Energy Infrastructure: Chinese Companies
Kerry McCarthy Excerpts(4 days, 16 hours ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
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Christine Jardine (Edinburgh West) (LD)
(Urgent Question): To ask the Secretary of State for Energy Security and Net Zero if he will make a statement on the potential security implications of the involvement of Chinese companies, including Mingyang, in energy infrastructure projects.
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Kerry McCarthy)
I thank the hon. Lady for bringing the urgent question to the House.
The protection and security of the energy sector is an absolute priority for this Government. We have a range of effective measures in place that give the Government powers to balance an open investment environment to facilitate growth with protecting the areas of our economy that are most sensitive to national security.
The Government firmly believe that the biggest risk to our energy system and energy security is remaining dependent on international fossil fuel markets, controlled by petrostates and dictators. That is why we have a mission to make Britain a clean energy superpower to end that dependence. We have a world-leading offshore wind industry in the UK and international investment plays a crucial role in supporting jobs across the country. As part of that mission, my Department engages in discussions with a wide range of investors, including those from other countries. We are also clear that alongside that, the growth of UK supply chains is critical. That is why we have set out plans for a clean industry bonus to drive investment in manufacturing, as well as setting up Great British Energy and the national wealth fund.
The Government will not hesitate to use our powers to protect national security whenever we identify concerns, and we will take a consistent, long-term and strategic approach to managing the UK’s relations with China, rooted in UK and global interests. The Government will co-operate with China where it can, compete where it needs to and challenge where it must.
Christine Jardine
I thank the Minister for her comments and general reassurances, but there are specific concerns at the moment. China can produce what is useful to us for the development of renewables, particularly in the North sea, and we can benefit from those investments. China also needs access to our markets. However, security issues involving companies working in offshore renewable development have become apparent in recent weeks and have been raised numerous times.
It has been reported that the Chinese company Mingyang is interested in producing turbines for a new project in the North sea. Around £60 million of Scottish Government funding has been earmarked for a wind turbine factory near Inverness, in addition to a potential £27 million for Orient Cable to provide subsea cables for island communities. That is despite the European Union bringing anti-trust cases against China and the Norwegian Government blocking Mingyang from its green infrastructure projects.
Will the Minister reassure the House that the Department will follow the same rigorous processes to assess those risks as the previous Government, which ultimately blocked Huawei from the 5G network? This must include an assessment of any opportunities for remote access to the turbines, as the software will normally remain in the control of the manufacturers even once commissioned, leaving them vulnerable to being switched off. We need local control.
Will the Department reassure the House that discussions are ongoing with the Scottish Government to ensure that no public money is invested before this risk assessment has taken place? How will Ministers work with the Scottish Government and Cabinet colleagues to ensure that offshore and undersea infrastructure is safe?
Kerry McCarthy
The hon. Lady raises important concerns that we are very much alive to. As I said in my first answer, energy security is critical to the Department’s work and that is why we have the clean power mission to end our dependency on fossil fuels. International investment is a crucial part of that and helps to support growth and jobs across the country. As part of that, we have discussions with a wide range of international investors, but we absolutely recognise that this needs to be balanced against national security implications. We work on that constantly across Government with input from a number of Departments, and I am pleased to see my hon. Friend the Minister for Security from the Home Office here for the urgent question.
The Government have to consider both those aspects together: the need for investment and for greater capacity in our supply chains, and the security risk. While I cannot get into the details of the individual case, given the nature of the ongoing discussions, I reassure the hon. Lady that we are taking these factors into account. We do want to make sure that the most robust processes are followed as we look at the details of this particular issue.
Bill Esterson (Sefton Central) (Lab)
I was pleased to hear the Minister confirm the importance of our energy security, in contrast to what we saw under the previous Government. [Interruption.] Opposition Members can groan all they want, but that is the reality of what was inherited in July last year.
As we extend energy infrastructure in this country, can my hon. Friend the Minister confirm how this Government will ensure that we have control of the operation of that infrastructure? Does she agree it is vital that through the industrial strategy we see a renaissance in our manufacturing and greater resilience in our supply chain, all of which adds to the energy security of this country?
Kerry McCarthy
My hon. Friend is absolutely right that dealing with capacity issues in our supply chain is a crucial part of getting this investment into infrastructure. It is one of the reasons why, through the national wealth fund, we invested in lithium in Cornwall last week. Through the critical minerals strategy, we want to maximise the natural resources that we have, where we can. As I have said, we want to make absolutely sure that security concerns are addressed as well when we look at which investors invest in our new economy.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
The indication that Mingyang will get the green light from the Treasury to supply wind turbine technology to the Green Volt wind farm in the North sea is concerning. Indeed, alarm bells have been sounded by officials in the Minister’s Department and in the Ministry of Defence. This green revolution will come with a “made in China” label. The Government, in collusion with the Scottish National party in Holyrood, are determined to see Chinese companies reap the economic reward.
The Minister’s party says again and again that the transition to renewable energy will reduce our reliance on hostile regimes. Chinese-controlled technology embedded in our critical energy infrastructure is evidently a threat to our security. Can the Minister assure us that she is taking this threat seriously? Can she explain how using wind turbines made by Mingyang reduces our reliance on foreign states?
Just last week I, along with many MPs in the Minister’s party, was briefed by the Royal Navy on the vulnerability of our subsea communications and energy infrastructure. We have seen a pervasive rise in sabotage attacks on subsea cables in the Baltic, affecting our Scandinavian allies. If Chinese-manufactured turbines are installed, security experts have warned that sensors could spy on British seas, defence submarine programmes and the layout of our energy infrastructure. We would be reliant on Chinese equipment and software, and on Chinese suppliers for updates and maintenance, handing Beijing significant opportunity for interference. In the current international climate, it is unthinkable to disregard the security implications of this decision.
Can the Minister confirm that the Government have scrapped the GIGA—green industries growth accelerator —scheme that we launched to build British supply chains in energy technologies? What discussions has she had with the Ministry of Defence about its concerns over our ability to ensure the security of our energy system? What safeguards will be in place to prevent Chinese maintenance ships accessing the turbines for repairs? What guarantees has she had, if any, from our defence and security agencies that this investment will pose no threat to our national security? If such assurances are not forthcoming, will she revisit this decision and put a halt to the madness of allowing the People’s Republic of China to have such a significant stake in our energy system?
Kerry McCarthy
When the Minister—[Interruption.] Sorry, I am the Minister now. [Laughter.] The shadow Minister mentioned revisiting this decision, but, as yet, no decision has been made. We are undergoing rigorous processes to consider the role of China in our supply chain and in the investment in our critical infrastructure.
Having been in my position, the hon. Gentleman will know why it is so important that I do not provide a running commentary on individual cases, but I have made it clear that we are taking into account the national security considerations as well as our need for investment in the supply chain. Let me touch on the legacy that we were left by the previous Minister: he was perfectly happy to leave our energy system exposed, with the British people paying the price. The retreat—the “under new management” line that he was parroting earlier this week—would leave us even more exposed to those petrostates and dictators. We are getting on with our clean power mission to end our energy insecurity, and I shall take no lessons from the shadow Minister on energy security given his Government’s record.
Ms Polly Billington (East Thanet) (Lab)
I am glad to hear the Minister point out that, when it comes to green investment over the past 14 years, the legacy that we were left with was of an absolutely vacant industrial strategy. I urge her to explain further how we might be able to develop the skills and competencies in this country to make sure that we have good, strong and ethical supply chains.
Kerry McCarthy
I thank my hon. Friend for her question. We have launched the clean industry bonus, which will be crucial in protecting our supply chain. We are investing through GB Energy and the national wealth fund—I have already mentioned lithium in Cornwall. Through the global clean power alliance, which we launched at the end of last year, we will bring together our counterparts from other countries, including at the International Energy Agency conference in April, to look at a supply chain mission to deal with these issues. These issues do not just affect us in this country. As other countries seek to decarbonise and increase the role of renewables, we will all need to co-operate and deal with the capacity issues across the supply chain.
Pippa Heylings (South Cambridgeshire) (LD)
I thank my hon. Friend the Member for Edinburgh West (Christine Jardine) for securing this important urgent question. Since the Russian invasion of Ukraine, as the Minister has rightly said, “energy security” has been a key term in this Chamber. There are two ways of looking at energy security. First, it is about generating our own renewable energy to avoid price volatility and exposure to authoritarian regimes, ensuring that we have the jobs here at home for design and construction. Secondly, it is about the national security issues around our energy infrastructure, which is also a form of energy security. A former MI6 chief has warned of the vulnerabilities, either deliberate or inadvertent, posed by foreign-controlled software embedded in our energy infrastructure. Given those serious concerns, can the Minister guarantee that any further investment in Scotland will increase both our energy and our national security?
Kerry McCarthy
As I have said, we are going through the robust processes to try to make absolutely sure that our national security is not compromised by investment from overseas, and we will continue to do that.
Brian Leishman (Alloa and Grangemouth) (Lab)
The Grangemouth refinery is a vital piece of Scottish infrastructure, and its economic contribution to the Scottish economy is worth more than £400 million every year. The Grangemouth refinery is also a joint venture between PetroChina, owned by the Chinese state, and INEOS, a multinational conglomerate. Together, they are Petroineos. The refinery is due to close, with thousands of jobs being lost, an unjust transition and Scotland having to rely on importing oil, all at a time of great global volatility. Why are this Government allowing a foreign Government and private capital dictate Scotland’s industrial capacity, its ability to produce oil and, overall, our national security?
Kerry McCarthy
We are not allowing anyone to dictate to us. I know my hon. Friend has been deep in conversation for some time with the Minister for Energy over Grangemouth’s future. To reiterate, we absolutely need to attract investment to meet our clean power mission, to secure our future energy security and, in the long run, to bring down bills for the British people. We need to balance national security concerns in tandem with that, and neither one takes priority. We need to tackle those challenges together, and that is what we will do.
Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)
Whatever the question about energy is, China is not the answer. First, we know the Ministry of Defence and the Department for Energy Security and Net Zero have raised objections about the Treasury’s push to bring Mingyang Smart Energy into the circuit to bid for this. Secondly, China is determined to involve slave labour in its products. We are investing under this Government in solar arrays, which use a huge amount of slave labour in producing polysilicon. Do the Government not recognise that their tilt towards China to get it to invest runs the real risk of utter dependency on China and serious threats to our security, which have been highlighted endlessly by the security services, and will they now stop?
