Carbon Budget Order 2026
(1 month, 1 week ago)
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20:58 - Division on the amendment to the Motion. - Ayes: 61 / Noes: 60 - Amendment to the Motion agreed.
Lord Whitehead
That the draft Order laid before the House on 2 June be approved.
Relevant document: 5th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)
The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)
My Lords, I thank the committee for its consideration. The draft Carbon Budget Order 2026 was laid before the House on 2 June and the draft Climate Change Act 2008 (Credit Limit) Order 2026 on 14 April.
Given that we are sitting here this evening on the second of the four hottest days there ever have been in June, after a similar number of hottest ever days in May, we may think that the question of whether we should debate doing anything about climate change answers itself. We have a far more scientific way to act on climate change at the moment, as this Carbon Budget Order sets a science-led budget to reduce emissions by about 87% for the period 2038 to 2042 compared to 1990 levels. This is in line with the level recommended by the independent Climate Change Committee and endorsed by the Environmental Audit Committee.
The detailed impact assessment published alongside the Carbon Budget Order provides a rigorous assessment of options, all showing significant benefits of continuing towards net zero over abandoning it. The proposed seventh carbon budget sets a pragmatic and achievable path that will enable the UK to continue seizing the benefits of clean energy and climate action, including energy security, lower bills, good jobs and growth, and health and nature benefits. This is also consistent with the action needed globally to meet the goals of the Paris Agreement, building on the UK’s 1.5 degree-aligned nationally determined contribution for 2035. We can fight for our national interest only by pushing for global action built on the power of our domestic example.
A delivery plan setting out how carbon budget seven will be met will be published as soon as reasonably practical after Parliament has approved the budget. I emphasise that what we are debating today is the level at which carbon budget seven should be set. We are not debating—or should not be debating—the policies that will be set by the Government in response, to make sure they can meet that level. Those policies, as I have emphasised, will be published shortly but are not really a question for debate in detail today.
Under the Climate Change Act, the Secretary of State is required to set a limit on the number of international credits that can be used towards a carbon budget at least 18 months before the budget period starts. That is very relevant to the second SI we are discussing tonight, concerning the credit limit order. This order sets a zero credit limit for the carbon budget five period of 2028 to 2032. It does not represent a change in policy but reflects the fact that carbon budget five can be met through domestic action. All other carbon budgets to date have been delivered solely through domestic action. The order takes into account the advice of the independent Committee on Climate Change that carbon budget five can, and should, be achieved without the use of international credits, and this also ensures that the UK economy will profit from the co-benefits of the transition.
The Secondary Legislation Scrutiny Committee has reported on the Carbon Budget Order, and I am grateful to the committee for its report and the careful consideration of this draft instrument. The committee noted the importance of incentivising the shift to clean electricity. The Government recognise that rebalancing the price ratio between electricity and gas is important to long-term fairness so that electricity prices reflect the falling cost of clean power.
We are taking steps to address this from Budget 2025, removing £150 off energy bills due to the success of the contracts for different scheme in bringing forth new renewable assets at fixed competitive prices, which are beginning to decouple electricity and gas markets. Reformed national pricing enables us to further bear down on network constraint costs and improve system efficiency.
I recognise the non-fatal amendments tabled by the noble Lord, Lord Moynihan, for discussion today and I will address the points he has raised in turn. In relation to the Carbon Budget Order, the noble Lord first suggests that this will increase reliance on intermittent renewables. The Government are, in fact, strengthening energy security by reducing dependency on volatile fossil fuel markets and delivering a diverse, secure and clean energy system. This will be backed by unabated gas only when it is essential, and any residual emissions would be offset by removals.
The noble Lord suggests that the order will cause higher energy prices. The main driver of high energy costs has been global gas prices, which have also pushed up electricity prices. Clean power is what will give us control over prices, with the offshore wind secured in a recent auction being 40% cheaper than building and operating new gas plants.
On causing deindustrialisation, this Government are committed to supporting UK industry to decarbonise, while protecting and creating thousands of jobs across the UK. We are taking ambitious steps to lay the groundwork for further industry investment. Last year, the Government set out their modern industrial strategy, which will drive forward ambition for UK business operating in the clean energy space.
With regard to economic growth, setting carbon budget seven at this level builds on the UK’s pioneering Climate Change Act 2008, providing a framework for combining economic growth and climate action. I have a fairly simple and straightforward comparison. The UK has cut its emissions by 54% since 1990, while growing the economy by over 85%. In other words, emissions reduction and growing the economy have been fully and effectively decoupled over that period. Indeed, since July 2024, the UK has seen over £100 billion of private clean energy investment announced and the Government’s clean energy plans are expected to support 400,000 extra jobs by 2030.
With regard to claims that retaining the carbon tax negatively impacts households and industry, the biggest threat to energy security is the UK’s dependency on volatile fossil fuel markets, not the carbon price applied under the emissions trading scheme. The UK has had an emissions trading scheme in place for over 20 years. It provides stability to UK businesses and industries, supporting them to take long-term investment and planning decisions, while “free allowances” protect sectors at risk of carbon leakage, ensuring we decarbonise over time without undermining UK competitiveness, and limits many sectors’ exposure to the carbon price. It has already played a key role in ending the burning of coal for electricity, setting us on our way to being a clean energy superpower.
On behaviour change, the noble Lord suggests that the Carbon Budget Order relates to a reduction in livestock numbers and meat and dairy consumption. This Government have been clear that we will meet our targets in a way that does not tell people how to live and behave. The transition will be led by consumer choice. Accepting the CCC’s recommended target does not mean we replicate its pathway.
I am sure a number of other issues will be raised in the debate, including offshoring UK emissions. Clear actions are being undertaken—CBAM and various other things—to make sure that does not happen and we are taking precautionary action to prevent carbon leakage.
In conclusion, these orders set a clear, credible pathway to net zero and ensure that these emissions reductions are delivered at home. I urge noble Lords to act together in the interest of current and future generations by agreeing these statutory instruments, which will give us energy security, lower bills, good jobs, cleaner air and protect our homes for our children and grandchildren. I beg to move.
Lord Moynihan
At end insert “but this House regrets that the draft Order will increase the UK’s reliance on intermittent renewables, causing higher energy prices, further deindustrialisation and lower economic growth; is contingent on retaining a carbon tax which will impoverish households and industry; requires a reduction in livestock numbers and meat and dairy consumption; and will encourage the offshoring of emissions to countries with more polluting energy systems.”
Lord Moynihan (Con)
My Lords, while preceding my noble friend Lord Deben, I pay tribute to his lifetime work on climate change and, while our views will certainly differ this evening, I share with him a passionate belief that we should work towards tackling climate change—he will agree that there are many different routes to achieving that goal. We are meant to be the revising Chamber, capable of detailed consideration of government measures, yet we have just six minutes each and, as the Minister has shown, that is insufficient.
