Action on Climate Change and Decarbonisation

Caroline Lucas Excerpts

Tuesday 5th July 2022 Commons Chamber

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

The right hon. Member is talking about the recalibration that is needed in the Department. Does he agree with me that one area where that is extremely true is the need for a proper home insulation programme? We have never seen this Government get that right, in spite of the £11.7 billion allocated to the energy bills support scheme, which is of course welcome. What we need is a proper home insulation programme—street by street, local authority-led—and we still do not have it.

[Philip Dunne]

The hon. Lady makes a very important point, and she made a strong contribution to our Committee’s report on the inquiry into the energy efficiency of existing homes. I will comment on that in my remarks, but I broadly agree with her.

It is right that the Government do what they can to align their spending priorities to support all those who are being squeezed, but as the CCC reminded us last week, we are also in a future of living crisis. Large-scale changes in climactic conditions are undeniable, and they have the potential to make parts of the globe uninhabitable, provoking a crisis of barely imaginable severity. So it is entirely appropriate, in Net Zero Week, that the House consider in a little more detail the spending that the lead Department on net zero is proposing in the current financial year to tackle climate change and to address decarbonisation of the economy.

In October 2021, just before the COP26 conference in Glasgow, the Government produced their net zero strategy. This is an ambitious document, ranging widely across all areas of Government. It presents the first wide-ranging plan across Government to build on the initial 10-point plan for the green industrial revolution, which the Prime Minister presented in November 2020. It demonstrates that the Government are in the business of climate mitigation and climate adaptation for the long term. I would argue that there is broad consensus across the parties in the House that this has to be the direction of travel. It also reflects the broad scientific consensus that the planet is under threat from climate change as never before in recorded history, and that our behaviour must change in certain ways if we are to be able to avoid the worst effects. However, my concern is that the Government’s strategy seems, in too many areas, to defer substantive action and to leave real expenditure to a future date—and, dare I say it, possibly to a future electoral cycle. The warning from the Committee on Climate Change last week surely demands that more immediate action is taken to achieve the Government’s priorities and net-zero ambition.

My Committee had an interesting exchange last week with my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs. He disagreed with the thrust of the CCC’s conclusions, which he thought did not make sufficient allowance for the potential contribution of technology to mitigation of the climate crisis. That is a perfectly reasonable debating point. Indeed, our Committee has looked at a number of technologies that can play their part in achieving our net-zero ambition. However, I say gently to those on the Treasury Bench, that waiting for the right technology to turn up is not a strategy.

The Committee has been looking at potential solutions to help decarbonise the economy, from tidal power to offshore wind—there is significant emphasis on that in the Government’s strategy—and heat pumps, where there is ambition, but currently a significant gap in delivery. As the Secretary of State for Business, Energy and Industrial Strategy, and the Minister for Energy, Clean Growth and Climate Change will know—we wrote to them about this—the current state of development of negative emissions technologies does not promise a “silver bullet” from carbon capture and storage plants, which by 2050 will snatch carbon from the air and allow us all to go on as before. It is simply not there yet.

The Chancellor’s spending review last autumn gave a breakdown of the Government’s expected expenditure on net-zero measures in each year to 2024-25. In total, the Government plan to spend £25.6 billion on net-zero measures over that period, with £5.5 billion to be spent in the current financial year—subject, of course, to the House’s approval of these spending plans tomorrow. There are concerns about how effective that spending will be, and the Public Accounts Committee has recently been critical about the overall funding of the net-zero transition. The House is right to be concerned about the value for money of such approaches, and I commend the National Audit Office for its detailed and expert analysis of the Government’s plans.

The excellent briefing on the Department’s estimate, produced by the House of Commons Library for this debate, indicates that £21.8 billion—20% of the Department’s budget for this year—is dedicated to reducing UK greenhouse gas emissions to net zero. I do not include in that figure the £11.6 billion for the reduction in energy bills announced as part of the Government’s measures to address the cost of living crisis. Although the Government list that as a measure contributing to the net-zero target, I do not think that short-term energy bill reductions should be treated as a net-zero measure, unless somehow they are linked to fossil fuel reduction measures more directly.

