19:33 - The House divided: - Ayes: 332 / Noes: 94 - Question accordingly agreed to.
19:47 - The House divided: - Ayes: 329 / Noes: 94 - Question accordingly agreed to.
19:59 - The House divided: - Ayes: 330 / Noes: 93 - Question accordingly agreed to.
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Katie White)
I beg to move,
That the draft Carbon Budget Order 2026, which was laid before this House on 2 June, be approved.
Madam Deputy Speaker (Ms Nusrat Ghani)
With this it will be convenient to discuss the following:
That the draft Climate Change Act 2008 (International Aviation and International Shipping) Regulations 2026, which were laid before this House on 14 April, in the last Session of Parliament, be approved.
That the draft Climate Change Act 2008 (Credit Limit) Order 2026, which was laid before this House on 14 April, in the last Session of Parliament, be approved.
Katie White
This week has been like no other. At this very moment, people across our country are experiencing another reminder of the world we now live in. If anyone in this Chamber still thinks that climate change is a problem for tomorrow, they should step outside today. Parents will struggle to get their children to sleep through sweltering nights. Farmers will look anxiously at weather forecasts and cloudless skies. Hospitals, schools and care homes will prepare for temperatures that would have seemed extraordinary in Britain just a few decades ago.
Parts of our country are facing temperatures of up to 38° this week, while experts warn that 40° days may arrive far sooner than anyone expected. Today’s debate is not taking place against the backdrop of climate change; it is taking place in the middle of it, and I cannot make it clearer to the House that this is not normal. A Met Office extreme heat warning is in place for parts of the UK today and tomorrow. In fact, it has just confirmed that today is the hottest June day ever.
In recent months the crisis in the middle east has felt like a ghost from the recent past. Once again, the world has found itself staring at a major fossil fuel-producing region and wondering what happens next. Once again, energy markets have been holding their breath. Once again, families, businesses and Governments have been reminded just how fragile the system can be. This is, of course, the second fossil fuel shock in barely half a decade. It is only four years since Putin’s tanks rolled into Ukraine and sent shockwaves through the global economy, four years since family budgets were shredded by soaring energy bills, and four years since Britain was reminded that when our energy system depends on volatile fossil fuel markets, a crisis on the other side of the world can land on our doorstep in a matter of days.
When faced with challenges of this scale, there is always a temptation to focus on the immediate crisis, to become consumed by the pressures of the day, and to postpone difficult decisions for another Parliament, another Government or another generation.
Katie White
I will make some progress.
Postponing difficult decisions has never been how our country has met its greatest challenges. We have always been strongest when we have looked beyond the immediate horizon, recognised the risks ahead and taken practical steps to prepare for them. That is what the carbon budget framework represents: a science-led budget to reduce emissions by around 87% between 2038 and 2042 compared with 1990 levels, including in international aviation and shipping. The framework is in line with the advice from the independent Climate Change Committee and is endorsed by the Environmental Audit Committee, which I thank for its rigorous scrutiny, including in the evidence session that it held with me last week.
Alongside the carbon budget framework, the regulations before the House today will formally include the UK’s share of international aviation and shipping emissions in carbon budgets from carbon budget 6 onwards, while the Climate Change Act 2008 (Credit Limit) Order 2026 will ensure that carbon budget 5 is met through domestic action, allowing the UK economy to capture the full benefits of the transition.
Katie White
I will keep going.
In determining the level of the seventh carbon budget, we assessed different pathways for Britain’s future. What the analysis showed was remarkably clear: whether viewed through the lens of economic growth, national security, public health or long-term prosperity, the benefits of continuing on Britain’s path to net zero significantly outweigh the benefits of abandoning it. Let me explain why.
The first reason is business uncertainty. This framework provides something every successful economy depends on and every serious business asks for: certainty. Investment flows not to the country with the lowest costs or the biggest market, but to the country with a plan. It flows to the country where business investors and entrepreneurs can look 10, 15 or 20 years into the future and have confidence about the direction of travel.
Yesterday, in a career highlight, I was proud to open the London stock exchange to mark London Climate Action Week. It also celebrates a remarkable finding in new analysis by the London stock exchange, which is that the global green economy is now worth more than $10 trillion. Its analysis has found that green revenues grew by 5.3% in 2025, despite energy shocks, market volatility and geopolitical tensions. Here in the UK, I am proud to announce that this Government have officially secured £100 billion of private investment in clean energy since taking office.
The message from investors could not be clearer: the race is on. Capital is flowing towards the countries that are building, planning and backing the industries of the future, and that is one of the great strengths of the Climate Change Act and the carbon budget framework. For almost two decades, that has provided a stable and predictable signal about where Britain is heading, giving businesses the confidence to invest, innovate and grow.
