EU Referendum: Energy and Environment

Caroline Lucas Excerpts

Tuesday 12th July 2016 Commons Chamber

[Barry Gardiner]

What an excellent point my hon. Friend makes. She knows, as I do, that the Secretary of State was someone who saw the value in the UK’s staying in the European Union and in all the directives and regulations that came from Europe, which afforded the sort of environmental protections and energy policies that would secure our future. No doubt the Secretary of State will respond responsibly to today’s brief, but I think she will feel a great deal of sympathy both with the remarks that my hon. Friend has just made and indeed my own remarks from the Dispatch Box.

[Caroline Lucas (Brighton, Pavilion) (Green)]

The hon. Gentleman is making a powerful case about the lack of investment and about economic instability. Does he agree with me that now is a good time for the Government to reverse their decision to privatise the Green Investment Bank, and that when they negotiate withdrawal the Government should make a strong case to remain in the European Investment Bank? If those two things do not happen, we will be in really difficult times.

[Barry Gardiner]

The hon. Lady, whom I regard as an hon. Friend, particularly on these matters, speaks with great knowledge. She is absolutely right about the Green Investment Bank, which was set up for a particular purpose: the Government recognised that there was a market failure. It was quite right of the Government to put the Green Investment Bank in place, but unfortunately the borrowing powers did not come quickly enough, and I think it is a huge mistake now to privatise the bank. It is a matter of deep regret to all who work in this environment. As for the hon. Lady’s remarks about the European Investment Bank, I shall come on to that subject later in my speech.

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[Amber Rudd]

I thank my hon. Friend and, as he rightly said earlier, we must move on. There are benefits to what we have already proposed and there have been benefits from the EU directives as well. They have raised standards in some areas, and I believe we will now maintain them and not allow them to slip at all.

[Caroline Lucas]

We were speaking earlier about investment and how, unfortunately, investors are getting increasingly cautious. Will the Secretary of State do all she can to persuade her colleagues that we must remain part of the European Investment Bank, at least as long as the negotiations are going on, because if we withdraw right now there will be another huge amount of potential investment not coming into this country when we need it most?

[Amber Rudd]

I thank the hon. Lady for her question; I was going to talk about investment anyway. She is absolutely right to mention the importance of investment in securing our clean energy. Like her, I appreciate the impact that the European Investment Bank has had on supporting clean energy in this country and I would hope that our membership of it will continue. I cannot give her any commitments, however. I shall wait to see how this emerges as part of the negotiations, but I share her view on how important it is.

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[Callum McCaig (Aberdeen South) (SNP)]

This is a good debate to be having and I thank the shadow Secretary of State, the hon. Member for Brent North (Barry Gardiner), and the Labour Front Bench team for giving us the opportunity. It is a shame, however, that the hon. Gentleman did not get beyond his introductory remarks in what was an excellent overview of the issues.

SNP history is being made today in that it is the first time that the full force of “Team Callum” has been deployed at the same time. We will hear later from my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (Calum Kerr)—or, as I like to call him, the junior member of the team.

Today’s debate feels a little bit like the last day of school. There is a little bit more work to do, but not a huge amount of Government work is going on as we discuss things, pick over the bones of Brexit and ask questions about how we go forward. I am sure that the Secretary of State is pleased—as we all are—that we have a new Prime Minister because that will help to ease some of the uncertainties that were building up and it is welcome that we will not have several weeks of uncertainty. I hope that the Government use the summer recess to come up with some plans, because plans are badly needed.

Last week, we discussed the excellent Energy and Climate Change Committee report on investor confidence and were able to discuss some of the issues affecting the sector that have been exacerbated by the Brexit vote. It is fair to say and it bears repeating time and again that Scotland did not vote for Brexit, and we will be doing everything in our power to ensure that we do not leave. We should change the lexicon slightly and refer either to “Exit” or perhaps “Wexit”. Scotland is not for leaving, and our Parliament and Government have united around keeping Scotland in the European Union. However, the uncertainty afflicting the United Kingdom following the vote will have some effects while we wait for clarity about our maintained position in the European Union

On energy bills, The Guardian reports today on uSwitch research suggesting that, since 23 June, 12 providers have pulled their cheapest fixed-rate tariffs and replaced them with more expensive deals. That is the impact of Brexit, which will be felt by consumers and those who can ill afford to pay more. The weak pound will have another cost impact as the UK is a net importer of electricity. Such things will drive up bills and are an unfortunate consequence of the Brexit vote. The future of interconnection is also uncertain. Interconnection is important and represents a valuable and sensible Government aim. I have often said that we should not see it as a way of importing cheap electricity from the continent, as the Secretary of State said in her “reset” speech; we should be using it to export electricity to the continent. We should be investing in domestic, low-carbon electricity generation, for which Scotland has immense and highly enviable potential.

The prospect of cheap electricity from the continent is also slightly questionable. Exchange rates will obviously change over time, but the assumptions about future interconnection decisions built into the sums might not look so good when the pound is not faring so well against the euro. Such things will come out in the wash, as we say in Scotland, but we need to look at energy policy and interconnection to see whether it is the right thing to do.