As Minister for Energy in the salient benchmark year of 1990, I launched the first renewables round, the non-fossil fuel obligation, while encouraging the growth in offshore gas, with strong environmental prerequisites to ban non-essential flaring, and securing gas to CCGTs, thus creating firm low-cost power to generate economic growth, jobs and prosperity. Low-cost electricity is the lifeblood of a successful economy. My business career and time in politics have taught me that a headlong rush based on DESNZ zealotry will be costly and unattainable; it will not just jeopardise but destroy economic growth.
The UK produced circa 367 million tonnes of CO2 equivalent in 2025, meaning that by 2039 we will have to reduce our annual emissions by more than two-thirds, with all the low-hanging fruit already picked. The capital and finance costs alone are estimated to be £880 billion. Government claims for the benefits are all target-derived prices to justify the policy, and we have seen the stumbling blocks impeding the rollout of heat pumps and zero-emission vehicles, not to mention the commercial challenges facing carbon capture and storage.
The Climate Change Committee has estimated that, in order to meet the emissions target, household consumption of meat and dairy would have to fall by 25%. The number of sheep and cattle would have to fall by 50%. Farmers will be required to diversify away from livestock farming to double tree-planting rates by 2030 and double peatland restoration by 2040. Where is the plan? When will the Government tell the public that they intend to halve the number of sheep and cattle in the United Kingdom, with inevitable price increases in the supermarkets? When do the Government intend to tell the residential building sector that it will have to spend up to £15 billion a year on low-carbon heating systems?
Add to all this the costs we introduce through this measure: demand management to apply to air travel, increasing the cost of short-haul flights, such as between London and Alicante, by £150 and long-haul flights, such as between London and New York, by £300. Industry is already facing the stark reality of the highest prices for electricity in the OECD, but the Climate Change Committee now estimates that British industry would face net costs of up to £3 billion per year in every year between 2025 and 2050. Does Ed Miliband have the remotest idea of what this will do to British industry and the economy?
What is worse is that my reading of the economics is that the capital expenditures required for solar and offshore wind are hugely underestimated. Perhaps the Minister can explain how the CCC expects offshore wind to cost around £1,500 per kilowatt hour, whereas actual projects such as Hornsea 3 are expected to cost over double that. If he cannot, the up-front capital costs are underestimated, making the CCC’s claim of operating cost savings compared with fossil fuels highly questionable. I look for the CCC’s total gross cost of its pathways and I cannot understand why they are absent. No wonder the UK boss of EDF Energy has said:
“We should stop building wind farms and focus instead on raising demand for electricity … As a country, we’ve always got it wrong … So now we have this large infrastructure, twice as much as we need, which means we also need to build twice”
the transmission grid. No wonder almost £800 million has been spent on so-called curtailment payments so far this year alone, putting 2026 on course to eclipse the £1.4 billion spent on switching off turbines last year.
Heavy manufacturing and chemical sectors have argued that the orders before us this evening introduce additional bureaucracy without tangible environmental benefits. Customers are understandably worried about the costs burden and the major lifestyle changes required by law—not by choice, as the Minister just said, but by law—in how people heat their homes, what they can eat and how they travel.
All this is based on an accounting policy which wholly ignores the impact on global warming from the supply chains that we rely on. We are blind to the coal-fired CO2-belching furnaces in China, many in Xinjiang province with Uyghur labour, which produce the polycrystalline in solar panels for us. China delivers an estimated 140 million to 200 million tonnes of CO2 annually just by manufacturing solar panels, accounting for about 1% of China’s total annual emission, and we do not count that. The Democratic Republic of the Congo produces 70% of the world’s cobalt—a core component in the lithium-ion batteries used for electric vehicles and grid-scale energy storage—with its forced evictions, land disposals and child labour, and we do not count that. We ignore that.
We do not have clean, home-grown energy. It is time to prioritise cheap energy over clean energy, remove the heavy weight of carbon taxes from our electricity prices, and exploit all remaining North Sea oil and gas reserves, in the same way the Norwegians do on their side of the median line, with gas which is four times less polluting than the LNG that we have to import instead from the States. That would strengthen our energy security.
Lord Deben (Con)
My Lords, I declare an interest as having been chairman of the Climate Change Committee for 11 years. I also chair a company advising on sustainability, business continuity and risk, and I am a partner in a small organic arable and livestock farm—so it may be said that one knows a little bit about what we are talking about.
I say to my noble friend that I listened to him make a brilliant speech yesterday on sport, and the brilliance of it was that he explained, first, why the Government had got it wrong and, secondly, how to put it right. The problem with his speech this evening is that neither of those has been part of it. It is no good standing up and saying that they do not like this or that. The truth is that a Conservative Government, when previously in opposition, were the creators of the Climate Change Act and they turned it into a cross-party agreement. Every Conservative Government have supported these policies to end up with meeting the Paris Agreement, which a Conservative Government signed. Yet at the moment all we hear is opposition to what is being proposed by the Government, on the basis of the very best advice that they could have.
There are a number of things that I think the Government are getting wrong. Any idea of loosening the movement to EVs is a great mistake, and the Government are also spending too much money on carbon capture and storage, as a matter of fact. But those are reasonable arguments to have from the point of view that we actually have to protect ourselves from the climate change that, surely, we are beginning to understand—as all the businesses I deal with understand —is no longer on the risk register: it is on today’s issue. How do we deal with this? The public and our grandchildren will never forgive us if what we do is to pretend that we are in favour of it in general, but not actually prepared to take the measures that are necessary. These figures are the necessary measures and are done far enough in advance for us to be able to deal with this.
It is very interesting that we should talk about intermittent renewables. The intermittency at the moment is with fossil fuels; the problem is that we cannot rely on them. It is also interesting that this is evidently “causing higher energy prices”, as 67% of the higher prices in this country and around Europe are because of the higher price of gas. What my noble friend proposes is to spend more money and more time on gas, instead of recognising that there is another fault of this Government, which is that they have wrongly continued the Conservative policy, which I opposed for 20 years, to put the costs of the necessary change on customers’ bills, instead of what they did between 1945 and 1951, when the Labour Party made the last huge change in our system and rightly said that that was a taxpayer’s price. If that came off now and was put on to the taxpayer’s bill, we would be properly competitive, and we would become more and more competitive as we moved.
It is all right talking about the Chinese—the Chinese are going to reach net zero by 2060, which means 2050, because they always promise in advance much less than they actually deliver. Every other country in the world that is thinking about the future is moving in this direction, because renewables are dependable and they are also cheaper. There is this idea that renewables are somehow deindustrialising Britain, but, since the Climate Change Act was passed, the GVA of the manufacturing industry has grown in real terms, and the CBI points out that there was £105 billion in added value in 2025 alone. This is a whole operation presented improperly. There is nothing in this order that is going to change whether I can grow my excellent red poll cattle.
The fact is that the reduction in our meat eating that the Climate Change Committee suggests we make is considerably less than that the medics think we ought to make; considerably less than Dimbleby, in his food strategy, said that we ought to make; and is less than what is now happening naturally. We have seen a 10% cut in the way people are eating, and there is nothing in this order that forces people to do more than that. We have to recognise that many of the people who will oppose this tonight are the same people who told us how wonderful leaving the European Union was, and the truth of the matter is that we can look at that. We have to look forward to a society in which we have protected our children and grandchildren from the menace of climate change, and until the Opposition are prepared to stand up with an alternative system that delivers that, it must be right to support what the Government are putting forward.
