Net Zero

Lord Callanan Excerpts

Thursday 26th January 2023 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, I pay tribute to the noble Baroness, Lady Hayman, for securing this important debate today, and to the excellent contributions that we heard from all parts of the House on this extremely important issue.

I start my response by answering directly the question of the noble Baroness, Lady Blake, on the UK Government’s plans. These plans are already well advanced. We have made great strides in our actions to tackle climate change, as the noble Baroness and other noble Lords will be aware. In 2019, the UK was the first developed economy to set a legal commitment to reach net zero by 2050. This was followed by the 10-point plan, published in November 2020, which sets out our plans for what was then termed a green industrial revolution.

Building on the momentum of that plan, in October 2021 we published the Net Zero Strategy, setting out a detailed pathway to meeting our carbon budgets and net-zero targets. This was in turn followed by the British Energy Security Strategy in April 2022, accelerating our ambitions towards cleaner energy. It is well worth remembering that, since publishing the net-zero strategy, economic conditions have of course changed significantly due primarily to the Russian invasion of Ukraine. Energy prices and inflation have both risen sharply—the former, as we know to our cost, to record levels.

In the light of all that, in September 2022 the Government appointed Chris Skidmore MP to chair an independent review of our approach to setting our net-zero 2050 target, to ensure that we deliver our legal commitment to reach net zero by 2050 in a way that is pro-business and pro-growth, given the tremendous changes that we have seen in the economic landscape. The review heard from businesses, academia, individuals and local government across the country that net zero is in fact creating a new era of change and opportunity. It explains the opportunities and benefits of net zero for individuals and the economy, and specifies the actions needed to catalyse change in individual sectors of the economy, through to how we enhance the role of local authorities, communities and individuals—all to help deliver a just transition.

The review confirms what the Government have understood for years now: that the benefits of net zero far outweigh its costs. As the noble Lord, Lord Grantchester, observed, the costs of global inaction significantly outweigh the costs of action. Delaying action will only put future generations at risk, and the UK’s approach demonstrates that green and growth can go hand in hand. The UK’s net-zero transition provides lots of exciting investment opportunities for the private sector, all of which we are doing our best to leverage.

The noble Viscount, Lord Stansgate, pointed out the risks of the UK falling behind in the global race to net zero, and was right to do so. The Government are committed to ensuring that the UK remains an attractive destination for private investment, and we have an excellent story to tell on attracting that very green investment which we need to see. Bloomberg New Energy Finance estimates that, in 2021 alone, around £24 billion-worth of new investment was committed to the UK across our low-carbon sectors. Done right, the net-zero transition will provide huge opportunities for jobs, investment, innovation and exports. While the noble Viscount was right to point out the disappointment of the Britishvolt situation, the site remains an excellent location for a battery gigafactory and the Government stand willing and able to commit substantial levels of investment and support, if the right investment opportunity comes along. I know that the local authority is also committed to that, so we remain optimistic on that site.

The noble Baroness, Lady Blake, asked me whether the review has the support of the Prime Minister. I can certainly confirm that the net-zero strategy remains government policy and has not been quashed. There was no criticism of the substance of our plans, which remain well on track; in fact, the claimants themselves described them as laudable during the proceedings. The review even confirms that the net-zero strategy of 2021 is still the right pathway.

The noble Baroness, Lady Worthington, commented on the definition of net zero itself. I was very interested in her remarks, and I know that Chris Skidmore talks about this. The Committee on Climate Change agrees that greenhouse gas removal technologies will be essential for reaching net zero, balancing residual emissions from hard-to-decarbonise sectors, while providing, at the same time, new economic opportunities. It also recognises that we have made a great deal of progress.

As the noble Baroness, Lady Hayman, says, we have delivered innovative policy mechanisms. She referred to the contracts for different scheme and I totally agree with her: the officials who dreamt up that scheme deserve whatever bonuses they received, hopefully, that year, because their scheme has been so successful that the rest of Europe is now seeking to follow on from the success of our offshore wind programme—in fact, to such an extent that constraints will probably be put on the supply chain in our attempt to ramp up production even further. It has contributed to a 500% increase in renewable energy since 2010 and helped us to become a world-leading country in offshore wind and advances in transformative technologies such as carbon capture and electric vehicles. One in six new cars sold in this country is now electric.

The noble Baroness, Lady Hayman, and the noble Lord, Lord Whitty, referred to the ways government is set up to deliver net zero. In the past few years we have gone further than ever before to ensure that the climate is at the heart of our decision-making. For example, we have taken new approaches to embed net zero in spending decisions, including requiring departments to include greenhouse gas emissions in their spending review bids and their impact on meeting carbon budgets and net zero. We continue to build on the strong progress we have already made. Certainly, we have many exciting policy announcements in the coming year—if the House will have a little bit of patience. As many Members know, we already have the Energy Security Bill in Parliament, which will help deliver an energy system that is cleaner, more affordable and more secure.

The noble Baroness, Lady Worthington, and the noble Lord, Lord Grantchester, both rightly mentioned our world-leading centre for green finance. Both will therefore be very happy to hear that we are committed to publishing an update to our Green finance strategy early this year, setting out how we will continue to mobilise finance for the UK’s energy security, climate and environmental objectives and maintain our position as a leading green finance hub.

I also recognise, as a number of noble Lords observed, that local authorities can and do play an essential role in driving local climate action, with significant influence in many of the national priorities across energy, housing and transport which will be needed to achieve net zero. They are delivering the vast majority of our energy efficiency programmes, such as the public sector decarbonisation scheme, the social housing decarbonisation fund and home upgrade grants. These are all delivered through some of our excellent, innovative local authorities.

The noble Baroness, Lady Scott of Needham Market, mentioned joining up net zero and levelling up. The levelling-up White Paper outlined that the new UK shared prosperity fund will support interventions which reinforce the Government’s commitment to reaching net zero by 2050. This includes providing up to £2.6 billion for investment for places, including for community infrastructure projects. As of January 2023, the local net zero hubs are working on a pipeline of projects with a projected total capital value of around £4.4 billion.

The noble Baroness, Lady Bennett, commented on the need for local delivery of net zero. As I have already mentioned, we work very closely with local authorities and their representative bodies to discuss their role in net zero. They are already contributing a lot, and I am sure we will want to examine how they can contribute even more in future.

As new technology will be critical to the transition, the Government are looking forward to publishing the net zero research and innovation delivery plan shortly. It will set out the Government’s current portfolio of research and innovation programmes, which are backing Britain’s most innovative businesses to develop the next generation of technologies needed to deliver our net-zero ambitions.

In conclusion, as I have set out today, our net-zero target remains a government priority. I can assure the House that we will carefully consider the recommendations made in Chris Skidmore’s review. We will of course provide a full government response later in the year. I thank the noble Baroness, Lady Hayman, again for securing this debate.