EU Referendum: Energy and Environment

David Mowat Excerpts

Tuesday 12th July 2016 Commons Chamber

[Amber Rudd]

I thank my hon. Friend for clarifying that position, which will no doubt give the hon. Member for Brighton, Pavilion (Caroline Lucas) as much comfort as it has given me.

I want to make some more comments on investor confidence, which is central to this afternoon’s debate. Since the referendum, I have met investors from across the energy spectrum: nuclear, renewables, energy efficiency—all areas in which we need investment. Yesterday, I spoke to members of the managing board of Siemens to reassure them of the commitments that I am setting out here today. Officials across my Department have regularly kept in contact with investors and energy companies to reiterate that message.

The message from business is clear. It still sees the UK is a great place to invest in. Britain remains one of the best places in the world in which to live and to do business. We have the rule of law, low taxes, a strong finance sector and a talented, creative and determined workforce. We have to build on those strengths, not turn away from them. Those factors combine with a clear energy policy framework and a strong investment-friendly economy to make the UK an ideal place to attract much-needed energy investment. The UK has been the fourth highest investor in clean energy globally for the past five years. This is investment in the energy infrastructure that we need to underpin a strong competitive economy, and this Government will do all we can to ensure that the UK remains an attractive place for investment. Whatever settlement we decide on in the coming months, those fundamentals will remain unchanged.

I want to underline our commitment to addressing climate change. Climate change has not been downgraded as a threat. It remains one of the most serious long-term risks to our economic and national security. I attended the world-class team of British diplomats at last year’s Paris climate talks. Our efforts were central to delivering that historic deal, and the UK will not step back from that international leadership. We must not turn our back on Europe or the world. Our relationships with the United States, China, India and Japan and with other European countries will stand us in strong stead as we deliver on the promises made in Paris. At the heart of that commitment is our own Climate Change Act 2008. The Act was not imposed on us by the EU; it was entirely home grown. It was also a world first and a prime example of the UK setting the agenda that others are now following. And let us not forget that it was delivered with unanimous support from right across the House.

[David Mowat (Warrington South) (Con)]

The Secretary of the State will be aware that the fifth carbon budget means that the UK is reducing carbon at a faster rate than any country in the EU and significantly faster than the EU’s intended nationally determined contribution put forward in Paris. Is the risk of Brexit not that we might go back on our climate change objectives, but that we will not bring the rest of Europe with us, given the leadership position that we have taken and the fact that we are moving so much more quickly than they are?

[Amber Rudd]

My hon. Friend, who knows this area so well, has raised an important point. I hope to be able to reassure him that we will be able to continue to use our influence to encourage the European Union to raise its game and to reach the high standards that we do, but I agree with him that this will be an additional concern, on which we will have to work to try to deliver.

It is true that we had to make tough decisions on renewable energy when we came into office last year, reflecting the need to cut costs and the need for technologies to stand on their own two feet. I will not shy away from taking tough decisions. We need technologies that are low cost and clean, to protect bill payers.

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[David Mowat (Warrington South) (Con)]

It was a pleasure to hear the hon. Member for Tooting (Dr Allin- Khan), whose speech was excellent, in both content and delivery. My son is a junior hospital doctor and I know how hard doctors work. We need more scientists and doctors in the House of Commons, so for that reason, too, she is really welcome. I congratulate her.

The implication of the Opposition’s motion is that somehow, by leaving the EU, we will become the dirty man of Europe and that, without the glad hand of European legislation, we will go back to our dirty ways.

I want to talk about climate change police, particularly how far ahead we are of the rest of the EU, and how Europe’s slow pace is causing increasing difficulty for the rest of the world.

People are right that environmental protection and policy is cross-border. We produce 1.3% of global emissions. Since 1990, the UK has decreased its carbon emissions by 28% and the EU has decreased carbon emissions by 21%. That figure includes our contribution of 28%, so the rest of the members have done a bit worse; although that in itself is not a disaster. What is extraordinary is the variability between different countries in Europe on carbon emissions since 1990: Austria has increased emissions by 14%, Ireland by 7% and Poland by 14%; Germany has decreased emissions, but not by anything like as much as we have. It is really quite bizarre.

Quite often, people talk about countries such as China as being the issue when it comes to emissions. However, the reality is that the Chinese are taking the whole issue a great deal more seriously than a number of OECD countries are. China has 40 to 50 nuclear power stations under construction. It increased its proportion of energy from nuclear by 30% last year, and from renewables by 20%. That is a huge effort. The truth is—

[Philip Boswell]

I take the hon. Gentleman’s point that China is making commendable progress in respect of nuclear construction. However, is it not also the case that, along with India, it is constructing up to several thousand coal-fired power stations? The argument, as was well put by the Prime Minister of India, Mr Modi, is this: why should we come to the banquet, have only a dessert and be presented with the bill?

[David Mowat]

I have a lot of sympathy for that argument, and that is why we have to cut more slack for these developing countries. I am going to come on to talk about coal, but in November the Secretary of State in this country said that we were going to phase out coal by 2025. The following week, Germany commissioned a brand new lignite-burning power station. That sort of behaviour plays to the point just made by the hon. Member from the Scottish nationalists that it is very hard to lecture the Indians and the Chinese on coal when there are countries in Europe, this year, commissioning brand new coal power stations.