Lord Redwood (Con)
My Lords, as a Member of Parliament, I was unable to vote for the original climate change legislation. It seemed to be totally unrealistic, it was likely to be extremely expensive, and I thought it would be self-defeating. It was quite obvious that a large number of important economies around the world would not adopt this. It was extremely likely that an economy such as China would use the huge opportunity of our self-inflicted wound to export more and more to us—burning lots of coal and gas and marine diesel to get it here—and that we would deindustrialise too rapidly. Of course, that is exactly what is happening.
My noble friend on these Benches has just asserted that we have not deindustrialised, but he needs to look at the facts. We are losing massive amounts of traditional industry in petrochemicals, ceramics, glass and glass fibre. Many companies have gone down, many plants are being closed, and we are losing our traditional steel industry. It is true that we have had great success in industries such as pharmaceuticals. That may have been what my noble friend had in mind with the figures he was quoting, but he cannot get away from the fact that this is now doing huge damage: closing factories, closing plants, and causing a loss of jobs.
My first objection to the Government’s proposal tonight is that we should not adopt a very tough national carbon budget without knowing what the impact is going to be on carbon dioxide produced elsewhere in the world. You need to look at the net position, not just at the UK’s position. I suspect that the future will be like the last 20 years: there will not be a big net reduction in world CO. There will probably be an increase in world CO, because of all the extra marine diesel needed for the imports; because of a shift from gas down a pipe from our own fields to LNG, which my noble friend on the Front Bench has stressed is much more CO intensive; and because, for traditional industrial products, we will be more and more dependent on countries that may use methods that are more CO intensive—as well as all the obvious extra environmental costs those countries will incur, from the way they get the raw materials out of the ground, to the social costs of the conditions of labour that they use for producing the products, and the extra transport involved in the imports.
My second big objection to this order is cost. We are given a provisional figure of £880 billion, or £35 billion a year. My noble friend is right that this is likely to be a gross underestimate of the true cost. I challenge the Minister on how much he thinks grid expansion will cost, because the grid expansion will have to be on a completely unprecedented scale. When all the energy sources come from renewables, rather than the more dependable gas-fired sources—which do not need nearly so much grid—the Minister will need a much bigger grid to deliver the current amount of power that we need. Further, since electricity is still a minority part of the power we use, if we are going to treble or quadruple our use of electricity to replace the gas that we burn in our home heating, and the petrol and diesel we burn in our transport, the mind boggles at just how many pylons there will need to be around the country, and at just how much grid capacity there will have to be to deliver all that extra power.
The Minister also needs to understand that, while he is right legally that he can meet his commitments now by coming up with a—probably completely fictional—plan for the amount of carbon the country will produce over the next 12 to 16 years, he does not have to show in any detail how we might get there. My advice to all Governments is not to try to predict the future beyond 10 years, because nobody can. Everything is going to change. A year ago, we could not even predict who the Prime Minister of the current Government was going to be, but we meet tonight on the eve of a new Prime Minister. So how on earth can we predict how big the UK economy is going to be in 2040? How can we predict whether any of our industry of a traditional kind will survive or not? How can we predict what the technologies will be? It may be that the so-called new technologies around the lithium-ion battery—currently the main marketing ploy of those who favour this kind of policy—will be completely old hat in 10 or 15-years’ time. There may be something genuinely better. There may be an electric product that I want to buy because it works well and is genuinely cheaper.
My next challenge to the Minister is that I do not believe this line that electricity is cheap and will get cheaper with the more renewables we use. The evidence is there for all to see. We have gone further than most with renewables. We have the dearest electricity in the advanced world, and one of the reasons for that is the cost of renewable—a lot of renewable power is contracted at very high guaranteed prices. Worse still, we need the gas power stations, and we need to pay them for doing nothing, because you need the backup. Of course it is going to be a lot dearer to have electricity from renewables, because you have to pay twice to have two different lots of capital equipment. The Minister has wisely limited my time, so I will have to suffice with just those few very strong objections. I back my noble friend’s amendment.
Lord Hunt of Kings Heath (Lab)
My Lords, this has been a very interesting debate so far. I thank my noble friend for his very detailed explanation of the order before us. I am not sure that we are spending much time on the detail of the order, as he requested, and we are clearly turning this into a debate about net zero and climate change. Although the noble Lord, Lord Moynihan, acknowledged climate change, I must say that, as the noble Lord, Lord Deben, said, it is very difficult to square what is being said tonight by Members of the party opposite—and, I suspect, by rather a few more of them as the debate ensues—with what the Conservative Government did. After all, it was the Conservative Government who legislated for net zero. I know that the noble Lord, Lord Redwood, did not vote for it, but it was their responsibility. They signed the Paris Agreement. The Sunak Government made a bold statement that
“energy transition and net zero are among the greatest opportunities facing this country”,
as indeed they are. We may hear a little bit about North Sea oil and gas, as the party opposite now seems obsessed with that. It is worth pointing out that, between 2010 and 2024, production in the North Sea halved under the Conservative Government’s stewardship.
I come back to the pertinent point made by the noble Lord, Lord Deben. Both the noble Lord, Lord Moynihan, and the noble Lord, Lord Redwood, have criticised carbon budgets and the whole net-zero approach by the Government, but what is the alternative? It is rare now for members of the Conservative Party to say that they do not believe in climate change, but it is almost, as St Augustine said, “Oh Lord, deliver us from sin, but not yet”—“We will tackle climate change at some point in the future, but let us carry on with our obsession with oil and gas”.
I turn to business. The noble Lord, Lord Deben, referred to the CBI report, but this is one of the most thriving sectors of our economy. In fact, looking at the last year of the Conservative Government, it was the one sector that actually gave us some growth in the economy, yet they want to snap it off, whereas our competitors have seen that the impact of the green/net-zero economy can be profoundly changing and progressive and give so many opportunities to people. The CBI report says that the net-zero economy now supports 1.1 million full-time equivalent jobs—and they are good jobs, jobs that our young people can go into.
On China and the international experience, we are lectured that, somehow, by going into a leadership role in relation to decarbonisation, we are letting other countries take great advantage. If noble Lords look at the reports of the International Energy Agency, particularly its 2025 report on renewables, they will see that there is a huge advance in the use of low-carbon energies globally. China currently accounts for 60% of global renewable capacity growth. It is going to meet its targets way ahead of schedule, in 2035. I agree with the noble Lord, Lord Deben: it tends to set conservative targets and then meet them much more quickly, so to talk about China as if it is simply carrying on with oil, gas and coal is misleading.