I will focus the remainder of my brief remarks on the points that my Committee made last session in its report on the energy efficiency of existing homes, to which the hon. Member for Brighton, Pavilion (Caroline Lucas) referred. It seems that this is the area where greatest progress can be made towards the net-zero target, and in the shortest time. It was also the area that many witnesses before the Committee identified as a missing component from the recent energy security strategy.

I was pleased that late last month Ministers laid before Parliament the draft legislation needed to implement the fourth energy company obligation scheme. That hugely successful scheme has driven energy efficiency improvements in a great many domestic properties. Such improvements will reduce consumer bills. They will also reduce energy consumption, and thereby emissions from power generation. In the nine years of the scheme’s operation to date, it has supported cavity wall insulation in over 1 million properties. That is impressive, but there are still some 19 million homes that need upgrading to energy performance certificate band C. The cost estimate on which our Committee received evidence averaged £18,000 per property. Our Committee, I am afraid, found that the Government estimate for decarbonising Britain’s housing stock by 2050, at some £65 billion overall, was highly likely to be a significant underestimate. Welcome though the ECO is—last month, the chair of E.ON told the Committee about industry support for the scheme—it represents only a small fraction of what is genuinely necessary to achieve domestic energy efficiency. Will the Minister be in a position to elaborate further on the Department’s plans to drive energy efficiency in existing homes? It is not immediately apparent in the spending plans that the House is examining.

It is unlikely that the average householder will be able to afford a one-off payment of about £20,000 to upgrade their property without some incentive from the centre. I do not want to hark back to the green homes grant voucher scheme, but I hope that the Government have learned the lessons from its introduction. It was a well-meaning scheme that could have kick-started energy efficiency improvement, but it was strangled by red tape and ultimately abandoned in less than a year, having reached only a fraction of the homes that it was expected to improve.

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[Darren Jones]

There are two points to make. On consumer awareness generally, although there is very significant support for action on climate change, polling shows that most consumers do not realise that that means replacing their gas boiler and insulating their homes. Part of the net zero strategy for Government should be to try to engage with homeowners, tenants and the public about the work that needs to be done, but they have failed to introduce any effective engagement programme with the public. The concern is that when people do not want to do the work, that will cause a lot of anger among the public, and that will undermine our ability to reach net zero.

The use of public funds is also very important, because the disposable income of an average household, once we take away rent or housing costs, is around £9,000 a year. As we have heard, however, we are asking people to spend £10,000 to £20,000 on their home. How on earth can we ask a family with an annual disposable income of £9,000 to spend £20,000, when there is no support from the state or councils and when the banks are not even offering low-cost energy-efficiency financial products to help people who want to make these investments? That is why the Government need to be more involved in thinking about delivery. I suggest having incentives and behaviours that nudge people in the right direction, so that the vast majority of people feel able to do what they want to do and support the national effort to tackle climate change.

[Caroline Lucas]

I certainly agree that incentives and greater financial support will be crucial. However, does the hon. Gentleman agree that another way of tackling the issue that the hon. Member for North East Bedfordshire (Richard Fuller) raised would be to make very sure that there was a requirement to up the energy performance certificate rating before the house next changed hands or was put on the rental market? In other words, if people wanted to sell their house, they would have to make sure that it was properly insulated. In a sense, we would have both the carrot and the stick.

[Darren Jones]

We may end up having to do that, but I think that we need to lead with the incentive and support for positive behaviour before getting to the stick. I also note that the obligation is on people who own a home that they rent out to make sure that their home has an EPC rating of C or above. That comes in much earlier than for homeowners. That is a good thing, but the Government have still not set out how they will help homeowners to do the work affordably.