Katie White
I will keep going for a bit if that is okay.
This is a market solution to a generational challenge, providing certainty about the destination while allowing competition, innovation and enterprise to determine the journey, and the results can be seen across the country. On the day we laid this order before Parliament, new analysis showed that Britain’s net zero economy now supports more than 1 million jobs and generated £105 billion for the UK economy alone. We see that opportunity in carbon capture projects in Teesside, in new nuclear at Sizewell C in Suffolk, and in companies across the country building the technologies, supply chains and industries that will power the next chapter of British economic growth.
Indeed, as more than 75,000 people have descended on London for London Climate Action Week this week—taking part in over 1,300 events and helping to broker deals, partnerships and investments that will shape the global economy for years to come—they are doing so in a city that has established itself as the sustainable finance capital of the world. That is why support for this framework extends far beyond Government. The British Chambers of Commerce says these plans provide “greater certainty for…firms”. The CBI describes the green economy as
“a powerhouse of job creation and economic expansion”.
E.ON says that
“the prize is bigger than emissions alone.”
Business leaders, manufacturers and investors are all making the same argument. In a world competing for capital, talent and innovation, long-term certainty is not a burden on growth; it is one of the foundations of it.
Secondly, if the economic case for action is increasingly clear, so is the security case. Climate change has become a central concern not just for scientists and policy makers, but for our country’s military leaders, intelligence chiefs and security experts. On the agenda for the Munich security conference, climate change sits alongside geopolitical conflict and nuclear proliferation as one of the defining risks of our age. That assessment is increasingly shared across Britain’s own security establishment. Air Chief Marshal Sir Mike Wigston has said it
“threatens global resilience and our shared security and prosperity.”
Baroness Manningham-Buller, the former director general of MI5, has said it is clear that climate change is the “greatest threat” we face. Lieutenant General Nugee has said:
“Climate change is not an abstract environmental issue. It is now a core national security risk.”
These are not campaigners or commentators; they have served their country and are people who have spent their careers identifying risks before they become crises and preparing our country for threats before they arrive.
Climate change is often discussed as an environmental challenge, yet it is increasingly showing up elsewhere in conversations about food security, energy security, national resilience and the basic responsibility of Government to protect their citizens from foreseeable risks. The framework before the House is not just about reducing emissions; it is part of the long-term work of making Britain safer, stronger and less vulnerable in a more uncertain world.
Thirdly and finally, we should see this transition for what it really is: one of the greatest upgrade projects in our country’s history. Too often, debates about climate change become trapped in the language of targets, regulations and emissions, but when future generations look back on this period, they are unlikely to remember the technical details of carbon budgets or policy frameworks. What they will remember is that this was the moment Britain began upgrading the system that underpins modern life.
Every generation has had its national upgrade. Previous generations built the railways that connected our country, electrified our towns and cities, brought clean water into people’s homes, connected millions of households to the gas grid and transformed the way people travelled, worked and lived. Our generation’s task is no different. We are upgrading an energy system that leaves us exposed to volatile fossil fuel markets and replacing it with one powered increasingly by clean electricity generated here at home. We are upgrading homes and technology that allow families to generate, store and manage their own energy. We are upgrading transport, upgrading industry and upgrading infrastructure that in many cases was designed for a different century and a different economy.
That is not a marginal adjustment to the economy we have today; it is a fundamental upgrade to how Britain powers itself, and the prize is enormous. Our analysis shows that clean power and electrification could save families and businesses £445 billion in fossil fuel spending over the next 25 years. Cleaner air could mean up to 8,000 fewer hospital admissions every year by 2050 and around £80 billion in health benefits, while action to restore nature could deliver a further £50 billion-worth of benefits.
Katie White
No, I will make some progress.
Those benefits include greater protection from flooding, cleaner rivers and greater biodiversity.
But this is not simply about what we avoid; it is about what we build. Across the world, more than $2 trillion is now invested in clean energy every year—roughly twice the amount invested in fossil fuels. It is where global capital is flowing, where industries are being built and where future economic advantage will increasingly be won. I make no apology for Britain competing for that opportunity. I do not want our country watching from the sidelines while others capture the jobs, industries and investment of the future. I want Britain helping to shape that future and benefiting from it.
Let me finish by saying this. Long before I entered this House and long before I became a Minister, I was one of the many people involved in the wider effort that helped to build support for the Climate Change Act, which is one of the most significant and widely supported pieces of cross-party legislation this country has ever passed.
Katie White
Let me just finish.
