Net Zero Carbon Emissions: UK’s Progress

Ed Davey Excerpts

Thursday 28th February 2019 Commons Chamber

[Mary Creagh (Wakefield) (Lab)]

Does the hon. Lady regret that in government the Liberal Democrats oversaw the scrapping of the Department of Energy and Climate Change—

[Sir Edward Davey (Kingston and Surbiton) (LD)]

No, we didn’t.

[Mary Creagh]

I thought they did, but perhaps I am wrong. It was a machinery of government change. I am happy to be corrected if that is not the case. [Interruption.] It was subsumed into the Department for Business, Energy and Industrial Strategy. But we also saw the end of the green new deal and of the energy efficiency standards in homes, which means we have a carbon lag that will be more difficult—[Interruption.]

[Layla Moran]

Thank you, Madam Deputy Speaker. The hon. Member for Wakefield (Mary Creagh) should have waited for the speech from my right hon. Friend the Member for Kingston and Surbiton, because none of those things is true. Perhaps he will correct the record later.

[Sir Edward Davey]

I congratulate my hon. Friend on securing this debate. The intervention she just took was wrong on every count. It was the Conservatives who got rid of the Department for Energy and Climate Change, the zero carbon homes allowance; and the green deal, the carbon capture and storage experiments—I could go on—whereas the Liberal Democrats have a proud record. Under us and our policies, carbon emissions fell dramatically.

[Layla Moran]

So where do we go from here? The COP24 summit in Katowice, where countries settled most elements of the rulebook for implementing the 2015 Paris agreement, did not go far enough. I have been contacted by non-governmental organisations, the Climate Coalition, Green Alliance and the UK Sustainable Investment and Finance Association, and they are all disappointed by the lack of forceful language and ambitious pledges to come of out COP24. Not enough was agreed.

I am delighted to hear, however, that we are bidding for the next round. What are we doing about it and what progress has been made? It is a good thing, but what is going on? We must make sure it happens. What can we do to lead from the front? The lack of action by Parliaments and Governments has prompted young people from across the world to strike. We all know of 16-year-old Swedish activist Greta Thunberg, whose solo protest outside the Swedish Parliament started this movement. The idea has spread rapidly. Across the world, 70,000 school children each week in 270 towns have wholeheartedly supported what we are trying to do here, but they ask us to go much further.

--- Later in debate ---

[Zac Goldsmith]

I could not agree more with my right hon. Friend. My final remarks will relate partially to the point that he just made, and he is right. It would be madness for those countries that have not yet developed in the sense that we have to develop in such a way that required them to become addicted to the same system that is causing this problem. They have an opportunity to leapfrog into a much cleaner, leaner and more efficient future. The technology is there.

As my right hon. Friend the Member for Newbury pointed out earlier, there are still doubters. Of course we can quibble with the predictions, because climate systems are complex. There is not a computer model on Earth that is capable of fully taking on board the complexity of the natural world and the realities of the positive and negative feedbacks that impact on climate. Nevertheless, we are faced with a pretty simple calculation: what happens if we ignore that overwhelming scientific consensus, listen instead to the sceptics, and are then wrong? The IPCC predictions have told us that we would be risking life on Earth as we know it. We would be risking civilisation.

What happens if instead we listen to that consensus, take action and are wrong? Well, by accident we would end up with a cleaner and eventually cheaper energy system. We would end up protecting more of the world’s forests and ecosystems. We would end up with an economic system that was more circular and less wasteful. It really is not a difficult calculation to make—and that is even more true given that almost everything we need to do to tackle climate change is something that we need to do irrespective of climate change.

The challenge is gigantic and no one doubts that—we are told that if we are to meet that 1.5°C total global emissions target, we need to reach net zero by 2050 at the latest—but we can do it. In fairness to the Government, it is worth highlighting that we are already making progress—not enough, but progress all the same. We have already heard about the world-leading Climate Change Act, on which I am not going to dwell, but since 2010 the UK has reduced emissions by 23%. We have reduced emissions faster than any other G7 nation. I am delighted to acknowledge that the Government have instructed the Committee on Climate Change to look into how we can go further and move to a net zero emissions target. It also needs to be said, though, that at the current rate of progress, despite our having met the early targets and being on course to meet the next one, we are not on course to meet the fourth and fifth carbon budgets, so we do have a long way to go.

Clearly, we will have to change much of what we do not just in terms of how we generate electricity, but in terms of how we use it, how we manage the land, and how we organise our transport, food and industry. There has long been a belief, a fear, that there must be a direct correlation between emissions and economic growth. That has been true. For much of the industrial revolution, there has been a direct link: emissions go up, growth goes up. However, it is not so clear now. Since 1990, we have cut emissions in this country by 42%, even while our economy has grown by two thirds. As we enter this gigantic economic transition, there will, of course, be losers—the polluters—but there will also be winners. Last year saw a record amount of power generated from renewable sources—more than 30% is now coming from renewables.