Delivery is important for the Business Department, because, of course, we cannot do this without business. Remarkably, however, given that we are talking about the Business Department, the constant chopping and changing between policies, financing and the requirements for businesses to be able to get access to financing—through the green homes grant or other programmes—make it extremely difficult for businesses to have any certainty about what will happen. That also makes it very difficult for businesses to invest in their kit or workforce, in training and upskilling their staff, or in the expansion of their services in larger geographies across the country so that they can do this work. We have feedback time and again from business that they are ready and willing and want to do the work, but that the constant chopping and changing from Government makes it very difficult for them to scale up and provide the amount of work that needs to be done across the country.

It is crucial that we get this right urgently. The CCC’s report to Parliament this week showed why, of all the issues, we must move more quickly on building decarbonisation, not just for consumers, homeowners and businesses, but for our ability fundamentally to hit net zero and protect the planet from the worst effects of climate change. I urge Ministers, when they are thinking about delivery and, as a consequence, about value for taxpayers’ money, to radically change their approach. I urge them to set out a policy direction and a well thought-through product design that businesses and homeowners understand they can take part in. It should be properly financed and go street by street across the country to ensure that we get on with this now, given the complete lack of progress over the past few years. I wonder whether the Minister, in summing up, will have any reflections on how the Department might improve its delivery of this important work.

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[Jim Shannon (Strangford) (DUP)]

rose—

[Caroline Lucas]

rose—

[Chris Skidmore]

I will give way to the hon. Gentleman and then to the hon. Lady, but after that I must get on, because I do not want use up all my time with interventions.

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[Bim Afolami]

I thank my right hon. Friend for that typically well-made and excellent point. If the major energy companies established a long-term fund on that basis to make the investment that they say they are making—and which they are making, but which they say they want to make more of and which the Government want them to make more of—that would be helpful, not just as a signal to the market of where they were using their capital, but as a signal to the country that they were serious about putting their money where their mouth is.

[Caroline Lucas]

I am all in favour of fossil fuel companies creating funds, but would not another way of achieving that be for the Government not to give oil and gas companies such an extraordinary subsidy, as part of the windfall tax—the so-called 80% investment allowance, which incentivises precisely the opposite kind of behaviour that the hon. Gentleman is speaking so eloquently about?

[Bim Afolami]

I thank the hon. Lady for her point. The intention behind subsidies—or, to use another word, support—for energy companies is to try to achieve what we want them to achieve. The investment allowances—there are various other things—should be tweaked or changed to incentivise more directly the sort of behaviours that we are talking about. On that, I support her.

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[John Mc Nally (Falkirk) (SNP)]

I congratulate the right hon. Member for Ludlow (Philip Dunne) on securing this valuable debate.

Let me start by saying that I have here a reminder of why we are in this place debating our children’s future. It is a “Climate Comic”, produced by children in Windsor Park primary school in my constituency. I think the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) might be quite interested in having a look at it later on—I guarantee it will not go into Hansard. The children who helped to produce it all have sensory impairment problems; most of them are deaf, and they signed the presentation they made to us.

If we want to change the world, we must get busy in our own little corner, and that is exactly what those children have done. It is top-class work by the primary school. The children produced their climate-conscious comic as part of the Forth Valley Sensory Centre’s “Making Sense of Climate Change” project. I thank all who helped to produce the comic and raise awareness of the fact that time is not on our side. The narrative on climate change of, “We need to do this.”, will soon become, “We should have done that.”

Here is why: the energy and security strategy presented a prime opportunity for the UK Government to tackle the dual climate and cost of living crisis, and they failed on both fronts. Their lack of ambition in setting meaningful policy to tackle that crisis was exemplified by their energy and security strategy in April, a strategy that was widely criticised and deemed inadequate by stakeholders. In the aftermath of the strategy being announced, the former chief of Ofgem noted:

“One failure, that could’ve helped in the short to medium run, is a lack of focus on energy efficiency, on insulation, on improving the quality of people's homes—I think that is an opportunity missed.”