Back then, it often felt like a cause that sat at the margins of politics, rather than at its centre. Progress felt slow; success felt uncertain. If someone had told me that one day I would stand at this Dispatch Box I might have struggled to believe it, but what that journey reminds me of is that real change is rarely the work of one person, one Government or one political party. It happens because people keep building year after year, Government after Government, Parliament after Parliament. Eighteen years ago, this House came together to pass the world’s first climate change Act. Seven years ago, it came together again to make Britain the first major economy to legislate on net zero emissions. Different Prime Ministers, different Governments and different political traditions have all helped to write that story.
Katie White
I will just finish.
History has many authors. As a result of that shared effort, Britain was the first major economy to cut emissions by more than half, while growing its economy by more than 85% between 1990 and 2025. We have helped to inspire around 60 countries to adopt similar legislation and we have shown it is possible to combine climate action with economic growth, energy security and national prosperity.
At its best, this House has always been capable of looking beyond the pressures of the moment and acting in the interests of future generations. I believe this is one of those moments, so whatever our differences on the detail I hope we can recognise what this debate is really about: the kind of country we leave behind and whether we upgrade it while we have the chance. That is a legacy worth building together. I commend these orders and regulations to the House.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call the shadow Secretary of State.
Justin Madders (Ellesmere Port and Bromborough) (Lab)
Thank you, Madam Deputy Speaker. I will attempt to be moderate and not twirl.
The net zero transition is now a fundamental part of our economy, generating about £105 billion in value and, as we have heard, employing over 1 million people. Importantly, it is not focused in one part of the country, but spread all across the UK. Growth in the sector is expanding, with 400,000 jobs expected to be created by 2030. Given that productivity in the net zero sector is one and a half times the average for the UK, the potential is there for all to see.
As we head towards the future, we need to have in mind the protection of existing jobs. The order sets the carbon budget for 12 years’ time, but there is an area where I think the Government are letting the perfect become the enemy of the good: the zero emission vehicle mandate. This country has a long history of building cars that should rightly be regarded as some of the best in the world. We have a strong manufacturing base for electric vehicles—including at the Vauxhall Motors plant in Ellesmere Port, which has embraced the transition to net zero by becoming an all-electric plant—but the market demand for electric vehicles has not developed as quickly as anticipated. As of May, the market share for electric vehicles was only 26%, which is a long way short of the 33% required this year in the ZEV mandate.
The Climate Change Committee predicted that the market share for new electric vehicles would reach 55% by next year. Market share is going to need to double within a year for that prediction to come true, which is simply not going to happen. Its prediction that the proportion of electric cars and vans will reach around 95% of new sales by 2030 is not born out by experience to date, and needs revising down in light of the evidence.
Barry Gardiner
My hon. Friend is making a good point. Does he accept that the way that the previous Government changed the dates for the ZEV mandate may have had something to do with people’s confidence in being able to support an electric vehicle?
Justin Madders
My hon. Friend makes an interesting point, because there are a whole range of factors, which I will come to, in why people are not purchasing the vehicles. The industry is still keen to have a clear signal on where we are heading, but the speed and steepness of the incline is too much for it to bear.
We cannot ignore the fact that the figure of 26% relies heavily on subsidies from Government, which are pushing sales to about twice their natural level. I am afraid that there is deep concern among manufacturers about that. To fill the gap between demand and what domestic manufacturers are producing, the industry is already having to buy credits, in the order of hundreds of millions of pounds a year, which is clearly not sustainable. Meanwhile, importing manufacturers, including from China, can exceed ZEV thresholds here and sell their unused credits on to domestic manufacturers. That means that foreign manufacturers of EVs from China are not only taking ever-increasing shares of the market but profiting from exceeding ZEV thresholds.
To be clear, this is not an argument about having no ZEV mandate. It is important that we tackle the climate crisis and put an end to internal combustion engines, but what bigger fillip could there be to the climate sceptics than UK factories closing down because of a rigid approach to net zero—an approach that sees millions of pounds go to overseas competitors whose manufacturing is often far more carbon intensive than ours?
The ZEV mandate must be adapted to take account of the real-world market conditions, and the escalator must be changed to reflect them. It is clear that for many consumers, even with generous discounts, the cost of a new EV is out of reach. We need to be aware of limitations caused by cost, range anxiety and charging infrastructure. I agree with my hon. Friend the Member for Brent West (Barry Gardiner) that we can do more in that area.
As a number of Members have said in this debate, we need to take people with us; we are clearly not bringing them to where we need them to be in order to hit the target. I welcome the Chancellor saying that the review of the mandate will be brought forward to this year, but that needs to start now, and we need to get the right answers within a few months.
On the subject of well-meaning policies that could actually be counterproductive, I raise a red flag about the proposed introduction of the deposit return scheme, scheduled for later next year. Most households already recycle their materials through kerbside collections. The participation rates for kerbside recycling are high: it works and it provides a revenue stream to councils. If we are changing that, the public will undoubtedly ask what problem we are trying to fix.
