Carbon Budget Order 2026

Lord Moynihan Excerpts

Tuesday 23rd June 2026 Lords Chamber

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[Lord Moynihan]

At end insert “but this House regrets that the draft Order will increase the UK’s reliance on intermittent renewables, causing higher energy prices, further deindustrialisation and lower economic growth; is contingent on retaining a carbon tax which will impoverish households and industry; requires a reduction in livestock numbers and meat and dairy consumption; and will encourage the offshoring of emissions to countries with more polluting energy systems.”

[Lord Moynihan (Con)]

My Lords, while preceding my noble friend Lord Deben, I pay tribute to his lifetime work on climate change and, while our views will certainly differ this evening, I share with him a passionate belief that we should work towards tackling climate change—he will agree that there are many different routes to achieving that goal. We are meant to be the revising Chamber, capable of detailed consideration of government measures, yet we have just six minutes each and, as the Minister has shown, that is insufficient.

As Minister for Energy in the salient benchmark year of 1990, I launched the first renewables round, the non-fossil fuel obligation, while encouraging the growth in offshore gas, with strong environmental prerequisites to ban non-essential flaring, and securing gas to CCGTs, thus creating firm low-cost power to generate economic growth, jobs and prosperity. Low-cost electricity is the lifeblood of a successful economy. My business career and time in politics have taught me that a headlong rush based on DESNZ zealotry will be costly and unattainable; it will not just jeopardise but destroy economic growth.

The UK produced circa 367 million tonnes of CO₂ equivalent in 2025, meaning that by 2039 we will have to reduce our annual emissions by more than two-thirds, with all the low-hanging fruit already picked. The capital and finance costs alone are estimated to be £880 billion. Government claims for the benefits are all target-derived prices to justify the policy, and we have seen the stumbling blocks impeding the rollout of heat pumps and zero-emission vehicles, not to mention the commercial challenges facing carbon capture and storage.

The Climate Change Committee has estimated that, in order to meet the emissions target, household consumption of meat and dairy would have to fall by 25%. The number of sheep and cattle would have to fall by 50%. Farmers will be required to diversify away from livestock farming to double tree-planting rates by 2030 and double peatland restoration by 2040. Where is the plan? When will the Government tell the public that they intend to halve the number of sheep and cattle in the United Kingdom, with inevitable price increases in the supermarkets? When do the Government intend to tell the residential building sector that it will have to spend up to £15 billion a year on low-carbon heating systems?

Add to all this the costs we introduce through this measure: demand management to apply to air travel, increasing the cost of short-haul flights, such as between London and Alicante, by £150 and long-haul flights, such as between London and New York, by £300. Industry is already facing the stark reality of the highest prices for electricity in the OECD, but the Climate Change Committee now estimates that British industry would face net costs of up to £3 billion per year in every year between 2025 and 2050. Does Ed Miliband have the remotest idea of what this will do to British industry and the economy?

What is worse is that my reading of the economics is that the capital expenditures required for solar and offshore wind are hugely underestimated. Perhaps the Minister can explain how the CCC expects offshore wind to cost around £1,500 per kilowatt hour, whereas actual projects such as Hornsea 3 are expected to cost over double that. If he cannot, the up-front capital costs are underestimated, making the CCC’s claim of operating cost savings compared with fossil fuels highly questionable. I look for the CCC’s total gross cost of its pathways and I cannot understand why they are absent. No wonder the UK boss of EDF Energy has said:

“We should stop building wind farms and focus instead on raising demand for electricity … As a country, we’ve always got it wrong … So now we have this large infrastructure, twice as much as we need, which means we also need to build twice”


the transmission grid. No wonder almost £800 million has been spent on so-called curtailment payments so far this year alone, putting 2026 on course to eclipse the £1.4 billion spent on switching off turbines last year.

Heavy manufacturing and chemical sectors have argued that the orders before us this evening introduce additional bureaucracy without tangible environmental benefits. Customers are understandably worried about the costs burden and the major lifestyle changes required by law—not by choice, as the Minister just said, but by law—in how people heat their homes, what they can eat and how they travel.

All this is based on an accounting policy which wholly ignores the impact on global warming from the supply chains that we rely on. We are blind to the coal-fired CO₂-belching furnaces in China, many in Xinjiang province with Uyghur labour, which produce the polycrystalline in solar panels for us. China delivers an estimated 140 million to 200 million tonnes of CO₂ annually just by manufacturing solar panels, accounting for about 1% of China’s total annual emission, and we do not count that. The Democratic Republic of the Congo produces 70% of the world’s cobalt—a core component in the lithium-ion batteries used for electric vehicles and grid-scale energy storage—with its forced evictions, land disposals and child labour, and we do not count that. We ignore that.

We do not have clean, home-grown energy. It is time to prioritise cheap energy over clean energy, remove the heavy weight of carbon taxes from our electricity prices, and exploit all remaining North Sea oil and gas reserves, in the same way the Norwegians do on their side of the median line, with gas which is four times less polluting than the LNG that we have to import instead from the States. That would strengthen our energy security.

--- Later in debate ---

[Lord Whitehead (Lab)]

Yes, indeed. The noble Lord makes those points, which I have taken well on board. The question of carbon pricing, of course, is a long-standing issue as far as carbon valuation is concerned, but I certainly will write to him about the particular points he raises as soon as possible.

[Lord Moynihan (Con)]

My Lords, I disagree with the Minister on one thing: I think this was a valuable debate. I thought that contributions from every Member of your Lordships’ House have been helpful and constructive. I do not think it has been, to quote him, “a waste of time”. I do not think anybody who spoke this evening wasted anybody’s time. There is cross-party recognition of the importance of addressing these issues, addressing the carbon order and addressing climate change. The question before us this evening is about the Carbon Budget Order 2026.

The Minister is completely right to say that we should address this in the context of the impact assessment, which he considers to show us the truth. He is completely right to have identified that importance. Everything in my speech related to that—everything. I say to my noble friend Lord Deben that the public and our grandchildren will never forgive us if we destroy our economy with high energy prices. That is a real concern across this Chamber. We currently have electricity prices that are four times higher than the United States. That is the issue that we need to address. The impact assessment shows us that prices will go even higher if we follow these measures.

I say to the noble Lord, Lord Hunt, that we share this factor: neither of us is obsessed with anything. There is no obsession on this side of the House, but there is real concern. There is cross-party concern with what is being proposed. Tony Blair has said that the net-zero policies that are being pushed forward are viewed as

“unaffordable, ineffective, or politically toxic”.

Gary Smith of the GMB, who is absolutely all over these issues, has recently said that the policies being pursued by the Government are “economic madness”. Even the Unite the Union says “No ban without a plan”.

These points are worthy of consideration, because the North Sea issue is very important. I know everybody may have been distracted by Makerfield, but an important referendum was in effect being undertaken in the constituency of Aberdeen South, which was overwhelmingly won by the Conservative candidate. It was an overwhelming rejection of both the measures that are in this climate change Carbon Budget Order and the current Government’s policy on the North Sea, which is referred to.

In closing, it is important for all of us to recognise that there is a universal position across this House that we have to get policy right. I do not think this order does. We cannot afford to damage our economy irreparably through a zealotry on net zero that goes too fast, too far, too early, and jeopardises our economic recovery and the key underlying policy of the Government, with which we agree—economic growth. The impact assessment is fundamentally flawed, not least on the important point about CCS, which, interestingly enough, is one point that was criticised by my noble friend Lord Deben. It is one of the three fundamental pillars on which the whole of this is based.

With those concluding comments, and with my gratitude to everybody who has contributed to this valuable debate, I seek to test the will of the House.