Simon Virley, KPMG’s vice-chair and head of energy and natural resources, no less, stated that

“this strategy won’t get us to Net Zero at least cost to consumers.”

Given the importance of tackling the cost of living crisis, that is a missed opportunity. Other European countries such as Holland, France and Germany are doing this as a matter of urgency. The strategy fails to set out measures focused on improving energy efficiency in buildings, which has been described as a silver bullet by industry experts.

I am a member of the Environmental Audit Committee. I pay tribute to our excellent Chair—the right hon. Member for Ludlow—my colleagues on the Committee and the excellent standard of work by its Clerks. On the sustainability of the built environment, our report stated:

“If the UK continues to drag its feet on embodied carbon, it will not meet net zero or its carbon budgets.”

The EAC also pointed to the lack of any evidence that the UK Government were taking action to prioritise retrofit or reuse of existing buildings. Furthermore, the chief executive of E.ON noted that

“our plea to the government has always been to push hard on energy efficiency because that is the proven way, if you like the only silver bullet for this crisis”.

[Caroline Lucas]

The hon. Gentleman is making a powerful case. Does he share my surprise that in a debate on energy costs there has been no reference yet to nuclear power, which is eye-wateringly expensive? We are just hearing that Hinkley Point is going to be a year late and cost yet another £3 billion. Does he agree that the money that is being sunk into nuclear could be much better spent in exactly the kinds of ways he is describing, such roll-out of energy efficiency in homes and renewable energy?

[John Mc Nally]

I absolutely agree. The money could be spent more quickly and efficiently, saving endless money that is wasted, is probably never going to be used properly, and is making someone somewhere very rich but certainly not putting energy efficiency into people’s homes or into businesses.

The UK Government’s failure to tackle the most basic measures that are crucial in helping to tackle the climate and energy crisis is emblematic of their broader failure to prioritise these issues. If Scotland is to stand any chance of meeting our ambitious climate targets, we simply cannot afford to be held back by inadequate Westminster policies for much longer. Scotland has the potential to become a global net zero energy hub. The UK Government’s lack of ambition cannot continue to jeopardise this. We have the perfect mix of skilled workers and natural resources to become a world leader in renewable energy. Our oil and gas workers have long been at the forefront of energy innovation. The Scottish Government are committed to a just transition that harnesses the expertise of these oil and gas workers and supports those currently employed in oil and gas to capitalise on the employment opportunities of net zero.

The Scottish Government’s national strategy for economic transformation sets out their ambition that by 2032 Scotland will be an international benchmark for how an economy can transform itself, decarbonise and rebuild natural capital. The Scottish Government’s climate emergency skills action plan sets out their ambitious approach to developing the current and future workforce to support the transition to net zero. The Economic Development Association Scotland has described the action plan as

“a leading example of planning for sustainable skills against climate change targets.”

The Scottish Government’s just transition fund, alongside their strong commitment to achieving net zero, shows that unlike the UK Government they are matching their climate promises with action. That is in stark contrast to the UK Government, who have refused to match the Scottish Government’s £500 million just transition fund despite the Treasury benefiting from £350 billion in revenue from North sea oil.

The Government in Scotland recognise that climate change is the priority. That priority, desired by the people, is being met as best as it can be by the Scottish Government, and with reasons matching desires in nearly equal measures. Give Scotland the competencies and we will surely match that desire.

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[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)]

Thank you, Mr Deputy Speaker, for the opportunity to contribute to this debate. I congratulate my right hon. Friend the Member for Ludlow (Philip Dunne) on opening the debate so ably and posing the questions he rightly did, given his responsibilities as Chair of the Environmental Audit Committee.

Obviously, today is a quiet day in the eyes of the world, as the hon. Member for Bristol East (Kerry McCarthy) said. It may be correct that they are elsewhere, but we will none the less continue to discuss, debate and focus on the important issues that I think this Government have been serious about trying to address. We have been serious about trying to put frameworks in place and show a clear direction of travel, and we do that in the knowledge that net zero is a challenge. It is therefore right to ask the questions and undertake scrutiny, and that is why I want to focus today on the long term.