The practical reality of the scheme for many people will be a minor inconvenience that they are happy to participate in, but for parents, carers, disabled people, elderly residents and those without easy access to large supermarkets, it could be a significant nuisance. People with complex lives will simply not do it at all. Once again, there is a well-meaning policy here that risks alienating people and damaging our road to net zero, which, on this side of the House at least, we all want to get to.
Katie White
The temperature has certainly gone up outside, and at times it has gone up a little in here. This has been a very passionate debate, which I really welcome. I will probably not have time to go through all of the points that were raised, but I am happy to meet anybody to discuss them. Constructive engagement is really helpful on this issue. I think most of our constituents want us to tackle climate change and bring bills down, and this is an opportunity for us to work together.
I will reply initially to the right hon. Member for East Surrey (Claire Coutinho). As she knows, this issue is about setting the trajectory towards 2050. It is not about 2050; it is about the budget. I listened really carefully and she makes some valid points, but I was a little confused at times. She challenged us on not having enough scrutiny, but this is the first time that we have had proper scrutiny of this budget. Under the previous Government, you never once voted on the carbon budget on the Floor of the House. You discredited, or you tried to discredit, the Committee on Climate Change—
Madam Deputy Speaker (Caroline Nokes)
Order. The Minister is better than that.
Katie White
The right hon. Lady used the Committee on Climate Change to discredit some of the figures and questioned food bills, but she knows that bills have already gone up by £361 as a result of food inflation. She talked about planning and referred to China’s innovation, but I would say that its planning system is a little bit more forthright than ours.
The thing I was most unsure about was this: if the right hon. Lady is so clear, why did she not do that when she was in office and she was in my place? Actually, she did take this through when she was in charge. It is only in Opposition that she has changed her position entirely. I am from Yorkshire and we say things fairly directly. My advice has always been that we want to save carbon and make cash. I think that is a fairly blunt way of saying that this is about growth in the economy.
I pay tribute to and thank my hon. Friends the Members for Chesterfield (Mr Perkins), for Sheffield Hallam (Olivia Blake), for Derbyshire Dales (John Whitby), for Mid Derbyshire (Jonathan Davies), for Brent West (Barry Gardiner), for Ellesmere Port and Bromborough (Justin Madders), for Putney (Fleur Anderson), for Hitchin (Alistair Strathern), for Ashford (Sojan Joseph), for Darlington (Lola McEvoy), for Portsmouth North (Amanda Martin) and for Basingstoke (Luke Murphy).
I would also like to thank the hon. Members for South Cambridgeshire (Pippa Heylings), for Chippenham (Sarah Gibson) and for Horsham (John Milne), my hon. Friends the Members for Exeter (Steve Race) and for North East Hertfordshire (Chris Hinchliff), and the hon. Members for South Devon (Caroline Voaden), for Honiton and Sidmouth (Richard Foord), for Taunton and Wellington (Gideon Amos), for Gordon and Buchan (Harriet Cross), for Broxbourne (Lewis Cocking) and for Boston and Skegness (Richard Tice).
I understand that the hon. Member for Boston and Skegness drives a Tesla, but his party wants to scrap the electric car grant. I understand that he put solar panels on properties owned by his former company, but Reform councillors are cancelling solar projects on public buildings. I understand that his former company invested in EV chargers and solar power, but Reform says Britain should slow down the green energy transition. I understand that he says he backs business, but he threatens to rip up green investment deals and send investors running for the exits. Some 91% of properties in the Boston and Skegness constituency face some level of flood risk. He talks about adapting to climate change, but he will not tackle what is causing it.
I ask the hon. Members who have questioned the motions today: what is the alternative? I am very happy to have those conversations. Should we tell black cab drivers to give up their electric taxis and go back to paying more at the pump? Should we look constituents in flood-risk communities in the eye and tell them, “Sorry, we’re not going to tackle the causes of this?” Should I tell the gentleman I met in Makerfield, whose solar panels have helped to reduce his energy debt by £800, that he was better off without them? Should I tell the investors at the London Stock Exchange that Britain is not interested in its share of a $10 trillion global green economy? Let us be clear: that is the choice.
In the middle of an unprecedented heatwave, perhaps we should all try to take the temperature down. This should not be a partisan issue. At its heart, carbon budget 7 is a pro-business, pro-investment framework. Let us choose resilience over risk, let us choose investment over stagnation, and let us choose the opportunities of the future over the comforts of the status quo. I hope that I have provided the reassurance that Members require. I urge colleagues across the House to support the orders and regulations before us today. I commend them to the House.
Question put.