Thursday 27th May 2021

(6 months, 1 week ago)

Grand Committee

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Department for Business, Energy and Industrial Strategy

Question for Short Debate

Asked by

Baroness Sheehan Portrait Baroness Sheehan
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To ask Her Majesty’s Government what plans they have to ensure that legislation aligns with their ambition for the United Kingdom to be a global leader in achieving its climate change targets.

Baroness Sheehan Portrait Baroness Sheehan (LD)
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My Lords, I start by thanking all noble Lords who will be speaking in this debate. I look forward to their contributions, which will fill in some of the gaps left by mine.

This year presents a unique opportunity for the UK to really grasp the nettle of collaborative global action on climate change. It is an existential issue for our planet and we owe it to our children and future generations to get this right. For us to lead the world we must, when all eyes are on us, present a clean domestic scene, which means some good housekeeping. My husband will testify that I am no domestic goddess but I can dust—maybe not behind fridges—and I can hoover a bit. So let me tell noble Lords why I think a bit of housekeeping is in order.

During my time as Lib Dem spokesperson for international development I came across various anomalies, the most egregious of which was the fact that at the same time as we were spending ODA to combat dreadful climate-related disasters overseas, such as the effect of famine in the Sahel due to increasing desertification, we were also investing in new fossil fuel infrastructure in Africa and elsewhere in the world, including in the North Sea. What really struck home was the injustice of those least responsible for climate chaos being the ones who suffer most.

According to Global Justice Now, since the 2015 Paris Agreement was signed, approximately £568 million of UK aid has been invested in fossil fuel projects overseas. If we include export credits provided by UK Export Finance for fossil fuels, that figure rises to £3.9 billion. This makes a nonsense of our commitments to tackling climate change—not just the Paris Agreement but the sustainable development goals and our own Climate Change Act. We cannot be serious about keeping global temperature rises to between 1.5 and 2 degrees centigrade, or about domestic net-zero targets, if we continue to export fossil fuel infrastructure, the ultimate source of the problems we face today.

The situation is worse than that. Our domestic legislation has incoherencies that reverberate here at home. In 2019 I tabled my Private Member’s Bill, the Petroleum (Amendment) Bill, the essential aim of which was to stop the issuance of new licences for oil and gas exploration, to put in place plans to safeguard jobs and livelihoods of communities as we start to phase out existing fossil fuel infrastructure, and to stop UK support for new fossil fuel projects abroad.

For now, I will focus on what is happening here at home. Existing legislation currently pulls government Ministers in different, incompatible directions. For example, the Petroleum Act 1998, as amended by the Infrastructure Act 2015, confers a duty on the Oil and Gas Authority to maximise revenues from petroleum, while the Climate Change Act commits Governments to aim for a target of net-zero carbon by 2050. To tidy up this anomaly, my Private Member’s Bill proposes that the Petroleum Act 1998 be amended so that its principal objective is no longer maximising economic recovery of UK petroleum, but instead is aligned to the otherwise competing statutory aim for a target of net-zero carbon by 2050 in the Climate Change Act 2008, as amended in 2019.

Since the Bill was tabled, the OGA, in July 2020, carried out a consultation to revise its MER UK strategy. It published its response to the review in December. Can the Minister confirm that the principal objective of the OGA is still to maximise economic recovery? If so, how can the Government continue to justify the OGA’s remit to, in effect, extract every last drop of petroleum from the North Sea, given that our existing fields alone will take us over our nationally determined Paris commitment?

On 24 March, the Government announced a new deal with the oil and gas sector, very much in line with the OGA response to its own review. In essence, the sector should reduce its own carbon footprint, deliver carbon capture and storage, and support the development of blue hydrogen. This came as a bitter disappointment to many climate campaigners, because it does not address the fundamental issue that the sector’s raison d’être—the extraction of fossil fuels—is the fundamental root of the problem of greenhouse gases that we face today. Nor does it recognise that carbon capture and storage is not a proven technology at scale. It remains decades away and is technology for the future. The Government’s deal with the sector shows little appreciation of the urgent need to act now. At the very least, we must draw a line under the issuing of new licences, as the International Energy Agency has done in its very recent landmark report, Net Zero by 2050: A Roadmap for the Global Energy System. What will be our response to the report? Does the Treasury intend to publish its own road map to net-zero emissions by 2050? Such an exercise is sorely needed and would concentrate minds on how we will go about this issue.