I think the important thing when we talk about net zero is to start from first principles. We often dive straight into this debate, and there have been some very good contributions today, but I think that first principles are a good place to begin. Most people in this place and across our country accept that human beings have had an impact on the world, and that that has changed over recent centuries. We all share the desire to tread more lightly on this earth and consider it appropriate that action is taken to do that.

The Government’s choice, and the choice of the centre right all around the world, is to seek to harness the immense power of capitalism, the immense ability of individuals and the immense ingenuity of human beings to find a way, in conjunction with Government, to achieve a resolution that ensures that we tread more lightly and get to the end point that we seek. That is on the basis of clear frameworks, of creating the conditions for investment—we are in the process of doing that—and of subsidy where that is reasonable and proportionate.

The first thing in a big task, which is what we have in front of us, is to have a plan, and the second thing is to execute that plan. Over the last year, we have now set out that plan—the net zero approach. Yes, it has assumptions in; yes, it is setting targets; and, yes, there will be challenges, but the whole point of a plan is to demonstrate direction. For those hon. Members who somewhat avoided this point in the debate, the plan has been lauded in the United Kingdom and elsewhere, and it was adopted early, demonstrating the commitment to trying to make progress. Now, the challenge is the execution of that plan.

I must remind hon. Members, particularly those who are extremely keen to see progress, as we all are, that we are nine months into a 29-year process. That means that there are issues, things will change and there will be progress reports; we will come back with a progress report in the usual way later in the year. It will be appropriate to look at the status, and some people will, of course, want to go further. However, we have the plan and we are executing it, and I think we are showing a consistent, calm and methodical approach to these very serious issues that recognises where we want to go and how we should get there.

I turn to some of the speeches and interventions. My right hon. Friend the Member for Ludlow introduced the debate, and I am grateful to him for his opening speech. He rightly holds us to account, and he is right that we live in challenging times—something that has to be considered in today’s discussion and in all our debates in this place. We have consensus about where we should move to. He is right to ask the question, but I hope he does not think that our attempts to move forward methodically, recognising that there are still challenges and that we still need to take time to work out how to approach things, can be described as waiting for something to turn up. I am sure he will not think that. Sector by sector, industry by industry, and element by element, we have to work out where the market or individuals will resolve the issues themselves, where it is reasonable and proportionate for the Government to subsidise the development and execution of solutions, and where other solutions may work.

Let us take aviation, which was considered by my right hon. Friend’s Committee a few weeks ago. We are still relatively early in the curve of knowing exactly what technology we will use. Working that out will allow us to quantify the cost of that technology, and to work with individual aerospace companies on how to approach the subject. Using a framework, a strong approach and collaboration, we must work through how to get to the end point that we want in aviation.

[Caroline Lucas]

The issue is not just that the Government are not bringing forward good stuff fast enough—in other words, the delivery gap that the Committee on Climate Change referenced. The Government are also doing bad stuff. The Committee on Climate Change said that the Government’s plans for more new oil and gas projects in the North sea did not make economic sense. Will the Minister listen to that committee, which is there to give him advice, and look again at the reckless idea of extracting yet more oil and gas from the North sea? That will not get our prices down, and it will not help with the cost of living crisis.

[Lee Rowley]

The hon. Lady and I have spoken about this before, and I know she has discussed the issue with my colleagues. We recognise that we are in a transition, and that fossil fuels are required to get us to the end. The aim of the transition is to get us to net zero, and a requirement of net zero will mean that for certain processes, we will still have to use a much smaller amount of fossil fuels, accompanied by capture technology.

[Caroline Lucas]

indicated dissent.

