can perhaps reflect on the rather high-level attitude she has taken on these issues.
No one disputes that achieving the Government’s statutory commitment to reach net zero by 2050 will cost a lot of money—although, as many noble Lords have pointed out, a substantial part of that investment will come from private rather than public sources. The noble Lord, Lord Howell of Guildford, is absolutely right that we have to look at innovative ways in which to partner between public and private in this area. But affordability, as this debate has illustrated, is a much more nuanced concept than simply that of price. It is less easy to calibrate, and it involves questions of both the return on the investment we are making and the value ascribed to the outcomes of that investment. It is also dependent on the external environment and changing pressures, as we have seen only too clearly in the altered views in NATO countries, since the invasion of Ukraine, of the affordability of increased defence expenditure.
There is no denying that there will be real technical and capacity challenges, particularly regarding the national grid, and competing interests and trade-offs of particular policies and infrastructure proposals. I certainly would never deny that the high cost of energy we currently face is causing hardships for households and holding back business growth. But there are solutions to all those issues; as the noble Lord, Lord Stern, pointed out, we need to take the right and urgent action to tackle them.
But other things cannot be denied. The overwhelming scientific evidence of the perils facing the world if we do not rapidly reduce global emissions and halt the rise in temperature has only become more compelling year by year. The recognition of that danger is what led to the passing of the Climate Change Act in 2008 and the net zero remit in 2019. The UK’s response through both policy and action on decarbonisation has been of benefit, not only in the global fight against climate change but domestically in the UK, as many have said.
We have reduced our dependence on fossil fuels, improved our air quality and, strikingly, grown our economy. We have established footholds in low-carbon industries and created new markets for exports, as we can see in our world-leading offshore wind sector. The net-zero economy, as others have said, is growing three times faster than the wider economy and each job generates 38% above the UK average in economic value. I will repeat the quote that others have given from last week’s OECD report:
“Accelerated climate action does not hinder economic growth, it provides economic gains”.
We have to recognise that calling a halt to progress is not a neutral or cost-free option. That was the crucial point that the noble Lord, Lord Stern, made in his seminal report. His judgment has been echoed by many others and many organisations. In the words of the CBI’s chief economist,
“inaction is indisputably costlier than action”.
Nothing has changed the imperative of the transition; it has become only more urgent. Our climate is already warming faster than scientists initially predicted. In these circumstances, it is a category error of monumental proportions to suggest that investing to tackle climate change can be treated as just another spending issue, of no greater significance than any other in the annual spending decisions, and airily dismissed as an unaffordable dream. This is not the time to lose our nerve. We need to buckle down with grit and determination to provide certainty for industry and to encourage innovation.
The fundamental reason why we should continue to lead on this issue is that we owe it to those who are immediately threatened by climate change and to our children and grandchildren. As many contributions in this debate have shown, leading nationally and globally to tackle climate change will also be in the best economic and security interests of the UK. Let us not behave like Oscar Wilde’s cynic, who knew
“the price of everything, and the value of nothing”.
Lord Teverson (LD)
My Lords, I apologise to the House. I forgot to declare my interests in the commercial battery storage sector.
Earl Russell (LD)
My Lords, I thank the noble Lord, Lord Offord, for bringing this timely debate and for the clear explanation of his personal position. I also congratulate the noble Lord, Lord Rees of Easton, on his very interesting maiden speech. Clearly, the Prince’s Trust invested well in him. If he does not mind my saying so, I am sure that all his relatives are proud of the speech he has just given.
The question before us is a loaded one, examining only the cost of the transition while ignoring any savings from net zero or the costs of climate change itself. The UK’s territorial greenhouse gas emissions are now 54% below 1990 levels. They are now at their lowest level since 1872, when Queen Victoria was on the throne. Our GDP has grown by 84% during the same period, and the UK’s green economy grew by 10.3% last year, adding £83 billion in GVA.
The costs of achieving net zero have halved from the sixth to the seventh carbon budgets as renewables prices have continued to fall—points that the right reverend Prelate the Bishop of Southwark and the noble Lord, Lord Sharma, have made. There is more to be done, but we have reasons to have hope. Further progress can be made without the proverbial sky falling in.
I want to thank the Conservative Party—the party of the noble Lord, Lord Cameron, who visited the Arctic, of the noble Baroness, Lady May, and the Climate Change Act, and of the noble Lord, Lord Sharma, and others. It is their work that got us here. Just at the point when the Conservative Party should be taking a standing ovation for all it has done, its leader has decided to wave the white flag of surrender—the white flag with a message saying to our young people, “Sorry we have given up. We offer no solutions; we offer no alternatives; indeed, we offer no hope for the future at all”. I question a political strategy which argues that it is worth saving a few pounds today merely to hasten our own communal demise tomorrow—do spend any savings quickly.
