Green Investment Bank
Debate between Nick Hurd and Alan Whitehead(7 years, 3 months ago)
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Mr Hurd
I am happy to address that point, because it is important. The hon. Lady needs to reflect on the motivation of anyone wanting to buy the GIB. It is a special organisation; there are other vehicles that people can buy if they simply want to invest in clean energy or strip assets. The GIB was set up for a special purpose. We put in place governance frameworks—the hon. Lady calls it the golden share; we call it the green share—that we think are robust and that Parliament approved.
Why bother if the only intention is to do easy stuff? The GIB has proven that it can do difficult stuff and make a return. We therefore come back to the motivation of a bidder, and to our doing our job in making sure that we test any proposal against the criteria we have set. One of those criteria is about not just the volume of future investment commitment to the UK, but the degree to which any buyer buys into the ethos and purpose of the organisation.
To draw things to a close, the central point is that the Government set out our case for privatisation and set out the criteria—value for money, declassification, but also a desire to see a credible commitment to the ongoing organisation and to increased levels of investment in the UK’s low carbon economy. We ran a competitive process, we received a proposal from a preferred bidder and we are now evaluating that against those criteria. No decision has yet been taken, because this is a very serious decision.
The debate, and the urgent question debate, have been very helpful—not only in sending a message about the importance of getting this right, which had already been received by Government, but, critically, in sending a message to anyone looking to buy the organisation about the importance that Members from both sides attach to getting the transaction right: it must be seen to deliver value for money, but also show a commitment to the ongoing organisation.
Dr Whitehead
The Minister has been very generous in giving way. Before he concludes, will he briefly categorically deny that the story in the Financial Times has any truth in it at all?
Emission Reductions and Low Carbon Investments
Debate between Nick Hurd and Alan Whitehead(7 years, 4 months ago)
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The Chair
We now have until 5.43 pm for questions to the Minister. May I remind Members that questions should be brief? It is open to a Member, subject to the discretion of the Chair, to ask related supplementary questions.
Dr Alan Whitehead (Southampton, Test) (Lab)
I note that the Minister has set out the UK’s position on phase IV of EU ETS in a document supplied for the Committee’s attention this afternoon. In that document, mention is made of the overhang of allowances that the Minister said will remain within EU ETS, but no mention is made of any Government position concerning what might be done about that overhang as we go into phase IV. Does the Minister any views on that and does he think there should be a Government position on it?
Mr Hurd
Yes, we do. What we have argued for is what is called a volume-based approach. This is our second crack at this issue. In the 2014 initiative, we were instrumental in setting up the market stability reserve, which is basically a mechanism for taking surplus allowances above a certain threshold out of the system.
What we suggest this time around, and it seems to be gathering some support, is that we should accelerate that process, in terms of both scale and time. As the hon. Gentleman will know from his deep experience of tracking the ETS, that is because the fundamental problem is a structural imbalance of demand and supply allowance. Our proposal is a volume-based approach, which is seeing whether can we accelerate the mechanisms for taking this surplus out of the system.
Dr Whitehead
I thank the Minister for that reply. However, the question of taking surpluses out can be done by means of the market stability reserve, which will be completely transported from phase III to phase IV, with all the surpluses, as things appear to stand at the moment. That means that, because the system is currently trading at about 200 million allowances below the capped level, there will be increased surpluses coming into phase IV, in addition to those in the market stability reserve and those carried over. The suggestion that might be put is that those should be forcibly retired in phase IV. Does the Minister have any views on that?
Mr Hurd
We are open to mechanisms and discussion about the how. The point that we are trying to make is that we need to accelerate the process of taking surplus allowances out. We think the MSR continues to be the right primary tool for doing that; the issue is the pace at which it is done. We are trying to gather support for doing that on a bigger scale at a faster pace.
Mr Hurd
We are talking about negotiating the principal elements of the reform of the emissions trading scheme. As far as I can see—it is a fairly opaque process—that is due to be completed by the end of 2017. That is when the base of the agreement is likely to be reached, and work can then begin on underpinning the implementation. That is well within the Brexit timeframe. Our view, therefore, is that we should continue to be a very constructive, positive, inquisitive voice at the table to ensure that the next phase of the emissions trading scheme—I would argue that it is in one of the most critical phases in its history—is structured in the right way.
Dr Whitehead
Pursuant to whether we will be a member of the EU when the fourth phase comes into operation, the Minister of course knows that a number of non-EU members are already in the EU ETS. First, does he have a model in mind of what our relationship with the EU ETS might be, bearing in mind that there are already non-EU members in the EU ETS?