Kerry McCarthy
I recognise that the right hon. Member has long-standing concerns about the role of China and its investment in our economy. He has been a great champion of raising concerns about forced labour, and he is right to do so. We have set up the solar taskforce, as I am sure he is aware, to look at whether there is forced labour in our solar supply chains. As I have said, a supply chain mission will be launched as part of the global clean power alliance. This is not something that one country can tackle by itself; we all need to be alert to the risks of slave labour. I know that an amendment was passed in the House of Lords last night that means the issue will come back to this Chamber soon, and I look forward to the discussion then.
Amanda Martin (Portsmouth North) (Lab)
Does the Minister agree that developing our economic and trading relationships with other nations is one lever of many that the Government are using to drive growth and investment, alongside planning reforms, public investment and a proper industrial strategy for the people not only of the UK, but my city? At the same time, our work across Departments must always have our nation’s security at its core.
Kerry McCarthy
My hon. Friend is absolutely right, and we are using a number of levers. The growth mission and the clean power mission work hand in hand to ensure that energy security and the decarbonisation of our power system contribute to growth in this country, and that means contributing to job creation and, in some cases, overseas investment. We have set up Great British Energy, and we have the national wealth fund and the clean industry bonus, all of which will help us achieve those objectives.
Bradley Thomas (Bromsgrove) (Con)
Have Ministers or officials in the Ministry of Defence, the Home Office or the security services raised any concerns with the Department over the possibility of offshore structures in British waters being used for Chinese intelligence-gathering technology? If there are sensitive matters that cannot be discussed in the House, will she commit to holding a private briefing for Members on the security implications of energy infrastructure from China?
Kerry McCarthy
I cannot comment on the extent of conversations, other than to reassure the hon. Member that, of course, those conversations are taking place and will be ongoing and that we are going through robust processes. Again, because it is not my specific role, I cannot say whether that information could be shared. I do not think that it can be shared on a day-to-day basis, but I will investigate whether we could arrange a briefing with Members to give some reassurance as to the general approach.
Melanie Onn (Great Grimsby and Cleethorpes) (Lab)
I am surprised that Conservative Members seem to have forgotten the time when they were pushing the golden era of the relationship between the UK and China. Some of this is a legacy of their time in government, so they should be careful about how they approach this conversation.
I point out to the Minister the role that Grimsby plays in servicing and supporting operations of offshore wind, not only around UK waters but as far as Taiwan. Those skills, competencies and capabilities exist here in the country, so what additional support will be given to expand those capabilities and support for skills in this country?
Kerry McCarthy
My hon. Friend has been a real champion for Grimsby, and I was glad to see her returned at the recent election, so that she can carry on championing all the potential that Grimsby has to offer, not least in the wind sector. It is important that we link up skills and capacity—that is one of the obstacles. We talk often about how grid capacity and planning issues can hold up the roll-out of clean power, but we have to have the skills base as well. We are working with the Department for Education on how we can train and develop capacity within the existing workforce through things like the growth and skills levy to work on these exciting new projects.
Sir Alec Shelbrooke (Wetherby and Easingwold) (Con)
The Minister speaks about being reliant on the petrochemical states and dictatorships that supplied the fuel needed for our energy system, and yet the vast majority of the processed materials needed—whether we construct things here or not—come from China. We recognise that some of those countries are dictatorships, but will the Minister confirm at the Dispatch Box that a country that uses slave labour, has carried out the most horrendous crimes against the Uyghur population and has sanctioned our own parliamentarians is as much a dictatorship as the countries that she says we want to no longer be reliant on?
Kerry McCarthy
If we followed the approach suggested by the Opposition Front Bench, we would be firmly back in the hands of the petrostates and the dictators. As for our relationship with China, as I have said, we will co-operate where we can, compete where we need to and absolutely challenge if we must. We have been clear that no company in the UK should have forced labour in its supply chain. That is why we have set up the solar taskforce and are going through robust processes ahead of the decision that we are talking about. I will take no lessons from the right hon. Member because we have had 14 years of being exposed to a volatile energy market, and we are trying to recreate our energy security through this investment.
Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)
Does the Minister agree that, after the real neglect of our energy infrastructure for the past 14 years, setting up GB Energy to help UK ownership of energy production can only be a good thing, and that our investment in critical minerals, particularly in Cornwall, and in the supply chain for floating offshore wind will be crucial for our national security?
Kerry McCarthy
On the one hand, Conservative Members raise concerns about critical minerals being imported from abroad. On the other, when my hon. Friend, who is a real champion for her area, praises the investment that we have put into lithium extraction in Cornwall, they start jeering. We will continue to invest through GB Energy and the national wealth fund.
Claire Young (Thornbury and Yate) (LD)
To have true energy security, we need home-grown capability at all stages of the development of renewable energy infrastructure, from the earliest research to maintenance and decommissioning. What steps is the Minister taking to ensure that we have that home-grown full-lifecycle capability?
Kerry McCarthy
From the hon. Member’s question, she may be talking about community energy—I am not quite sure.
Kerry McCarthy
In that case, I will say that it is important that any investment is place-based, and we need to look at developing the capability, such as the skills and the capacity of the local authorities—that is where community energy comes in. We also need to ensure that the finance goes where the investment is needed. If I have not understood the hon. Member’s question, I would be happy to take it up with her afterwards.
Tom Collins (Worcester) (Lab)
I welcome the Minister’s engagement on this topic. To have meaningful and serious discussions with other major economies is vital for our success. Does the Minister agree that those discussions are key to not only securing our economic aims, but tackling the climate and nature crisis and achieving our wider international objectives?
Kerry McCarthy
Yes, that international co-operation is absolutely crucial. It means talking to countries with which we share a great deal in common and which are signed up to the same objectives, but it also means talking to other countries to bring them with us. That is why we are hosting the International Energy Agency summit in London in April, why we have set up the global clean power alliance, and why the Prime Minister went to the COP climate change talks in Baku last autumn and showed international leadership, which was very much lacking from UK Governments of previous years.
Bob Blackman (Harrow East) (Con)
Clearly, national security concerns are being expressed across the House. Will the Minister ensure that the construction, maintenance and access to software will be carried out by British workers in British shops, and will not be subcontracted to foreign powers?
Kerry McCarthy
As I have said, I cannot comment on individual cases, but there are processes to ensure that our national security is protected as we look ahead.
Tony Vaughan (Folkestone and Hythe) (Lab)
I welcome the Minister’s reassurance about the Government’s rigorous scrutiny of energy projects involving Chinese technologies. I understand the argument that, at the current stage of our transition to net zero, we may need to look further afield to meet our domestic energy needs, but does she agree that the long-term plan ought to be to reduce reliance on Chinese technology in the UK energy sector and to use British-made green technology, about which there can be no national security or ethical supply chain concerns?
Kerry McCarthy
I agree. That is why we are doing all we can to increase capacity through initiatives such as the clean industry bonus, investment from the national wealth fund, the role of GB Energy, and all the other measures that we will take through our industrial strategy to ensure that we keep and create jobs in the UK.
Dave Doogan (Angus and Perthshire Glens) (SNP)
The Minister is all over the place on this. In her opening remarks, she said that the United Kingdom has a world-leading renewable energy industry. If we did, we would not be having this discussion about foreign imported infrastructure. Notwithstanding the Tories’ total failure over 14 years to invest in the industrial base for renewable energy manufacturing across the United Kingdom, what is the Government’s strategy to get in front of this, not just in manufacturing but in resource supply, enterprise resource planning and intellectual property? What is the big shift that the Government have planned? I just hear jibber-jabber.
Kerry McCarthy
That is not very polite of the hon. Member. As I have said, we are doing all we can to attract investment into the UK, so that we can be as reliant as possible on our own resources—that means our own supply chain and attracting investment and so on. We are doing that through the national wealth fund and through GB Energy. I do not know to what extent he took part in debate on the Great British Energy Bill, but there was much discussion then. As I have said, this issue must be solved on an international level. We are doing a lot of work with our colleagues to make the North sea the green power plant of Europe through the North Seas Energy Co-operation council, and we have set up the global clean power alliance. We cannot act alone—although I know that the Scottish National party prefers that approach. We are working in co-operation but also in the best interests of the British economy.
Alex Ballinger (Halesowen) (Lab)
Can the Minister confirm that her Department’s work is entirely consistent with the Government’s approach to China: co-operate where we can, compete where we need to and challenge where we must?
Kerry McCarthy
That is exactly our approach, and it is the right approach. Perhaps the Opposition Front Benchers would advocate not co-operating with China, but it is an incredibly important player on the world stage, and we gain nothing from completely turning our back on it and not engaging in dialogue.
Mr Andrew Snowden (Fylde) (Con)
Following its illegal invasion of Ukraine, we saw how Russia responded in the global tarrifs sanctions market: it tried to use its dominance in the nuclear fuel market to put pressure on Ukraine’s allies. We see the vulnerability in our energy supply chain when our enemies, and allies of those enemies, want to use it against us. Former head of MI6 Sir Richard Dearlove says that the Government’s target of decarbonising the grid hands power to Beijing. We have enough oil and gas in the UK not to have to rely on dictator states, so why do we not just get drilling and get our own oil and gas out of the ground? I suspect that, in their mad dash to decarbonise the grid, the Government will not do that, but have they undertaken a risk assessment of the strategic vulnerability of our national security in our increasing reliance on Chinese rare earth minerals and battery production?
Kerry McCarthy
I think I have made it clear that there are ongoing conversations about that, and that we take national security incredibly seriously when we consider investment decisions. On what the hon. Member said about producing more oil and gas here for our own use, I think he needs a lesson in how the energy markets work—there is no guarantee that it would be used here.
Harriet Cross (Gordon and Buchan) (Con)
The issue is the Labour Government’s rush to decarbonise by 2030, which means that this country does not have the capabilities to fulfil all the requirements to deliver on these projects. Until we do, we will always be reliant on overseas powers and people, such as the Chinese Government and Chinese manufacturers, to deliver what we need in order to decarbonise. Are the Government prepared and happy to sacrifice our national security and our energy security to reach that 2030 target?