The North Sea, if I can just end on that, has been a tremendous asset to our country. If only we had set up a sovereign wealth fund to invest in our infrastructure, like Norway did, I think we would be in a much better condition. The people working there are brilliant people, but if noble Lords look at the North Sea Transition Authority’s estimates, it reckons that only around 10% of the basin’s historic output could be recovered in the future. Analysis by the University of Oxford’s Smith School, using pre-crisis price data, suggests that households powered fully by renewable energy could save up to £441 per year on energy bills. By comparison, maximising North Sea oil and gas extraction was estimated to reduce household costs by around £16 to £82 per year. As we know, increasing UK production—and it would be a marginal increase in UK production—would not directly reduce prices, because we do not influence global prices and we buy on the global market.
I also point out that the Conservative Government, over 14 years, issued many licences for expropriation and extraction in the North Sea. That actually led to only 20 developments, which, I understand, would produce the equivalent of just 36 days of extra gas. So the challenge for the party opposite, it seems to me, is to stop running down the approach and the consensus that we have on net zero, and if it is opposed to it, it should come up with some suggestions about how we might go forward.
Lord Roborough (Con)
My Lords, I will address carbon pricing in the UK, its unfortunate consequences for policy-making, and its devastating results for the public purse and the future of our economy. This confusion is embedded in these instruments, so I speak in support of my noble friend’s amendment. I refer the House to my registered interests as an owner and developer of wind and solar energy generation projects, and as an owner and developer of forests that target carbon sequestration under the Woodland Carbon Code, as well as growing timber that addresses the UK’s structural deficit in construction-grade timber. I am also a partially regenerative dairy and beef farmer.
Our carbon pricing in the UK is muddled. UK Woodland Carbon Code units trade at around £30 per tonne; the UK Emissions Trading Scheme is trading at around £55 to £60 per tonne; the Government’s internal valuation for carbon emissions, used in calculating the relative merits of policy and projects, ranges from a low case of £130 to a high of £390 for this year, and that rises to £568 in 2050. The average carbon emissions per head in the UK are nine tonnes per annum, and that includes scope 2 and scope 3—so offshore emissions. That can be offset for a total cost of £270 through woodland carbon units or £510 through the emissions trading scheme, yet the Government’s cost, used for policy, implies up to £3,510 per head. The first two figures sound reasonably affordable to me, the third does not sound at all affordable.
I believe we are expecting the Government to publish an update to this valuation framework alongside this Carbon Budget Order. I ask the Minister, first, when is this five-year review of valuation of greenhouse emissions likely to be published? Secondly, is he prepared to look again at the whole basis of how this valuation is done, in order to create an environment for better policy-making? The argument that this is based on marginal abatement cost is ludicrous. In effect, the Government are using the extortionate cost of some of the technologies they are throwing money at to justify that cost. In Microsoft Excel, this would cause a circular reference error.
Net zero can be achieved through pragmatic decision-making based on an orderly market where technologies are assessed based on the cost of carbon set by buyers and sellers. Unfortunately, this Government are chasing fantasies around green hydrogen, carbon capture and storage, and direct air capture, as well as some of the renewable projects coming forward, and these have been justified by this ludicrous carbon pricing. It is leading us to ruin, discredits any efforts to keep atmospheric carbon down, and needs to be reassessed. It takes no heed of affordability for the consumer, who feels cost of living pressures everywhere, and is already providing huge subsidies to renewable energy and grid improvements through electricity bills, and suffering the tax burden of funding fantastical technologies, when this money really should be spent on our defence. It pays no heed to industry, which is forced to compete with peers that can access considerably cheaper power almost anywhere in the world. As my noble friend has described, this will simply lead to our jobs and industry being taken offshore, and probably means that the best chance of meeting these targets is by deindustrialising our economy even further.
My noble friend’s amendment regrets the impact on meat and livestock production and consumption, which I fully support. Latest scientific evidence and dietary advice concludes that animal protein, fat and vitamins are critical to our health. Calculations underpinning livestock’s impact on greenhouse gases are highly biased and unfairly penalise livestock for the transitory impact of methane in the atmosphere. They fail to recognise that livestock farming, particularly in a regenerative system, is simply recirculating carbon, in the same way as supposedly sustainable aviation fuel, Drax and renewable heating installations. Why are animals being villainised while these are promoted and grant-aided? This also undermines the affordability of dealing with climate change, exposes the Government to ridicule and poses a threat to our health. I look forward to the Minister’s reply.
Lord Harlech (Con)
My Lords, it is a pleasure to follow my noble friend. I declare my interest as the owner of a Welsh upland portfolio with agricultural tenancies, livestock, woodland and heritage assets serviced by renewables. I am therefore someone who lives with both the duty of stewardship and the economics of the transition we are debating. Let me say at the outset that I am not going to deny the science nor unpick the architecture of the Climate Change Act: climate change is a real and present threat to our food, our water, our coasts and our security, and the Conservative tradition of conservation demands that we take it seriously. My concern today is not with the direction of travel, it is with the means. The means before us are too reliant on central direction, too costly and too inattentive to the people and the industries asked to carry them.
Let us consider the foundation of this budget. The Climate Change Committee tells us that electrification must deliver around 60% of the savings through heat pumps in our homes and electric vehicles on our roads. Yet we ask families and businesses to electrify while our electricity remains among the most expensive in the developed world.
The ratio of electricity to gas prices in this country is roughly 4:1, against the European average of 3:1. If we want people to make the switch, the most effective step this Government could take is to make clean electricity cheaper, through levy reform, market reform and competitive auctions, rather than through state-led projects that risk crowding out private investment and adding further cost to the bill.
Let me give your Lordships an example. At the house in north Wales that I mentioned in my interests, the domestic hot water and heating is generated by two water-source heat pumps. However, electricity becoming so expensive has blown out of the water all the projections of cost saving and non-domestic RHI—they went completely out of the window. We have had to consider whether it would be more worthwhile to turn them off and go back to LPG. I am sure we are not alone in facing that cost crisis. Affordable power is not a threat to this budget: it is the condition for delivering it.
Then there is the land. The committee’s pathway implies halving the national flock and herd and reducing consumption of meat and dairy by a quarter. I know the people who farm that land. They are the ones who plant the trees, restore the peat and work to hold carbon in our soils, because good farmers have long been among our first conservationists. However, we do not decarbonise this country by reducing British livestock production and importing food from countries that farm to lower standards. That approach moves emissions abroad, rather than removing them. The better course is to reward farmers for the public goods they already provide and support domestic food production alongside the recovery of nature.
I put this question directly to the Minister: if the Government intend to press ahead with these reductions in livestock numbers, will they pay farmers full market value in compensation for the herds and flocks they are asked to give up, or is this simply another thinly veiled attack on farmers and the rural economy?
This brings me to the second order, and to the concern that my noble friend Lord Moynihan sets out in his regret amendment, which I support. A limit of zero on overseas credits, set against a carbon price among the highest of any market in the world, risks a self-defeating outcome. Energy-intensive industry may relocate abroad, taking its jobs, tax revenue and emissions with it, so that those emissions reappear on another country’s account while global emissions are no lower at all. Carbon leakage of that kind is not decarbonisation, and it weakens our industrial base in the process.