While I am on the subject of the oil and gas sector, I should mention tax breaks, and some other supports and subsidies that the sector enjoys. It was good to read in the media that the UK wants to lead discussions at the G7 to end fossil fuel subsidies. Sadly, the fossil fuel industries still get huge government subsidies. Annual fossil fuel subsidies were valued at £5.2 trillion dollars in 2017, equal to 6.5% of the global economy, according to the IMF, which also found that more efficient fossil fuel pricing in 2015 would have cut carbon emissions by a whacking 28%. The impact of success at the G7 and, one hopes, the G20 that follows, will be huge.

However, in this regard, the UK has, up to now, been a bit of a laggard, with a major sticking point on how subsidies are defined. What definition will we be asking our G7 partners to sign up to—the IMF’s, the OECD’s, the WTO’s, or will it be custom made? Also, is cutting the tax on North Sea profits, a policy introduced by George Osborne in 2015-16, a fossil fuel subsidy? Today’s tax rates in the UK are so low that in some years, the tax take is less than the subsidies, making UK oil revenues negative. As a result, UK oil and gas extraction is more profitable than most other UK sectors, is more profitable than oil and gas are in most other countries and enjoys benefits not extended to companies producing renewable energies. Rather than requiring companies to clean up after themselves, the UK taxpayer pays roughly half the cost of decommissioning oil platforms and cleaning pollution. Will these anomalies be addressed at the G7 leaders’ summit? These serious issues must be addressed if we are to match fine words with commensurate action.

In the short time I have left, I shall say a few words about planning, because it is so important to get this right. The Government have indicated they wish to reform the planning system and have plans to introduce a new planning law within this Parliament. However, what is needed more urgently is to bring existing planning rules into line with net-zero legislation. The national planning policy statements, which cover large projects, are a gaping hole and urgently need to be updated. The fiasco surrounding the Cumbrian coal mine decision is a salutary reminder of how badly things can go awry when legislation at all levels of government is not tightly aligned to the net-zero targets.

In conclusion, what does the Minister think of the Swedish Government’s climate action plan, published in December 2019, in particular their commitment to review all relevant past legislation and objectives for their compatibility with the plan, as well as to align future legislation? Our children deserve no less.

Lord Lennie Portrait Lord Lennie (Lab) [V]
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My Lords, I begin by thanking the noble Baroness, Lady Sheehan, for securing and introducing this important debate.

The climate crisis is the single greatest long-term challenge we face. We know the importance of aligning legislation with our climate change targets. We noticed recently, however, that some legislation was absent from the recent Queen’s Speech; in particular, the energy Bill was not included. Only a couple of months ago, the Minister himself said:

“The government intends to bring forward an Energy Bill as soon as parliamentary time allows. The Energy Bill will aim to enable progress to be made on commitments made by the Prime Minister in his Ten Point Plan as well as deliver policy commitments set out in the Energy White Paper.”

What happened? Will progress now be stifled rather than enabled without it? Regardless, the central challenge is whether targets are matched by the scale of action required in this decisive decade. The biggest concern is the growing evidence that there is a wide gap between rhetoric and reality. We are way off meeting our fifth and sixth carbon targets. The Green Alliance estimates that policy announcements will lead to only 26% of the reductions necessary to get the UK on track for 2030. How far off does the Minister think we are from meeting our fifth and sixth carbon budgets?

We desperately need a comprehensive plan for the massive task of retrofitting and changing the way we heat millions of homes, with the finance to back it up. The heat and building strategy was supposed to be published this year, but it has been delayed and delayed. Can the Minister promise that when it is finally published, it will contain the plan we need? The Treasury’s crucial net-zero review was due in autumn 2020, then promised in spring 2021. It is still not delivered. When will it finally see the light of day? From the underinvestment in hydrogen to the uncertainty of when 60% of our offshore wind will be domestic, the examples go on and on. Ultimately, we need a comprehensive green new deal. Only this will allow the UK to meet its climate change targets.

Baroness Meacher Portrait Baroness Meacher (CB) [V]
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My Lords, I too thank the noble Baroness, Lady Sheehan, for securing this very helpful debate.

I have raised on several occasions the urgent need for the Government to publish their hydrogen strategy, which presumably will require legislation to put into effect. As Bill Gates said in his book How to Avoid a Climate Disaster, significant investment in research into new technologies will be necessary if we are to reach net zero by our target date. He also said that some of the investments will be very costly and high risk; therefore, they will have to be funded by Governments. He also said that private investment will do lots of the heavy lifting in terms of investment, given appropriate government support. Does the Minister agree with Bill Gates’s assessment? Do the Government yet have a date for the publication of their long-awaited hydrogen strategy to move things along? Does the Minister understand the urgency of this issue? I am sure he does.

