Carbon Emission Charges

Abena Oppong-Asare Excerpts

Monday 1st November 2021 Westminster Hall

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

It is a pleasure to serve under your chairship, Mr Robertson.

I thank my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) for introducing this debate on behalf of the Petitions Committee. May I welcome the Minister to her place? This is the first time that we have faced each other and I look forward to debating with her on many issues. I also thank the hon. Member for Broadland (Jerome Mayhew), who spoke passionately about the climate crisis and made recommendations for changes. I found that really insightful.

I want to begin with some general points about the Government’s approach to net zero, the Treasury’s role and what Labour believes we should be doing differently. I will then make some specific points about carbon pricing and the emissions trading scheme.

As my hon. Friend the Member for Newcastle upon Tyne North said, the debate comes while COP26 is taking place in Glasgow, which I think has affected attendance at this debate. I want to state clearly that Labour hopes that COP26 is a success. We do not believe that the Government have done enough in the run-up, but for the sake of our planet and our future, we hope that it is a success.

A couple of weeks ago, the Government published their long-awaited net zero strategy and the accompanying Treasury review. We welcome the fact that the Government have published a detailed strategy for reaching net zero, but we are concerned that there are serious flaws in the strategy and the Government’s overall approach. The strategy does not go far enough to close the gap between the Government’s promises and delivery. First, in too many areas, there are issues: heat pumps, hydrogen, electric vehicle infrastructure, heavy industry and carbon capture and storage. We are not seeing credible plans from the Government that match the scale of ambition that is needed.

Secondly, the strategy underlines the total failure to provide the investment that is needed. The blame for that falls squarely on the Treasury and the Chancellor. The Treasury’s net zero review argued against borrowing to invest in the net zero transition because it would deviate from the polluter pays principles and would not be consistent with inter-generational fairness. That is extraordinary––an extremely worrying statement. It is precisely future generations who will benefit from the green transition, cleaner air and the jobs of the future. There is a failure to act and it would be an unfair legacy to leave this to future generations. I hope that the Minister will reconsider that statement.

It is also staggering that, in last week’s Budget, the Chancellor did not use the word “climate” once: on the single biggest issue facing the planet, the Chancellor has said nothing. When we look in detail at the Budget, we can see why, because it failed to take the decisive action needed on climate change. The Budget had no plans for economic growth, and certainly no plan to invest, at scale, in the transition to a zero carbon economy.

In contrast, the shadow Chancellor has set out Labour’s climate investment pledge: £28 billion of green capital investment each and every year for the rest of the decade. That would go towards critical sectors, such as retrofitting and insulating 90 million homes, bringing down energy bills in the process, and helping industries, such as steel, to transition and keep the good jobs that so many communities rely on.

Unlike the Government, we will not leave households and businesses to face the costs of net zero transition on their own. That has been welcomed by a number of environmental and business groups as a serious offer that meets the scale of the challenge. Business groups and others know that the cost of inaction is far greater than that of action. Just last week, the Office for Budget Responsibility said that the Government’s failure to set out a clear plan for apportioning net zero costs between businesses, households and Government is a source of long-term fiasco risk.

We feel that a responsible Chancellor must be a green Chancellor, and I am afraid that our current Chancellor is simply not either. In fact, one of the major announcements in the Budget was to cut domestic air passenger duty, as has already been mentioned by the hon. Member for Kilmarnock and Loudoun (Alan Brown). We are talking today about the price of carbon, and yet the Chancellor is cutting duty on domestic air travel, which produces significant emissions, while failing to invest properly in rail travel. That is not a choice that Labour would have made, and it is baffling that the Government did.

I will now make a few points about the UK’s emissions trading scheme. In the Government’s response to the petition we are considering, they say,

“The UK has now launched its own Emissions Trading System (ETS) to replace membership of the EU ETS. This will be the world’s first net zero cap and trade market, delivering a robust carbon price signal and promoting cost-effective decarbonisation by allowing businesses to cut carbon where it is cheapest to do so.”

We support that in principle, but I have questions for the Minister on how the ETS is operating and what plans the Government have for its development.

First, the Minister will know that two thirds of emissions are not currently covered by the UK ETS. Will she update us on what plans the Government have to expand it into more sectors? Secondly, the Government have previously stated that they are open to linking the UK ETS to other international schemes. Have they made any progress on that? Are the Government in discussion with the EU about linking it with the EU ETS? Thirdly, there have also been concerns about the stability of the UK ETS, given its relatively small size. Can the Minister tell us how the market is functioning in this regard, and whether the Government consider any changes are required?

Finally, can the Government tell us what further plans they have for carbon pricing policy? The Treasury’s net zero review leaves us with many big questions unanswered, such as how costs will be rebalanced from electricity to gas, the future of vehicle and fuel taxes, and where new sources of revenue will come from.

To conclude, we need the Treasury and the Chancellor to get serious about our net zero transition. We need to end the delays and insufficient investment. We need a plan backed by funding to help us meet our moral obligations to the planet and to future generations. Anything less is simply not good enough.