Green Economy

Lord Callanan Excerpts

Thursday 12th March 2020 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, I am very grateful to the noble Baroness, Lady Parminter, for securing this important debate and for the excellent, well-informed contributions from many other Members. It is clear that your Lordships’ House has great expertise in these matters; that was very well reflected in the debate today.

There is no doubt that climate change is one of the greatest global challenges that we face and that action is urgently needed in the UK and across the world. It is worth repeating that the UK was the first major economy to legislate for a net-zero target, which will end our contribution to climate change. I am pleased to welcome the support for the net-zero target from the Church, as outlined by the right reverend Prelate the Bishop of Bristol.

We are looking to position the UK as a world leader in low-carbon technologies, services and systems. The UK will capitalise on established strengths to provide new jobs and business growth opportunities from the many future export markets. We have a strong base to grow from. There are already over 460,000 jobs in low- carbon businesses—the noble Baroness, Lady Parminter, said 400,000, so I hope my figures are more accurate than hers—and their supply chains across the country. Low-carbon exports are already worth billions of pounds each year to our economy. We have world-leading strengths in key sectors such as green finance, offshore wind, nuclear energy, smart energy systems and electric vehicles.

We are also seeking to capitalise on the UK’s world-leading expertise in fields such as industrial biotechnology and synthetic biology, the platform technologies that underpin the bioeconomy. This represents the economic potential of harnessing the power of bioscience, producing innovative products, processes and services that rely on renewable biological resources instead of fossil-based alternatives.

As well as the economic benefits we can achieve through a green economy, we must also ensure that we maximise resource efficiency, to protect our environment and minimise biodiversity loss. The resources and waste strategy is an ambitious document that sets out how we will preserve our stock of material resources by minimising waste, promoting resource efficiency and moving towards a more circular economy. It combines actions we will take now with firm commitments for the coming years and gives a clear long-term policy direction in line with our 25-year environment plan.

Setting this in context, our clean growth strategy sets out our proposals for decarbonising all sectors of the UK economy through the decade. The UK is determined to continue to lead the world in tackling the scourge of climate change by cutting our emissions while supporting strong international action to help meet the goals of the Paris Agreement. During this year, ahead of COP 26, we will be setting out further details of our plans to decarbonise key sectors of our economy including transport, energy, buildings and our natural environment.

Many excellent points were made during the debate and a number of questions were posed. I will try to go through as many as possible and apologise to individual noble Lords if I do not get around to their point. In her excellent contribution, the noble Baroness, Lady Parminter, asked about the just transition—this point was also made by the noble Baroness, Lady Sheehan. Clean growth offers the UK real opportunities and she is right to point out that the Treasury will be conducting a review into the costs of decarbonisation, including how to achieve this transition in a way that works for households, businesses and the public finances. Industrial clusters are one of our industrial strategy missions, reflecting the importance of strengthening our industrial base as we move to a net-zero economy.

The noble Baroness also asked about our nationally determined contribution. Increasing global ambition is key to closing the gap on meeting the temperature goals of the Paris Agreement. At the UN Climate Action Summit in September, the Prime Minister called on all countries to come forward with increased 2030 emissions reduction commitments. The UK will play its part and come forward with an increased NDC ahead of COP 26, in line with the global ambition cycle.

The noble Lord, Lord Oates, and the noble Baroness, Lady Parminter, both raised the important subject of energy efficiency in buildings. We plan to publish a heat and buildings strategy later this year which will set out our immediate actions for reducing emissions from buildings. These include the deployment of energy-efficiency measures and low-carbon heating as part of an ambitious programme of work required to enable key strategic decisions on how we can achieve the mass transition to low-carbon heating. The future homes standard will require new-build homes to be future-proofed, with low-carbon heating and world-leading levels of energy efficiency by 2025.

We have also committed to consulting on phasing out the installation of fossil fuel heating systems in off-gas grid properties, accelerating the decarbonisation of our gas supplies by increasing the proportion of green gas in the grid. We will publish these consultations in due course.

The noble Baroness, Lady Parminter, asked about the plan required to deliver the net zero target. In the run up to COP 26, we will bring forward ambitious plans across key sectors of the economy to meet our carbon budgets and net zero target, including an energy White Paper—I am afraid that I cannot give the noble Lord, Lord Grantchester, a date for that, but it will be published as soon as possible—a transport decarbonisation plan and a heat and buildings strategy. These plans will build on the strong frameworks we have established through our clean growth strategy.

The noble Baroness, Lady Parminter, raised an important point on the contributions that local councils can make to net zero targets. The local energy programme supports local enterprise partnerships, local authorities and communities in England to play an important leading role in decarbonisation and clean growth. The programme was announced in 2017 as part of the clean growth strategy. Almost £20 million has been invested in the local energy programme to date and the programme has funded a range of measures designed to build local capacity and capability and encourage joined-up working between local areas, investors and central government. In addition, funding was provided to local enterprise partnerships in England to develop an energy strategy for their area.