Another very important issue is the size of the hydrogen target by 2030. Why is this country’s target so low, at five gigawatts? This is the same as for Scotland alone, for example. Can we really not do better than that? The Government have claimed that their forthcoming hydrogen target will be world-leading—really? If so, some urgent work surely needs to be done to revise substantially upwards the five-gigawatt target. Finally, the energy White Paper set a target of one gigawatt of low-carbon hydrogen by 2025. Can the Minister spell out how the Government expect to meet this target? Is he content that the target is adequate if we are to achieve our final target for 2030? The Minister knows that this country has a brilliant opportunity to create lots of high-quality jobs across the UK in the hydrogen industry. I would be grateful if the Minister could give the House a clear indication of when the hydrogen strategy will finally be published.

Baroness Altmann Portrait Baroness Altmann (Con)
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My Lords, I too congratulate the noble Baroness, Lady Sheehan, on calling this debate and on her excellent introduction. In my brief time today, I would like to urge the Government to consider the use of pension scheme assets in our battle against climate change. They are the ideal long-term capital source to mitigate risks and prepare for both the known and unknown unknowns that we are facing. Climate change is potential catastrophe, both for us and for countries globally, and for future generations. We perhaps have an opportunity, if my noble friend agrees, to use our huge sums—more than £1 trillion—in pension assets, which are significantly larger than those in most other countries, to build back better; to ensure that traditional investments in global industries do not become worthless in the transition to low-carbon economies; and to address some of the inconsistencies in our policy stance, outlined by the noble Baroness, Lady Sheehan. Pension assets could support a hydrogen strategy; they could encourage fossil fuel reduction and encourage traditional energy companies to diversify and build alternative sources of energy before their assets become stranded. The noble Lord, Lord Oates, has been working on some of this for a while and talking about capital requirements and risk-weighting for such assets. I would be grateful if my noble friend could give the Committee his thoughts on those.

I have two further quick points. Do the Government have targets for building new, eco-friendly homes, especially for older people to downsize to, while ensuring that existing housing stocks can be retrofitted and upgraded to be more energy efficient? Do the Government have plans to ban cryptocurrencies from all regulated activities, given the measure of carbon emissions entailed in this socially worthless exercise?

Baroness Hayman Portrait Baroness Hayman (CB) [V]
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My Lords, I declare my interest as co-chair of Peers for the Planet and add my congratulations to the noble Baroness, Lady Sheehan, on her ongoing work in this area. This week we have seen a spotlight on disaster planning and crisis management. In climate change, we face an even greater potential catastrophe than Covid—what the Government themselves this week called the planet’s greatest threat. We need a response that is comprehensive, systemic and integrated, and brings together disparate contributions from many sectors into a coherent whole. It requires leadership from the Government, and a climate lens on all policies and legislation, if we are to ensure delivery not only of our domestic agenda but of our international aims for COP 26, leading, in the words of President Biden,

“by the power of our example.”

In regard to legislation, we are not there yet. Two crucial Bills in the last Session contained no reference to climate obligations whatever until changes were made in this House. That problem continues in this Session, with silence on the issue of climate in the Skills and Post-16 Education Bill and a potential lack of consonance between the Environment Bill and the planning reform Bill.

Can the Minister say today how the Government intend to ensure early and comprehensive scrutiny of all policies and legislation against their green agenda? Are they, for example, looking at the work being done in this area by other countries such as New Zealand and Sweden? Finally, can he assure me that the Cabinet Committee on Climate Change, which has met so infrequently, will now be fully engaged in leading the systemic co-ordination and integration that is so urgent?

Lord Bradshaw Portrait Lord Bradshaw (LD) [V]
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While there is no doubt about the ultimate objective of our climate change agenda, there are many choices—some very expensive, and some improbable of coming to fruition. People with possible solutions are keen to sell but, drawing on recent experience with the supply of PPE and ventilators during the pandemic, a willingness to sell does not equal a willingness to sell the right product at a competitive price.

