Climate Change: Wales

David T C Davies Excerpts

Wednesday 14th July 2021 Westminster Hall

[The Parliamentary Under-Secretary of State for Wales (David T. C. Davies)]

Thank you for your chairmanship, Mr Dowd. I join the congratulations for the hon. Member for Gower (Tonia Antoniazzi) and it is a pleasure to follow the hon. Member for Merthyr Tydfil and Rhymney (Gerald Jones). He just said that this is a positive and consensual debate, and all I can say is that it probably is. You should see us in Wales when we are disagreeing with each other, Mr Dowd—but that is another matter.

The UK is the first country in the world to have enshrined legally binding carbon budgets into legislation. We are now into our fifth carbon budget and have recently committed to a sixth, which will set the UK on course to achieve a 78% emissions reduction by 2037, having achieved 40% so far, which is no mean achievement. This target is consistent with the Paris agreement, and the goal is to limit global temperature rises to well below 2 °C and pursue efforts towards 1.5 °C.

The hon. Member for Swansea West (Geraint Davies) made a point about the fact our contribution is not going to count for much unless the rest of the world follows. He is quite right and this is one of the rare occasions when I agree with him. I want to put in context the rest of what I say, because it will be easy enough for hon. Members to say, “Well, you could be doing more.” The point is that if we want the rest of the world to follow us, we had better do what we are doing well and we had better do it without there being an obvious, drastic cut in living standards for everyone in this country as a result of the actions we are taking. If we saw living standards cut and people being thrown out of work because of action we were taking, the rest of the world, particularly countries like China, most certainly would not follow us and therefore we would defeat the whole object of what we are doing.

It is estimated that four times more low carbon power generation will be needed by 2050. We cannot predict what the balance of energy generation technologies will look like, but we can take bold steps now to build the foundations of a low carbon system that is mindful of the need to keep costs as low as possible for consumers and the taxpayer, for the reasons I have just mentioned.

The next contracts for difference auction in December will aim to support up to 6 GW of renewables across Great Britain, which is enough clean low-cost energy to power up to 10 million homes. That mechanism has already played a key role in driving up the terms of renewables while driving costs down. The next auction will include revenue support for floating offshore wind, which was mentioned by the hon. Member for Newport West (Ruth Jones) and which has significant deployment potential in the Celtic sea, where wind speeds are particularly strong. The Secretary of State for Wales and I have been to Pembroke Dock to look at the infrastructure there. We had a virtual meeting yesterday with one of the companies that is looking to deploy renewable technology there, and very exciting technology it is.

Some of the Swansea Bay city region growth deal projects were mentioned in passing as being funded by the Welsh Government, which of course they are, but hon. Members seemed to overlook the fact that they are also being 50% funded by the UK Government. We are very proud to be supporting those projects, including the Pembroke Dock marine programme, which is developing innovative floating offshore and wind technology.

We are also very well placed for marine energy generation more widely, providing it can offer clear value for money. The Department for Business, Energy and Industrial Strategy ran a call for evidence on marine energy last year, and we are considering policy related to wave and tidal stream energy as a result of the submissions we received. A few weeks ago, I visited the Morlais Menter Môn project in Ynys Môn, which has been championed by my hon. Friend the Member for Ynys Môn (Virginia Crosbie). Although that project is still being put together, from what I have seen it is well advanced, and I am confident that we may well see that project going ahead. Obviously, that depends on the business case, but it is an exciting and innovative project.

The hon. Member for Gower mentioned the Swansea bay tidal lagoon project, and I chaired the Select Committee inquiry into that with a Labour Member. There is a legal case going on at the moment, so I am not going to say too much about it, but I urge anyone interested in that project to look at the transcript of the meeting in which we heard from the developers. Since then, I have met Swansea Council to discuss the Dragon energy island proposal, and I can tell the hon. Member that I have a great deal of confidence in the competence of the council. That scheme is in its early stages, but neither I nor my right hon. Friend the Secretary of State has any problem at all with the principle of tidal lagoon development.