The noble Baroness, Lady Parminter, asked me a lot of questions, including on deforestation. We are committed to helping those countries and communities that will be most affected by climate change. The UK is doubling its international climate finance to £11.6 billion between 2021 and 2025 to help developing countries cut emissions, improve resilience and reduce deforestation.

The noble Lord, Lord Browne, and my noble friends Lord Howell, Lord Marland and Lord Selborne all raised the important subject of carbon capture and storage. It will be essential to meeting the UK’s net zero target. It can provide flexible, low-carbon power and decarbonise many of our polluting industrial processes, while also offering the option of negative emissions at scale. We are investing over £40 million in CCS innovation between 2016 and 2021, and I am delighted that the Chancellor yesterday announced our new CCS infrastructure fund, providing £800 million to establish CCS jobs in at least two industrial clusters, creating up to 6,000 jobs in the process.

The noble Lord, Lord Browne, also raised the point about offshoring the UK’s emissions, which is an important subject. We are following the agreed international approach for estimating and reporting greenhouse gas emissions under the UN framework and the Kyoto Protocol. Nevertheless, emissions on a consumption basis—what we import—fell by 21% between 2007 and 2016.

My noble friend Lady Jenkin made a very well-received speech. There was, perhaps, a bit too much information on her underwear strategy, but apart from that, it was an excellent speech about how individuals can act to change their own behaviour. She raised an important point about food waste, and we are taking action to help consumers reduce theirs. Ben Elliot—our Food Surplus and Waste Champion—recently announced the first ever Food Waste Action Week. It will run from Monday 11 May, calling on households and businesses across the country to join forces to reduce food waste. I am sure she will want to make her contribution to that.

My noble friend also asked about clarity on recycling consistency. The Government are committed to making recycling easier for everyone. We know that many people want to recycle but are confused by the many symbols and policies in this area. The Environment Bill introduces legislation so that, from 2023, all collectors of waste will collect a core set of materials from all households, businesses and other organisations. That core set will be metal, plastics, paper and card, glass, food and garden waste.

On the subject of fast fashion, also raised by my noble friend Lady Jenkin, the Government recognise the huge environmental impact of clothing as well as the importance of affordable and quality clothing. The Government have supported a collaborative industry-led approach through the sustainable clothing action plan, which has more than 80 signatories and supporters from across the clothing supply chain, representing nearly 60% of all clothes sold in the UK by volume.

My noble friend, along with the noble Lord, Lord Browne, also raised the subject of behavioural change. We entirely recognise that delivering net zero will need action across the whole of society. It does not necessarily mean net zero across everything that we do, because we can offset many of our emissions through tree-planting, carbon capture and storage, but we recognise the importance of engaging people across the whole of the UK in what will be a year of climate action.

The noble Baroness, Lady Sheehan, asked whether our plans for continued oil and gas exploration are compatible with the net-zero goals. It is important to recognise that, as we transition to a low-carbon economy, there will continue to be a need for oil and gas, which are projected to still provide around two-thirds of our total primary energy demand in 2035. All scenarios proposed by the Committee on Climate Change setting out how we could meet our 2050 target include continuing demand for natural gas.

The subject of green finance was raised by a number of noble Lords, including the right reverend Prelate the Bishop of Bristol, the noble Baroness, Lady Sheehan, my noble friends Lord Gadhia and Lord Marland—the best of luck to him with his clean investment fund. We welcome the strong leadership that is provided in this field by the Church and the role of many institutional investors, which will be key as we build up to COP 26. In fact, only today, an industry-led group called the Pensions Climate Risk Industry Group, convened by the Department for Work and Pensions, produced regulations and published guidance on how pension scheme trustees can disclose their approach to climate risk in their portfolios. Delivering on that is a key promise in the green finance strategy.

My noble friend Lord Howell, with his immense experience in the energy industry, raised the important subject of hydrogen. This will be a key commitment of ours going forward; we are committed to exploring the development of hydrogen as a decarbonised energy carrier alongside electricity and many other decarbonised gases. We are already investing up to £121 million in hydrogen innovation, supporting a range of projects to explore the potential of low-carbon hydrogen for use in heating and transport, and the production of low-carbon hydrogen with CCUS and electrolysis technologies. We are considering our strategic approach to hydrogen and are conducting further stakeholder engagement, notably around building sustainable policy frameworks to support investment in low-carbon hydrogen production.

[Lord Howell of Guildford]

Does my noble friend agree that, if we can make greener our entire domestic gas supply, it would be a far better approach than attempting to tear out 15 million gas boilers from people’s homes?

[Lord Callanan]

Yes, I agree with my noble friend; hydrogen can of course provide a potential solution to that. I heard only the other day about investments that we are making with companies such as Worcester Bosch and Baxi to develop new boilers that are able to work on natural gas and can be easily converted with only one hour of service engineering to work on hydrogen in the future. Nevertheless, hydrogen is, at the moment, given existing technology, expensive and difficult to produce.