How do Her Majesty’s Government propose to rank ideas as to their cost and deliverability? Are they aiming to establish a hierarchy of schemes to which resources should be targeted? I am anxious that we gather lower-hanging fruit first, because that has the greatest effect. I remind the Minister of the interest I expressed the last time we spoke in whether Ofgem’s objectives do in fact conform to the objectives of the Government’s policy on climate change.

Baroness Bennett of Manor Castle Portrait Baroness Bennett of Manor Castle (GP)
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My Lords, I thank the noble Baroness, Lady Sheehan, for securing this debate and particularly for the way that she framed it as ensuring that legislation aligns. That seems to point us towards the Queen’s Speech and the need to mainstream climate and environmental issues in everything.

I want to pick out three Bills from the Speech, two obvious, one less obvious. The noble Lord, Lord Lennie, referred to the lack of an energy Bill in the Speech, although there is of course a Bill addressing energy, the draft downstream oil resilience Bill—so the only energy Bill we have is about oil. It talks about working with the sector and, in particular, about transferring to abatement technologies. Will the Minister acknowledge that the Bill is talking about the hard, inefficient way to store carbon? What we have with carbon capture and storage is oil, gas and coal in the ground—and leaving it in the ground is by far the cheapest and most efficient way to store carbon.

I move on to the planning Bill. This seems to divide the country into two areas: open-slather development in some parts, with a few other parts protected. It is a “sparing and sharing” approach. Yet we have seen the Government recently adopt—after a great deal of campaigning—a new nature target, which would seem utterly incompatible with allowing any more trashing of our desperately nature-depleted country.

Finally, like the noble Baroness, Lady Hayman, I come to the Skills and Post-16 Education Bill. I spent this morning talking first to the Westminster Food & Nutrition Forum about food security and then to Building magazine about a national retrofitting strategy. Both stressed the need for skills, the need for people and the terrible shortage of labour supply. This Bill contains plans for a flexible, lifelong loan scheme. We need these workers and these skills; surely with education being a public good, we should not be asking people to take on the weight of loans—to have debt hanging around their neck as a burden. Surely, to deliver our climate and nature targets, we should be looking to fund this education from public spending.

Lord Mountevans Portrait Lord Mountevans (CB) [V]
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My Lords, I add my congratulations to those offered to the noble Baroness, Lady Sheehan, on securing this important debate. There is no greater challenge facing humanity than containing and reducing global warming. I want to focus the lens on maritime, an area of significant challenge but one of great opportunity for the UK. Before I start, I pay tribute to the Minister, who kindly made time to meet me and some maritime colleagues last year—here, I should declare my unremunerated maritime interests as declared in the register promoting the UK’s maritime industries.

Maritime is now, very properly, being brought into government legislative requirements. The industry is committed to playing its part. Although it can be said that maritime is a lesser sinner in terms of emissions per tonne mile of freight moved, due to the scale of the industry, it has been estimated that it accounts for 2.5% to 3% of global emissions. It is early days, and the technology for zero-carbon main engines has not yet been commercialised. An additional challenge is to lay on power at ports to supply ships that are alongside with electricity.

So far, the Government have awarded £3 million to the maritime research and innovation institute and have set up a £20 million clean maritime demonstration competition, which is currently open. These initiatives are of course welcome to the industry. I should also mention one significant example of government support: £30 million from BEIS for a Strength in Places bid from Artemis in Belfast to build high-tech ferries. This is not specifically a green investment, but I believe there will be a green beneficial outcome.

These investments represent a start, but they are small and must be regarded as only a start, and they are less than those of competitor states. If we are to be successful in meaningfully reducing carbon output from shipping, a fundamental problem that we face is that vessel charterers and users are unlikely to pay for expensive new ships with as yet untried technologies, with owners therefore discouraged from investing. Carbon pricing is the elephant in the room. The industry needs urgently to know what form carbon pricing in the UK will take. It is essential that any funds realised from the maritime sector are reinvested in shipping and maritime.

Does the Minister agree that, with the right policy framework, Britain can attract international owners as well as orders for the shipyards that government and all of us are so keen should flourish?

Lord Sheikh Portrait Lord Sheikh (Con) [V]
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My Lords, I commend the Government on their climate change ambitions and the leadership they have shown by increasing our commitment to reduce emissions by 78% by 2035 and achieving net zero by 2050.

As we prepare to host COP 26, which is now less than six months away, we must make sure that we have the proper legislation to deliver on our climate change goals. This means that we must work to support specific Bills in both Houses, such as the Environment Bill and the Education (Environment and Sustainable Citizenship) Bill, as well as making sure that our environmental commitments are properly considered in other legislation.