Hinkley is another big question about which we have had some discussion and it will come as no surprise to anyone on the Government Benches that the SNP is not in favour of it. We have discussed it ad nauseam, but it bears repeating that the economics of Hinkley were, in the views of my party, myself and a large number of people in the Chamber, highly dubious. The fundamental economics have only been undermined by the Brexit vote, and we need to reconsider them. We cannot afford to have all our eggs in this particular basket, because if it does not happen—I suspect it will not—there will be a rather large hole to be filled. We cannot, like we did with the Brexit vote, enter the unknown with no back-up plan.

[Caroline Lucas]

To give some shape to the hole that the hon. Gentleman mentions, does he agree that it is shocking that the expected fall in wholesale electricity prices has driven up the Government’s estimate of the whole lifetime cost of Hinkley to £37 billion from the £14 billion of only a year ago?

[Callum McCaig]

I thank the hon. Lady for that intervention. The costs are eye-watering. Given the extent to which Hinkley is an international project, the costs could rise even further still. It is time to have a sincere look at the plans and to decide whether the project is possible, but I strongly assume that it is not, so we require a back-up plan. If we do not address the huge strains on our energy system, the bread and butter of keeping the lights on will be put in jeopardy—perhaps not today but in the decades to come. It is incumbent upon the Government and the Department of Energy and Climate Change to act now.

We also need clarity from the Government on the position of the internal energy market in the European Union. The Vivid Economics report that was cited last week and again today about the potential of being outwith the system adding £500 million per annum to the costs of our energy system is sobering. When DECC and the Government as a whole are engaged in their summer homework of working out how to get out of this particular pickle, I suggest that ensuring that we keep the co-operation of the IEM should be high up the agenda because it delivers for us here and for folks abroad. It will help us to meet the trilemma of energy costs and should not be sold down the river lightly.

To maintain security of supply, the time has come to scrap Hinkley and to invest in viable and cheaper forms of domestic energy, including onshore wind, on which we need to lift the embargo. We need the contract for difference auctions that the Secretary of State has mentioned. They should be as wide as possible, technology neutral—as they are supposed to be—and no one should be excluded from bidding. We need to get serious about building the suggested new gas plants, and I will make the case for Scotland again: if we can get the anomaly of transmission charging sorted, we are ready to go with gas plants in Scotland that will contribute significantly to reducing the forthcoming hole in energy production.

Above all, we need to invest in energy efficiency. The Scottish Government are doing strong work and that needs to be replicated right across these islands. If we are to deal with an ever more challenging set of energy circumstances, including where we get it from, the best way is to use less of it. The benefits for everyone are substantial in the long term.

On climate change, I agree with the hon. Member for Warrington South (David Mowat), who is no longer present, that it is regrettable that the UK will not be a member of the European Union. I pay tribute to the Secretary of State for her role in the Paris talks, where the UK played a strong hand—perhaps not as strong as I and others would have liked, but it was played well and resulted in a pretty good deal. The fact we are no longer going to be at the heart of the decision-making process is regrettable, because the UK can be proud of what it has done on tackling climate change and has more it could offer the EU. We need to work out how that will happen in a renewed relationship with the EU, but there will be an absence and that is regrettable.

I have some specific questions to ask about what the process will be and what the impact of Brexit is on our commitments from the Paris talks, which have been touched upon. Our nationally defined contribution was the European Union’s NDC, and I am not clear whether that still applies to us. I assume it does, as we are still a member, but we can and should do more. I am also unclear about some issues on the ratification of the deal. Do we have to ratify this before the Brexit deal is concluded? Is there an impact on the EU as a whole? I understand that the EU ratification process requires all member states to ratify before the EU can ratify it as a whole. Ultimately, the UN requires ratification by the 55 countries that account for 55% of the emissions. So are there implications for us? Are there implications for ratification by the EU? Are there implications for the whole deal if we are not able to do that?

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[Mary Creagh]

My hon. Friend is absolutely right, but of course the setting of those minimum standards does not prevent individual member states from going above and beyond them. Vitally for business, it also provides a common baseline and a harmonised market for products. That is absolutely crucial for UK businesses as we move forward into the uncertainties of a Brexit world.

EU membership is also key for air quality. Successive Governments have dragged their feet on this very difficult issue. Since 2010, the UK has been in breach of EU legal air quality limits in 31 of its 43 clean air zones, and one of those is in my constituency of Wakefield. Although London tends to get all the attention—as a cyclist in London I am certainly aware of the very high pollution levels—constituencies such as Wakefield with the M1 and M62 crossing by it have severe burdens of cardiovascular disease and lung disease as a result of the breaching of those limits.

EU legislation has allowed UK campaigners to hold the Government to account. The High Court has ordered Ministers from the Department for Environment, Food and Rural Affairs to come up with new air quality plans. In April, those Ministers were back in court over allegations that their plans were still insufficient to bring the UK’s air quality in line with EU minimum standards. There is a series of question marks about what will happen to air pollution standards in the brave new Brexit world.