[Tonia Antoniazzi]

I thank the Minister for the positive comments he has made about Labour-run Swansea Council and Dragon energy island. In any conversations that he has with other Ministers, the shadow Secretary of State for Wales or the Prime Minister, I urge him to push that agenda forwards for the future of Swansea.

[David T. C. Davies]

All I can say is that it has a lot of potential. The figures that were put to us by the leader of Swansea Council were very positive, but obviously the council has to make its case to the Department for Business, Energy and Industrial Strategy. It is certainly not something that we have any problem with in principle.

We are developing a business model to support the application of carbon capture, usage and storage technology to the power sector. That, along with a range of other measures that we are taking, is of particular relevance to Wales, because of the higher proportion of electricity that Wales has historically generated from fossil fuels. We are taking the next important steps to cultivate next- generation nuclear technologies, committing £385 million for small and advanced modular reactors and £222 million for the UK’s first fusion power plant. Both actions align well with Wales’s advanced nuclear ambitions across fission and fusion technologies. I know my hon. Friend the Member for Ynys Môn is particularly interested in those schemes.

That leads me to make another point: a lot of the actions that we are taking need the support of all those who care about the environment. One of the problems we have had with nuclear power is that those people who have clamoured loudly for electricity to be generated from carbon-free sources have not always been willing to commit themselves to technologies such as nuclear, which delivers just that and does so in a predictable fashion that allows the national grid to function properly. The regulation of the electricity network is a matter for Ofgem, and £2.7 million has been earmarked for investment in the distribution networks across Wales and Merseyside for the period from 2015 to 2023.

Turning to business and industry, I am sure hon. Members will welcome the Government’s commitment of £21.5 million to the south Wales industrial cluster, matching £18.5 million committed by industry. South Wales is the second largest industrial cluster in the UK in terms of greenhouse gas emissions—hence the need for targeted action in the region. That funding will enable the cluster to undertake detailed engineering studies into hydrogen and carbon capture infrastructure and to develop a strategic decarbonisation plan. I was very pleased to be in Swansea last week, discussing the region’s low-carbon growth deal projects. Those tie in with the aims of the cluster and are, of course, being supported financially by the UK Government.

All parts of Wales have the opportunity to benefit from funding through the £289 million industrial energy transformation fund, the £250 million clean steel fund, the £240 million net zero hydrogen fund and the £1 billion carbon capture and storage infrastructure fund.

In addition to our funding commitments, we are working to establish policy frameworks to support our industrial partners to make the transition to net zero. We have confirmed a new and ambitious UK emissions trading scheme to create the world’s first cap and trade market for greenhouse gas emissions and, as announced in the recently published industrial decarbonisation strategy, we are encouraging low-carbon fuel switching and growing the market for low-carbon industrial products. Meanwhile, we are developing business models to financially incentivise the take-up and usage of key decarbonisation technologies such as carbon capture and hydrogen.

Turning to transport, as my hon. Friend the Member for Montgomeryshire (Craig Williams) pointed out, we will end the sale of new petrol and diesel cars and vans by 2030. All cars and vans will be 100% zero-emissions from the tailpipe by 2035. Between 2030 and 2035 all new cars and vans will be required to have a significant zero-emissions capability, which would include some plug-in and full hybrids. That will of course entail a lot of changes for consumers, and it is only fair that we bear that in mind.

I share my hon. Friend’s disappointment at the blanket decision to stop building roads across the whole of Wales, because the roads of the future will not throw out the emissions of the roads of the past. He mentioned one in his constituency. The problems of congestion in Chepstow are appalling. We are seeing World Health Organisation guidance being breached. We know what the solution is: a bypass. At the moment, it cannot happen because the Welsh Government have halted all road building. That is a matter of great disappointment to many of us.

