Global Energy Sector

Lord Callanan Excerpts

Wednesday 15th June 2022 Lords Chamber

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

I thank the noble Baroness, Lady Sheehan, very much for securing this debate on a vital topic. It was an interesting and informative, albeit brief, debate with some excellent contributions from all sides. I am very grateful to all who contributed.

The UK became the first major economy in the world to pass legislation to end its contribution to global warming by 2050. I confirm to the noble Baroness, Lady Blake, that we remain absolutely committed to that goal and to achieving net zero. The report we are debating, the IEA’s Net Zero by 2050 report, sets out in very concise terms and detail for the international community to see how we can make that vision reality. We emphatically welcome the report, as has been pointed out. In fact, as COP 26 president, the UK asked the IEA to develop it. We peer-reviewed it and provided feedback and input into it. In doing so we believe we have helped the IEA to sharpen its focus on driving a clean energy transition, and to think through the positive impacts net-zero policies are having on quality job creation and investment, for example, with up to 30 million more people working globally in clean energy, energy efficiency and low-emission technologies by 2030, as the noble Baroness, Lady Sheehan, reminded us.

The report provides a robust basis for the UK, as COP 26 president, to seek raised climate ambition through international diplomacy. The reality is that we need all countries to deliver on their commitment in the pact to revisit and strengthen their 2030 targets to align with the Paris agreement temperature goal by the end of this year. In our presidency year, we are working with all parties to deliver on this commitment and to go further and faster to close the 2030 emissions gap to 1.5 degrees centigrade.

We also recognise, as pointed out in the report, that this transition must be fair and inclusive. That is why we launched the International Just Transition Declaration at COP 26, which commits to using our overseas development assistance to support a just transition globally, as the noble Baroness, Lady Bennett, mentioned. Just transition is also about the health implications of energy transition, and the UK is also promoting this internationally.

Turning to what we are doing at home, we are taking urgent action to make sure that the UK pulls its weight in the effort to shift the world on to the path to 1.5 degrees centigrade, as set out by the IEA in its report. The Prime Minister’s Ten Point Plan for a Green Industrial Revolution, the net zero strategy, sets out a clear vision for how the UK will transform its production and its use of energy in a decisive shift away from fossil fuels. The UK Government have set in law, as I said, the world’s most ambitious climate change targets, cutting emissions by 78% by 2035 compared to 1990 levels. This would bring the UK more than three-quarters of the way to net zero by 2050. As part of this, the Government remain committed to phasing out unabated coal generation in Great Britain by October 2024.

The recently announced British Energy Security Strategy, which was referenced in the debate, accelerates this plan in a series of fairly bold commitments that put Great Britain at the leading edge of the global energy revolution, which could see 95% of Great Britain’s electricity set to be low carbon by 2030. We have a new offshore wind ambition of up to 50 gigawatts by 2030; this is more than enough to power every home in the United Kingdom. We want to see up to 5 gigawatts of that coming from floating offshore wind, which can of course be deployed in deeper waters. The Net Zero Strategy and the British Energy Security Strategy will level up the UK by supporting up to 190,000 jobs by the middle of the 2020s and around 480,000 jobs by 2030. We are also attempting to leverage an unprecedented £100 billion-worth of private investment by 2030.

A number of noble Lords—particularly the noble Lord, Lord Teverson, and the noble Baronesses, Lady Blake and Lady Sheehan—referred, of course, to the central news item in the world at the moment: the appalling illegal Russian invasion of Ukraine. This has underlined the need to address our vulnerability to international oil and gas prices by helping to reduce our dependence on oil and gas imports. Building a robust and secure UK energy market is now an issue of national security, and it is an important driver of the transformation of the UK economy, alongside decarbonisation.

More than ever, we need to work together to accelerate the shift to clean power generation and zero-carbon economies. An accelerated and more ambitious shift to clean energy provides the most effective route to ensuring climate and energy security and, ultimately, our long-term prosperity. As the IEA pointed out at last month’s Energy Transition Council ministerial, a clean energy transition will support energy autonomy and reduce energy cost over time—I agree with the noble Baroness, Lady Sheehan, that this is a win-win scenario.

