Reducing Greenhouse Gas Emissions

Baroness Altmann Excerpts

Thursday 2nd May 2019 Lords Chamber

[Baroness Altmann (Con)]

I congratulate the noble Lord, Lord Rooker, on securing this important debate and on his excellent and passionate remarks of introduction. Let me say first that we have much to be proud of. We are showing global leadership in combating climate change. For example, a recent PwC study reports that the UK is reducing emissions faster than any other G20 country, while still growing our economy. Moreover, 2018 was the cleanest and greenest year ever for electricity generation as renewables generated more than 37% of UK electricity, up from 6% in 2010. Greenhouse gas emissions have reduced by a quarter since 2010. The Government deserve praise for their actions to decarbonise the power sector, with emissions down by 64% on 1990 levels. These are excellent achievements but there is absolutely no room for complacency. There is so much more to be done, as my noble friend Lord Deben outlined so eloquently and as the report from the Committee on Climate Change today explains.

I will focus most of the rest of my remarks on the big challenge now, which is transport. Those emissions have actually been rising, partly as we are driving more but also because carmakers have not reduced emissions as quickly as they promised. Transport is now the sector with the highest level of emissions. I hope my noble friend the Minister will agree that this must change and that there is a huge opportunity for the UK to lead the world in the transition to electric vehicles. I declare an interest as a very happy driver of an all-electric car and I urge the Government to do more to promote this form of road transport and to get our market moving, as we are falling behind Europe’s leaders. Providing £1.5 billion for supporting low-emission vehicles through their Road to Zero strategy is a start. We are also investing £3.5 billion to reduce emissions from road transport but we need zero emissions, not just low emissions.

So far this year, fully electric vehicles have made up under 1% of new car sales. In Germany the figure is 1.7%, in the Netherlands it is 5% and in Norway, incredibly, 50%. This shows what can be done; there are significant benefits to the planet and to air quality for our citizens if we do so. The UK has more than 17,000 public charging points for electric vehicles, of which around 1,700 are rapid devices. This is an achievement, of course, but far more is needed. Without a better regionally spread network of charging points, we will not reach the leadership position and targets that we could achieve.

We need investment in infrastructure. I hope that the Government could encourage more of our long-term investment funds, including local authority-funded pension schemes and other investors, to look for the stable long-term returns that can come from investing even more in climate change mitigation measures and improvements to our infrastructure. These long-term pension funds have huge resources available; I refer my noble friend the Minister and your Lordships to my registered interests in this area. I believe those resources could be far better utilised in securing often inflation-linked returns, which can help meet their liabilities, by investing in not just the income-producing elements but the early-stage infrastructure. That can deliver better ways of managing the risks and returns of these funds than chasing, for example, government bonds.

Early-stage infrastructure and environmentally friendly investments can deliver equity-like returns to investors willing to seek alternative sources of risk premium, other than pure equity or hedge funds, and alternative sources of stable returns—often inflation-linked—outside both the gilt market and the conventional and supposedly low-risk bond markets. These have potentially been heavily distorted by central bank policies and we do not yet understand what that has done to investment risk for long-term investors. Climate and environmentallyfriendly investments should be a core part of any risk-return management assessment for long-term investors.

In reducing transport sector emissions, I suggest to my noble friend the Minister that having vehicle fleets for company cars is an extremely effective mechanism. The company car market is often overlooked and we could encourage more zero-emission company cars. The Government certainly deserve praise for showing leadership last year by committing to end petrol and diesel sales by 2040. However, it is vital that the Government confirm urgently that future rates of company car tax, beyond April 2021, can bring in the 2% rate for zero-emission vehicles for multiple years beyond that. I would be grateful if my noble friend the Minister could take that back to his department.

I fully agree with my noble friend Lord Deben that this should not be a party-political issue. Encouraging institutional investors to take on more responsibility for investing in the reduction of greenhouse gas emissions and helping to mitigate the impact of climate change, which is already under way, is for global security and economic stability a national issue, not a political one. I shall not dwell on my concerns about the reduction in government resources that will potentially result from our problems on Brexit. Notwithstanding any of this, by utilising long-term investment resources we could play a leading role in this area of critical importance to the planet, and we must.