I believe in manmade climate change, and I also believe in manmade solutions to it. I am disappointed that we no longer have an all-party political consensus on climate change, as the noble Baroness, Lady Hayman, and others have said. These matters are hard enough when we have a basic level of agreement, and they are made even more challenging when we do not. The noble Lord, Lord Sharma, made the point that this may be one of the most damaging aspects of all, because it will damage inward private investment and confidence and thus probably cause higher prices.
I state unequivocally that achieving net-zero emissions by 2050 is not only affordable but the most economically sound and responsible path forward. Any deviation from this path will just end up costing people more. I disagree profoundly with the recent statements of the leader of the Conservative Party and her self-professed declaration that this vital target is impossible. The dismissal of our legally binding targets is deeply troubling and flies in the face of a huge body of scientific evidence and economic analysis.
The most expensive course of action we could possibly take is to do nothing. The longer we do nothing, the longer we will continue to pay more. The Office for Budget Responsibility has estimated that unmitigated global warming could lead to UK debt growing up to three times larger than our economic output by the end of the century. It also warns of greater and more frequent economic shocks caused by climate change. A study just published by Australian scientists suggests that average per person GDP across the globe will be reduced by 16% even if warming is kept to 2 degrees Celsius. Today, a top global insurance company has warned that the climate crisis is on track to destroy capitalism. The noble Lord, Lord Sharma, spoke of global insolvency resulting from climate change. To ignore these potential catastrophes in favour of short-sighted scepticism is not fiscally prudent; it is a dereliction of our duty to future generations. The noble Lord, Lord Stern, reminds us that we must keep climate science at the forefront of our minds, particularly in the face of Trump’s denial of it.
The claim that achieving net zero will bankrupt the country is simply not supported by any evidence. Analysis by the London School of Economics has found that, while reaching net zero by 2050 will involve initial costs, it is projected to save money by around 2040. The noble Lord, Lord Freyberg, reminded us that the OBR’s analysis of the Climate Change Committee’s plans also indicates that, from 2040 onwards, net operating savings are projected to outweigh investment costs, with a potential £19 billion annual saving by 2050 relative to baseline scenarios. The OBR has clearly stated that the cost of climate inaction is much larger than the cost of transitioning to net zero.
The continued reliance on importing gas is a significant drain on our economy and a major source of economic instability. The Energy and Climate Intelligence Unit has estimated that the UK spent around £140 billion in total on wholesale gas between the start of 2021 and the end of 2024. The surge in energy costs during the gas crisis is a stark reminder of the vulnerability of our energy system to international fuel markets. The transition to renewable energy offers a pathway to greater energy security and more stable and cheaper energy bills. Suggesting that abandoning our net-zero targets and continuing our dependence on the volatile international markets is a more affordable option is utter madness.
Renewable energy now accounts for just under half, or 45%, of the UK’s power generation. The shift towards a low-carbon energy future is not a pipe dream; it is today’s reality. The noble Lord, Lord Stern, said that this is the growth story of the 20th century and the noble Lord, Lord Freyberg, reminded us that the tech is here today.
The Climate Change Committee’s seventh carbon budget outlines an ambitious yet deliverable pathway to net zero by 2050, based on detailed modelling of cost effectiveness and feasibility of decarbonisation options. While upfront investment is required, significant savings and operation costs from more efficient low-carbon technologies will begin to outweigh these investments during the seventh carbon budget period.
The leader of the Conservative Party has claimed that there have never been any detailed plans. The noble Lord, Lord Turner, is right that nothing could be further from the truth. This assertion is unequivocally contradicted by extensive legislation, including that passed by her own party. The comment is disingenuous and ignores the significant work that has been undertaken by so many to date.
The claim that the target is “impossible” simply does not align with the expert analysis and modelling that has been done. The transition to a net-zero economy also presents significant economic opportunities. Being against green technology is the equivalent of saying at the start of the Industrial Revolution that you do not support steam power. The noble Baroness, Lady Curran, reminded us that the net-zero economy is already growing three times more quickly than other sectors. Adding political uncertainty now will only undermine investor confidence.
The noble Baroness, Lady Jones, also raised the important point of the just transition, and it is important that we leave no one behind as we transition. This means supporting workers in sectors that are in need of transition and investing now in the skills and infrastructure required for the green economy. It also requires policies that address the potential for distributional impacts, ensuring that the costs and benefits of the transition are shared fairly across society.