Kerry McCarthy
It sounds very much like the hon. Member is making the case for an industrial strategy that ensures that we can match demand with supply. That approach was particularly missing from the previous Government.
Sammy Wilson (East Antrim) (DUP)
Almost on a weekly basis, we are lectured by the net zero-obsessed Secretary of State that the race for renewables is necessary in order to give this country a secure future supply of energy. Yet the renewables industry is increasingly dependent on Chinese technology, and on rare earth metals, of which the Chinese control 70%, so we are placing our future energy supply in the hands of a dictatorship that has proved itself willing to use such infrastructure to blackmail the countries in which it is based. Should we not consider the supply of fossil fuels in this country—decades of oil and gas—which we could use without interference from others?
Kerry McCarthy
We believe that the best route to energy security is through our clean power by 2030 mission and further investment in renewables. That remains our stance.
Jim Shannon (Strangford) (DUP)
The Minister will be aware that the costly environmental obligations that the Government impose on home-manufactured goods are not adhered to by many other nations, which often prevents UK manufacturers from being able to compete. Does the Minister agree that those considerations, as well as the routine human rights breaches of Chinese business against the Uyghurs, Falun Gong, Christians and other ethnic minorities, should be equally weighted with costs? Human rights and Chinese production will never add up; that must inform any contract offered by this nation of ours.
Kerry McCarthy
The hon. Member has frequently raised almost every issue that one could think of, but he and I have taken part in many debates about human rights in countries of concern over the years, and he is absolutely right to flag those concerns. As I have said, we have the solar taskforce and the supply chain mission with the global clean power alliance. We are very much alert to those matters. We do not want to see forced labour or any form of modern slavery in our supply chains. We are determined to take action on that.
Contingency Fund Advance: UKAEA Pension Scheme
Kerry McCarthy Excerpts(4 days, 16 hours ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Kerry McCarthy)
I hereby give notice of the Department for Energy Security and Net Zero’s intention to seek an advance from the Contingencies Fund of £55,000,000 for the UK Atomic Energy Authority pension schemes. This is a cash request to enable pension payments to be made as they fall due.
Parliamentary approval for additional cash of £55,000,000 will be sought in a supplementary estimate for UK Atomic Energy Authority pension schemes. Pending that approval, urgent expenditure estimated at £55,000,000 will be met by repayable cash advances from the Contingencies Fund.
The cash advance will be repaid upon receiving Royal Assent on the Supply and Appropriation (Anticipation and Adjustments) Bill.
[HCWS441]
Oral Answers to Questions
Kerry McCarthy Excerpts(1 week, 5 days ago)
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Harpreet Uppal (Huddersfield) (Lab)
When I visited Birkby junior school, I saw that tackling climate change and pollution is one of its key priorities. Does the Minister agree that setting a strong nationally determined contribution at COP29 and committing to an ambitious clean power target is important in demonstrating that the Government are intent on tackling climate change, especially at a time when other global leaders are not?
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Kerry McCarthy)
Last week, the UK formally submitted its NDC to the United Nations framework convention on climate change. It is a world-leading, ambitious target that we hope will demonstrate ambition to other countries. In that NDC, we have a youth clause for the first time, and I am very keen to talk to Members across the House about how we can better engage with schools, communities and young people to bring them on board with us as we seek to achieve our ambitions.
Tim Farron (Westmorland and Lonsdale) (LD)
Draft Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2025
Kerry McCarthy Excerpts(2 weeks, 6 days ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Kerry McCarthy)
I beg to move,
That the Committee has considered the draft Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2025.
It is, as always, a pleasure to see you in the Chair, Mrs Harris.
The draft order was laid before Parliament on 3 December 2024. I will set out some of the background. The UK emissions trading scheme was established under the Climate Change Act 2008 and the Greenhouse Gas Emissions Trading Scheme Order 2020 as a UK-wide greenhouse gas emissions trading scheme, to contribute to the UK’s emissions reduction targets and net zero goal. The scheme is run by the UK ETS Authority, a joint body comprising the UK and devolved Governments. Our aim is to be predictable and responsible guardians of the scheme and its markets.
Under the UK ETS, operators are required to monitor, report on and surrender allowances in respect of their greenhouse gas emissions. Most allowances are purchased at regularly held auctions, but operators in certain sectors at risk of carbon leakage are given a number of allowances free, to manage their exposure to the carbon price and the risk that business decarbonisation efforts could be undermined by higher carbon imports. Under the UK ETS, an “operator” is the person who has control over an installation. An “installation” is a stationary unit at which regulated activities take place, and sub-installations represent operations carried out at an installation in respect of which free allocation operators are required to report activity levels for ETS purposes.
The draft statutory instrument introduces the final year rule. We introduced it to enable important changes and improvements to be made to the scheme. Under previous UK ETS policy, when a sub-installation ceased operation, the free allowances were no longer distributed in respect of that sub-installation in the year after the year in which it ceased operation, but the operator was entitled to retain the full amount of free allowances made available in respect of the sub-installation, without recalculation to account for the permanent cessation of the sub-installation within the scheme year. In other words, if it ceased operations during a year, it still got the free allowances for the whole year.
That had the potential to result in the over-allocation of free allowances beyond the volume required for carbon leakage mitigation, and in the distribution of free allowances that were no longer associated with an activity resulting in emissions. The draft order ensures that the volume of free allocation that an operator is entitled to in the final year in which operations are carried out at one or more sub-installations is calculated by reference to the level of activity at the relevant sub-installation in that year. That is the final year rule.
To facilitate this change, the draft statutory instrument will require the operators to prepare an activity level report in respect of the final year in which operations are carried out. That activity level report will be used to recalculate the volume of free allocation that the operator is entitled to in the final year. Any over-allocation will be recoverable in accordance with the existing scheme rules.
There is an exception to the final year rule in circumstances where the permanent cessation of operations at a sub-installation is part of a series of changes that has resulted in a material reduction in the specified emissions per unit of production of those pre-cessation products which continue to be produced at the installation. The exception will incentivise decarbonisation, as operators that can demonstrate that the relevant requirements are met will continue to be entitled to the free allocation calculated in accordance with existing UK ETS rules, which is calculated in advance on the basis of historical activity levels.
The draft instrument also amends the circumstances in which an installation or sub-installation has “ceased operation” for these purposes. The previous definition was: at the point in time when it became technically impossible to resume operation. That definition was difficult to apply consistently in practice, though. The updated definitions provide that an installation has ceased operation when: all regulated activities in the case of an installation, or the relevant operation in the case of a sub-installation, have permanently ceased to be carried out at the installation. That amendment increases certainty for the scheme regulators and the operators.
The draft instrument also introduces a requirement for operators to notify the relevant scheme regulator of circumstances in which all regulated activities cease to be carried out at an installation by the end of the scheme year in which the cessation occurs, or within one month of the date of cessation, whichever is later; and to confirm whether the operator intends one or more regulated activities to resume at the installation. Operators are similarly required to provide details of the cessation of operations in respect of a sub-installation in annual activity level reports prepared in relation to the 2025 scheme year and thereafter. Requiring those reports will facilitate the application of the new final year rule.
The statutory instrument introduces a new power for regulators to issue a notice to an operator that determines that an installation or sub-installation has ceased operation for the purposes of UK ETS legislation. The new power is available in circumstances in which the regulator is not satisfied that the operator intends regulated activities to resume at the installation, or intends regulated operations to resume at the sub-installation level. That change will increase certainty for operators and facilitate equivalent treatment for all installations undergoing a cessation.
The changes follow comprehensive engagement and consultation with stakeholders. Between 18 December 2023 and 11 March 2024, the UK and devolved governments ran a consultation seeking views on proposals to alter the free allocation methodology for the UK ETS stationary sectors to better target those most at risk of carbon leakage and to ensure that free allocations are fairly distributed. The UK ETS free allocation review covered the provisions included in the statutory instrument on permanent cessations. The responses to the consultation were broadly in support of the proposed technical changes to the treatment of permanent cessation. The authority response to the consultation will be delivered in two parts. An early response to the proposals on permanent cessations was published last November.
The changes in the draft order will deliver on commitments made by the UK ETS Authority, improve the operational fairness of the scheme and increase certainty for both regulators and operators; and the alterations to the UK ETS will support its role as a key pillar of the UK’s climate policy. These measures show that we will take action to extend and improve the scheme when necessary. I commend the draft order to the Committee.
Kerry McCarthy
I suppose I should welcome the shadow Minister to his place, but it is a bit depressing to hear him outline the Opposition’s position. In the last year or two that the Conservatives were in government, we saw them U-turn and row back on getting to net zero. We recognise that it is an integral part of our growth and industrial strategy, which will protect jobs and investment in this country, so to hear the Opposition’s position spelled out in such stark terms is disappointing.
Net zero is part of our growth strategy, and energy security is very much at the heart of what we do in the wake of Putin’s illegal invasion of Ukraine and other global factors. The shift away from volatile fossil fuel markets is not just about a desire to reach net zero, although of course that is really important—we see evidence of what happens if we do not tackle climate change around us every day. It is about protecting our security. The UK emissions trading scheme is a key pillar of the climate and net zero policy regime and our industrial strategy. It sets a cap on emissions in the sectors covered, which currently represent about a quarter of the UK’s emissions, and guarantees that those sectors will reduce their emissions in line with our world-leading net zero target.
We believe that maintaining a strong UK ETS will play a key role in making Britain a clean energy superpower, delivering on our mission of ensuring secure and clean electricity by 2030 and cutting bills. The ETS makes fossil fuel electricity generation face the costs of its pollution. It is only a small component of electricity bills, especially compared with wholesale gas prices. As power generation continues to shift to renewables and nuclear, and as we reduce our reliance on volatile international gas markets, the impact on bills will fall and the costs to consumers will be reduced.
Only fossil fuel electricity generation will be captured by the UK ETS, so the increasing uptake of renewables and nuclear power will reduce the costs for consumers. By driving green investment as part of our industrial strategy, the UK ETS will also help to deliver a just transition, growing the UK’s economy and securing good jobs for people across the country.