The measures that we have taken on transport send an unequivocal signal on the direction of travel that we are pursuing in partnership with industry towards a zero-carbon transport future, but as well as top-down market creation we also need bottom-up technological innovation. In that field, Welsh innovators are ahead of the pack, following in the footsteps of the fuel pioneer from Swansea Sir William Robert Grove, who I looked up on Wikipedia last night. He had a very interesting background.

We are looking to attract at least one gigafactory to Wales. We are supporting the development of electric heavy vehicle trucks in Cwmbran, in the factory that I know as Lucas Girling because I was one of the subcontractors there for many years. It is now known as Meritor, and we backed it with £15.9 million. I am looking forward to going back and visiting, and meeting some of my old friends on goods outward again.

Innovative companies such as Riversimple, which His Royal Highness the Prince of Wales visited last week alongside the Secretary of State for Wales, are developing hydrogen vehicles. Riversimple took me out for a spin in one recently in Monmouth, and good fun it was too. That is being supported by £1.3 million. In the Budget, my right hon. Friend the Chancellor announced £4.8 million for the Holyhead hydrogen hub—another scheme that was championed by my hon. Friend the Member for Ynys Môn. It is a proposal that aims to supply hydrogen fuel to the heavy goods and maritime vehicle markets on Ynys Môn. I am also aware of the exciting opportunity presented by the LanzaTech proposal to develop sustainable aviation fuel in south Wales, which came up during my visit in Swansea last week—[Interruption.] You are looking at me purposefully, Mr Dowd. I wonder whether I am exceeding my time limit.

[Peter Dowd (in the Chair)]

No, I just want to clarify that if people have a proxy vote we can carry on. If not, we will have to suspend for 15 minutes for the Division in the House.

[David T. C. Davies]

I am on a proxy, Mr Dowd, so I am happy to carry on.

Those projects and more show that Wales is leading the way when it comes to low-carbon transport innovation, and they will play a key part in the UK-wide effort to decarbonise the sector, which we will say more about as we publish the transport decarbonisation plan. The plan focuses on the challenges that we need to overcome to reduce transport emissions and ensure that the UK reaches net zero by 2050. It will also review the existing forecasts of future transport emissions from each mode of transport and set out a range of actions to drive further decarbonisation.

The Government are taking a range of actions to put our homes, which comprise a tenth of Welsh emissions, on a pathway towards clean power. A comprehensive overview of the key near-term actions that we will take will be set out in the heat and building strategy, which we expect to publish soon. The strategy will set out a range of policy levers to encourage consumers and businesses to make the transition to clean heat and improve the energy efficiency of buildings. We have already announced our intention to consult on the territorial scope and a key market mechanism to support the delivery of 600,000 heat pumps per year by 2028. Hydrogen will be considered as a potential decarbonisation option for heat, and we will be assessing the case for encouraging or requiring new gas boilers to be readily convertible to hydrogen in preparation for any future conversion of the gas network. We will continue to work with the Health and Safety Executive to enable up to 20% of hydrogen blending in the gas network by 2023, subject to the success of testing and trials.

We recognise that different areas will have different heat decarbonisation requirements. Heat networks are one of the most cost-effective ways of reducing carbon emissions from heating, and their efficiency and carbon-saving potential increases as they grow and connect to each other. We have already provided £7.9 million to the heat networks in Cardiff, and I was very pleased to be able to visit them virtually back in April. There is another one in Bridgend, which I hope to see shortly— not virtually, but in reality. Backed by £36 million, the Active Building Centre in Swansea is one of Wales’s most promising innovation projects, working to transform the way in which buildings are designed, constructed and operated by integrating power generation technology into the fabric of the building itself, and of course there is a growth deal in the Swansea area, which is focused on retrofitting buildings. Again, that will be supported by the UK Government.