Let me conclude where I began. I support the framework and the goal. The United Kingdom should lead, but leadership means delivery that is affordable rather than not, that supports our farmers rather than reduces them and that keeps industry here rather than driving it overseas.
Lord Frost (Non-Afl)
My Lords, I declare an interest as an unpaid director of the company Net Zero Watch.
It was 10 years ago today that we had the referendum that decided whether we would be governed from Britain or the EU: “Who Governs Britain?”. However, when I look at the carbon budget and the piece of legislation before us today, I wonder whether the actual Government of Britain is the Climate Change Committee. I do not make that point rhetorically; I make it seriously. Once the carbon budget is in place, it affects every aspect of what the Government and much of the private sector do. It constrains activity and shapes what can and cannot be done. It is an essential feature of the way this country is governed, and we are just waving it through tonight on the basis of a piece of secondary legislation.
The noble Lord, Lord Hunt, said that we were not paying enough attention to the detail. Well, perhaps the Government would like to provide some time to debate the detail. The carbon budget is 400 pages long and there is a supplement of 60 pages. We are spending an hour and a half discussing something that will affect the entire UK economy, if we are to believe it, for a period of five years—so let us get serious about this.
There are a number of problems with the carbon budget and this legislation which have been mentioned to some extent by others. First, even on their own terms, the Government are not choosing the cheapest path. Probably all the figures before us are completely worthless, but the impact assessment’s own table shows that option one is better in cost-benefit terms as it has a higher net present value. Ministers are choosing the more expensive path because they are focused on achieving the target rather than worrying about what happens to the British economy.
Secondly, a lot of the savings are meaningless paper numbers. Of the so-called £1.6 trillion headline benefits identified in the impact assessment, almost all of them —over 90%—are simple carbon savings. These values are not set by any objective reality; they are defined by what is necessary to reach the target. It is an entirely circular process; these are not real benefits in the sense that any normal person would recognise them in any way.
Thirdly, the generation of technology cost figures are implausible, as the noble Lord, Lord Moynihan, has already stated. They consistently underestimate the cost of renewables: offshore wind and onshore wind. There is also a belief that the costs of products such as heat pumps, and many other things, will fall in the future: a belief for which there is no evidence, as far as I can see.
Fourthly, on carbon capture and storage, I am very glad I can find something to agree with the noble Lord, Lord Deben, on, because, as far as I can see, the assertions are based on nothing. The target requires us to capture 80 million tonnes of CO2-equivalent every year by 2050, using what we are told is “state of the art” technology. Unfortunately, the state of the art is that these technologies do not work and cannot be made to work, and are probably never going to work. We are being asked to legislate for a fantasy.
Fifthly, there is dishonesty about lifestyle impact, which other noble Lords have already mentioned. The Government say they will not do what the Climate Change Committee says is necessary on farming. Okay—what are they going to do? As I have said, these carbon budgets affect everything. If you do not make the saving in one place, it has to be made somewhere else. Simply saying, “We’re not going to do that”, is not really an answer.
There is simply no reflection in the discussion of the legislation of the policy reality: the fact that the rest of the world is paying much less attention to this than we are. The US has, in essence, moved away from the net zero policy entirely, and even the European Union is beginning its internal discussions to question whether this is absolutely the right way forward. If they are, then we really should be.
To conclude, a number of speakers today have already asked us, “What would you do then if you’re not happy with this? How would you deal with the problem of climate change?” I say in return, why should we take seriously those who have a policy that simply cannot achieve its declared goal? They seem to have a belief in the miraculous powers of action in this country to affect what happens all round the world. Carbon budget 7 means the destruction of the British manufacturing economy over the next 20 years and huge hits to the lifestyle of the inhabitants of this country.
If we use the methodology of the IPCC, we are asked to do this to reduce global temperatures by 0.01 degrees centigrade in the year 2100. That is the effect we are going to have. This is a crazy, irrational policy and one that simply should not be followed. That is why I support the regret amendment from the noble Lord, Lord Moynihan. We can speak against the Government’s policy today and perhaps vote against it, if we can. Obviously, it will make no difference, but I take comfort in the fact that by 2038, when this budget comes into force, the full irrationality of this policy will long have become evident, and it will never come into force.
Lord Douglas-Miller (Con)
My Lords, I declare my farming and forestry interests as set out in the register and will speak in support of the amendment from my noble friend Lord Moynihan. I also associate myself with the comments made by my noble friends Lord Harlech and Lord Roborough.
There are a few challenges with the proposed Carbon Budget Order 2026. The issues I have are not so much ideological and technical as more practical. In the wider context, if passed, the Carbon Budget Order will increase the UK’s reliance on intermittent renewables, causing higher energy prices, further accelerating deindustrialisation and driving lower economic growth, as we have heard many times this evening. Even the Climate Change Committee has estimated that British industry would face net costs of up to £3 billion per year every year between 2025 and 2050. Clearly, this will make UK businesses uncompetitive and add to the general cost of living for the British public.
The area I would like to focus on is the impact it will have on British farming, particularly livestock farming, and the UK’s future food security. Two weeks ago in this Chamber, we debated the impact of Labour Party policy on the rural economy, and it was widely agreed that a number of policies that have been introduced—such as the family farm tax, national insurance increases and the hike in the minimum wage—have had a strong negative impact on sustainable farming and food production across the UK. With this in mind, further negative impacts should really be avoided, otherwise rural productivity will fall even further. This seems challenging given what is proposed in the Carbon Budget Order 2026.
As we have already heard from the noble Lord, Lord Moynihan, this 2026 order means that by 2038, we will have to reduce annual emissions by more than two-thirds. What that translates to on the ground, according to the Climate Change Committee’s own report, is that household consumption of meat and dairy will have to fall by 25%. In farming speak, this means that the number of sheep and cattle will have to reduce by 50%, forcing farmers to diversify away from livestock farming and further reducing our national food security. I ask the Minister: is this sensible or even realistic? If we were to reduce livestock by 50%, it would render every livestock farm economically inoperable, threaten the future of many of our livestock breed varieties and collapse meat and dairy production and any domestic meat supply completely, leaving us wholly dependent on foreign imports. Why would we want to do this, particularly at a time when food security should be higher up the Government’s agenda, given what is going on in the wider world?
Suggesting that meat and dairy consumption is going to drop by 25% flies in the face of all current statistics. There is no indication that this is happening now or that it is likely or even desirable in the future. It just seems pie in the sky—excuse the pun—unless the Government are planning to restrict what the public want to eat. In essence, if this Carbon Budget Order proceeds, the most likely outcome will be that meat and dairy consumption will stay exactly the same and domestic production will collapse. Suggesting otherwise is simply ignoring the reality of living in the world as it is today.
We live in an era of global commodity prices and international trade, so if our domestic prices go sky high, the supermarkets and the public will switch to imports from other countries, which will increase to fill the void. As well as collapsing our domestic food security, it is just offshoring emissions to countries with more polluting energy systems, and that will negate any savings at home. This is a hopeless outcome and will ultimately make little or no difference to anything.