We have talked about how important Paris is. The hon. Member for Swansea West (Geraint Davies) made the point that we may well be close to 1.5% anyway—it is a statistical model and it is quite hard to tell. However, the fact is that the INDC that the EU, including the UK, put into the Paris commitment is approximately half as onerous in terms of decarbonisation as that which the Climate Change Act 2008 requires us to do in the UK. We will reduce our emissions by the fifth carbon budget by 57% in 2030. The EU offering was a 40% reduction, which includes the UK’s 57%. We are seeing the result of this already. Last year, carbon emissions across the EU as a whole increased by 0.7%. I accept that that was only one year, and that this is not something to be looked at one year at a time, but 18 of the 28 countries in the EU either had no decrease in emissions or an increase. For completeness, in that same time the UK reduced its emissions by around 3%. Those statistics are from Eurostat.

I want to talk more widely about why it is that the EU has lost its way on climate policy. There is a fixation on coal in the EU. Germany is often regarded as being a leader on renewables, and it is; Germany has far more renewables than we have. However, it also has much higher carbon emissions than we do. The reason for that is the coal that it has: Germany has four times as much coal as the UK, and it is not four times more populous. There are parallels in other countries. Does it matter? Perhaps not, in one sense; someone has to lead, and it is us. However, the DECC website shows that electricity prices in the UK for domestic consumers are something like 50% above the EU mean—our gas prices are not—and our industrial prices are about 80% higher. Why does that matter? I come from a constituency in the north of England, where we still try to manufacture things. It is very hard to talk about rebalancing the economy and the northern powerhouse on the back of differentially high energy prices.

I do not think that the EU has taken the position that it has on purpose. So why is it that the policy objectives of reducing carbon have not been realised? The first error that was made—this is true of a lot of directives—is that there was confusion as to the target. A lot of the early EU directives were about renewables and not decarbonisation, which is a secondary target. The consequence is that CCS, which we have talked about, was not emphasised, gas as a transition fuel was not emphasised and nuclear was not emphasised—the biggest omission of all. Of all EU electricity, 30% comes from nuclear. The fact that, for many countries in the EU, that is not even regarded as part of the solution is quite bizarre.

Two or three hon. Members this afternoon talked about CCS, and I regret that the UK is not pushing ahead with that. However, it really beggars belief to say that that is a European issue when a number of countries in the EU, including Germany, have banned CCS. It is not a question of not developing it; they have banned it.

The other error that the EU has made is to create a general parity between different types of fossil fuels. Coal and gas are very different indeed in terms of their materiality on this. One reason why the UK does a lot better than the EU is the amount of gas that we use and the fact that we have displaced coal with gas. I like to quote this statistic: if the world were to replace all the coal that we currently burn with gas, that would be equivalent to five times, or a factor of 500%, more renewables. To pretend that that is not part of the solution is just plain wrong. One reason that people regard it as not being part of the solution is that the pathway has been mistaken for the objective.

Yes, at some point we need to get to an emissions level below that which is afforded by gas, but the truth is that emissions are cumulative. The hon. Member for Swansea West (Geraint Davies) said that we may well be close to the 1.5% in terms of particulates and all that goes with them. That is true and it is a cumulative effect. Carbon does not go out of the atmosphere for a very long time. It is not just about pathway. For that reason, gas should have been far more of a factor in this than it has been.

[Geraint Davies]

On the related matter of where we are, is the hon. Member as concerned as I am about the leakages of methane from fracking, which are 5%, given that methane is 83 times worse than CO₂ in global warming?

[David Mowat]

I recognise the issue that the hon. Gentleman raises. If methane were being released from fracking at that level, it would represent that percentage. However, I do not think that that is the case in the United States of America. I am prepared to be corrected on that, but I do not think anything like that amount of methane is being emitted by fracking in the United States of America.

[Geraint Davies]

I can provide the hon. Member with satellite evidence of this. The figure is somewhere between 3% and 8%, with the best judgment being that it is 5%. That makes it two and a half times worse than coal in terms of global warming.

[David Mowat]

I do not accept that that is true, but if it was, it would apply to fracked gas only and not gas generally. Most of our gas is liquefied natural gas from Norway and Russia. That said, various papers have been written on the amount of methane coming out of wells in the United States, and I do not think that the evidence is quite as the hon. Gentleman said. I think we should leave it at that for now, and maybe have a coffee afterwards.

The other thing that was not done was that the EU has no price for carbon. The emissions trading system was an attempt to put in place a price for carbon. However, because of the recession, carbon permits became very cheap indeed and it became no issue at all. We in the UK then established a carbon floor price. The EU Parliament debated that and it was blocked by MEPs, particularly those from Germany, so there is no price of carbon in the EU, which would have fixed some of this.

The result of all this is a policy that overly emphasises renewables as a solution, without taking into account some of the other things that we could have been doing, such as nuclear, CCS and the displacement of coal with gas. Result: we see in Germany a country with very high renewables, but also very high carbon emissions. Something like 15% of Germany’s total energy and 30% of its electricity come from renewables, but because of the amount of coal it produces, its carbon emissions are a third higher per unit of GDP and a third higher per capita than those of the UK.

So, there is an issue with our leaving the EU. It is not an issue of us learning from the EU how to reduce carbon emissions; it is a question of the EU not being held to account for the level of emissions that many of those countries are currently going on with. If Brexit has got a downside in terms of environmental policy around climate change, it is that the leadership that the UK has been able to demonstrate—so far, perhaps unsuccessfully—to the EU on climate targets will not necessarily be so evident in future.