Carbon Budget Order 2026

Earl Russell Excerpts

Tuesday 23rd June 2026 Lords Chamber

[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.