Central Government clearly have a leading role to play in the net zero transition. We can set regulations, help to incentivise the adoption and development of net zero technologies, and provide further funding for strategic projects. However, in Wales we are seeing our local partners rise to the climate challenge as well, through the city and growth deals and backed by £790 million of UK Government funding. Our colleagues in north Wales are paving the way for tidal energy and new nuclear technologies. Swansea’s low-carbon growth programme is pioneering hydrogen, marine-energy and low-carbon buildings. I have been very pleased to visit those regions and see first hand the innovative projects they are looking to deliver. Cardiff has identified energy and the environment as one of its priority sectors, and I am absolutely certain that, as the mid-Wales growth deal develops, it too will be pursuing net zero projects as part of the development.

Our job is to deliver a green industrial revolution that has reducing emissions as its core objective. It is also about jobs and levelling up: the infrastructure we build and the technologies we develop to reach net zero will spur on a whole new wave of economic development. It is estimated that delivering the net zero infrastructure required by the south Wales industrial cluster alone could create up to 5,000 jobs. Depending on the extent of local supply chain engagement, Rolls-Royce estimates that 40,000 jobs could be created across north Wales and the north-west of England if the production of small modular reactors reaches its peak. The Offshore Renewable Energy Catapult forecasts that the first Celtic sea floating offshore wind projects could deliver 3,000 jobs across south Wales and the south-west of England, an opportunity that would support the Government’s target of reaching 60% of UK content in UK wind projects. Driving up prosperity and driving down emissions is the approach we are taking to confront two Government priorities simultaneously: levelling up across the UK, and fulfilling our obligations to reduce dependency on fossil fuel.

To conclude, the Government are in no doubt about the need to take bold and ambitious action to rise to the challenge of climate change. We have made significant progress, with emissions 40% lower now than they were in the 1990s. We do understand the need to go further, and we will work with local communities, partners, businesses, the Welsh Government, and international partners to do so. This is a collective effort in which we all have a role to play, and I thank hon. Members for their contributions today.

[Peter Dowd (in the Chair)]

Thank you, and I apologise for my virtual—and then actual—interruptions.

[Tonia Antoniazzi]

I thank the Minister for his detailed response, and all Members present for participating in today’s important debate. I want to reflect on a few things that have been said, particularly the words of the shadow Minister, my hon. Friend the Member for Merthyr Tydfil and Rhymney (Gerald Jones), who spoke about thinking global and acting local. That is so important, because so many of the community councils have been making really great progress in my constituency.

In Mumbles and Pennard, they have a plastic-free mission. There is a wonderful place called Pennard Stores. If hon. Members ever go down to Three Cliffs, they should go to Pennard Stores—Jamie runs it—because it is carbon neutral and everything there is just magnificent. These are small actions that local businesses and councils are taking, and it even goes down to the individual. There is a young boy called Sonny, who goes every day to do a litter pick, and we have two-minute beach cleans across Swansea bay. These things make a difference to climate change in Wales.

I thank hon. Members for their excellent contributions to the debate. One of the things that the Minister did not mention, though, was the electrification to Swansea, which was one of the Tory Government’s big promises to constituents in Swansea. That is a massive disappointment.

[David T. C. Davies]

The hon. Lady is quite right to say that I should have mentioned that. I was on the Welsh Affairs Committee—and she may have been as well—when this issue was looked at. The reality is that the costs of electrification from Cardiff to Swansea were absolutely extortionate and had gone up and up. The journey times were not going to decrease in any way, so there was no benefit to the consumer. If we recognise that we have a certain amount of money to spend on such projects, it would have been better—this is what the Government felt—to spend it somewhere where we were actually going to have more of an impact on carbon dioxide emissions.

[Tonia Antoniazzi]

I, too, was on the Committee, which is why it is really interesting to see the money going into HS2. It would not have been beyond the wit of man to realise back in 2015, when those promises were made, that it was going to be a challenge, and it is a challenge. The Minister makes a valid point, but it is still a lost dream now, and that is what is disappointing about it.

My hon. Friend the Member for Newport East (Jessica Morden) said that inaction is not an option, and I think that all hon. Members who have contributed to the debate agree that that is the case.

Question put and agreed to.

Resolved,

That this House has considered measures to combat climate change in Wales.