Secondly, does the Minister have any views on the recent announcement in the autumn statement that there is no definite commitment to extend our carbon floor price mechanism beyond 2020-21? As was said in the autumn statement, it is possible that the EU ETS level will coincide with our carbon price support in the middle of the next decade, which strongly implies a relationship, whether we are in the EU or not, between the EU ETS and our carbon price support mechanism.
Oral Answers to Questions
Debate between Nick Hurd and Alan Whitehead(7 years, 5 months ago)
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Dr Alan Whitehead (Southampton, Test) (Lab)
On clean energy, we are close to the first anniversary of the announcement by the Secretary of State’s predecessor that all unabated coal generation would close by 2025 and that a consultation on that closure would be launched in spring 2016. As we can see, it is not spring any more, and no consultation appears to be in sight. Is that because the Department is reconsidering his predecessor’s commitment, or because the Department has not got around to writing the consultation yet?
Mr Hurd
The hon. Gentleman will not have to wait much longer for the answer to that question. The Government are committed to the transition from coal to clean energy. In fact, he will know that this year is the first in which we will generate more electricity from renewable energy than we do from coal.
Paris Agreement on Climate Change
Debate between Nick Hurd and Alan Whitehead(7 years, 7 months ago)
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Mr Hurd
I thank my hon. Friend for that constructive and positive intervention. I am delighted that we are doing our bit to shift the tone of this debate, which is much needed. I will go on to address her point about how we intend to maintain our leadership and this international influence.
Dr Alan Whitehead (Southampton, Test) (Lab)
The Minister is quite right to point to the two-stage process of ratification, and the question of how the UK will go about that process in conjunction with the EU. The fact is that that process is undertaken in the UK by laying an order to achieve the objectives of an EU treaty, by having it debated by both Houses and by it coming out the other end. That process has already been completed by France, and yet the UK is nowhere near even thinking about it. Is that the Minister’s understanding, or is such a process imminent in this House?
Mr Hurd
The hon. Gentleman has a long and distinguished record. We served together on environmental Committees a very long time ago. I thank him for his interest. He is right on one point. Yes, France has completed its domestic processes. He is entirely wrong on his second point, which was that the Government have not even begun to think about the process. We have, and we will be in a position to make our announcement on this at an appropriate point. I am sorry that it is not today, but we have made it clear, as the Prime Minister set out explicitly today, that we do intend to ratify as soon as possible.
On the important question of international influence, the challenge is not just how we meet our own commitments in the fairest and most cost-effective way, but how we maximise our influence to make sure that others play their full part. Those two aspects are linked, because it is easier for us to keep our people, businesses and private sector with us on this journey if they feel that other countries are fully engaged, and if they see that the global opportunity offered by the low-carbon economy, which I will come to, is real, substantial and growing, and that we must maximise our involvement in it.
I want to address the question of an international instrument, which the hon. Gentleman is rightly and understandably probing and which underlies the motion. UK diplomacy is widely recognised as having played an important role in shaping and securing the Paris agreement. The framework for the commitments to which countries have signed up has clearly been influenced by the structure that we have set up in the UK. That is enormously welcome. Our influence was built not on symbolism, but on substance.
We were the first to put our own house in order, putting world-leading targets into law and implementing the policies to meet them. We then established what is still the most extensive network of climate attachés in our embassies overseas. We gave other countries practical help in areas such as carbon pricing, energy planning, power sector reform, low-carbon urban development, green finance and climate legislation. Climate change researchers are now, apparently, working with the Chinese on the structure of their own emissions trading scheme. In many of these areas, UK expertise is world leading, and sharing it has strengthened our bilateral relationships and opened up commercial opportunities. I pay tribute to Sir David King for the work that he has done over many years with commitment and passion, which he maintains today.
We have also played a leading role in international climate finance. Ahead of Paris, we committed to providing at least £5.8 billion—that is serious money—of international climate finance over the next five years to support poorer countries in raising their level of ambition to reduce emissions and strengthening their resilience to growing climate insecurity. In the Department for International Development, I had responsibility for the climate finance brief. On regular trips to Africa, I saw the exposure, vulnerability and cost attached to lack of resilience to climate change, which made even clearer to me the importance of international climate finance. I am very proud of the lead that we have taken, and of the fact that we have been asked by the global community to take the lead in Marrakesh on setting out the road map for further progress.
We arrived in Paris well respected, with a strong set of relationships. On top of that, the UK negotiating team in the UN is recognised as one of the strongest in the world. It was rightly praised after Paris for playing a key role in bringing diverse countries into the agreement. Before I close on the past, it is appropriate to put on record my personal appreciation, and I am sure that of many colleagues, of the leadership role played by the then Secretary of State for Energy and Climate Change, who is now Home Secretary.