I will move on to some of the points made by noble Lords in the debate. The noble Baronesses, Lady Sheehan and Lady Blake, the noble Lord, Lord Teverson, and virtually everyone else in the debate mentioned the critical issue of energy efficiency and how essential it is—they will hear no disagreement from me on that. The cheapest energy is that which we do not use. The IEA report confirms energy efficiency measures as one of the most effective means of promoting the energy transition. Leading into COP 26, the UK and our partners launched a product efficiency call to action, with the goal of doubling the efficiency of four priority products that will account for 40% of global energy consumption by 2030. The Super-efficient Equipment and Appliances Deployment initiative—SEAD—today supports more than 20 countries in achieving this ambition quickly and at lower cost.

Domestically, our Heat and Buildings Strategy committed a further £3.9 billion-worth of investment in energy efficiency and low-carbon heating over the next three years, which takes our total investment to almost £6.6 billion during the lifetime of this Parliament. I know that noble Lords will push me, saying, “It’s important to do more”, “We could do more” et cetera—but let us at least agree that we are spending considerable sums of money on energy efficiency, and the vast majority of this is targeted to those in our society who are on lower incomes.

Furthermore, we are making significant progress on improving the energy efficiency of UK homes—again, you would not know it from some of the speeches that we have heard this evening. Back in 2008, just 9% of homes had an energy performance certificate—EPC—of band C or above; now, 46% do. We are committed to upgrading to EPC band C as many homes as is cost-effective, practical and affordable by 2035, and—I repeat—we are spending £6.6 billion during the lifetime of this Parliament to help to achieve that goal.

The noble Baroness, Lady Sheehan, asked about the government strategy to improve climate education and encourage the behaviour change necessary to reach net zero. We are, in fact, increasing our work on public engagement and net zero, both in communicating the challenge and in giving people a say in shaping future policies. The Net Zero Strategy sets out the Government’s vision for transitioning to a net-zero economy, outlining our approach to public engagement through building public acceptability for major change and presenting a clear vision for how we will get to net zero. For example, in our Together for Our Planet campaign in the run-up to COP 26, our 26 “One Step Greener” champions showed how taking one step can have a positive impact on the environment, encouraging the public to do their bit, however large or small—everyone can make a contribution.

My noble friend Lord Lilley and the noble Baroness, Lady Bennett, both referenced the IEA modelling, which found that developers of oil and gas fields and coal mines will in fact not find it profitable to open new fields when demand for fossil fuel drops. Like the noble Lord, Lord Lilley, I say that they will not find much sympathy from me. But the IEA report was published before Russia’s invasion of Ukraine and the subsequent turmoil in international energy markets.

We have made it clear, and I make no apology for saying, that we need to source from British waters more of the gas that we need and will use in the transition, in order to protect our energy security. I totally agree with my noble friend Lord Lilley that it has to be more climate effective to source the gas that we need in the transition—as recognised by the Climate Change Committee—from UK supplies, rather than very carbon-inefficient international sources of supply, through things like LNG. While we are working hard to drive down demand for fossil fuels, there will be continuing demand for oil and gas over the coming years, as we transition to cleaner, lower-carbon energy. The IEA report makes this clear, and we must be clear that it does not lock the UK into fossil fuel dependency in the longer term.

In response to the question raised by the noble Lord, Lord Teverson, regarding exploration at Loxley, the Government have now consented to a three-year drilling programme to establish the extent of the gas fields. The field could hold a sizeable volume of around 43 billion cubic feet of gas, helping the UK to respond to the current and unfolding energy crisis.

Unfortunately, I am running out of time, but I will deal with one point raised by the noble Lord, Lord Teverson, about methane emissions; I want to note this other crucial area that was referred to in the report. Action on methane is critical and can avoid up to 0.3 degrees centigrade of warming by 2040. The UK has started to answer that challenge: the global methane pledge, which was referred to, was launched at COP 26, with the UK as one of the first signatories. More than 100 countries—which are responsible for just under half of all global methane emissions—have now joined that pledge to cut methane emissions by 30%. That includes six of the top 10 methane emitters.

The noble Baroness, Lady Blake, asked me a number of questions on renewables which I would like to address, but I will write to her about them separately because I am running out of time.

I thank all noble Lords who have contributed to this important discussion, and for their sincere and considered questions and comments.