On biodiversity, the nature directives have preserved some of the most treasured places, plants and species in our country. Many of our best-loved sites, such as Flamborough Head, Dartmoor and Snowdonia, are protected by the EU.

[Caroline Lucas]

The birds and habitats directives are the real jewels in the crown of our environmental protection. Does the hon. Lady agree that, even if we do keep them in British legislation—as I hope we do—what we must do is ensure that there is a proper enforcement mechanism? That is what the EU has provided us with, and we will need to create a new enforcement mechanism that is as rigorous as possible.

[Mary Creagh]

I do not think that anything can be guaranteed in this world. The first step is to hear from Ministers, but it is said that today is like the last day of term. I wish the Under-Secretary well in whatever future role he is called on to play in the Government. He has been an excellent Minister, and he has appeared before the Environmental Audit Committee many times. I do not think that anything should be taken for granted. As a passionate pro-remain campaigner, I took part in many debates during the EU referendum campaign, and I heard many different versions of Brexit depending on whom I was debating with.

In an interview with The Guardian, the Minister of State, Department for Environment, Food and Rural Affairs, the hon. Member for Camborne and Redruth (George Eustice) described the birds and habitats directives as “spirit crushing”. He said that if we voted to leave, “they would go”. We will have to see whether his version of events is the same as that of the new Prime Minister. He also said that leaving the EU would free up both common agricultural payments and up to £2 billion in “insurance and incentives” for farmers. Nowhere in that do I hear anything about the need for protecting species, wildlife, and plant life. There is no mention of the vital services provided by soils and bogs or of the need for the restoration of bogs and peatlands, which we recommended just a month ago in our excellent report on soil, and which was echoed this morning by the Adaptation Sub-Committee report of the Committee on Climate Change. So, we have seen otters, hen harriers and bitterns making a comeback, and the referendum result could put all that progress at risk.

The EU has also played a key role in promoting investment in sustainable businesses and technologies. Investors need clear policy signals emanating from strong legislative frameworks, and, to be fair, those frameworks are provided by the Climate Change Act 2015. However, our Committee has received some mixed messages from the current inquiries into both the Department for Transport and the Treasury. In particular, I posed a question on the cancellation of the carbon capture and storage competition, which has had a massive debilitating effect on investor confidence. We do not want to get into a position where consumers are not spending and investors are not investing, because that is absolutely disastrous not just for the economy, but for the UK’s environmental progress.

Twenty years ago, in 1997, the UK sent almost all of our household waste to landfill. Now we recycle almost 45% of it, although I was disappointed to see those numbers slightly dip last year. The Treasury introduced the landfill tax escalator in response to the EU landfill directive. Over the past five years, according to the Environmental Services Association, the waste and resources management sector has invested £5 billion in new infrastructure thanks to this long-term policy signal. Those policy signals are vital as is the need to keep investing in infrastructure if we are to meet those 2020 waste targets—if they still apply in UK law. [Interruption.] A sip of gin to keep me going. A slice next time, please.

I shall end on the topic of microplastic pollution. The Committee is concluding its inquiry into microplastics—tiny particles of plastic, which can come from larger particles of plastic that are broken down, or from products such as shaving foams, deodorants, toothpastes and facial scrubs. Unfortunately, it seems to be the higher-end products that have not been cleaned up as quickly as the mass volume scrubs. We are finding that the particles have washed down the sink, passed through sewage filtration systems and ended up in the sea. Anyone who has had a dozen or half a dozen oysters recently will have consumed about 50 microplastic particles. For those of us who like seafood, that is something to reflect on. Bon appétit.

Over a third of fish in the English channel are now contaminated with microplastics. As an island nation we must take the problem of microplastic pollution seriously. The way to solve the problem is to work with our partners in the EU. Those are not my words. It is what the Minister of State, Department for Environment, Food and Rural Affairs told our Committee when he gave evidence just before the referendum on 23 June. If the EU takes action to address an environmental problem, it creates not only a level playing field for businesses, but an opportunity to market environmental solutions.

Brexit raises a series of questions. There is the issue of the circular economy package, which is the EU’s drive to get us to reduce waste, recycle more and have a secure and sustainable supply of raw materials, such as paper, glass and plastics. That would have driven new, green jobs in the UK economy. The decision to abandon all that has left investors reeling.

We heard from my hon. Friend the Member for Brent North (Barry Gardiner), the shadow Secretary of State, about Siemens’ decision to freeze its investment in the wind industry in Yorkshire, Hull and the Humber and we face a protracted period of uncertainty. When the Under-Secretary of State appeared before our Committee as part of that EU inquiry, he told us that the vote to leave would result in a “long and tortuous” negotiation. That has not even begun yet.

The period ahead is fraught with risks. The UK risks not being regarded as a safe bet, and investors may no longer wish to invest their cash in UK businesses. Significantly, contracts are no longer being signed in London because the risk of London no longer being part of the European single market means that people want contracts to be signed in a European country so that if something goes wrong, contract law will be enforceable across all the countries of the European Union. That will have a very big effect on our financial and legal services.