In New Zealand, all policy proposals going to Cabinet must have a climate impact policy assessment. Can my noble friend the Minister comment on the Government’s willingness to consider a similar process in the United Kingdom? Such checks would help us not only to meet targets but to avoid unintended negative impacts that could undermine our ambitions. They would also show the rest of the world that we were serious about being an environmental leader and encourage other countries to take similar steps.

In 2020, 78% of respondents to a Local Government Association climate change survey said that a lack of skills was a barrier to them tackling climate change. Does my noble friend the Minister have any comments on this, and can the Government tell us how they plan to address this knowledge and skills gap? We must make sure that policymakers, civil servants and those working in local government are properly trained so that legislation can be adequately in line with climate change ambitions and be properly implemented. Furthermore, we must drive forward legislation that develops proper skills for green jobs. Does my noble friend agree?

Baroness Boycott Portrait Baroness Boycott (CB)
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My Lords, I too congratulate the noble Baroness, Lady Sheehan, on raising this important debate. I want to raise the issue of subsidies in two areas: wood and waste food. Currently, burning wood in power stations is much costlier than genuinely non-emitting and renewable electricity technologies. Burning wood exacerbates climate change and puts at risk our net-zero target and our desire to be a climate leader. It degrades forests and is a nightmare for wildlife. Black bears and pine martens are suffering in America, from where we get a lot of wood. It also emits deadly air pollution, which is linked to an array of health problems.

We direct scarce funds in the wrong direction. When he was a Back-Bencher, the noble Lord, Lord Goldsmith, led the charge against these subsidies, yet new data reveals that the UK is the top subsidiser of bioenergy in Europe. We spent more than £1.9 billion in 2019 on such stuff, primarily to burn wood imported from overseas forests at places such as Drax power station. In 2020 Drax earned £832 million in direct government subsidies for biomass, and it benefits from multi-million-pound tax breaks, calculated to be worth £258 million in 2020. The Secretary of State is not powerless in this. He could amend the renewables obligation—the RO—and apply the GHG emissions intensity threshold. None of the pellets burned at Drax would qualify.

I now want to use my final 30 seconds to ask why we are still subsiding food waste for use as fuel. Currently, low or negative gate fees charged by AD plants for food waste collection disincentivise using food waste to feed people because they lower the cost of disposal. Some AD plants pay for food waste so that they can fulfil government contracts for energy. About 8 million tonnes of edible food waste occurs in the UK and 1.9 million tonnes of this currently goes to AD although a lot of it is edible.

In a recent survey, the public said that they find this an intolerable situation. Eight out of 10 said that the Government are completely hypocritical in continuing to facilitate forest loss in other countries, thereby potentially preventing other countries meeting their goals. I would like the Minister’s view on this.

Baroness Ritchie of Downpatrick Portrait Baroness Ritchie of Downpatrick (Non-Afl) [V]
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My Lords, I congratulate the noble Baroness, Lady Sheehan, on securing this debate. In the Queen’s Speech, the Government laid out many commitments for updating and toughening climate change legislation. That Speech focused on green investment and jobs, with particular reference to the existing measures set out in the Government’s 10-point plan. It sought to reiterate the UK’s commitment to achieving net zero by 2050 and to provide global leadership in tackling climate change. However, the Government have not made entirely clear how the legislative programme will be carried out and co-ordinated between departments, allowing for the climate and biodiversity goals. It seems nothing but an empty promise.

As time is constantly running out for action to be taken to achieve the net-zero goal by 2050, it is paramount that the Government begin immediate action to ensure that the existing legislative programme aligns with climate change targets and objectives. Will the Minister indicate what immediate action will be taken to do just that? Will it be before the international climate change conference in Glasgow later this year? There are at least 15 Bills in the Queen’s Speech that need to be aligned. It is worth noting that the Dasgupta review states that for the UK to change its legislative direction towards nature-positive outcomes, it is clear that the Government have to make system choices about investment and production processes in the public and private sectors. Will the Minister say whether the Government are up to that challenge of ensuring that the legislation meets the climate change and biodiversity challenges of this era?

Lord Bilimoria Portrait Lord Bilimoria (CB) [V]
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My Lords, this year, we are organisers of both the G7 summit and COP 26. The UK has an obligation to demonstrate global leadership on climate and environmental policy, and build on our existing strengths to help others to face climate change risks. We are the first country to commit to achieving net-zero greenhouse gas emissions by 2050. I thank the noble Baroness, Lady Sheehan, for initiating this debate.