I think the shadow Minister is arguing that decarbonisation is coming too fast, but we are absolutely at the forefront of the new technologies and industries. My hon. Friend the Member for Redcar could wax lyrical about what that means for a constituency such as hers. Redcar has a strong industrial base but its future will be built on decarbonisation technology and the accompanying jobs.
Delivering an industrial strategy is the centrepiece of the Government’s growth mission. It will make us energy independent while creating jobs and providing investment in communities across the UK. A key part of that will be investing and creating the right conditions so that the green industries of the future can flourish, and the UK ETS is a vital element of that approach. It sets out a clear trajectory for emissions from the sectors covered and drives investment in decarbonisation.
In November 2024, the UK ETS Authority set out an early response on its proposals on permanent cessations. This draft statutory instrument will implement those changes and improvements to the scheme, following detailed consultation. These changes have the support of the four Governments of the UK. I think Scotland and Wales have already approved them, and Northern Ireland is about to consider them in the next few days, so there is consensus on advancing carbon pricing policy, which adds to the strength of the UK ETS. The shadow Minister mentioned the need for close co-operation with the EU, and we certainly want to achieve that.
To ensure the scheme continues to remain a key driver of decarbonisation, our intention is to expand its scope further. We have recently consulted on proposals to expand it to energy from waste and waste incineration, and we have recently consulted on expansion to maritime operators and on a regulatory framework for integrating non-pipeline transport for carbon capture, usage and storage. Beyond those new sectors, we are exploring options to build the UK ETS into the world’s first integrated market for carbon emissions and carbon removal. Subject to consultation, our intention is to include engineered greenhouse gas removals. That would support the new technologies we need to reach net zero while providing a sustainable path for industry to decarbonise and flourish.
We recognise the importance of long-term certainty to decarbonisation planning. The authority’s intention is to run the scheme until at least 2050. The authority published a long-term pathway for the UK ETS in December 2023, outlining our intention to consult on extending the scheme beyond its current date of 2030. We will consult on that and on any cap for future scheme phases in due course.
We are committed to being attentive to views and to bringing forward changes as required to ensure the scheme operates efficiently and achieves emissions reductions. It is an integral part of our journey on our path to decarbonisation coupled with industrial growth. I commend the order to the Committee.
Question put and agreed to.
Oral Answers to Questions
Kerry McCarthy Excerpts(1 month, 4 weeks ago)
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Johanna Baxter (Paisley and Renfrewshire South) (Lab)
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Kerry McCarthy)
We know that nature-based solutions have a key role to play in climate mitigation and keeping to 1.5°C at home and abroad. I have met the Minister for Nature, my hon. Friend the Member for Coventry East (Mary Creagh), and the Government have appointed two special representatives for climate and for nature, who will be working closely together too.
Dr Savage
The climate and nature crises are now recognised as inextricably interlinked—we cannot resolve the climate crisis without addressing the nature crisis—but that is not recognised in current legislation. Will the Minister meet me to discuss my Climate and Nature Bill and its potential to achieve the Government’s stated goal of integrating UK climate and biodiversity policy?
Kerry McCarthy
We are not convinced that the Bill is necessary as a well-developed legislative framework with legally binding targets is already in place, including, of course, the Climate Change Act 2008 and the carbon budgets. However, I appreciate the action on both climate and nature and the hon. Member’s commitment to both. I believe that our offices are already trying to find a date for us to meet.
Johanna Baxter
My constituency of Paisley and Renfrewshire South is home to the beautiful RSPB Lochwinnoch nature reserve. In addition to supporting our biodiversity, the reserve serves as a natural carbon sink. Globally, wetlands hold approximately 20% to 30% of the Earth’s soil carbon despite covering only 5% of the land surface. Will the Minister outline how the Department is integrating wetland and peatland restoration into its strategy for meeting the UK’s carbon capture and storage targets?
Kerry McCarthy
I am aware of the excellent work being carried out at Lochwinnoch. We know that protecting and restoring our peatlands is essential for tackling the climate crisis. We are committed to restoring approximately 280,000 hectares of peatland. We are also looking at innovative ways of getting funding into those nature-based solutions so that they can thrive.
Kenneth Stevenson (Airdrie and Shotts) (Lab)
Cleve Hill Solar Park
Kerry McCarthy Excerpts(2 months ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Kerry McCarthy)
It is always a pleasure to see you in the Chair, Dr Huq. I begin by congratulating the hon. Member for Faversham and Mid Kent (Helen Whately) on securing the debate and giving us a chance to discuss an important topic, not just for her constituents. I hope she will understand, however, that due to the quasi-judicial role that my right hon. Friend the Secretary of State plays in taking decisions on applications for development consent for energy infrastructure proposals, it would not be appropriate for me to comment on matters related to any specific proposals.
Although the development consent order for Cleve Hill solar park was granted by the previous Government in 2020, as she said, the Department for Energy Security and Net Zero may still be involved in any proceedings relating to the implementation of that order. As a result, I cannot comment today on the details of that project. The reasons for the decision and details of supporting plans are available on the Planning Inspectorate’s website, as the hon. Lady knows. I am afraid I cannot elaborate or speculate on that published material.
The hon. Member spoke eloquently about the importance of the site to her constituents—the views, the biodiversity and the birds, and the importance of wetlands. My colleagues in the Department for Environment, Food and Rural Affairs and I are working closely on nature-based solutions to climate change, and wetlands play an important role. I am also glad that the hon. Member acknowledged the importance of reaching our net zero objectives, with that mission for clean power, by 2030.
As I said, I cannot speak specifically about Cleve Hill, but I hope I can reassure her by speaking in general terms about Government policy. First, it ensures that all local impacts are considered in the planning process. Secondly, it makes a steadfast commitment that those who host clean-energy infrastructure should benefit from it. In order to achieve our goal of clean power by 2030, we will need to deploy various renewable energy sources. According to the recent National Energy System Operator clean power pathway report, we need to increase solar deployment from 15 GW to 47 GW. Along with onshore wind, solar is the cheapest clean power option available to us right now, making it an essential part of the UK’s energy mix. Without a substantial increase in solar deployment, the clean power mission becomes very difficult.
That is why my right hon. Friend the Secretary of State relaunched the solar taskforce earlier this year. It is also the reason that the Under-Secretary of State for Energy Security and Net Zero, my hon. Friend the Member for Rutherglen (Michael Shanks), who has this portfolio, cannot reply to the debate, because he is at a meeting of the solar taskforce. The taskforce brings together the industry and Government to discuss the actions needed to rapidly increase the deployment of solar panels on rooftops and in solar farms, and it will publish its recommendations in a solar road map very soon.
We should never lose sight of the core motivation behind our clean energy mission. Clean power generated here in Britain will reduce our dependence on volatile imported fossil fuels. It will provide lower bills in the long term and create thousands of highly skilled future-proofed jobs across the country. Delivering those benefits for the British people requires the development of new infrastructure. We accept that a top priority should be the deployment of solar on rooftops. That is why we are bringing forward new standards to ensure that all newly built houses and commercial buildings are fit for a net zero future. We will encourage the installation of solar panels on those buildings where appropriate.
But we know that our mission will require more ground-mounted solar too, and decisive reform to the planning system is urgently needed to support that. As the Prime Minister said last week, we will streamline the approval process in the forthcoming planning and infrastructure Bill. As part of the new plan for change, in which the Prime Minister set out the milestones in how the Government will deliver on our national missions, we will work towards the new target of 150 major infrastructure projects, including energy projects. That will mean tripling the number of decisions on national infrastructure, compared with the previous Parliament. We recognise the impact that such new energy projects can have on local communities and the environment. The Government are committed to striking the right balance between those considerations when delivering the clean power mission.
All proposed solar projects are subject to a robust planning process. Most projects are assessed by local planning authorities themselves, and those assessments are governed by the national planning policy framework, which encourages developers to engage with local communities before submitting an application. Local planning authorities will continue to seek representations from local communities and will continue to weigh local considerations against the need for renewable energy.
As the hon. Member for Faversham and Mid Kent said, larger projects such as the Cleve Hill solar park are decided centrally through the nationally significant infrastructure regime. That is a rigorous process. Developers whose projects qualify for the assessment must complete considerable community engagement before any decision is taken, and decision makers take into account its level and quality.
We recognise that new infrastructure can have an impact on the local community, and the planning system is designed to take account of the social, cultural, economic and environmental effects. Indeed, all large-scale solar developers are legally obliged to complete an environmental statement as part of any application for development consent. The hon. Members for Faversham and Mid Kent and for Strangford (Jim Shannon) raised disruption, which will be considered as part of the environmental statement.
The statement requires the developer to consider the potential environmental impact of a project, not just during the construction phase but during its life. It spans pre-development, construction and operation, all the way to decommissioning. The statement is a helpful tool that allows planning authorities to review any significant effects on biodiversity or the environment. I know the hon. Member for Faversham and Mid Kent is committed to improving the natural environment, and she spoke eloquently about her vision for that part of her constituency. There is some evidence to suggest that solar can improve biodiversity when installed and managed appropriately. The environmental management plan for Cleve Hill includes commitments to build a habitat management area of 56 hectares, which is predicted to increase on-site biodiversity by 65%.
I want to touch briefly on the use of agricultural land for solar. I hope I can reassure the hon. Lady that the Government recognise that food security is linked to national security, and that we will always back British farming. In previous years, we worked together on the all-party parliamentary group for fruit and vegetable farmers, which she chaired, so I gained some knowledge of the importance she attaches to standing up for farmers in her constituency.
Planning guidance makes it clear that developers should situate their projects on brownfield or industrial sites whenever possible. Where the development of agricultural land is shown to be necessary, developers are steered away from using the best and most versatile land, and we have no plans to change that. We do not believe, however, that the accelerated deployment of solar power poses a threat to food security. The total area of land devoted to solar farms nationally is very small. Even in the most ambitious scenarios, less than 1% of the UK’s agricultural land would be occupied by solar farms. My colleagues at the Department for Environment, Food and Rural Affairs are developing a land use framework, which will consider issues such as food security and how we can expand nature-rich habitats. The framework will work hand in hand with the strategic spatial energy plan.
May I just ask, Dr Huq, will the hon. Member for Faversham and Mid Kent be given a minute to respond?
Kerry McCarthy
Okay.