A much quicker transition to electric vehicles—something on which we really need to push—will mean more jobs and more investment. Supporting new, clean technologies means both jobs and investments. That transition will happen whether we like it or not. It is the old story of the whale oil. In 1850, every home in America was lit by whale oil. Nine years later, Edwin Drake struck oil, and we had the oil rush. Almost immediately, the whale oil sector simply evaporated. There is a cutting in a diary of the biggest whale oil trader at the time who said that he was astonished that he had run out of customers before he had run out of whales. That is what will happen. Old industries and old technologies will give way to new ones, and it is in our interests as a country to lead the charge.

Hon. Members have covered lots of areas on which we need to get going, but I want to focus on just one last point that has been neglected in almost all of the debates that we have had on climate change, and that is forests. Apart from transport, deforestation is the single largest source of emissions. It accounts for around 20%—a fifth—of all carbon emissions. Forests are one of the world’s largest carbon sinks, absorbing around 2.5 billion tonnes of carbon a year and storing many billions more, yet we are losing 18.7 million acres of forests every year, the equivalent of 27 football pitches every single minute. It is self-evident madness that that is happening—not just because of climate change. Forests provide us with clean air, water and soils. We do not fully understand their influence on world weather patterns, but we know that it is defining. They are home to 80% of terrestrial biodiversity. More than 1.5 billion people depend directly on forests for their livelihoods, many of whom are the world’s poorest people, so we need to protect them. That needs to be a priority.

The UK can be proud that we are the only nation in the G7, and indeed in the G20, to hit the UN’s target on overseas aid the year before last—we were the only country to do so. Only a tiny fraction of that aid—as little as 0.4%—goes towards nature, and we can do much more than that. The very existence of DFID is to tackle poverty, but the surest way to plunge people into desperate poverty is by removing the environments, the ecosystems and the free services that nature provides. Those are the things on which people depend. Of course, the world’s poorest people depend much more directly on nature than we do here in this House, but, ultimately, we all depend on the natural world.

[Sir Edward Davey (Kingston and Surbiton) (LD)]

I am grateful to the hon. Gentleman for giving way. He is right to say that this country needs to help developing countries. One of the best ways that we can do that is by using our expertise in organisations such as the Met Office. Kew Gardens in his constituency has some of the world’s greatest scientists. We should work with other countries to make sure that they can adapt and indeed mitigate climate change.

[Zac Goldsmith]

The right hon. Gentleman is absolutely right. I love the fact that he mentioned Kew Gardens and I thank him for doing so. I am trying to push through a private Member’s Bill, but it keeps being blocked by my hon. Friend the Member for Christchurch (Sir Christopher Chope)—cue boos from people who happen to be watching this discussion. It would deliver about £40 million or £50 million extra to Kew Gardens without dipping into the public purse, and it would enable the scientists to do exactly the work that he has just mentioned, much of which focuses on helping developing countries, poorer countries, adapt to the reality and the risks of climate change. Those scientists do extraordinary work, and I am grateful to the right hon. Gentleman for allowing me to put that on the record.

In addition to being at the forefront of the new net zero revolution, which is what it is, let us also be world leaders in restoring ecosystems on a scale that finally matches the problem.

--- Later in debate ---

[Sir Edward Davey (Kingston and Surbiton) (LD)]

I refer the House to my entry in the Register of Members’ Financial Interests and particularly to my involvement with community renewable energy and solar energy.

Many colleagues have talked about the huge challenge that is climate change, and they were absolutely right to do so. We must act much more quickly. If we are to do that, however, we must ask what is the real barrier. Of course there are political barriers, whether they are represented by President Trump in America, President Bolsonaro in Brazil or Brexit, and we need to break them down. There are also some technological barriers, such as the need to improve the efficiency of storage, although that is coming along much faster. But the biggest barrier now, in my view, is finance. We must change the way in which our financial system works.

Fossil fuels have been the energy leader for 200 years, so they have seeped throughout our society and our economies. Whether we are talking about the City, our banks, our pension funds or hedge funds, fossil fuels are entwined with their investments in a very deep, profound way. In our stock markets, we have Shell and BP, which are very successful companies, but a significant part of someone’s pension may well come from the returns expected from a BP or a Shell investment. That is the challenge that we face. If we are to green our economy, we really must get serious about finance.

In my experience—both my experience as Secretary of State for Energy and Climate Change and my experience of working in the renewables sector—too many of our financial institutions do not really get the fact that investments in renewable energy can be fantastic; nor do they get the fact of climate risk, which will cause investments in fossil fuels to fail. The so-called carbon bubble will burst and people who thought they would get returns from fossil fuels investment will have their fingers burnt, and that could affect the pensioners of the future.