Rural communities are always at the sharp end of the climate change policy debate. In addition to the farming community, I also raise the issue of additional costs for those who live off grid. This might sound like a niche issue for a small number of hillbillies living in the outback, but it is not. There are 1.7 million oil-heated rural houses that are not connected to the gas grid. Can the Minister say what support he might offer to the 1.7 million households who, according to the Climate Change Committee’s own estimate, will consistently pay more to decarbonise through electrification?
As I said in my introduction, there are quite a few challenges with the Carbon Budget Order. The impact will be felt across many areas, although my comments have been largely focused on farming. Pursuing the Carbon Budget Order seems the wrong route for UK farming and the wrong choice for the British public. It will achieve little or nothing in the way of carbon savings.
Lord Fuller (Con)
My Lords, I will focus on the unintended consequences that flow from the 16 words in the order that place an arbitrary cap on our nation’s economic potential. There are hard truths that need to be told about the practical effects, which include incentivising the importation of the most polluting products while jobs are lost at home. I do not deny the importance of decarbonisation—the oil is going to run out eventually—but setting a cap of 535 million tonnes of carbon dioxide equivalent from 2038, more than a whole decade away, in a world of uncertainty is to take a path that makes our people poorer and, counter- intuitively, makes global emissions worse in the rest of the world.
I declare my interest as someone involved in the fertiliser trade. While I do not produce it, I am involved in the trade that brings it to our shores.
It is always useful to follow the money. From 2013 to the end of last year, EU ETS auctions have raised over €258 billion in revenue for the EU. In 2025 alone, EU ETS revenues totalled more than €43 billion. This is a tax gusher dressed up as environmental virtue signalling. On that basis, it is hardly surprising that the EU has introduced trade barriers to keep everyone else out, and now the UK wants to follow suit.
Let us deep dive into the industry I know best, which will be subject to insane fertiliser taxes from next January. I know about carbon budgets and the paraphernalia that flow from them: the emission trading schemes, the carbon border adjustment mechanism, free allowances and default values that, bizarrely, will create powerful fiscal incentives to send the most polluting fertilisers to the UK. They all sound so good in theory, but the CBAM and its evil twin, the ETS, are making us structurally uncompetitive—and, as a double whammy, the way Britain has chosen to implement them in the UK, like VAT, is architecturally incompatible with the EU system, which relies on permits and registries.
These orders tie us to the EU ETS, but there are many other ways in which the UK ETS differs from the EU equivalent. Not only is the denomination euro versus sterling but there is the EUA versus the UKA, reflecting two different economic territories. There is no CBAM hedging liquidity, alongside all sorts of arbitrages that place the UK at a competitive disadvantage. There is also a wilful refusal to provide the clarity on free allowances, which the EU is now diluting but which are essential to enable future trade in our country.
Why would we tie ourselves to the EU via the draft Climate Change Act 2008 (Credit Limit) Order 2026, which is so incompatible with the UKA, sterling and default values? This is not dynamic alignment or mutual recognition; this is fossilising our future based on today’s values in an uncertain world, putting a cap on our country’s ambition and capability. The risks are that, if the EU changes the goalposts for any of the carbon components—as it is doing at the moment—we would be left at a comparative disadvantage for the next 15 years. The EU has seen us coming—something our Government cannot see for themselves. Why are we running towards this danger?
Worse, we are hard-coding numbers 12 to 16 years hence, yet the Chinese, who do not share our worldview, have unilaterally changed the way in which they calculate carbon emissions, leaving us high and dry up that proverbial creek without a paddle. The naive “good chap” way in which we have chosen to account for carbon—in divergent ways to the EU and the rest of the world—will make us the natural dumping ground for the world’s most polluting fertilisers. Success was never to be like that. In the past two months, the Chinese have reversed a fertiliser export ban and turned up coal-fired urea production to eleven to exploit global shortages.
Our proposed default carbon values, which flow from these orders, provide perverse incentives to import these polluting products at the expense of cleaner products. The system of free allowances has diverged into an Alice in Wonderland fantasy land where, with the aim of levelling the playing field, we will be taxing imports of certain carbon-intensive goods that are not even made in this country. All that does is drive inflation. The UK is proposing free allowances for a fertiliser industry that no longer exists in this country, making farmers pay even more for their most expensive input. That is clearly contrary to the WTO and the rules-based order, which the outgoing Prime Minister purports to support. It is madness.
Last week, the EU announced that carbon taxation would be extended to secateurs and gardening tools. I ask the virtue signallers to accept that, by making UK energy feedstocks uncompetitive by forcing the highest energy prices on our chemical industry, they will actually increase global emissions by outsourcing production to more poorly regulated nations, throwing thousands of Britons on to the dole in a crass deindustrialisation, just so the members of the London Labour Party can virtue signal how green they are while sipping negronis on their step-free bifold-access terraces, grazing on tofu picked up at Whole Foods.
The facts are that, for everyone else, these carbon budgets and the taxes are driving up the cost of beer, biscuits, bread, butter and barbecues. I hope the Mancunian Messiah recognises that simple truth in the coming weeks.
Lord Ashcombe (Con)
My Lords, I wish to express my regret at these statutory instruments. Let me begin by recognising that carbon budgets are a vital part of the UK’s approach to tackling climate change. They provide long-term clarity on the pathway to net zero at some future date, set a direction of travel for policy and investment, and signal the seriousness of our ambition. My concern lies not only in the pace, the manner and the potential consequences of the course now proposed but on the realism of the pathway itself and the practical deliverability of the measures that underpin it.
The Carbon Budget Order sets an exceedingly ambitious and legally binding cap to reduce emissions to little more than a quarter of their current level for the period 2038 to 2042—a period still far removed from present realities. In doing so, it risks committing the United Kingdom to a trajectory of decarbonisation so steep as to be impracticable. It is one thing to aspire, quite another to legislate, for a future shaped by uncertainties in technology, economics and geopolitics.
Today in this country, oil and gas account for roughly three-quarters of our own energy demand, and they will remain a significant part of our energy mix for decades to come. This very evening, about 50% of our power is generated from gas. We already use roughly 10% fewer hydrocarbons than the global average consumption by country, and make no use of coal, which remains a substantial contributor to energy consumption worldwide.
Domestically, we already face some of the highest electricity costs in the G7, placing a heavy burden on households, business and industry alike. There is every indication that these pressures will intensify. The latest round of offshore wind licences has been awarded at a strike price of about £90 per megawatt—almost twice that of AR6—and yet the Climate Change Committee suggests that there needs to be a sixfold increase in offshore wind, a doubling of onshore wind and quadrupling of solar power. I wonder what the next round of auctions will actually cost. This is without mentioning the necessary grid expansion required to cope with the transmission of this power to the end-user, which my noble friend Lord Redwood mentioned. The CCC also suggests further enormous demands on the heavily troubled agricultural sector, as has already been noted.