I come on to the issue of battery safety. I note that the hon. Member for Faversham and Mid Kent said that members were given some reassurance at the community meeting she held but still have significant concerns about fire safety. As she knows, batteries are regulated by the Health and Safety Executive. The framework requires battery designers, installers and operators to take the necessary measures to ensure health and safety through all stages of the system’s construction, operation and decommissioning.
The Government have updated the planning practice guidance to encourage battery storage developers to engage with local fire and rescue services and for local planning authorities to refer to guidance published by the National Fire Chiefs Council, which I note the hon. Lady said was represented at the meeting she held. The health and safety framework for batteries is kept under review to respond to changing circumstances. In 2018, the Department for Business, Energy and Industrial Strategy set up an industry-led electricity storage health and safety governance group, whose members include the National Fire Chiefs Council, the Environment Agency and DEFRA. That group is responsible for ensuring that an appropriate, robust and future-proofed health and safety framework is sustained. My Department worked with it to develop and publish health and safety guidance for grid-scale batteries that aims to improve the understanding of existing health and safety standards, which the battery storage industry should apply to its own processes.
The hon. Member for Faversham and Mid Kent mentioned DEFRA. As I understand, DEFRA is considering further options, including environmental permitting, for managing the environmental and public health risks from fire at grid-scale sites. I am happy to speak to my colleague in DEFRA who is responsible for that and get back to the hon. Lady on her specific question—she will appreciate that I cannot answer on their behalf today. If her constituents require any further reassurances on the safety issue, my hon. Friend the Member for Ashford (Sojan Joseph) will be happy to follow up on that in writing.
In the few minutes I have left, I turn to community benefits. We absolutely understand that we need to fully engage with communities and bring them along with us on our clean power mission, which includes public engagement and consultation. The hon. Member for Faversham and Mid Kent asked specifically about community benefits. We know that communities are providing a service to the country as a whole when they host clean energy infrastructure, so there need to be benefits for them. Sometimes there is a direct benefit where the infrastructure is owned by the community—the benefit goes straight back into the community, whether it is through solar panels on a village hall or one of many other examples—but we are considering how best to deliver those community benefits to host communities. That includes looking at existing examples in Europe and further afield to see what has worked well.
A wide variety of community benefits can be delivered, including funding for local projects, investment in the local area, direct benefits to individuals and, as I said, opportunities for community ownership. Great British Energy will build on existing community energy schemes, helping communities to unlock opportunities through the local power plan. In the hon. Lady’s constituency, up to 1,400 homes are powered by Orchard Community Energy, which is a community-owned solar farm near Sittingbourne that provides power to Swale and Medway. That puts communities at the heart of the energy transition and gives them a stake in the transition to net zero as owners and partners in clean energy projects.
As I said, the Secretary of State for Energy Security and Net Zero, my right hon. Friend the Member for Doncaster North, is today at the meeting of the solar taskforce, which brings together industry and Government. It is considering the question of how a community can benefit from the infrastructure that is hosted on their patch, and its recommendations will be published in the solar road map.
To conclude, the Government are committed to considering the interests of local communities affected by proposed energy infrastructure. I thank the hon. Member for Faversham and Mid Kent for securing the debate and for giving me the opportunity to set out the Government’s vision. We will work to balance the local impact of new projects with the delivery of our clean power mission. The renewable energy transition will always be done through co-operation rather than coercion, ensuring that all parties benefit on our journey to net zero.
Question put and agreed to.
Draft Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2024
Kerry McCarthy Excerpts(2 months, 3 weeks ago)
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Sir Roger Gale (in the Chair)
Members may remove their jackets if they wish to, if they are hardy or foolhardy enough.
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Kerry McCarthy)
I beg to move,
That the Committee has considered the draft Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2024.
As always, it is a pleasure to see you in the Chair, Sir Roger. The draft order was laid before Parliament on 22 October 2024. To give a bit of background, the UK emissions trading scheme was established under the Climate Change Act 2008 by the Greenhouse Gas Emissions Trading Scheme Order 2020, as a UK-wide greenhouse gas emissions trading scheme contributing to the UK’s emissions-reduction targets and net zero goal. The scheme is run by the UK ETS Authority, a joint body comprising the UK Government and the devolved Governments. Our aim is to be predictable and responsible guardians of the scheme and its markets.
We have introduced this statutory instrument to enable several important changes and improvements to the scheme. It resets the UK ETS cap to be in line with the top of the net zero-consistent range. The cap sets a limit on how many allowances can be created over the trading period, which runs from 2021 to 2030, and in each year. That level reduces over time to drive down total emissions. When the scheme was established, the cap for the legislated period of the UK ETS—from 2021 to 2030—was set at 5% below the UK’s expected notional share of the EU ETS cap for the same period. However, that was not consistent with the UK’s net zero trajectory for the traded sector. This statutory instrument brings the overall UK ETS cap in line with our net zero target and carbon budgets under the Climate Change Act.
The statutory instrument also reduces the industry cap, which is the total number of allowances that can be made available to existing installations for free if no cross-sectoral correction factor mitigation is applied. The SI reduces the absolute level of the industry cap while increasing its proportion of the overall cap. While the share of allowances set aside for this purpose will increase from 37% to 40%, the reduction in the overall UK ETS cap means that the industry cap will fall. That will help to mitigate the risk of carbon leakage across participating sectors while maintaining an effective incentive to decarbonise.
The statutory instrument creates a flexible reserve of allowances for maintaining market stability and sufficient carbon-leakage mitigation. In addition to allowances specifically created for the reserve, unallocated free allowances from the industry cap and designated free allowances that are returned by operators due to changes in participant eligibility or activity level reductions will also stock the flexible reserve. The flexible reserve can be used to increase the allowance supply for market-stability purposes if the cost-containment mechanism is triggered. The flexible reserve can also mitigate the application of the CSCF through a uniform reduction to all eligible existing participants’ free allocation if the eligibility for free allocation exceeds the industry cap.
I will move on to venting and flaring. Under current legislation, carbon dioxide released through flaring in the upstream oil and gas sector is included in the UK ETS, as it is within the scope of the regulated activity of combustion. This SI introduces CO2 that is released through venting in the upstream oil and gas sector into the scope of the UK ETS for installations already covered by the scheme. That means that such emissions will also be subject to a carbon price.
The controlled processes of venting and flaring can sometimes be essential for safety purposes. They are also used in more routine situations where the oil and gas hydrocarbons are unable to be used, exported, or reinjected without CO2 being removed. The removed CO2 can then be released in the process of flaring, when waste gas, including the stripped-out CO2 as well as combustible elements, is ignited, or in the process of venting, when unignited gas is released through a vent. The legislation will remove a perverse incentive whereby operators could routinely vent gas that contains carbon dioxide without it being subject to a carbon price, even though it would, if flared, constitute reportable emissions for the purpose of the scheme.
I will now move on to Northern Ireland. In line with the original policy intent, the statutory instrument extends legislative amendments made by the Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2023 to Northern Ireland. The amendments include capping the aviation free allocation at 100% of emissions, clarifying the treatment of carbon capture and storage plants, and freeing the allocation rules for electricity generation.
In 2022, a memorandum of understanding between the UK and Swiss Governments was signed, setting out the intention to include flights from the UK to Switzerland in the UK ETS. Such flights were brought into the UK ETS scope on 1 January 2023 by the Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 3) Order 2022. The statutory instrument extends the scope to cover flights that depart from an aerodrome in Northern Ireland and arrive at an aerodrome in Switzerland.
Scheme regulators are responsible for enforcing compliance, including operational functions such as the issuing of penalties. The statutory instrument makes a number of amendments to the levels of scheme penalties to ensure the consistency and proportionality of enforcement for all operators. It also introduces a new deficit notice, with an associated penalty, to strengthen the enforcement of the fundamental scheme obligation to surrender allowances equal to an operator’s annual emissions.
Finally, the statutory instrument makes several corrections and clarifications to existing legislation. The changes follow appropriate and comprehensive consultation with stakeholders. In the “Developing the UK Emissions Trading Scheme” consultation in 2022, the UK ETS Authority considered proposals on changes to the rules for sectors covered by the UK ETS to ensure that more greenhouse gas emissions were covered by the scheme, along with changes to the cap.
The authority response to the consultation was published in two parts, in August 2022 and July 2023. A majority of respondents agreed with the UK ETS Authority proposals on creating a flexible share reserve of allowances, on bringing venting in the upstream oil and gas sector into the scope of the ETS, and on the addition of a new penalty and deficit notice. Several respondents expressed concern regarding the reduction of the cap and the changes to the industry cap; an assessment of these responses informed the decision to set the cap at the top of the net zero-consistent range.
Between 23 February 2024 and 8 March 2024, the UK ETS Authority ran a targeted consultation on the minor penalty amendments. The responses to this consultation were in broad agreement with the proposals, or noted that they were not affected by them. The authority response has been published in advance of the laying of this statutory instrument.
The changes in the draft order will deliver on commitments made by the UK ETS Authority and improve the operation of the scheme. The alterations to the UK emissions trading scheme will support its role as a key pillar of the UK’s climate policy. They show that we will take action to extend and improve the scheme where necessary. I commend the draft order to the Committee.
Kerry McCarthy
I thank the shadow Minister for his contribution. As I said, the UK emissions trading scheme is a key pillar of the UK’s net zero policy regime. I am slightly surprised by his decision not to support the SI —perhaps not from a political point of view, but because I am pretty sure that if he was still in the Department occupying the post I am in now, he would have supported the measures. As I said, they are just about ensuring that the scheme retains its credibility and moves forward and adapts to circumstances.
With the Northern Ireland Assembly established, it is absolutely common sense that Northern Ireland should be treated in the same way with regard to venting and flaring—
Kerry McCarthy
I am glad the shadow Minister agrees on that. He asked a specific question about the pricing. As the market conveners, we cannot comment on the price. I will leave it at that, other than to say that the market determines the price of the allowances, and opting for the top of the net zero-consistent range means that more allowances will be available while we can still deliver against our net zero trajectory.
The shadow Minister also brought up some broader issues about carbon leakage. Again, there will be plenty of opportunities to debate the issue, but we are absolutely committed to providing certainty to industry about the steps we will take to protect against carbon leakage. That is why in July 2023 the overall level of free allocations that will be provided from 2026 were set out. We have since consulted on how best to target those free allocations from the next allocation period, to ensure the smooth functioning of the market and the continued protection of at-risk sectors.