Do the Government agree that government and the private sector need to work closely together on this? The CBI, of which I am president, welcomes the industrial decarbonisation strategy. We await the Government’s net-zero strategy and look forward to the heat and building strategy, the decarbonisation of transport plan and the hydrogen plan. On Monday, the CBI launched Seize the Moment, our economic vision for the next decade, whereby decarbonisation will be a key pillar in the years to come. We urge the Government and industry to make the most of this unique time and focus on building future growth and prosperity. We need ambitious private partnerships, sustainable financing and innovative clean tech solutions. We need to cut emissions, not only in the power sector but in transport, buildings and industry. Do the Government agree?

The CBI is happy to support the National Centre for the Decarbonisation of Heat at the University of Birmingham, of which I am the chancellor. Do the Government support such an initiative? Decarbonising heat is perhaps one of the most significant challenges on our journey to net-zero emissions. We must make progress on decarbonising emissions associated with our buildings; their heating is a significant factor.

At COP 26, the CBI would like to see progress on international negotiations so that countries are aligned in setting and delivering ambitious targets for emissions reduction. Two weeks ago, as president of the CBI, I was privileged to host the B7 summit. Climate change was of course one of the key themes. There was a lot of enthusiasm across the international business community for a more sustainable future. I repeat what I said on 17 May:

“The Prime Minister said at the B7 last week that the race to net zero is not a zero-sum game. In true Boris style, he also said: ‘Green is good.’”—[Official Report, 17/5/21; col. 381.]

Lord Oates Portrait Lord Oates (LD)
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My Lords, I thank my noble friend Lady Sheehan for initiating this important debate and underlining, as other noble Lords have, the lack of alignment between policy and legislation on the one hand and our ambitious climate targets on the other.

In the short time I have, I want to focus on taxation and regulatory policy. Today’s Financial Times reports that the Chancellor has commissioned work on a carbon border tax. Can the Minister tell us when this work will be completed and how the Treasury will consult stakeholders? Can he also tell us what discussions the Treasury is having with our friends in the EU who are currently working on the same issue?

Secondly, can he tell us what consideration the Government are giving to fiscal measures to incentivise energy efficiency in homes, such as a stamp duty rebate for home owners who raise the efficiency band of their home within a certain period of purchase, as the Liberal Democrats have proposed?

Thirdly, can the Minister explain how the Government’s 2017 decision to scrap the graduation in vehicle excise duty by fuel efficiency—except for the first year—and their current proposal to scrap air passenger duty on domestic flights align in any way with our net-zero policy?

Fourthly, will the Government look at reforming the renewable transport fuel obligation so that not just green hydrogen produced from electrolysers directly connected to a renewable source but green hydrogen produced with electricity from renewable-only contracts qualifies? Will the Government consider waiving grid fees for electrolysers and scrapping VAT on green hydrogen? This is an important area, as the noble Baroness, Lady Meacher, said.

Finally, will the Government look again at how the regulatory system prices the cost of capital in relation to climate change risks? At present, we have the absurd situation where funding loans for new fossil fuel exploration and exploitation is often significantly cheaper than financing the new industries and technologies that we need to tackle climate change. If the Minister does not have time to answer all these questions and those from other Peers in his response, I would be grateful if he could write to us.

Lord Whitty Portrait Lord Whitty (Lab) [V]
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My Lords, I have been impressed by many of the preparations for COP 26, but I am also struck by the fact that the policies and strategies of the Government, and of most individual departments, do not seem to reflect that priority; nor did the recent Budget; nor does the legislative programme for this parliamentary Session. The drafts of those Bills which we have seen so far do not do so either, including the supposed flagship in this context of the Environment Bill itself.

Like the noble Baroness, Lady Sheehan, I will focus on MHCLG and the so-called reform of planning. The noble Baroness emphasised the national planning statements, but it is also true that, currently, individual development proposals do not have to have mandatory net-carbon reduction criteria. Yet building construction, demolition and subsequent building use, if taken together, add up to nearly 40% of all emissions.

Developers propose schemes that do not have net-zero objectives or even an assessment of the greenhouse gas effects; the same is true of biodiversity. Local planning authorities increasingly nod through schemes whose carbon effect has not been properly assessed, let alone whether they would create a net reduction. The contribution to net zero should be written into all planning legislation and planning procedures, decisions and appeals. At the moment, it is a very low priority.