Carbon dioxide emissions may fall sharply under this framework, but at what economic price, and who pays? We are already seeing signs of industrial migration. Companies are reconsidering their presence here, with some relocating production overseas. The implications for jobs, investment and the long-term resilience of our industrial base are deeply concerning. One must ask how long heavy industry can be sustained under such conditions.
I would also hate to disappoint the noble Lord, Lord Hunt of Kings Heath, but the situation in the North Sea provides a cautionary illustration. Our offshore sector, developed over many decades, supports not only oil and gas but also technologies of the future: carbon capture and storage, hydrogen and offshore electrification. These capabilities are deeply interconnected. They depend on a skilled workforce, a resilient supply chain and an active industrial base, as we saw from the electorate in Aberdeen South. That system cannot be maintained or scaled if the investment environment becomes unstable or uncompetitive and the resources left unexploited. The sanctioning of Jackdaw, Rosebank and renewed drilling would assist this immeasurably, as opposed to relying ever more on more polluting imports.
As to the means of achieving these targets, much rests on technologies that are not yet proven at scale. Renewable energy, as suggested by the CCC, will play a vital role, but alone it cannot meet the demands of electricity, heating and transport. Nuclear capacity takes time to deliver, while large-scale carbon capture, hydrogen and long-term storage remain in development. To anchor binding commitments upon their rapid deployment is, I fear, a considerable gamble.
We have often reflected in this noble House on the United Kingdom’s relatively small share of global emissions: 0.8% of world emissions. The top three emitters account for over 50%. There is a real danger that, in acting unilaterally, we merely displace emissions abroad while inflicting further disproportionate harm on our economy. That would serve neither our national interest nor the global emissions cause.
Earl Russell (LD)
My Lords, we debate the seventh carbon budget on a day when our warming climate is making itself known. The Conservative Party may feel that fighting climate change is no longer urgent or possible, but the extreme heat begs to differ.
We support the carbon budget and credit limit orders. We express our disappointment at the regret amendments. CB7 is not a discretionary gesture. It is a statutory requirement, setting the path to an 87% emissions reduction by 2040. To waver now, as these amendments invite us to do, is to ignore both scientific certainty and economic opportunity.
Our ever-warming climate is an existential threat. Until recent times, we have all benefited from a cross-party consensus on climate change. It is regrettable to see the Conservative Party’s continued retreat from reality. The Conservative Party introduced the Climate Change Act and implemented half of our carbon reductions to date. In 2013, it introduced the carbon price support, and in 2019 the carbon emissions tax, which, in this very amendment, the noble Lord, Lord Moynihan, now seems to regret.
There are real issues to debate, but the need to fight climate change is not one of them. To describe this transition as a threat to “industrial sovereignty,” or a cause of “impoverishment” is a serious mischaracterisation of the risks. It is the abandonment of the Climate Change Act, and its implementation, that would put our energy security at risk and strip away the legal certainty that investors in British industry rely on.
On intermittent renewables and higher prices, the evidence does not support the argument. The Climate Change Committee has shown that renewable electricity and electric vehicles are now cheaper than fossil-fuelled equivalents, and that the cost of the path to net zero, every year out to 2050, is less than the cost of a single fossil-fuel price shock. It is fossil fuels that are insecure in supply and volatile in price.
The price of electricity is too high, but that is not the fault of renewables. It is hard to defend a market in which a unit of electricity costs 4.3 times as much as a unit of gas. That is the real barrier holding back heat pumps and EVs, which is why my party continues to call on the Government to break the link between gas and electricity prices, strip policy costs off bills and introduce an essential energy guarantee.
On deindustrialisation, the risk runs precisely opposite to the arguments advanced. CBI Economics has found that failure to transition our car industry to EV manufacturing could cost the economy £34 billion and over 400,000 jobs. The net-zero economy generates over £100 billion a year in value and supports 1.1 million jobs, with nearly half a trillion pounds of investment in the pipeline. Conservative and Reform plans to weaken net-zero targets would pointlessly destroy business confidence, investment and the jobs and growth this country needs.
The regret amendment also misrepresents the credit limit order. It sets a zero limit on the use of overseas carbon units for the fifth budgetary period. This is not a loophole; it is the opposite. We support this order because it sends a clear signal to investors that the UK’s reductions will be delivered through domestic infrastructure and domestic supply chains, not purchased on paper from elsewhere. Support for this order will not obstruct us in pushing the Government further to improve energy security for individuals and business.
It is sensible for the Government to keep open the option of joining the EU’s carbon border adjustment mechanism. Properly designed, this framework protects British industry from offshoring. Farmers need fair reward. Last year’s harvest was one of the worst on record, costing arable farmers more than £800 million. My party continues to call for an extra £1 billion a year for environmental land management schemes so that farmers can diversify into woodland creation and peatland restoration. The Government have the opportunity to implement a policy reset.
On electrification, around 60% of the emissions reductions required by 2040 will depend on EVs and heat pumps, yet reports suggest that the Government may weaken the ZEV mandate’s 2030 target from 80% down to as little as 50%. That mandate is the single biggest carbon reduction lever that this Government hold, so I hope the Minister can rule that out. UK heat pump sales are the lowest of 19 major European economies because of price.
The nature and climate crises are conjoined. Both tree planting and peatland restoration need to double. More must be done to restore our habitats and fight the growing threat of wildfires. Labour’s airport expansion plans for growth go well beyond the targets. By 2040, aviation will be our single biggest emitting sector. The Government’s plans seem incompatible with the budget. My party opposes all airport expansion in the south-east.
In 2008, this country led the way with the Climate Change Act. Some 76 other countries have since followed. The seventh carbon budget is, in the Climate Change Committee’s own words,
“the most credible and balanced option”
open to us. It will shield households and businesses from price shocks and an increasingly volatile fossil fuel market, as well as strengthening our energy security.
We must not let short-termism undermine the only path to a cleaner, more secure and prosperous Britain. Our message to the Government is, “You need to go further and faster. Don’t do things to people. Work with them. Support them. Help them benefit from community energy. Fight for climate and nature. Adapt. Above all, bring down the cost of electricity; that would do the most to put the transition within reach of every family and business”.
I welcome the citizens’ panel. Its message is clear: this transition must be equitable, affordable and fair. The Government must do more to make it so.
Lord Whitehead (Lab)
My Lords, first, let me thank noble Lords for their valuable—that is what it says here in my brief—contributions to this debate. I cannot say that I endorse that entirely. I also cannot quite get my mind around the parallel universe that some noble Lords seem to have been inhabiting while making their points this evening.
On that parallel universe, I draw noble Lords’ attention to a very significant speech that was made today just a few hundred yards from this building. It was given by the Secretary-General of the United Nations, who, as part of London Climate Action Week, made an impassioned speech on climate change, including what we need to do about it, how quickly we need to do something about it, and what we need to do on electrification and low-carbon economies in particular.