The noble Baroness, Lady Curran, spoke of the emphasis on affordability, and this is a welcome part of this debate. As I have said before—and I say it again—more must be done now to reduce the costs of energy and to improve our energy efficiency. The noble Lord, Lord Stern, is also right that we must work now to reduce electricity prices. I am pleased that this Government will be considering at least some aspects of electricity market reform. These matters require much greater urgent attention from this Government. We must include people and take them with us on this journey. There must be less “done to” and much more “done with”. The citizens’ panel covering the Climate Change Committee’s seventh carbon budget highlighted the importance of upfront affordability and protecting vulnerable groups during this transition. Policies that penalise those who cannot afford the transition are not in people’s interests. It is fundamental to our energy security. We can have cheaper bills and households will save money. It is important that we do not give up hope now.
In conclusion, achieving net-zero emissions by 2050 is not only affordable but an economic imperative and a moral responsibility. The evidence overwhelmingly demonstrates that the cost of inaction far outweighs the investments required for transition. The biggest cost we face is not the investment in our future but the catastrophic price of doing nothing. We must not falter now.
The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)
My Lords, I thank the noble Lord, Lord Offord, for opening the debate. Like the noble Baroness, Lady Hayman, I have been enormously impressed by the quality of the contributions that have been made by so many speakers. I congratulate my noble friend Lord Rees of Easton on his excellent and memorable maiden speech. His tribute to the Prince’s Trust was particularly noticeable, as was his family history and his extraordinary life journey. We await his further contributions eagerly; I am sure he is going to make a huge contribution to your Lordships’ House in the years ahead.
This has been an interesting debate. The noble Lord, Lord Offord, argued that he was not a climate change denier and spoke about his presence at COP 26, where he advocated for net zero with the noble Lord, Lord Sharma, to whom I pay tribute for all the work he did in his leadership there. The noble Lord then argued that we are no longer energy-independent and we are paying a high price with what he called the deindustrialisation of our country. When it comes to deindustrialisation, I remind him of the Thatcher legacy, which decimated so many industries in our country.
This Government are absolutely focused on the forthcoming industrial strategy. Indeed, my noble friend Lady Gustafsson, sitting beside me, is spearheading the investment that we are to generate in this country because of our great potential. I am convinced that it is the green economy that will fuel much of that investment and growth.
Many noble Lords, including the noble Lord, Lord Offord, suggested that we cannot really afford our net-zero ambitions. The response of the Government is not only that we can afford our net-zero ambitions but that we must—and that we have to drive this as quickly as we possibly can. In a sense, the challenge from many noble Lords to the Government is not that that we are going too fast; it is that we need to accelerate our efforts. Indeed, in our debates on the Great British Energy Bill, that was very much the thrust of many noble Lords’ contributions.
The noble Lord, Lord Teverson, the noble Baroness, Lady Hayman, and the noble Earl, Lord Russell, referred to the loss of consensus, which is indeed very unfortunate. The noble Lord, Lord Sharma, made a very pertinent contribution on that point, suggesting that our consensus laid the foundation for giving confidence to the private sector. I agree with that. I will come on to nuclear energy shortly, but the fact that we have political consensus about the importance of the nuclear sector is vital to long-term investment. Noble Lords will know that, in nuclear, you are investing for decades, so that political consensus is vital.
Another point I would make in response to the noble Lord, Lord Offord, is that I do not believe that suggesting that we should reverse our policy and rely on a declining, super-mature basin, such as the UK continental shelf, is the way forward. I do not underestimate the work that has been done in the North Sea and what the workers have done—and we will need a strategic gas reserve in future—but it is not the answer to the overall issues that we face.
On the climate science, it is absolutely clear that climate change is happening. We are seeing it already; it impacts our everyday lives. As the noble Baroness, Lady Jones, put it, its effects range from severe and damaging heatwaves to heavy rainfall and floods, and from a loss of diversity to an increased risk of wildfires. The noble Lord, Lord Sharma, spoke of the inevitability of countries experiencing economic and environmental insolvency unless we take action. My noble friend Lord Rees spoke of the wider social degradation that we are threatened with. My noble friend Lady Curran, in facing up to the hard facts, was clear that we have to tackle this issue—and very quickly indeed.
On energy security, surely the noble Lord, Lord Stern, was right to discuss the importance of ensuring our energy security and resilience. In fact, the only way to protect bill payers, in the long term, is to speed up the transition away from fossil fuels and towards homegrown clean energy. On the benefits of securing our energy security, the OBR has assessed that responding to future gas price shocks—let alone climate damage from a warming world—could be twice as expensive as the direct public investment needed to reach net zero. Energy security is key to our economic resilience. With households and businesses shielded from damaging price shocks, we will have a more stable and adaptable UK as a result.