As the shadow Minister will know, the UK Government have announced that from 2027 a UK carbon border adjustment mechanism will be in place for certain at-risk sectors, and the authority has consulted on aligning free allocation charges with the start of that CBAM. I assure him that the UK ETS Authority will work the UK Government to ensure that a CBAM will work cohesively with the UK ETS, including with free allowances. No doubt that will be revisited—perhaps in this very room —over the coming months.
The draft order is a key part of our net zero policy regime. We believe that the maintenance of a strong UK ETS will play a key role in making Britain a clean energy superpower and in delivering our mission of having secure and clean electricity by 2030. By driving green investment as part of our industrial strategy, the UK ETS will also help to deliver a just transition, thereby growing the UK’s economy and securing good jobs for people throughout the country.
As I said, the changes proposed in the SI will bring in a net zero-consistent cap. I remind the shadow Minister that it was his Government who legislated for net zero, and at one point they were proud of having done that. The SI will also alter the industry cap and expand the scope of the ETS to the venting of CO2 in the upstream oil and gas sector. The change follows a comprehensive consultation on developing the UK ETS that was carried out in 2022. The proposals deliver on commitments made in the response to that consultation in July 2023, when the UK ETS Authority set out a comprehensive package of reforms to the scheme. The proposals have the long-standing support of the four Governments of the UK.
We, as part of the UK ETS Authority with the devolved Governments, are determined to manage and improve the scheme effectively. Our aim is to be predictable and responsible guardians of the scheme and its markets. We are committed to being attentive to views and to carrying forward changes as required to ensure that the scheme operates efficiently to achieve emissions reductions. The changes to the UK emissions trading scheme in the SI will support the scheme’s role as a cornerstone of the UK’s climate and net zero policy. I therefore commend the draft order to the Committee.
Question put.
Oral Answers to Questions
Kerry McCarthy Excerpts(3 months ago)
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Harpreet Uppal (Huddersfield) (Lab)
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Kerry McCarthy)
Today, the Secretary of State for Energy Security and Net Zero, my right hon. Friend the Member for Doncaster North (Ed Miliband), is already at COP29 in Baku, where he will be leading climate negotiations. He sends his apologies. The Prime Minister is also at COP29 and will be speaking at the global leaders summit, announcing our ambitious 1.5°C-aligned nationally determined contribution and showing that the UK is truly back on the international stage. A written statement will also be made later today.
Harpreet Uppal
I welcome the leadership the Government are showing, in particular on NDCs, as my hon. Friend mentions. The news that this year is likely to be the hottest on record across the world is deeply concerning and reminds us that climate breakdown is a global challenge that we must all face. Does the Minister agree that we must have ambitious plans at home, so that we can go to COP and challenge other world leaders to do more to tackle climate change?
Kerry McCarthy
I completely agree with my hon. Friend. There is a direct link between taking action to protect the British people at home and leading on climate action abroad. If we want to protect our country from future energy shocks and the runaway cost of climate chaos, we must work with other countries to protect our planet. We now have the credibility to do that because of the action we have taken since entering government, as was apparent when I attended pre-COP meetings in Baku last month and as the Prime Minister will demonstrate in Baku today.
Carla Denyer (Bristol Central) (Green)
I warmly welcome the new Government target to cut carbon emissions, and I know the Secretary of State and the Minister thoroughly understand the importance of joined-up action on climate justice. Can she tell us whether every single Government policy across every Government Department will now be assessed to check whether it is compatible with 1.5°? What steps are the Government taking to ensure the global south is properly compensated for climate loss and damage?
Kerry McCarthy
On the second point first, at this COP we want to ensure that we fully operationalise the loss and damage fund, so we then start getting money into it and channelling money to developing countries. We also want to do that through the new collective quantified goal, which we hope will be ambitious and multi-layered.
On the question of looking at our policies across the piece, that is very much my job. We will be responding soon to the Committee on Climate Change’s report, which the hon. Lady will know was quite critical of the previous Government’s action. We will be setting out our plan to implement the NDC and looking at the next carbon budget. All those things require effort share across Departments to ensure we actually meet them. It is about not just setting ambitious targets, but making sure that, unlike the previous Government, we have a strategy to get us there.
Several hon. Members rose—
Mr Toby Perkins (Chesterfield) (Lab)
I am ready to go, and so is the Prime Minister—it is great to see him in Baku showing leadership. The recent Cali conference was a disappointment. Ultimately, nations were not able to reach agreement. Alongside the positive steps the UK Government are taking, what conversations are we having with international partners to recognise the necessity of an agreement that brings all western nations together in showing equal ambition?
Kerry McCarthy
I thank my hon. Friend for that question. I know he was at Cali. There was some progress on such issues as digital sequence information, but more needs to be done. We are very seized of the need to join up action on the nature and climate crisis. When I head out to COP29 tomorrow, Members will hopefully hear more from us on our efforts to protect forests and on the support we are giving to countries at risk of deforestation. We are also looking at nature-based solutions to climate change. The nature Minister—the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Coventry East (Mary Creagh)—will be out there as well, and we will have more to say, but I entirely agree with my hon. Friend the Member for Chesterfield (Mr Perkins) that we cannot deal with one crisis in isolation from the other.
Jess Brown-Fuller (Chichester) (LD)
For the UK to be an international leader on climate change we need to bring the business community with us. The Summer Berry Company in my constituency recently invested £8 million in ensuring it is carbon neutral, but it was then quoted a further £3 million to be able to feed its excess energy into the grid. What is the Minister doing to make additional grid connections affordable and accessible for green businesses?
Kerry McCarthy
The energy Minister—the Under-Secretary of State for Energy Security and Net Zero, my hon. Friend the Member for Rutherglen (Michael Shanks)—is very much involved with that issue. We have also set up the energy superpower mission board, headed by Chris Stark. I had a conversation with him yesterday about what we can do to ensure grid capacity and grid connections in the right places. If the hon. Lady has a specific issue to raise and would like to write to me, I will make sure it is passed on to him.
Joy Morrissey (Beaconsfield) (Con)
When I asked the Secretary of State about the appointment of Rachel Kyte as his international climate envoy during our last questions session, he failed to say whether Quadrature Capital’s £4 million donation to the Labour party had been declared to the Department before her appointment, and I have still not received a reply to my letter of 17 October. Will the Minister tell me whether the Secretary of State declared those interests to the Department before Rachel Kyte’s appointment, and whether Ministers have ever met directors of Quadrature Capital or Quadrature Climate Foundation?
Kerry McCarthy
I am sure that the shadow Minister will receive a reply to her letter in due course, but I can tell her that Rachel Kyte is extremely well respected, and that her appointment as our special representative has been welcomed across the board.
Catherine Atkinson (Derby North) (Lab)
Jo White (Bassetlaw) (Lab)
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Kerry McCarthy)
We agree that fusion could be a globally transformative green energy solution. The UK Government’s fusion programme continues to lead the world in the development of fusion energy, and our ambition is to continue to do so.
Jo White
Two weeks ago, the Budget announcement that the first fusion power plant will be built in Bassetlaw was welcome news. Can the Minister provide greater detail on this commitment, alongside the funding support being made available for the next financial year?
Kerry McCarthy
My hon. Friend is a great champion for her constituency, and I was pleased to meet her to talk about this issue and to hear her Westminster Hall debate. I look forward to visiting her constituency later this month to see the fusion café and to visit West Burton, the site of the STEP project, after which I hope to be able to share more detail on how we will support fusion.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
Dounreay, in my constituency, was the site of the UK’s first fission reactor. Today, we have a highly skilled workforce, a licensed site and a local population that warmly supports the industry. Will the Government seriously consider involving Dounreay as we bring fusion to its wonderful fruition?
Kerry McCarthy
I think fusion has huge potential, and so many companies stand to benefit. It is not just about the ultimate goal of fusion energy; it is also about all the technological advances we will discover. I have spoken to fusion companies which are, for example, finding uses for cancer treatment. I am very interested to hear what the hon. Gentleman has to say about the possibilities of fusion in his constituency. We want to see this proceed. If he drops me a line, I will be happy to explore the opportunities in his patch.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
We have spoken a lot about the Conservative party’s record in government, and I am very proud of our record on fusion. We launched the Fusion Futures programme to provide up to £55 million of funding to train more than 2,000 people, we became the first country in the world to regulate fusion as a distinct energy technology, and we launched the process to build the spherical tokamak for energy production—I cannot say that as quickly—at what will be the first fusion power plant at West Burton in Nottinghamshire. [Hon. Members: “Hear, hear.”] Members are very welcome. Will the Minister confirm that it is still the Government’s intention, as it was ours, to have fusion power on the grid by 2040?
Kerry McCarthy
As I mentioned, I am very much looking forward to visiting West Burton soon. The Budget announced significant support for fusion energy in 2025-26 and, yes, we remain as ambitious as the previous Government for the potential of fusion energy.
Andrew Bowie
Having confirmed that 2040 is still the ambition, which does the Minister think will come first: fusion on the grid or the final investment decision on Sizewell C?
Kerry McCarthy
The final investment decision on Sizewell C, as I understand it, is expected soon. We will hear more about support for that in the next spending review. Fusion energy has huge potential, not just in the long term but from the innovation we are already seeing in that sphere, which I very much welcome.
Seamus Logan (Aberdeenshire North and Moray East) (SNP)
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Kerry McCarthy)
I think the shadow Secretary of State needs to seek a debate if she wants to elaborate on these issues. Having attended COP last year as part of a cross-party delegation, I found it incredibly depressing to see the way the UK was received. It is really important that we are stepping up and showing global ambition. Reaching net zero in this country and getting to clean power by 2030 is a massive opportunity, not a cost.
Melanie Ward (Cowdenbeath and Kirkcaldy) (Lab)
Pippa Heylings (South Cambridgeshire) (LD)
The US President-elect, Donald Trump, has repeatedly called climate change “a hoax”. I share the concerns of young people in South Cambridgeshire that these views represent a threat to our efforts to tackle climate change. The global community is meeting right now at the international climate summit in Azerbaijan—COP29. Does the Minister believe and share with me the view that the UK must rebuild its leadership by getting back on track with our climate and nature targets?