I hope that noble Lords will go away and look up that speech, because among other things it completely gives the lie to the idea that no one else in the world is terribly interested in this climate change business, that no one else is doing anything about it, that the activities we are undertaking on climate change are just blowing in the wind, and that we are giving away our industries to other people who will take advantage of them. A number of the industries that they are talking about are sunset industries that are being replaced by low-carbon industries which, if we are not careful, the rest of the world will run away with. They would then overtake the advantages that we have at the moment in green industry, which we are doing very well in. The green economy has grown three times as fast as the general economy in the last few years.
The people who live in this fantasy parallel world appear to be saying that none of that counts. We are making tremendous changes to how energy is distributed in the low-carbon economy. This is a good thing for climate change purposes and will bring people’s bills down in the long term. The energy we will be using will inevitably be cheaper, more affordable, less volatile and more stable than the energy we are using now. It will produce a very large number of jobs: £100 billion in green investment has come into this country over the last two or three years.
However, none of this appears to have any effect whatever on the parallel facts that are put forward. The noble Lord, Lord Frost, appeared to be saying that the rest of the world was moving away from action on climate. I was at an international meeting this morning where people from around the world were standing up and saying what they were doing about this, how committed they are to a low-carbon future and how important it is for their own countries and for the world that we continue down this path.
This climate budget has to be set in the context of the real world of facts and information about where our world is going and what we need to do to make sure that it does not continue in the direction that it appears to be going at the moment, rather than in the context of quite a lot of what we have heard this evening about why all of this is a waste of time. I am afraid that I must single out the noble Lord, Lord Redwood, in this respect. One really cannot make a serious case that, because we cannot completely know the future, we should do nothing whatever about it and just hope that the market somehow sorts it out. We have got to take action.
As the noble Lord, Lord Deben, mentioned, we took action with the Climate Change Act, which was carried by everybody in the Commons except five people. I can name them.
Lord Whitehead (Lab)
Indeed, the noble Lord, Lord Lilley, is with us this evening. At least I can say that the noble Lord is consistent. He did not sign it in the first place and I do not think he would sign it now if he had the opportunity.
That Climate Change Act, which requires us legally to carry out these carbon budget examinations, set up the Climate Change Committee to advise us on the science behind the proceedings and tell us what we need to be doing, not just now but in the future, so that we have time to make policy for what we will be doing to match what is required in those carbon budgets. We have that legal obligation, because we passed the Climate Change Act together in that year.
It has stood us in very good stead. It has directed what this country tries to do, without telling us what we do in detailed policy. Some of the discussions this evening have set up what the Government are apparently going to do and then said, “We don’t like it very much”. No, the Government are not going to go around shooting cows and rounding up livestock for slaughter. The Government will be doing what it is doing now and investing £5 billion over two years in farming. This is perhaps the largest investment in sustainable food production and nature recovery in this country’s history.
Alongside that, the Government are actively exploring ways to reduce livestock-related greenhouse gas emissions, including through scientific research on mitigation strategies and management, feed, such as the increasing adoption of methane-suppressing food products, and breeding. There are many alternative ways of making sure that agriculture and land use plays its part in climate change emission reductions without the straw man that some of the opponents of climate change action seem to have set up in this Chamber—that the Government are somehow going to chase livestock out of the country in order to meet climate change restrictions. To produce alternative theories, I am afraid you need alternative facts.
The impact assessment has, among other things, a fairly exact examination of the costs of doing nothing, as opposed to the costs of doing something. This has been a long-standing theme. The University of Cambridge, for example, estimates that climate damage will reduce global GDP by up to 24% under a high emissions scenario by 2100. There are pages of other information about the costs of doing nothing, as opposed to the cost of doing something, and I always advise noble Lords to go to impact assessments if they want to know the truth about what is happening on any piece of legislation.
My noble friend Lord Hunt underlined that the regret amendments that we have in front of us are big on things that are not liked very much and tiny to insignificant on what, if anything, to do about it. Indeed, one has a responsibility, if one does not like what is being done now, to say what should be done alternatively. Alternatively, if one does not like, say, the climate change legislation, stand up and say that, and say what else you will do instead, or, as some Members have said, just deny that the whole thing is an issue and have an alternative universe of facts to try to underpin that.
I am conscious that I will have to write to a number of noble Lords on specific issues, but I thought it necessary to put what we are doing tonight in the right context. What we are doing is making sure that our futures are secure in this world.
Lord Roborough (Con)
I asked two specific questions relating to these orders. One was about the timing of the update and the valuations for carbon, and the second was whether the Minister would reconsider the faulty basis on which I think they are calculated. If he does not have answers today, would he commit to write?
Lord Whitehead (Lab)
Yes, indeed. The noble Lord makes those points, which I have taken well on board. The question of carbon pricing, of course, is a long-standing issue as far as carbon valuation is concerned, but I certainly will write to him about the particular points he raises as soon as possible.
Lord Moynihan (Con)
My Lords, I disagree with the Minister on one thing: I think this was a valuable debate. I thought that contributions from every Member of your Lordships’ House have been helpful and constructive. I do not think it has been, to quote him, “a waste of time”. I do not think anybody who spoke this evening wasted anybody’s time. There is cross-party recognition of the importance of addressing these issues, addressing the carbon order and addressing climate change. The question before us this evening is about the Carbon Budget Order 2026.
The Minister is completely right to say that we should address this in the context of the impact assessment, which he considers to show us the truth. He is completely right to have identified that importance. Everything in my speech related to that—everything. I say to my noble friend Lord Deben that the public and our grandchildren will never forgive us if we destroy our economy with high energy prices. That is a real concern across this Chamber. We currently have electricity prices that are four times higher than the United States. That is the issue that we need to address. The impact assessment shows us that prices will go even higher if we follow these measures.
I say to the noble Lord, Lord Hunt, that we share this factor: neither of us is obsessed with anything. There is no obsession on this side of the House, but there is real concern. There is cross-party concern with what is being proposed. Tony Blair has said that the net-zero policies that are being pushed forward are viewed as
“unaffordable, ineffective, or politically toxic”.
Gary Smith of the GMB, who is absolutely all over these issues, has recently said that the policies being pursued by the Government are “economic madness”. Even the Unite the Union says “No ban without a plan”.
These points are worthy of consideration, because the North Sea issue is very important. I know everybody may have been distracted by Makerfield, but an important referendum was in effect being undertaken in the constituency of Aberdeen South, which was overwhelmingly won by the Conservative candidate. It was an overwhelming rejection of both the measures that are in this climate change Carbon Budget Order and the current Government’s policy on the North Sea, which is referred to.
In closing, it is important for all of us to recognise that there is a universal position across this House that we have to get policy right. I do not think this order does. We cannot afford to damage our economy irreparably through a zealotry on net zero that goes too fast, too far, too early, and jeopardises our economic recovery and the key underlying policy of the Government, with which we agree—economic growth. The impact assessment is fundamentally flawed, not least on the important point about CCS, which, interestingly enough, is one point that was criticised by my noble friend Lord Deben. It is one of the three fundamental pillars on which the whole of this is based.
With those concluding comments, and with my gratitude to everybody who has contributed to this valuable debate, I seek to test the will of the House.