The big developers and big housebuilders favour demolition and rebuild over retrofit and refurbish, which is usually more environmentally sensible. The materials they use for much new build and rebuild are steel, glass and a lot of plastics. The glass, steel, concrete and hydrocarbon manufacturing processes take a lot of heat, most of which is currently based on fossil fuels. None of that is weighed in the assessment of major development projects. I could say the same about the building regulations from the department. My main point is that we need a powerful, concerted, cross-Whitehall structure to ensure that saving the planet is indeed a priority for all Whitehall departments and for the country as a whole.

Lord Callanan Portrait The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
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My Lords, as I made clear to the House just a few weeks ago, climate change remains one of the most pressing issues of our time. While we of course presently find ourselves in the midst of a fairly vicious health pandemic, we will not abandon our climate change goals and risk further crises down the line. Let me reaffirm the point I made to the House a few weeks ago: this Government are absolutely determined to play their part in upholding the Paris Agreement and driving down our own greenhouse gas emissions.

To this end, we recently passed a significant milestone by beginning the process of enshrining the UK’s sixth carbon budget in law, proposing a target which would reduce greenhouse gas emissions by 78% by 2035 compared to 1990 levels. This is a huge commitment which the Government are working flat out to achieve. Despite the considerable challenges that we face, we can leverage our strengths to deliver a greener and stronger economy, and go further and faster to level up and accelerate the transition to net-zero greenhouse gas emissions by 2050.

In response to the noble Baroness, Lady Sheehan, I am pleased to confirm that on 31 March 2021 the UK Government implemented their new policy and will no longer provide any new direct financial or promotional support for the fossil fuel energy sector overseas. This applies to any new ODA and investment, including support provided by UK Export Finance. We are working hard to drive down demand for fossil fuels. However, there will continue to be ongoing demand for oil and gas, which is recognised by the work of the independent climate change committee.

Through our recent landmark North Sea transition deal, we are the first G7 country to set in place an ambitious partnership to back the oil and gas industry to transition away to clean, green energy while supporting the tens of thousands of highly skilled jobs that exist in this sector. I agree that it is an existential issue and that we need to get it right. The foundation for delivering net zero is through the Prime Minister’s 10-point plan for the UK to lead the world into a new green industrial revolution. This innovative programme sets out ambitious policies, backed by £12 billion-worth of government investment.

To respond to the point on legislation, and to a similar point made by my noble friend Lord Sheikh, this is key to delivering our climate change goals. We were the first major economy in the world to set a legally binding target to reach net-zero greenhouse gas emissions across our economy by 2050 and in April we laid the draft legislation for the UK’s sixth carbon budget. As I said earlier, it proposes a target which would reduce emissions by 78% by 2035.

Under the Climate Change Act 2008, we have made significant progress in meeting our climate targets. We confidently met the first two carbon budgets and we are projected to meet the third out to 2022. We exceeded the required emissions reduction in the first carbon budget by 1.2%, and in the second by nearly 14%. Now is the time to double down and decrease our emissions further and faster.

In response to the noble Lord, Lord Lennie, we do recognise the need for further action to meet the fourth and fifth carbon budgets. Our forthcoming sector decarbonisation strategies and our wider plans that deliver a green economic recovery following the Covid-19 pandemic will contain further proposals to support delivery of carbon budgets 4 and 5. We will also publish a comprehensive net-zero strategy ahead of COP 26, setting out the Government’s vision for transitioning to a net-zero economy.

The noble Baroness, Lady Meacher, and the noble Lord, Lord Oates, talked about the UK’s plans to develop hydrogen production. Working with industry, the UK is aiming for five gigawatts of low-carbon hydrogen production capacity by 2030. This is stretching but credible for the UK. We welcome the Scottish Government’s ambition, which will be important in developing low-carbon hydrogen production at scale within the UK. Our ambition will be supported by a range of policy measures, including the £240 million net-zero hydrogen fund, which was confirmed out to 2024-25, for co-investment in hydrogen production. We have committed to consulting on our preferred hydrogen business model in 2021 and set out a revenue mechanism to enable our new business models to bring through private sector investment. The noble Lord will be aware that we are developing our hydrogen strategy in partnership with industry, because while our ambition is important, the key ask from industry is that we have a clear revenue/business model to support delivery. That is why we are not rushing ahead with a strategy.