I can reassure the House that all these elements of our influence remain strong. Our bilateral co-operation on climate and energy with key international partners remains as wide ranging and ambitious as ever. As I said, our climate finance over the next five years will be 50% greater than it was over the past five years. Our investment in clean energy research and development will double over the next five years, and we are a leading member of a group of 20 countries that have all made such a commitment. The Governor of the Bank of England is leading the way globally on green finance and the important issue of climate risk disclosure. The Bank of England co-chairs the G20’s working group on green finance with the People’s Bank of China. Our negotiating teams across Government remain active and influential, not only on the US process that will meet again soon in Marrakesh, but in critical negotiations on emissions from civil aviation and the maritime sector, and hydrofluorocarbons.
I agree that ratifying the Paris agreement early is important symbolically. That is why we will ratify as soon as we can, but it is not credible to suggest that our international influence hangs on this one symbol when it is so firmly rooted in substance. We in this Government are proud of the leadership that the UK has shown and we have no intention of surrendering it.
Our influence overseas will always rest on our action at home. Few countries can lay greater claim to leadership in decarbonisation than the UK. Through the Climate Change Act, we were the first country to set a legally binding 2050 target to reduce our emissions by at least 80% compared with 1990. That target is in line with the Paris agreement’s goal of keeping the temperature rise to well below 2º C. We have not just set targets; we have acted. At home, just as abroad, we focus not on symbolism, but on substance. We reduced UK emissions by 36% in 2014 compared with 1990. Between 2010 and 2015 alone, we reduced emissions by 17%, which was the biggest reduction in a single Parliament.
On this journey, we have proved something that was in doubt when we started debating the issue in 2005 and 2006: whether cutting emissions comes at the expense of economic growth. We have proved in the UK that it does not. UK emissions have steadily decreased since 1990 while GDP has increased. By 2014, emissions had fallen by 36%, while GDP has increased by 61% since 1990. We have proved that green growth is a reality.
We have invested in clean energy, with 99% of our solar power being installed since 2010. Renewables now provide a greater share of our electricity generation than coal. I am confident that that impressive progress will continue. During this Parliament, our investment in clean energy generation is set to double, and we are on track for 35% of our electricity to come from renewables by 2020.
I will respond to the provocation from the hon. Member for Brent North. As we develop our emissions reduction plan, which is one of the Department’s top priorities, we will set a course towards deeper emission reductions in both heating and transport. The hon. Gentleman asked me about the emission reductions plan and, I think, manufactured a suggestion of gossip from the Secretary of State. The hon. Gentleman totally distorts what I said last night. He needs to check his sources.
The emissions reduction plan matters enormously. Any suggestion from the hon. Gentleman that this Government are not taking it seriously, are sliding away from it or do not understand its importance is misleading and misrepresents our position. It is important for the reasons that he states: to underpin the credibility of our progress towards challenging decarbonisation targets, and because, as he stated, if it is done well, it will send signals to market for investment and for the mobilisation of private capital and the private sector that is fundamental for success. It is essential that we get our carbon reduction plan right.
Dr Whitehead
There is perhaps an irony in the words “put into storage”, because the whole purpose of the exercise in the first place is storage. However, my hon. Friend is absolutely right that the whole question of what will happen with not only CCS pilot projects but the infrastructure and the prospects for CCS as a whole appears to have been put into the long grass, and that is a profound problem as far as our future climate change commitments are concerned.
It is going to be hard to write a convincing new low carbon programme in the light of just some of these things unless the Department gets to work very rapidly and unpicks the damage to the long-term low carbon prospects that have been underlined by the savage changes of the past year. I know that the new Minister is committed personally to making sure that the consequences are right, so that is perhaps an early task on his desk. Let us turn this round so that we can put into the low carbon programme positive consequences for the future rather than the negative consequences that there are at the moment.
These two issues go very closely together. We have to get on, very soon, with doing our bit on ratification. I am encouraged to hear from the Minister that if the documentation is not imminent, perhaps it is pretty imminent.
Dr Whitehead
The Minister is sort of nodding his head, so that is good. At the earliest opportunity, we need to have a good look at the new low carbon programme to see whether what we are committing ourselves to do can really be carried out, and, if it cannot, what we must do next to make sure that we can meet those commitments. That is part and parcel of the documentation, and the sooner it can come forward, the better. I hope that by putting the two issues together, we can get a real grip on what we have committed ourselves to and how well we can do it for the future.