Kerry McCarthy
I agree that it is now more important than ever that the UK shows global leadership, and that is exactly what the Prime Minister, the Foreign Secretary and the Energy Secretary are doing with their presence at COP today—I will be heading out there tomorrow. I am very keen to work with the hon. Lady cross-party on these issues. Working with young people is very important as well.
Steve Race (Exeter) (Lab)
Kerry McCarthy
As I have said, showing domestic leadership gives us the credibility to show international leadership too. We will be doing both.
Lee Anderson (Ashfield) (Reform)
Adam Thompson (Erewash) (Lab)
Kerry McCarthy
I got to see the JET project when I visited Culham. There is huge potential for a cluster there. Many more companies are being attracted to that sector. My hon. Friend is right that we need to maximise the skills that are there, but I am confident, having spoken to companies that have been attracted to Culham, and having spoken to international companies too, that we will continue to do so.
Helen Morgan (North Shropshire) (LD)
Many homes in my constituency are off grid, which means that their owners have to fill up the tank at the beginning of winter to keep warm. The pensioners who have lost the winter fuel payment are struggling with that up-front amount. Will the Minister review the level at which the winter fuel payment is removed, because the most vulnerable are struggling?
Joe Powell (Kensington and Bayswater) (Lab)
Kerry McCarthy
I understand that the Foreign, Commonwealth and Development Minister has raised the case with the Azerbaijani Foreign Minister and urged allowing Dr Ibadoghlu to travel overseas for specialist medical care if required. We will continue to use our diplomatic channels to raise our concerns about the protection of freedom and human rights in Azerbaijan, including for my hon. Friend’s constituent.
Gareth Davies (Grantham and Bourne) (Con)
Conservative Members will never stop holding the Government to account for their pre-election promise to cut energy bills by £300. Have civil service officials conducted any modelling whatsoever that can legitimise that figure?
Kerry McCarthy
We hope that, at COP29 in the coming weeks, we can settle on a figure for a new ambitious goal, which will not just bring in finance from donor countries, but mobilise private sector finance. We will use all the mechanisms we can to ensure that we get money to developing countries as quickly as possible. As my hon. Friend said, it is more urgent than ever to act.
Mr Speaker
Order. I have got to get all Members in, and Ministers have got to help me and work with me.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
My constituent Konnie Huq, with Arts Council and Lottery funding, has compiled a kids’ climate guide, with Jamie Oliver among the contributors. Will Ministers join forces with her to get it out there, preferably to every school in the country, because we have got to start young?
Kerry McCarthy
I would be more than happy to meet with my hon. Friend and her constituent, who sounds rather familiar, to discuss what more we can do to support climate education among children, including in our schools.
Patrick Spencer (Central Suffolk and North Ipswich) (Con)
I met with National Grid yesterday and communicated my concerns about the Norwich to Tilbury line but we remained constructive and talked about community benefit schemes. Unfortunately, it told me that the Government were dragging their feet on defining community benefit schemes. Can the Minister update the House on when they will bring forward guidance, and can he promise that a community benefit scheme is a real, positive economic benefit for my residents who are impacted by the pylons?
Renewable Energy: Cornwall
Kerry McCarthy Excerpts(3 months, 3 weeks ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Kerry McCarthy)
It is always a pleasure to see you in the Chair, Ms Vaz. I thank my hon. Friend the Member for Truro and Falmouth (Jayne Kirkham) for securing this debate and the other Members for their contributions. It is good to see a clean sweep of new MPs in Cornwall, although my hon. Friend the Member for St Ives (Andrew George) is a familiar face from days gone by. The passion of hon. Members for the region shines through, and all six MPs are brilliant advocates for Cornwall’s sheer potential.
I want to note the recent letter from the four Labour MPs in Cornwall to the Minister for Industry, the hon. Member for Croydon West (Sarah Jones), concerning the need for investment in the county. As the hon. Member for Truro and Falmouth mentioned, the Minister for Industry and the Secretary of State for Business and Trade have visited the region recently. I know that both are aware of the county’s incredible potential for economic and industrial growth. I understand that the four MPs will be meeting my colleague, the Minister for Industry, very soon to discuss the issues raised in the letter.
My hon. Friend the Member for Truro and Falmouth will be aware that one of the Prime Minister’s five missions for national renewal is making Britain a clean energy superpower, including delivering clean power by 2030 and accelerating to net zero. As has been mentioned, we have wasted no time in getting started. Within our first 100 days in government, we lifted the onshore wind ban in England, consented to more nationally significant solar projects than had been consented to in the past 14 years, and delivered the most successful renewables auction in British history. Now we are busy setting up Great British Energy, which will drive clean energy deployment, creating jobs, boosting energy independence and ensuring that UK taxpayers, bill payers and communities reap the benefits of clean, secure, home-grown energy. As we heard, Cornwall has a vital role to play in that clean energy mission, and indeed our mission to secure economic growth.
Cornwall may be primarily known as a tourist destination these days, but it has a proud industrial past. It was once known as the mining capital of the world, with tin mining and clay, and was where Richard Trevithick invented the high-pressured steam engine. As much as tourism is welcomed in Cornwall, we know that it puts pressure on the local infrastructure and economy, particularly the housing supply, which then has a knock-on effect on public services in the area.
From meeting local businesses in Cornwall when I went down with the now Chief Secretary to the Treasury last year, I know that there is excitement about the opportunities offered by Cornwall’s huge industrial potential from wind, geothermal, lithium and more. Great work is already being done through the continuing development of a local area energy plan in Cornwall and Isles of Scilly, and the Government are doing what they can to support the region too. Last September, three geothermal projects, all located in Cornwall, were successful in our contracts for difference auction for the first time, with contracts totalling 12 MW of generation. As part of my visit to Cornwall last year, I also went to see some of the exciting work that the Eden Project is doing on geothermal.
Critical minerals have been mentioned as an important area for future industrial development. Cornwall has some of the largest critical mineral deposits, with research showing that the county alone could meet more than half the UK’s 2030 demand for lithium, which is an essential part of the electric vehicle battery supply chain. As we transition to a renewables-based economy, the demand for critical minerals will only grow, and I note the concerns that have been raised about current sourcing and the need to diversify supply. Indeed, Cornwall is home to at least three of the 18 critical minerals, and I hope that local MPs, in the meeting with my hon. Friend the Minister for Industry, can further discuss how we can take advantage of all that Cornwall has to offer on that front.
The county is perfectly placed to take advantage because of its strong mining heritage—I was interested to hear what my hon. Friend the Member for Truro and Falmouth said about the potential for reopening tin mines—as well as a growing supply chain, skilled workforce and supportive local government. It has the support of national Government too. In 2023, the UK Infrastructure Bank’s first equity deal was an equity investment of approximately £24 million to support Cornish Lithium in the development of the UK’s critical minerals supply chain.
One of the most exciting areas with huge potential is the floating offshore wind that my hon. Friend the Member for Truro and Falmouth talked about, which would enable turbines to be set up where the seabed is too deep for traditional fixed-bottom turbines. A new report from the floating offshore wind taskforce says that the UK’s floating wind industry will be able to support 97,000 jobs by 2050, contributing £47 billion to our economy, and we want Cornwall to have a proper stake in that via the Celtic sea.
I reassure Members present that we want to do all we can to support floating wind infrastructure and supply chains to develop the Celtic sea, to ensure that we get the floating wind pipeline built and bring jobs and growth to the area. As part of leasing round 5, the Crown Estate has launched a £10 million supply chain accelerator fund, focused on capturing some of the economic opportunities identified by the Celtic sea blueprint. A further £40 million has been earmarked, which could be deployed on further opportunities nationally.
More broadly speaking, Members present will know that last week, the Chancellor announced that the UK Infrastructure Bank is becoming the national wealth fund. Capitalised with £27.8 billion, it will have additional financial capacity and an enhanced risk budget, as well as an expanded remit beyond infrastructure in support of the Government’s industrial strategy. At least £5.8 billion of the national wealth fund’s capital will focus on priority sectors, including ports infrastructure, which I am sure my hon. Friend the Member for Truro and Falmouth will be pleased to hear.
Also last week, we published in a Green Paper our vision for a modern industrial strategy—Invest 2035. That is a credible 10-year plan to deliver the certainty and stability that businesses need to invest in high-growth sectors. It will help us create a pro-business environment and support high-potential clusters across the country. It will channel support to eight growth-driving sectors, including clean energy industries, and it will support those sectors to create high-quality, well paid jobs across the country, backed by employment rights fit for a modern economy.
If the plan is to be a success, it needs to be designed and implemented in lockstep with local and regional leaders. That is particularly important in places such as Cornwall, where we are looking at reindustrialisation to an extent, rather than building on current industrial clusters. We will explore how to build on existing place-based initiatives, how to create the best pro-business environment possible in city regions and high-potential clusters, and how to identify, select and intervene in industrial sites to make them magnets for globally mobile investment.
As I said, unlocking Cornwall’s potential is slightly different from going into other areas. That is absolutely key. Planning was mentioned; we must undo some of the blockages in the planning system. In relation to the grid, I very much remember, from when I visited, the knock-on impact of the fact that the transmission line goes only as far as Indian Queens. Until we create the grid infrastructure to cover the right areas and provide sufficient capacity, we cannot deliver on Cornwall’s potential. I think that one of the things holding the Eden Project back with its geothermal work was that it could not get that broader grid connection. The former chief executive of the Climate Change Committee, Chris Stark, has been put in charge of the mission board, and one of his key tasks is to bring in a more strategic approach to grid planning, speed it up and stop those blockages that mean that projects just do not get off the ground because they are stuck in that system.
Skills are also a very important issue, on which I hope we can have continued engagement. I think I am due to meet my hon. Friend the Member for Truro and Falmouth next week to follow up on some of these issues. I want to reassure her and colleagues that our doors are always open, in terms of discussing these things, and I will return to my original point that I share the excitement that Cornwall has huge potential. I think we want a more balanced economy—
Perran Moon
Looking at Cornwall, we have mentioned floating offshore wind, onshore wind, geothermal, tidal, solar, lithium, tin and manganese. Can the Minister name anywhere else in the UK where there is such a distillation of critical minerals and renewable energy opportunities? I am very excited by what she said about the cluster concept. Would not Cornwall be an ideal place to be an official cluster for renewables and critical minerals?
