Draft Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2024
Debate between Andrew Bowie and Kerry McCarthy(4 weeks, 1 day ago)
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Kerry McCarthy
I thank the shadow Minister for his contribution. As I said, the UK emissions trading scheme is a key pillar of the UK’s net zero policy regime. I am slightly surprised by his decision not to support the SI —perhaps not from a political point of view, but because I am pretty sure that if he was still in the Department occupying the post I am in now, he would have supported the measures. As I said, they are just about ensuring that the scheme retains its credibility and moves forward and adapts to circumstances.
With the Northern Ireland Assembly established, it is absolutely common sense that Northern Ireland should be treated in the same way with regard to venting and flaring—
Kerry McCarthy
I am glad the shadow Minister agrees on that. He asked a specific question about the pricing. As the market conveners, we cannot comment on the price. I will leave it at that, other than to say that the market determines the price of the allowances, and opting for the top of the net zero-consistent range means that more allowances will be available while we can still deliver against our net zero trajectory.
The shadow Minister also brought up some broader issues about carbon leakage. Again, there will be plenty of opportunities to debate the issue, but we are absolutely committed to providing certainty to industry about the steps we will take to protect against carbon leakage. That is why in July 2023 the overall level of free allocations that will be provided from 2026 were set out. We have since consulted on how best to target those free allocations from the next allocation period, to ensure the smooth functioning of the market and the continued protection of at-risk sectors.
As the shadow Minister will know, the UK Government have announced that from 2027 a UK carbon border adjustment mechanism will be in place for certain at-risk sectors, and the authority has consulted on aligning free allocation charges with the start of that CBAM. I assure him that the UK ETS Authority will work the UK Government to ensure that a CBAM will work cohesively with the UK ETS, including with free allowances. No doubt that will be revisited—perhaps in this very room —over the coming months.
The draft order is a key part of our net zero policy regime. We believe that the maintenance of a strong UK ETS will play a key role in making Britain a clean energy superpower and in delivering our mission of having secure and clean electricity by 2030. By driving green investment as part of our industrial strategy, the UK ETS will also help to deliver a just transition, thereby growing the UK’s economy and securing good jobs for people throughout the country.
As I said, the changes proposed in the SI will bring in a net zero-consistent cap. I remind the shadow Minister that it was his Government who legislated for net zero, and at one point they were proud of having done that. The SI will also alter the industry cap and expand the scope of the ETS to the venting of CO2 in the upstream oil and gas sector. The change follows a comprehensive consultation on developing the UK ETS that was carried out in 2022. The proposals deliver on commitments made in the response to that consultation in July 2023, when the UK ETS Authority set out a comprehensive package of reforms to the scheme. The proposals have the long-standing support of the four Governments of the UK.
We, as part of the UK ETS Authority with the devolved Governments, are determined to manage and improve the scheme effectively. Our aim is to be predictable and responsible guardians of the scheme and its markets. We are committed to being attentive to views and to carrying forward changes as required to ensure that the scheme operates efficiently to achieve emissions reductions. The changes to the UK emissions trading scheme in the SI will support the scheme’s role as a cornerstone of the UK’s climate and net zero policy. I therefore commend the draft order to the Committee.
Question put.
Oral Answers to Questions
Debate between Andrew Bowie and Kerry McCarthy(1 month, 1 week ago)
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Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
We have spoken a lot about the Conservative party’s record in government, and I am very proud of our record on fusion. We launched the Fusion Futures programme to provide up to £55 million of funding to train more than 2,000 people, we became the first country in the world to regulate fusion as a distinct energy technology, and we launched the process to build the spherical tokamak for energy production—I cannot say that as quickly—at what will be the first fusion power plant at West Burton in Nottinghamshire. [Hon. Members: “Hear, hear.”] Members are very welcome. Will the Minister confirm that it is still the Government’s intention, as it was ours, to have fusion power on the grid by 2040?
Kerry McCarthy
As I mentioned, I am very much looking forward to visiting West Burton soon. The Budget announced significant support for fusion energy in 2025-26 and, yes, we remain as ambitious as the previous Government for the potential of fusion energy.
Andrew Bowie
Having confirmed that 2040 is still the ambition, which does the Minister think will come first: fusion on the grid or the final investment decision on Sizewell C?
Kerry McCarthy
The final investment decision on Sizewell C, as I understand it, is expected soon. We will hear more about support for that in the next spending review. Fusion energy has huge potential, not just in the long term but from the innovation we are already seeing in that sphere, which I very much welcome.