I do not underestimate the issue of prices. Of course, it is serious for both businesses and domestic customers. I agree with the noble Baroness, Lady Hayman. I gently point out to the noble Lord, Lord Offord, that the electricity market structure we have and the reliance on the international gas market are inheritances from the last Government. The noble Lord, Lord Stern, said that the best way to protect bill payers and mitigate the energy price spikes we saw in 2022 and 2023 is to deliver clean power by 2030. Low-cost and low-carbon energy is the way forward.
On the issue of what is driving the increase in prices, I say to the noble Lord, Lord Offord, that it is gas prices that are still mostly setting the GB wholesale electricity price, which has driven the recent price cap increases. Around 80% of the increase to the price cap level between quarters 1 and 2 of 2025 is a consequence of the increase in the wholesale price of gas. The noble Lord mentioned social cost and the other costs that are levered on top of that, but I remind him that the structure we have is exactly the same as used by the last Government. As we have more low-carbon sources of generation and flexibility on the system, NESO analysis has shown the greater protection a clean power system provides against gas price spikes.
The noble Baroness, Lady Jones, and I will have to agree to disagree on the value of nuclear. We think it is an absolutely essential baseload for the future electricity structure. The noble Lord, Lord Howell, and I agree on the importance of nuclear, but I fundamentally disagree with his remarks on Sizewell C. It is not a white elephant; it is a crucial development. We are moving towards a final investment decision. I have made the point to the noble Lord that it is a replication—80% above ground—of Hinkley Point C. Following what has been learned from the issues faced over unit 1, the productivity in unit 2 at Hinkley Point C has improved by 30%. The lessons are then being translated to Sizewell C. Certainly, a 3.2-gigawatt power station that will power 6 million homes is a really important part of our future low-carbon structure.
The noble Lord, Lord Teverson, raised a very important point on warm homes. He knows that we have ambitious warm home plans. We have committed an additional £3.4 billion over the next three years, but I accept that this is an enormous challenge that we face for the future.
My noble friend Lord Berkeley raised the issue of off-grid homes. We are looking at solutions to that, and I am happy to have further discussions about it.
On the actual issue of whether we can afford the move to net zero, I say to my noble friend Lady Curran, the noble Lords, Lord Stern and Lord Freyberg, and other noble Lords that surely this has to be seen not as a cost but as an investment in the future. As the noble Lord, Lord Turner, put it, the original Committee on Climate Change estimates were overpessimistic, as the costs have dramatically come down.
We should surely turn this around and see the transition to net zero as the economic opportunity of the 21st century for this country. We have huge opportunities here. It is a chance to create hundreds of thousands of good jobs and drive new investment in all parts of the United Kingdom, benefiting people and businesses alike. The nuclear industry is a classic example where we started from scratch to build new nuclear. The jobs that are being created in areas of the country that have found it very difficult to develop new jobs have an amazingly positive impact. This is what investment in green energy and net zero can bring to us.
A number of noble Lords referred to the CBI report. It is extraordinary: there was a 10% growth in the green economy in 2023 compared with 1% growth overall. If I remember rightly, the report said that there are 950,000 people now working in what one would call the green economy or the net-zero economy and its supply chain. I am surprised that the noble Lord, Lord Offord, does not take some credit for what has been achieved, because that is a very credible achievement on which we want to build in the future. The Committee on Climate Change, in a review of external studies, found that up to 725,000 net new jobs could be created in low-carbon sectors by 2030. I suspect that is another underestimate of the likely outcome.
The other issue here is the long-term consequences of not investing in net zero. There have been so many reports now, and they are objective. The Office for Budget Responsibility—I know that noble Lords sometimes disagree with its conclusions, but it is no soft touch—has been absolutely clear that delaying the move to net zero will cost us even more in the long term.
I was very interested in the right reverend Prelate’s remarks about the contribution of the Church, which I very much acknowledge. I am sorry that some churches have had difficulty in getting planning consent to put solar on their roofs, of which I have some knowledge in the city of Birmingham, but their contribution is very much valued, as is that of many community groups.
My noble friend Lord Rees was absolutely right in exemplifying the work that has been carried out in Bristol but also the need for us to strengthen engagement between central and local government and the role of local authorities in this. We have a Local Net Zero Delivery Group, which met first on 26 February 2025, but I am very happy to talk to my noble friend about how we can build on that work and link with local authorities in the way that has been suggested.