Kerry McCarthy
I am not sure that we quite have an official badge of cluster; we just have clusters, but yes, I think Cornwall is different in terms of the geography and the current use of the land and we have to approach it in a sensitive way, and one in which we might not have to approach areas that currently are perhaps transitioning from traditional fossil fuel industries to the clean industries of the future. This area is bringing something that, to an extent, is genuinely buried in the land—the industrial heritage there. It has so much potential. The question is how we can work across Departments, starting with my own, DESNZ, but also bringing in other Departments that can unlock that potential. I am sure that the brilliant advocates that there are in the region will all be pushing, and I really hope that we can see swift progress, because clean power by 2030 is such an important part of the Government’s mission and I do not think we can do it without Cornwall playing its part.
Question put and agreed to.
COP29: UK Priorities
Kerry McCarthy Excerpts(5 months ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Kerry McCarthy)
It is a pleasure to see you in the chair, Dr Huq, and even more of a pleasure to be standing here in the Minister’s place rather than on the Opposition Benches. I thank my hon. Friend the Member for Ealing Southall (Deirdre Costigan) for securing this important debate. She has certainly hit the ground running, as this is her second Westminster Hall debate—I think many new MPs are yet to discover where Westminster Hall actually is.
My hon. Friend was a powerful voice on climate issues as deputy leader of Ealing council and as its cabinet member for climate action. I acknowledge from the outset—it has been brought up by a few Members—that local government has a huge role to play in helping us to deliver net zero. As a Bristol MP I would be expected to say that; I have previously boasted about the many achievements of Bristol council on that front in this House. I will not do that today, but it is really important and we are looking at how we can make the local net zero forum work more effectively.
My hon. Friends the Members for Ealing Southall and for Manchester Rusholme (Afzal Khan) mentioned the impact on diaspora communities living here, including on constituents of Pakistani and Indian heritages. As a Bristol MP, we have a significant Somalian community and we know that the Horn of Africa has been absolutely ravaged by droughts and floods. We are dealing with the consequences of climate change here in the UK, but some people are also dealing with the consequences where their families and friends are based. I look forward to working with my hon. Friend the Member for Ealing Southall, and I am sure that she will continue to drive this agenda forward in Parliament. I also thank other Members for contributing to the debate and I will reply to some of their specific points later.
We are almost halfway through what is a decisive decade to halt climate change. As global surface temperatures continue to rise following 12 months of record-breaking warmth; as people around the world face the very real effects of this crisis with rising sea levels, nature loss and food insecurity; and as we see climate vulnerable countries devastated by extreme weather events, it is clear the decisions that we make now will define our planet’s tomorrow. If we want to leave future generations a world that is liveable and safe, we must stick to the Paris agreement and keep 1.5° of global warming within reach.
As we have heard, we are currently way off track. Last year’s global stocktake confirmed that emissions need to peak by next year and fall by 43% between 2019 and 2030 to reach the Paris goal, yet we are currently on course for global emissions to fall by just 2%. We need to increase climate finance at least fivefold, phase out coal seven times faster, and reduce forest loss at least twice as fast.
Here in the UK, the Climate Change Committee’s July report provided a wake-up call. It found that the UK is not even on course to hit our own 2030 target of 68% emissions reductions, and highlighted a slowing of pace and reversed or delayed key policies. I will not reply here in detail, but the Government’s response to that report is coming. We will address some of the specific criticisms about domestic policy, including on the new homes standard and energy efficiency. I hope that the hon. Member for North Herefordshire (Ellie Chowns) has heard enough about retrofitting and the warm homes agency in other forums. We will very much be announcing our policies across the piece.
Ellie Chowns
The whole point is that I have not heard anything about it. I have heard two speeches by the Secretary of State for Housing, Communities and Local Government and she has not mentioned it at all, which is why I asked that specific question. I look forward to a written response, but I urge the Government to take the point on board, because even the warm words are not there yet, let alone the action.
Kerry McCarthy
The hon. Member will know that a consultation on the new homes standard closed in March and we are looking to respond to that. Obviously, we want to make sure that our housing stock is as sustainable as possible, as well as setting up the warm homes agency to retrofit the 5 million homes that we have made a priority. I am pretty sure I have heard her mention retrofitting and get an answer from our Department, but I digress.
We very much need to up the pace. We are determined as a Labour Government to get us back on track by becoming climate leaders at home and abroad. That means decarbonising our power sector by 2030. We have already taken ambitious steps by lifting the onshore wind ban, giving the go-ahead to major solar proposals despite opposition in some quarters and setting up Great British Energy. We will also ensure that every large company has credible 1.5°-aligned plans for transition. As I said, we will be revealing more details as we move on, particularly in terms of setting out the next carbon budget, but also in our response to the CCC report.
Demonstrating strong leadership at home will give us the credibility that has been sadly lacking in recent years to demonstrate strong leadership abroad. Several Members, including my hon. Friend the Member for Stratford and Bow (Uma Kumaran) and the hon. Member for Bath (Wera Hobhouse), mentioned that we were in Dubai last year. It was quite a depressing experience, particularly when we met climate activists from climate vulnerable countries who pressed us on what the UK was doing—the country that led with the groundbreaking Climate Change Act 2008 and then raised the ambition to net zero—and whether it had completely abdicated its sense of international leadership. That was a constant refrain.
That is why in my first few weeks in this role, I spoke with key climate organisations about how we could restore the UK’s global leadership. I also held a roundtable with non-governmental organisations to discuss their priorities on climate action, as I will do again before Baku. In fact, I will be holding a series of roundtables with various stakeholder groups.
The Energy Secretary hosted the COP29 and COP30 presidencies, as well as Lord Sharma, who presided with distinction over COP26 in Glasgow, at a recent event in London to discuss how we can ramp up global ambitions. He then travelled to Brazil to strengthen ties ahead of next year’s Amazon COP, reflecting that this is a sequence. It is not just about what happens in Baku; we are already looking ahead to COP30 as well.
As we prepare to head to Azerbaijan this autumn, it is worth reflecting on the progress that has been made by the UK delegation in recent years. I make it clear that, after a couple of months in the Department, I have no criticism of the civil servants. They are incredibly dedicated and hard-working, and it is down to them that a lot of what I am about to mention has got over the line, regardless of a lack of political direction.
In Glasgow, we saw the proportion of global GDP committed to net zero go from 30% to more than 90%. In Sharm El Sheikh, we agreed a landmark fund to support those most vulnerable to the effects of climate change. Last year in Dubai, we saw real progress on the pledges made in previous years. We welcomed 13 new members to the Powering Past Coal Alliance, including the USA and the UAE, meaning that 180 Governments, businesses and organisations have now committed to phasing out unabated coal power.
We were one of 123 countries to support the global pledge to triple renewable energy and double energy efficiency by 2030. We expanded the breakthrough agenda, which is our clean technology accelerator. We announced £1.6 billion of new international climate finance projects. We agreed half a billion pounds to protect forests and the rural communities depending on them. We committed £50 million for loss and damage to help developing countries to deal with the impact of climate change, and we signed an international green public procurement pledge to boost the use of green steel, cement and concrete.
We are absolutely determined to build on those successes in Baku, so the Energy Secretary will be breaking with recent tradition and leading the delegation himself, demonstrating the importance we attach to international negotiations at this critical time. I will be accompanying him, and we will hear more in due course about whether other Government Members will be coming with us.
Going into this COP, we have three priorities. The first is increasing finance. COP29 presents the first opportunity in 15 years to agree a new post-2025 finance goal. It is critical that the new collective quantified goal addresses the needs and priorities of developing countries, and we stand ready to work with Azerbaijan and its COP29 presidency to make that happen. As I said, meetings have already been taking place with them.
The second priority is raising ambitions to speed up the global net zero transition. In particular, we want to use COP29 to build momentum for the new nationally determined contributions, which are due by February 2025. We have already started planning our next NDC and we will do everything we can to encourage partners to be ambitious and wide-ranging with theirs. We will also develop a clean power alliance to bring together a coalition of countries at the cutting edge of ambition. Every country must show domestic action to contribute to the critical targets agreed last year on energy, methane, forests and more.
Thirdly, we must deliver on existing commitments and continue to support people on the frontline of the climate crisis, championing their voices through initiatives such as the climate and development ministerial, which places developing countries at the heart of work to improve access to finance for climate adaptation. I know that the hon. Member for Bath feels strongly about that. We look forward to co-chairing the fourth climate and development ministerial in Baku later this year. We also want to encourage even greater action on deforestation, which accounts for about 10% of global emissions, and we are committed to co-ordinated action outside the main negotiations, including making vital clean technologies accessible and affordable through the breakthrough agenda.
I will quickly turn to some of the key points made in this debate. I welcome the fact that the hon. Member for Bristol Central (Carla Denyer) and my hon. Friend the Member for Stratford and Bow support what we are doing in the consultation on no new oil and gas licences. As they said, it is important that this is a just transition and that we take local communities with us. My hon. Friend the Member for Whitehaven and Workington (Josh MacAlister) talked about the importance of nuclear to his constituency. He has already proved to be a real champion for that; nuclear is very much part of the mix.
I say to the hon. Member for Strangford (Jim Shannon) that one of the first things I said when I got into the Department was that I wanted to make sure that the devolved Administrations were part of the conversation as we headed into COP, and officials have been talking to the Department of Agriculture, Environment and Rural Affairs; we know that we want to have those conversations. Members asked about the appointment of an envoy, which is under consideration—again, watch this space. My hon. Friend the Member for Stratford and Bow talked about the role of cities, which I have already said is important. She will know that I recently met the head of C40 Cities, Mark Watts, and we talked about whether the UK can sign up to CHAMP—the Coalition for High Ambition Multilevel Partnerships—so that is on my radar.
I have covered the main points and I want to leave a minute for my hon. Friend the Member for Ealing Southall to reply. Although that was a quick canter through things, I hope that it has got across that we want to be in the driving seat when we go to COP. We can do that only if we have established our credibility at home, and I hope that we have done so.