The noble Baronesses, Lady Suttie and Lady Jenkin, asked what we are doing about plastic waste. I am pleased to tell them that the UK is a world leader in tackling plastics and that we have committed to work towards all plastic packaging placed on the market being recyclable, reusable or compostable by 2025, and to eliminate avoidable plastic waste by 2042. The Government’s landmark resources and waste strategy sets out our plans to eliminate avoidable plastic waste over the lifetime of the 25-year plan.

I hesitate to referee the debate between the noble Baronesses, Lady Jenkin and Lady Jones, on Extinction Rebellion. I am sorry to tell the noble Baroness, Lady Jones, that I am very much on the side of noble Baroness, Lady Jenkin, on this. I witnessed at first hand the huge piles of disposable plastic waste that Extinction Rebellion left behind after its demonstrations. Before lecturing the rest of us on what we should be doing, it should act to put its own house in order first.

[Baroness Jones of Moulsecoomb]

Does the Minister accept that had they had time to clear away, they would have done so? I visited the site and they had recycling systems set up and they were extremely careful about rubbish. If they had had time, they would have removed it.

[Lord Callanan]

I thought that might prompt an intervention. No, I do not accept that. Even on the sites they vacated voluntarily, they still left behind piles of rubbish, which cost the local authority tens of thousands of pounds to remove. They are, of course, quite entitled, as everybody is, to demonstrate and make their point, but they are not entitled to bring the whole of London to a standstill while they are doing it.

[Baroness Jones of Moulsecoomb]

Does the Minister understand that we are in a climate emergency? This is bigger than Covid-19, bigger than any other emergency we have ever faced. Those people have actually put climate change on to the agenda here in the House in debates I have been part of. I have not even mentioned climate change: everybody else has mentioned it, so they have actually performed an incredibly important role within our society.

[Lord Callanan]

I am sorry, but I just do not agree with the noble Baroness. Climate change was on the agenda well before Extinction Rebellion decided to get involved in the subject. It has been a subject of cross-party agreement. It is not just something for this Government; Governments of the party opposite and the coalition Government were also on the ball with this, and legislation was put in place with cross-party agreement. Nobody doubts the scale of the problem; they do not need to tell us it is a problem; what we need are practical solutions that are deliverable in the normal political landscape. That is what we are working towards and what we are interested in giving contributions for, and, frankly, camping out in London for weeks on end does not change the fact that we need practical, deliverable solutions.

[Baroness Jones of Moulsecoomb]

My Lords—

[Lord Callanan]

I am happy to continue this debate with the noble Baroness, but time is getting on. We will return to the subject. I should not have raised it in the first place.

[Baroness Jones of Moulsecoomb]

My Lords—

[Baroness Jones of Moulsecoomb]

He is being very provoking, you must admit.

[Lord Callanan]

It is fine: it is my fault for raising it. I should not have got involved in the debate, but I am happy to talk to the noble Baroness, for whom I have the greatest admiration, as she knows. I am sure that we will discuss it on plenty of other occasions.

The noble Lord, Lord Giddens, talked about the 2050 target and asked why Finland has a net-zero target of 2035 when ours is 2050. Our independent advisers, the Committee on Climate Change, made it clear in its report that it does not currently consider that it is credible for the UK to reach net-zero emissions earlier than 2050, and we have legislated in line with that advice.

The noble Baroness, Lady Suttie, asked about plastic waste exports. We are committed to banning plastic waste exports to non-OECD countries and the Environment Bill includes a power to enable us to deliver this commitment. We will consult this year on the date by which this will achieved.

The noble Baroness, Lady Jones, raised the energy company obligation—we have discussed this subject with her before. I know that we have a different opinion on it, but we believe that energy efficiency will be key to reach net zero and we agree that the transition has to be fair. The energy company obligation is a key policy that, since 2013, has delivered more than 2.5 million measures in more than 2 million homes. This scheme is now entirely focused on low-income, vulnerable and fuel-poor households and funded to the tune of something like £640 million a year until 2022. I know that we have a different view about how it should be funded, but it is, in my view, a successful scheme.

The noble Lord, Lord Marland, talked about international climate finance. Since 2011, our international climate finance has helped 57 million people to cope with the effects of climate change, while reducing or avoiding 16 million tonnes of emissions.

I am sorry that I am out of time; I had a number of other points to refer to. If noble Lords will permit me, I will respond to them in writing—apart from an intervention from the noble Lord, Lord Browne.

[Lord Browne of Ladyton]

I am very grateful to the noble Lord for giving way. Before he sits down, will he either address the question of pricing the risk of carbon capture and storage or agree to write to me about it?

[Lord Callanan]

It is an important subject, as I have said, and there is a lot of development in this area. I will write to the noble Lord with the details of pricing the risk, because it is a complicated subject.

It just remains for me to say that tackling climate change continues to be one of the Government’s highest priorities. We will continue to work with others, both domestically and internationally, to build on the excellent progress that we have already made to reach net zero. I thank noble Lords once again for some excellent contributions to this debate.