[Lee Rowley]

The hon. Lady shakes her head, but the alternative is closing down large swathes of industry. If she wants to make that case to the electorate, she can do so and see whether they agree. There would be a lot of people unemployed or without livelihoods, and a lot of industries that would close down. It would not benefit the world as a whole, because those industries would just move elsewhere and offshore. Those are exactly the kinds of unintended consequences that the centre left in this country need to think through, understand and work through before they suggest—as they do, incorrectly, regularly—that they have a viable solution to climate change.

The hon. Member for Bristol North West (Darren Jones) is rightly keen on delivery, as am I. Having sat on the Public Accounts Committee for 18 months in the previous Parliament, I know that delivery is at the core of what we should all seek to do in this place. Policies are one thing, but making sure they are implemented can be very different. I hope the hon. Gentleman will accept that we are in the relatively early phases of some elements of the net-zero plan, and that he will give us time to develop the propositions, as we have done over the last year. We must ensure a strong delivery focus, just as my colleagues in the Department for Business, Energy and Industrial Strategy have done, and I am sure that will continue to be the case in the months and years ahead.

I have the greatest respect for the hon. Gentleman. We have worked closely together on other areas, and we share a similar corporate background. He will know from our time in corporate life about the importance in project management of sending signals and ensuring that clarity about where we are going. The combination of those signals, our track record, and the road maps that we have published for carbon capture, utilisation and storage, for hydrogen, for auto, and for other things will provide some comfort that we are making progress. We obviously have a disagreement about the level of state intervention in certain areas, and I am sure we will continue to debate that in forums such as this Chamber.

My right hon. Friend the Member for Kingswood (Chris Skidmore) makes a number of important points about ensuring that we have a long-term approach. To take aviation as the example again, the challenge is in ensuring that we understand exactly what that will look like and where it will go. However, I accept and acknowledge his point. He also rightly made a point about the importance of dependency, in this instance on fossil fuel producers. He and I have had discussions about not wanting to switch from dependency on fossil fuels to dependency on critical minerals. That is why the Government will introduce a strategy on critical minerals in short order.

I am grateful to the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) for his comments, in particular on onshore wind, which I will certainly pass on to my right hon. Friend the Minister for Energy, Clean Growth and Climate Change. He made an incredibly important point about the importance of having local supply chains where possible. On Thursday, I visited Siemens in Goole, and it was heartening to see that much of the supply chain for the amazing new facility coming to the East Riding is made up of local businesses and local people from across Yorkshire. They are ensuring that we have a fantastic train factory that will allow us to support net zero.

My hon. Friend the Member for Hitchin and Harpenden (Bim Afolami) was right to highlight the importance of transition within net zero, which I have covered, and of not demonising but working with industry. My hon. Friend the Member for North East Bedfordshire (Richard Fuller) made an incredibly important point about individual agency. He spoke about the importance of taking people with us, and of ensuring that we undertake this massive task of treading very lightly on the Earth by 2050 with the consent of the people we represent. We do that by calmly and methodically setting frameworks and defining approaches.

The hon. Member for Falkirk (John Mc Nally), in summing up for the Scottish National party, talked about mechanisms for demand in the British energy security supply strategy. That should be looked at in concert with other strategies, documents and frameworks that have been brought forward. I encourage him to do that. The Labour spokesperson, the hon. Member for Bristol East, extensively referenced the Climate Change Committee report. As I said, we will respond on that in due course. We welcome all outside organisations’ comments, but it is important that there be recognition in the committee’s document of what the UK has achieved, that it is a world leader, and that it has set the right course. It is important that we provide all of that in the round.

I am grateful for all the contributions to what has been one of our better debates in this place. This is a hugely important issue. We recognise, as did most of the contributions, that this is a long-term issue. In some places, we have made huge progress—there has been a 40% reduction in carbon emissions in the last 30 years—but we have some way to go. That is the entire point of net zero, and of the Government working with business to harness the fantastic ingenuity of capitalism, so that we can make progress. I look forward to more of it being achieved, so that we can ensure that the objective of treading lightly on the Earth by 2050 is achieved.