Climate Change Act 2008 (Credit Limit) Order 2021

Baroness Healy of Primrose Hill Excerpts

Tuesday 15th June 2021 Grand Committee

[Lord Grantchester (Lab)]

Once again, the Committee meets to consider important matters concerning climate change. I thank the Minister for his explanation of the order before us. It follows the well-worn pathway of setting credit limits for the first three carbon budgets of 55 million metric tonnes of CO₂ equivalent as flexibility insurance in meeting the UK’s legal obligations. As we have seen, there has been no need to utilise these credits for the first two carbon budgets, and the UK is on target to meet the third carbon budget. The Government are to be congratulated on that. They are also to be congratulated on accepting the advice of the Climate Change Committee on setting the carbon budgets. Last week, the committee approved a sixth carbon budget for the years 2032 to 2037. This CCC advice was endorsed also by the devolved Administrations.

However, there, the congratulations must end. It has not been generally accepted, as the noble Lord, Lord Oates, queried, that the Government are on course to meet the fourth and fifth carbon budgets and they have had to have a reset, with additional targets, to get back on track, as we discussed last week. The Government have gathered in the low-hanging fruit from earlier years, referred to by the noble Lord, Lord Bradshaw, and done the least development possible, paring back the budget and policies from necessary support for climate action.

The Government have now responded on the realisation of the climate emergency by setting net-zero targets for 2050 in accordance with the Paris Agreement to limit global warming, but they continue with self-congratulatory rhetoric, setting targets without clear action plans. As we discussed last week, they must come forward with policies, plans and strategies and engage in meeting these budget commitments.

It must be recognised that this order, which sets the traditional credit limit, goes against the advice of the Climate Change Committee, which was again endorsed by the devolved Administrations. That advice was to set a nil credit limit—that is, not to allow the purchase of carbon credits from overseas. Yes, none has been required in the past, but the CCC is right in its determination that the UK must meet its carbon emissions reductions domestically. It recommended that international emissions credits should not be allowed to be used to meet the fourth carbon budget and, furthermore, that any surplus from the third carbon budget should not be carried forward.

It is recognised that the UK Government intend to meet the new NDC and the 2030 target without the use of international credits. Inventory uncertainty projections and forecast inaccuracies are also recognised —they have always existed—but it is now time for clear actions, real leadership and determined signalling that the UK is meeting its obligations entirely through its own domestic obligations, as well as now taking the lead on international aviation and shipping.

I have just one question on the future development of policy. One necessary priority must be the development of batteries and energy storage; the noble Lord, Lord Bourne, identified this in his appreciation of this order. Can the Minister outline where and in which strategy and plan this priority will be answered by government plans, among the many opportunities they have identified?

[The Deputy Chairman of Committees (Baroness Healy of Primrose Hill) (Lab)]

I call the Minister. Oh—my apologies.

[Lord Grantchester (Lab)]

I am nearly finished.

The reasons given in the Explanatory Memorandum for continuing with budgetary insurance are no longer convincing. Sufficient flexibility must be managed through domestic commitments; offsetting is not a sustainable way forward. Unforeseen circumstances cannot provide a justification, and the UK has not previously contributed to the development of the global carbon market with any impact. The opportunity to purchase credits will only diminish as the world steps up with commitments to decarbonise. Consider the damage that would ensue should the Government need to go ahead with a carbon credit. They must self-insure and develop robust policies and plans to meet all the carbon budgets with clarity and certainty.

This is a missed opportunity that the Government could have taken as a decisive step, in this decisive decade, toward emissions reductions. This conclusion was also recognised by the noble Baroness, Lady Jones, in her remarks. The 2030 NDCs submitted at the UNFCCC last December should have set the tone. The sixth carbon budget will require more ambition and the pace of change to accelerate over the coming years. The confidence that could have been set by a zero-credit limit in this order needs to be corrected by the determination and announcement of policy developments before COP 26 later this year. I look forward to seeing the UK outperform and deliver. Labour understands the size of the task. The challenge is set.

--- Later in debate ---

[The Deputy Chairman of Committees (Baroness Healy of Primrose Hill) (Lab)]

The Grand Committee stands adjourned. I remind Members to sanitise their desks and chairs before leaving the Room.