Green Economy

Lord Howell of Guildford Excerpts

Thursday 12th March 2020 Lords Chamber

[Lord Howell of Guildford (Con)]

My Lords, I declare my energy interests in the register as chairman of the Windsor Energy Group and as adviser to Japanese climate and energy companies, and as a former Secretary of State for Energy.

It is always a great pleasure to follow the noble Lord, Lord Giddens, in his wise words. I am still trying to work out how his third way will enable us to escape from the paralysing ideologies of the present and past age. I expect I have a lot more thinking to do on that subject.

I have two considerations to add to this complex and major debate. They may sound rather technical, but I really believe that their omission is hampering our policy over the climate and our net-zero goals and the more serious contribution that we ought to be making to the global climate battle.

First, we hear amazingly little about the handling and potential of carbon dioxide in official plans and statements. What I think is missing is the understanding that CO₂ is not waste and a pollutant; it is in fact a resource. Far from being a substance that has to be stored in holes in the sea or suppressed at any cost, it is resource of enormous value. I have even heard it described by very well-primed authorities—particularly from the University of Swansea and a number of American universities—as “the new oil”. The reality is that CO₂ can replace the entire basis of the petrochemical industry. It can be converted into a vast range of inorganic materials, and can act as a feedstock for methanol and, if desired, ethanol—they of course are the basis of a vast part of the chemical and materials industries—and a variety of other catalytic processes. We have just been reminded that Asia is racing ahead in many ways in technology and indeed in living standards: Korean scientists have now found ways of converting CO₂ into hydrogen.

A major reset in policy thinking is demanded here, and I would like to hear from the Minister whether this is beginning. Carbon capture, and bringing down the cost of capture, from all industrial processes—the heat loss from industrial processes is enormous—is something we can all agree on; that is fine. There was little notice, but yesterday’s Budget funding of new carbon capture clusters is extremely welcome and a revival of an important area where we are falling miles behind our competitors. But storage is much more controversial, and it is I think probably the wrong and negative emphasis. If we want to stop carbon adding to the thermal blanket round the earth, it can be put profitably to a thousand uses, all of which we should be aiming at. That is the first point I want to make that seems to have been missing from the debate.

Secondly, when it comes to hydrogen itself, there still seems to be deep confusion. Hydrogen is not so much an energy source as a vector in energy transformation. It is enormously plentiful and can be added into our entire gas grid at up to 40% dilution without any change either to the piping of our national gas grid, which is very extensive, or to actual gas boilers or cookers, with huge savings in conventional hydrocarbon burning. It can also be used directly as a longer-range transport fuel, and is probably superior to dragging around heavy batteries in electric vehicles. I am very doubtful whether the battery technology required to make the EV revolution happen is not going to come to a dead end. For one thing, hydrogen can be loaded like petrol and just as fast. It is no wonder that some police forces—South Wales Police among them—have decided to go over to hydrogen when they have to respond in seconds to emergencies instead of using battery-powered vehicles for which they might have to wait half an hour to be filled up and ready to go on the job. Besides which, the lithium, cobalt, copper and rare earths required in batteries all come from monopoly sources, such as China, Argentina, Bolivia, Chile, Congo, Indonesia and Serbia—potentially a new sort of OPEC that could be a good deal more threatening and less friendly than the present one that we have had to work with for the past 40 years.

It is true that hydrogen needs electrolysis and that needs lots of electricity, but that is the one thing of which we have a vast, unused surplus in this country, surrounded as we are by massive and excellent investment in offshore wind farms. We now often have to pay those wind farms to stop generating for long periods to prevent major destabilisation of the whole grid, which has already occurred once or twice. The mismatch in timing between our now enormous wind electricity output and normal daily power demands provides the perfect extra electricity source for massive hydrogen electrolysis.

I read the recent report mentioned by the noble Lord, Lord Browne, from the so-called Energy Systems Catapult—a government-sponsored organisation, I understand. It was spouting nonsense about the need to double or treble electric power output, with 20-plus new nuclear stations by 2050—actually, the Times said 32 new stations, with classic exaggeration—along with drastic reductions in the eating of meat and dairy and other scary and difficult disruptions. Indeed, the report actually talked of the elimination of aviation and livestock products to get to the 2050 goal, all in my view adding up to the worst kind of fright, disincentive and discouragement to sensible and acceptable climate policies that will actually get us to the goals we want.

Of course, there is no silver bullet or single pathway to net zero or to really checking the growth of carbon particles in the atmosphere, but if the investment priorities go to carbon resource usage, and if plentiful hydrogen and major advances in efficient energy use are deployed—if those are the investment priorities—that is far the most promising way to actually get to net zero.

In the end, one has to ask what impact all our national efforts are actually having on worldwide climate change. Britain may be leading by example; I think it probably is, but who exactly is following? China is building coal-fired stations as never before—I am told there are 200 in central Asia and Africa along the belt and road routes—so there is not much example-following there. Not to focus on the real priorities, just to remain inward-looking, ignoring the really big emitters and the best investment priorities to prevent greenhouse gas accumulation—that really would betray the younger generation. Greta Thunberg is right about that, but if we continue to be led by the experts on present paths, then all I can say is that the real betrayers will not be the ones she thinks.

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[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.