Carbon Emission Charges

Debate between Catherine McKinnell and Lucy Frazer

Monday 1st November 2021 Westminster Hall

[The Financial Secretary to the Treasury (Lucy Frazer)]

It is a pleasure to serve under your chairmanship, Mr Robertson. As many other Members have, I begin by recognising that today is a significant day for international efforts to tackle climate change. Like other hon. Members, I suspect that that is why the Chamber, which I would have expected to be extremely full, is a little sparser than we expected. I am sure that all those who would have wanted to attend are debating this very issue in Glasgow. I thank, recognise and congratulate the more than 100,000 petitioners on securing a debate on this important subject. I do not think that there is any disagreement among the Members present, from both sides of the House, that this is a fundamental issue that we in the UK, as well as others across the world, need to address. As the Prime Minister said at the G20 meeting yesterday,

“If we don’t act now, the Paris agreement will be looked at in the future not as the moment that humanity opened its eyes to the problem but the moment we flinched and turned away.”

I cannot, of course, pre-empt the outcome of the discussions in Glasgow, but I repeat for the record that the Government are absolutely focused on tackling climate change, and we are taking action on a number of different fronts. As the hosts of COP26, we have been determined to promote ambitious action to deliver the urgent transformational changes required by the Paris agreement. We are also seeking to play our own part, as any responsible nation should. As I am sure hon. Members know, between 1990 and 2019 the UK reduced its greenhouse gas emissions by 44%, compared with 5% for the G7 as a whole. Since 2000, the UK has reduced emissions faster than any other country in the G20.

Turning to the specifics of the petition, and some of the points that hon. Members raised, I was grateful to the hon. Member for Erith and Thamesmead (Abena Oppong-Asare) for recognising the importance of the Government’s net zero strategy, which sets out the plan to reduce our emissions, and outlines measures to transition to a green and sustainable future. As my hon. Friend the Member for Broadland (Jerome Mayhew) recognised, we cannot reach net zero by Government action alone. The plan leverages up to £90 billion of private investment by 2030 and confirms £26 billion of public capital investment since the 10-point plan. That investment, and the package of policies in the net zero strategy, will keep the UK on track to meet its carbon budgets and our 2030 nationally determined contribution and to reach net zero by 2050. In doing that, we will lay the foundations for a clean and resilient energy supply by investing in wind, nuclear and carbon capture and storage, as well as accelerating decarbonisation in sectors such as transport and buildings.

The hon. Member for Erith and Thamesmead suggested that the funding was not enough. I reiterate the commitment to a total of £30 billion of domestic investment for the green industrial revolution from 2021-22. She also suggested that the Chancellor was not doing enough, but he is leading on COP26 in liaising with other Finance Ministers on this subject. We will see $100 billion investment by a variety of countries to support developing countries to reduce carbon emissions in their own countries by 2023. We expect to exceed that investment of $100 billion between 2023 and 2025. The Prime Minister is obviously also leading the work at COP26.

A key part of the debate has been about carbon pricing, which most hon. Members talked about. The petition specifically calls for a carbon charge to

“encourage industries and organisations to reduce their carbon emissions”.

The 2020 energy White Paper set out our aspirations to continue to lead the world on carbon pricing in the run-up to COP26 and beyond. The Government believe that carbon pricing is indeed one of the most efficient tools of decarbonisation and has a key role to play in helping the UK to achieve net zero emissions by 2050. That is why we have committed to maintaining an ambitious carbon price to ensure in turn that those who pollute with their emissions pay for them.

The UK already has two carbon pricing policies: the carbon price support and the UK emissions trading scheme. Hon. Members will know that the carbon price support rate is a tax on the fossil fuels used in electricity generation. Since the CPS rates were introduced in 2013, they have contributed to a fall in coal use for electricity generation. The amount of electricity generated from coal fell from 40% in 2012, prior to the CPS, to just 5% in 2018.

At the beginning of the year, the UK launched its own emissions trading scheme, which covers a third of UK emissions and applies a carbon price to the power, industrial and aviation sectors. We have committed to exploring expanding the UK ETS to other sectors. It works on the cap and trade principle by setting a cap on the total amount of certain greenhouse gases that can be emitted by covered sectors. Companies in covered sectors must obtain and surrender sufficient carbon allowances to cover their emissions.

My hon. Friend the Member for Broadland and the hon. Members for Newcastle upon Tyne North (Catherine McKinnell) and for Erith and Thamesmead highlighted that, at the moment, the scheme covers only a third of those emissions and asked what more we would do. I reiterate that we have committed to exploring expanding that scheme to the two thirds of emissions that are not currently covered. The hon. Member for Newcastle upon Tyne North also asked when we will review the carbon price trajectory in the ETS. I reassure her that we remain committed and intend to bring forward a consultation in the coming months. That commitment was reiterated in our net zero strategy.