My noble friend Lady Altmann spoke about using pension scheme assets to assist in the battle against climate change—indeed, she has spoken about this a number of times before. Trustees of occupational pension schemes are, as she is well aware, independent of government and not bound by the commitments which the Government have signed up to. However, given the significance of the financial risks posed by climate change, the Government expect all investment decisions made by pension scheme trustees to take climate change into account. As of 2019, trustees of pension schemes with 100 or more members have been required to set out in their statement of investment principles policies on stewardship and on environmental, social and governance considerations, including climate change.

In the Pension Schemes Act 2021, the DWP took powers to require trustees to manage climate risks and opportunities to their savers, and to report on how they had done so. After two consultations, the DWP will lay the required regulations next month. If approved, they will come into force in October 2021 and will require larger occupational pension scheme trustees to undertake governance activities, assess how their scheme will fare in different temperature rise scenarios, calculate the emissions of their portfolio, and set targets. They will need to make annual disclosures about these activities in line with the TCFD recommendations. This will make the UK the first major economy to mandate TCFD reporting for its pensions sector.

The noble Baroness, Lady Altmann, also asked about the Government’s plans for bitcoin and other cryptocurrencies. As always, we stand ready to respond to emerging risks or changes in the market, and we will continue to monitor how cryptoassets are being used in the UK. Regarding the emissions they create, it is of course important to consider this in the context of the UK’s success in decarbonising the power sector. As she will be aware, between 1990 and 2019, the sector saw a reduction of 71% in emissions.

The noble Lord, Lord Bradshaw, spoke about balancing our ideas to reach net zero with their cost and their deliverability. Our ambition to protect the planet goes hand in hand with supporting economic growth and prosperity across the UK. The 10-point plan will also help develop the cutting-edge technologies needed to drive down emissions in industries across the United Kingdom, such as through the significant investment in hydrogen that I spoke about earlier, and in carbon capture technologies through our £1 billion net-zero innovation portfolio. We have developed our plans to reach net zero centred around the UK’s strength, and there is huge potential in boosting innovation and advancing technology to help meet those ambitions. At every step on the path to net zero, we will of course put affordability and fairness at the heart of our reforms.

In response to the noble Baroness, Lady Bennett of Manor Castle, analysis from the Climate Change Committee shows that to achieve net zero, GGR methods will be required to balance residual emissions from some of the most difficult to decarbonise sectors—for example, some parts of agriculture and aviation.

Last year, it was my pleasure to meet the noble Lord, Lord Mountevans, and his colleagues to talk about the maritime sector, so let me respond to the points he made about the maritime industry. The UK will continue to play a prominent role in international forums, including at the International Maritime Organization, to encourage action from other countries to cut emissions from this sector. We will invest £20 million in the clean maritime demonstration programme to develop that clean maritime technology. We are already running hydrogen ferry trials in Orkney and we are due to launch a hydrogen refuelling power plant in Teesside, as we seek to revitalise our ports and coastal communities. The clean maritime demonstration competition includes feasibility studies on our sites, such as Orkney and Teesside. The competition will support the development of hydrogen and alternative fuel shipping hubs across the UK, enabling a number of clean maritime clusters.

In response to the noble Baroness, Lady Hayman, and the noble Lord, Lord Sheikh, on legislation being key to delivering our climate change goals, I remind them that, as I said, we were the first major economy in the world to set a legally binding target and in April, we laid draft legislation for the UK’s sixth carbon budget. Under the Climate Change Act 2008, we have made significant progress in meeting those climate targets. As for the point the noble Lord raised about requiring every policy submitted to have a climate impact assessment, net zero has become an increasing priority for this Government. For the first time, we now have two Cabinet committees, chaired by the Prime Minister and the COP president-designate, to turbo-charge the net-zero transition and co-ordinate action across government. As the lead department for net zero, BEIS works in the centre of government and other key departments to ensure that net zero is factored into all our key policy decisions and future plans.

The noble Lord, Lord Sheikh, also raised the point that in order to deliver on net zero, we must ensure that local authorities and the devolved Administrations are adequately involved and trained in delivery of net zero. We are working closely with our partners in the DAs and many local authorities to achieve those climate goals. Local authorities are key delivery partners in projects ranging from electric vehicle charging infrastructure to heat networks and energy efficiency schemes.

Unfortunately, I am running out of time, so I shall write to those noble Lords I have not had a chance to answer and that will be a more effective use of our time. I am grateful for the time of the Committee.

Sitting suspended.