The noble Lord, Lord Howell, spoke of the potential of private finance, as did the noble Lords, Lord Freyberg and Lord Sharma, and my noble friend is very interested in spearheading the Government’s work in encouraging that investment. The UK has many opportunities to crowd in private sector investment. We are a very stable country, we have a legal system that is admired, we have world-leading financial mechanisms, transparent market frameworks and targeted public investment. That is a very good foundation. We estimate that we will need £40 billion of investment mobilised annually over the next five years to reach clean power by 2030. My department’s analysis of Bloomberg New Energy Finance data estimates that total low-carbon investment of around £130 billion will be needed per year up to 2040, which is up from £51 billion in 2024.
We have made significant progress in attracting investment into green sectors. Around the 2024 international investment summit, £34.8 billion of private investment into low-carbon sectors has been secured, ranging from solar to offshore wind and its supply chain and battery energy storage.
Why the UK? That is a question that noble Lords opposite have asked me, particularly during the passage of the Great British Energy Bill. The noble Lord, Lord Sharma, put it so eloquently, because he linked global leadership to action by this country. The two have to go together; we have to show by example if we seek to give global leadership. Why on earth should we not seek that? I find it very puzzling when noble Lords in this House seem to suggest that we should sit back and be a backwater. Surely we have so much to offer. Our role is recognised. It is about the point that the noble Lord, Lord Sharma, made: yes, we are responsible for about 1% of global emissions, but if you put all the 1% of global emissions countries together, we pack a pretty big punch.
The fact is that, whatever geopolitical waves and uncertainties we are going through at the moment, this is an unstoppable movement going towards decarbonisation and net zero. The noble Lord, Lord Fuller, raised a number of points about the global position, and he mentioned China. It is just worth remarking that the International Energy Agency has reported that there will be an absolutely massive increase in the use of renewable energy in China over the next five years.
On the subject of global leadership, I am proud that we were the first country to set legally binding carbon budgets and the first major economy to establish a net-zero target in law. I pay tribute to the previous Government for what they did and the consensus that they achieved.
The noble Baroness, Lady Hayman, said that now is not the time to lose our nerve. I agree. That is why making Britain a clean energy superpower is one of the five missions of this Government in delivering clean power by 2030—which is the base, if you like, for accelerating to net zero by 2050. This, surely, is the answer to the challenges we face on climate change and energy security, affordability and sustainability. They all point in the same direction.
We are also committed to a fair and equitable transition. I accept what the noble Earl, Lord Russell, said about the impact on communities and people. I also accept that we have to explain more about what we are doing and why we are doing it. The real world impact is surely this: not that we are going too slowly, but that we must take action now. The challenges we face in this world are so profound that moving to net zero as quickly as possible is surely what we have to do. I am very grateful to noble Lords for the contribution that they all made to this excellent debate.
Lord Offord of Garvel (Con)
My Lords, I thank all noble Lords who have contributed to this very important debate. I pay tribute to the noble Lord, Lord Rees of Easton, for a very elegant maiden speech. Of course, the whole point of debate is to challenge consensus, and I am delighted that I have been able to do that today. Was it not Benjamin Franklin who said that when everyone is thinking the same thing, no one is thinking?
Allow me to sum up as follows. Our energy is the most expensive in the developed world. This is self-inflicted and it is not fair on ordinary working people, who pay the price. It is grotesque and unfair to see billions of pounds in curtailment subsidies going to owners of what are quite often foreign-owned wind farms, just because the wind blows too hard at the wrong time. Net zero is a laudable aim, but the purpose of this debate is to ask how we reassess it, not remove it, because we are in danger that the public will begin to see this as the biggest transfer of money from the poor to the rich since feudal times. Make no mistake: these green levies and taxes on working people are viewed as attacks on working people and a drag anchor on our industry. We must not allow that to happen or to be the perception.
Therefore, my argument is simply that 2025 is 25 years away from net zero 2050, so this is a good time to reassess the plan in the light of reality and to re-evaluate our energy strategy, with the simple objective that we must make it affordable and secure. We are living in different times from when this was moved in 2019. We need to make our energy affordable and secure. We need to reindustrialise our great nation. We need to get our proud people back to work. We need to be strong and independent in an uncertain world. We may well need to rebuild our military capability to keep us strong and protect our citizens, but above all, we need to give comfort, security and prosperity to all the inhabitants of these islands.
Therefore, it is high time that this House takes note of the affordability of net zero 2050. I commend this Motion to your Lordships’ House.