Net Zero: 2050 Target

Debate between Jonathan Lord and Kwasi Kwarteng

Tuesday 6th June 2023 Westminster Hall

[Kwasi Kwarteng]

Of course, that would have been at great cost, and it would have been brought forward. I do not know what the effect of Putin’s invasion of Ukraine or the sudden spike in gas prices at the end of 2021 would have been in that instance. The hon. Gentleman is right to notice that. If he permits me—I know Members are always enthusiastic to jump in—the insulation of homes and the decarbonisation of domestic heating are issues I will address squarely later in my speech.

Decarbonising power generation has been a relative success. Offshore wind installation has been hugely successful. The target of 50 GW by 2030 is hugely ambitious. The fact that we have already installed 13 GW or thereabouts is hugely significant. No other country, apart from China, has our capacity in offshore wind. As the hon. Member for Tiverton and Honiton (Richard Foord) observed, there are areas where we could do a lot better.

It has been very difficult to land a scheme than can effectively decarbonise domestic heating. Some 90% of the roughly 30 million homes in the United Kingdom rely on burning fossil fuels for heating: broadly 85% gas, and 5% oil. For that reason, it was always obvious to me that one of the quickest and easiest ways we can decarbonise domestic heating is through research and driving hydrogen. Hydrogen can be a substitute for natural gas. We obviously need to do that in a safe way—[Interruption.] I will give way one more time, but I need to finish the speech.

[Mr Jonathan Lord (Woking) (Con)]

I am grateful to my right hon. Friend for giving way. Will he also touch on nuclear? That is an area where we have not made as much progress over recent years as we could or should have done. It is effectively carbon efficient, as well.

[Kwasi Kwarteng]

My hon. Friend will remember my three years as a Minister in the Department for Business, Energy and Industrial Strategy. I was always a passionate advocate for nuclear, because one of the first things I was made aware of was that we need a balanced power generation system with lots of different technologies. In energy, there is no silver bullet, as I am sure my hon. Friend appreciates. We have to rely on a range of technologies in order to provide resilience to the system. Three metrics of any energy system are the “SAS” of security, affordability and sustainability. Those are the three watchwords I recall when I consider this important subject.

As far as I am concerned, and certainly as far as the Government are concerned, unless they have changed their policy in the past few months—this was the case when I was in government—nuclear has to be part of the answer. There is a debate to be had as to what sort of nuclear we need, be it small modular reactors or the large-scale approach. Our view until recently has been that we need a mix of both. I believe that is still the Government’s position, but the Minister can answer on that.

I wish to touch broadly on a couple of areas where, supportive as I am of the Government, they need to be wary and deliberate in their approach. Taxes have been increased, with the windfall taxes and the electricity generator levy, or whatever one wants to call them. I fully understand the political need for them, but we should not be discouraging investment in key technologies. The Government should examine the capital allowance regime and ensure there is more incentive to invest in decarbonisation technologies, not less.

One issue that has bedevilled our power generation system is the grid. I cannot see any colleagues from Norfolk and the east coast, but one issue that they have relates to the connectors, the landing stations and the substations for electricity generated by offshore wind in the North sea. We need to see how we can more intelligently and efficiently create an offshore network that can land this electricity in one point. I would like more Government engagement on that; it has been considerable but the point is important.

I realise that I am running out of time, because others wish to take part in the debate, but I wish to mention buildings, which were touched on by the hon. Member for Tiverton and Honiton. This has been the most difficult nut to crack in the whole decarbonisation space, as we see when we look at various other sectors. I have mentioned the power generation sector, where we have decreased considerably our dependence on fossil fuels, gas burning and coal burning. In the transport sector, electric vehicles have really taken off in the UK. We need more take-up of them, but the transport sector is an area where there has been success. I saw my first EV in Israel 10 years ago, in 2013, at a time when we had zero EVs. As late as 2016 we had very few, and there has now been quite an impressive take-up. If we go down that route, we can imagine a world where we have decarbonised transport to a considerable extent. However, this area of domestic heating and how we decarbonise our housing stock has proved the most challenging.

There are two issues with our domestic housing stock. First, the buildings themselves are not very energy-efficient; we have the oldest housing stock in Europe. Secondly, as I have said, 90% of those houses are rely on the burning of fossil fuels. So there are two criteria on which we are not doing very well. First, as the hon. Member for Tiverton and Honiton said, we have to make sure that we can retrofit and improve the housing stock. Secondly, we have to be smart about how we heat those homes once they have been improved and what the power sources will be. As I have said, there is a big challenge there.

Given the huge reliance on natural gas in our system domestically, hydrogen has to be part of the answer, as we see when we look at where the Germans are. They have a huge dependence on natural gas for industrial purposes, and Putin’s invasion of Ukraine set the cat among the pigeons. German Ministers, including Energy Ministers, and other politicians are focused on how to substitute other forms of power for the gas they imported from Russia. They have ruled out nuclear power and focused on liquefied natural gas and, particularly, on hydrogen, which is a source of energy that the Government could look at again in order to accelerate its deployment.

Briefly, I want to mention what the United States is doing. Since I started at BEIS, one of the biggest changes has been the introduction of the US Inflation Reduction Act. Industrial players in the sector say there is a huge pull to the United States because of the subsidies and support it is giving to green technologies, in a naked and unembarrassed way. As energy Minister, Secretary of State for BEIS and, briefly, Chancellor, I was very keen that we had something to say on this, because it is not just a huge challenge to us but to the European industrial base. Having been in his position, I know that the Minister will not be able to talk about Treasury affairs, but I would be interested to hear the Department’s thinking on the US IRA development.

This is an introductory debate about a subject I am very passionate about, as are many Members here, but finally I want to thank the House and the many varied organisations that have sent me great notes and briefings, which show me that this is one of the most important issues any Government will face in the next 20 or 30 years. I have brought this debate, other MPs will secure further debates before the end of this Parliament, and I am convinced we will revisit the subject in the next Parliament. Many issues that we debate are of largely ephemeral interest, but this matter will affect our children and generations to come, so I am honoured to be able to introduce this short debate today. It is not the first, but one of the very many debates we will have, and should have, about this crucial issue.