Several hon. Members, such as the hon. Member for Newcastle upon Tyne North and my hon. Friend the Member for Broadland, recommended that the Government introduce a carbon border adjustment. I reassure them that we are following developments on the EU carbon border adjustment mechanism closely. As COP and G7 president, our instinct is, obviously, that we need to work together with our international partners on how to tackle climate change. We are continually assessing a range of options on that issue.

[Catherine McKinnell]

I apologise to the Minister for pushing the issue, because I can see that she does not have a clearer response. “In the coming months” is as vague as the timings that we have already been notified of. Can she give either a clearer picture of the timescale that we are talking about or a reason why there is no clear timescale for the consultation?

[Lucy Frazer]

I do not expect anything other than for the hon. Member to push me on the timing. At the moment, however, all I can say is that we will bring it forward in the coming months. I am happy to keep her updated about the timing as we progress.

[Catherine McKinnell]

I thank the Minister for giving way again. I will not push her again on that point, as I can see that she does not have a clearer timeframe. Obviously, it is of keen interest to those who are following the debate.

The other issue that I will flag is that she has so far made no reference to ensuring that this is a just and equitable transition so that polluters pay and we do not expect consumers to continue paying more to enable the net zero transition. I wonder whether the Minister just has not got to those comments yet or whether she can say something to assure us that the Government are looking to spread the cost, as well as the responsibility, of meeting our net zero targets.

[Lucy Frazer]

I thank the hon. Member for her intervention. The two schemes that we already have in place are obviously ones through which the polluter pays; they are about industry recognising that when it pollutes, it must pay for that.

The hon. Lady, as well as the hon. Member for Kilmarnock and Loudoun (Alan Brown), talked about what the Government could do to support individuals. The issue of heat pumps, and the importance of such measures not being too burdensome on those who need to implement them, has been raised on two occasions. A number of Ministers have made this point clearly, but I reiterate that we are not forcing people to take measures such as installing heat pumps: we are saying that if they wish to do so, a grant is available to them. Regarding heat pumps in particular, I would like to make it clear that we expect the price to come down. I suspect that that will happen when we have a requirement for all new homes to be net zero by 2025. When there is the volume of supply of heat pumps that we need, I suspect that their price will come down, as we have seen in relation to electric cars, for example.

[Lucy Frazer]

I am grateful to my hon. Friend for that interesting intervention. I hope that the prices of installation will fall as well.

[Catherine McKinnell]

The Minister is being very generous with her time. I am sure she appreciates that it is important that the polluter pays, but many polluting businesses will pass that cost on to consumers, and we need to be really transparent about where those costs are going to land. I hope the Government are going to take steps to ensure that we do not push people further into fuel poverty and that, if we are installing fuel pumps, we help people to insulate their homes. There is a lot that the Government can do to make sure the poorest do not pay, even if it is by the back door.

[Lucy Frazer]

I assure the hon. Member that as we bring in policies—I am responsible for tax, and I know this is the case for my area—we are always very conscious of whether the prices are going to be passed down to consumers. As she knows, we already have a number of mechanisms through which we protect those on the lowest incomes: for energy costs, for example, we have the warm home discount and the energy price cap. Of course, we are conscious that we do not want costs to just be passed down.

Oral Answers to Questions

Debate between Catherine McKinnell and Lucy Frazer

Tuesday 18th December 2018 Commons Chamber

[Lucy Frazer]

Cornwall is a sparsely populated area and there are difficulties there, but there is always access to the telephone service. It is right that we should look not only at face-to-face advice but at where technology can help to deliver legal advice to people.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

24. The United Nations special rapporteur’s recent findings were shameful and damning. They highlighted the fact that the “dramatic reductions” in the availability of legal aid since 2012 have“overwhelmingly affected the poor and people with disabilities, many of whom cannot otherwise afford to challenge benefit denials or reductions and are thus effectively deprived of their human right to a remedy.” When will the Government accept responsibility for the most vulnerable in our community, and will the Minister commit to ensuring that the overdue review of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 will reinstate legal aid for early legal advice?

[Lucy Frazer]

The hon. Lady makes an important point about ensuring that we have support for those who are most vulnerable, but I would like to make two points on welfare benefits, which she has highlighted. First, the most important outcome for benefit claimants is that the decisions on their claims should be right first time. This avoids the need to go to court at all, and my Department is working closely with the Department for Work and Pensions to ensure efficient decision making. I have met the Minister twice to ensure that we get those decisions right first time. Secondly, while decisions on welfare claims significantly impact the lives of often vulnerable people, the claims are often not complicated. We are making changes to the tribunal system to ensure that those cases are handled simply, effectively and more quickly.