[Alex Sobel]

Does the right hon. Gentleman regret signing off the Hinkley Point nuclear power station? Surely that will be a stranded asset in the future.

[Sir Edward Davey]

No, because Hinkley Point is a low-carbon asset—and I did not actually sign it off; I did the heads of terms agreement. It was the current Government who signed it off. We could have a discussion about nuclear, but the difference between Hinkley Point and the fossil fuels investment to which I am referring is that Hinkley Point is low carbon.

The real issue that I am trying to bring to the House’s attention is the huge number of vested interests in the fossil fuels sector that seep throughout economies and finance. If we are to be really radical, we need to decarbonise capitalism. We need new regulations and new laws to change the incentives completely, so that any investor will need to factor in climate risk. Let me give some practical examples.

I hope to meet the Governor of the Bank of England in due course. It will be a private meeting. What I want to say to Mark Carney—whom I consider to be a hero in this area—is that I think the Bank of England should include in its reserve requirements a requirement for banks to be weighted according to how carbon-intensive their investments and portfolios are. That will encourage banks to lend to green initiatives.

I want to ensure that the pension regulators are looking at the pension portfolios and determining which are low carbon and which are high carbon, and supporting the low-carbon initiatives. I want to ensure that, through corporate governance, there is complete disclosure in a company’s accounts and its assets and liabilities of how much of that involves fossil fuels, so that investors can decide whether they really want to invest in a company that is so exposed to carbon risk. I want to ensure that if a company wants to be listed on the UK stock exchange, it must be transparent and disclose how much of its activities will be in fossil fuels.

I want a new treaty to back up the Paris treaty. I would call it a fossil fuels non-proliferation treaty. It would be a global treaty, and it would say, “We have enough fossil fuels. We do not need any more. In fact, we will not be able to use those that we have.” That is the sort of radical change that we need if we are to tackle climate change. This is not just about the policies in this country, although we have made some real progress.

[Anna McMorrin]

Does the right hon. Gentleman agree that UK Export Finance should also consider ceasing to invest in the fossil fuel infrastructure throughout the world, on which it is largely focused?

[Sir Edward Davey]

I do agree. I do not think the position is quite as the hon. Lady has described it—I think that that investment has been dramatically reduced—but it still needs to be go down further.

[Anna McMorrin]

We are looking at this in the Environmental Audit Committee, and that is not the case. The investment has gone up hugely, and we think the Government need to put a stop to it.

[Sir Edward Davey]

If the investment has gone up, I am very alarmed about that and will want to read the Committee’s report in due course.

The agenda I am putting to the House tonight is radical. It would mean that we needed a system-wide review through the Bank of England, the Prudential Regulation Authority, the Financial Conduct Authority and others to make sure we have the right incentives and regulations in our country to change this 200-year relationship between finance and fossil fuels.

The climate change agenda is also significant globally. If we get this right, we can take a major step forward in tackling human poverty, because we will bring electricity to rural Africa and rural India, and the children and families there will have the light and be able to keep their food and medicines cool, to educate themselves better and to be part of the global economy. So this is one of the biggest ways, particularly through solar energy, that we can tackle poverty. But it is even better than that: this is a way of promoting peace and reducing conflict and tensions throughout the world. Fossil fuel control is held by a small number of men in our world: Vladimir Putin, the dictator in Venezuela and so on. If we can get renewable energy, we can take the power away from those people and give it to all people—to all humanity.

--- Later in debate ---

[Claire Perry]

I will of course try to take as many interventions as I can, but I just want to respond to some of the points made in the debate.

After the very startling and worrying IPCC report, we were the first developed country to ask for advice on how we would achieve that target. We have asked how, by when and how much it is going to cost. We have to be pragmatic about this: we have to recognise the need for urgency, but we cannot bring forward policies and proposals that do not command the support of the people we represent. We can see just across the channel what happens when we do that.

[Sir Edward Davey]

While the Minister is talking about the targets and the request for the CCC to comment on net zero, will she say whether it will be possible for the CCC to recommend a new net zero target for 2050, following her letter?

[Claire Perry]

The current advice is that it is not technically possible, so I have asked the CCC to set out clearly when it thinks we should be able to achieve it. I look forward to sharing that information with the House and think a debate would be appropriate.

This is about not just actions, policies and words, but delivery. As others have noted, PricewaterhouseCoopers has said that the UK is at the top of the G20 leader board in this space. Since 1990, we have cut emissions by more than any other developed country—as a proportion of our economic growth. That is important because the best way to cut emissions is to have recessions, which is not a good thing for the prosperity and the future of our constituents. It is extremely important therefore that we recognise and celebrate that progress, but that we commit ourselves to do more.