EU Referendum: Energy and Environment

Philip Boswell Excerpts

Tuesday 12th July 2016 Commons Chamber

[Barry Gardiner]

Perhaps, then, the Secretary of State could tell us what assessment her Department has made of the price premiums on loans that will be demanded by investors in energy infrastructure to cover the cost of political uncertainty. Is it 1%? Is it 2%? Again, I will happily give way to the Secretary of State if she wishes to inform the House what assessment her Department has made of those matters. No? In that case, I will give way to the spokesman for the Scottish National party.

[Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)]

Will the hon. Gentleman take the Secretary of State to task on what she intends to do to achieve the climate change targets in respect of completely decarbonising the transport and heating sectors in order to achieve 2050 targets?

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[Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)]

The Secretary of State mentioned India as being among the countries standing by us in respect of investment. Given that about 2,400 coal-fired power stations are planned or under construction around the world, including in India and China, does she agree that cancelling the carbon capture and storage project represents a massive missed opportunity for this country?

[Amber Rudd]

The hon. Gentleman will be aware that we have been through the issue of CCS many times. We would like to have a CCS programme and we are working on an industrial strategy to address having such a programme. I know that he has played an important part, working with Lord Oxburgh in the other place, in ensuring that we put together a clear plan. At the time, we could not go ahead with the £1 billion that had been planned for the CCS proposal, but it is not off the table at all. We are still working towards having some sort of CCS proposals.

Our commitment to decarbonisation is clear, with £13 billion of investment in renewable electricity in 2015 alone and with investment in renewables increasing by 42% since 2010. We have already set out funding to be provided through auctions during this Parliament to support up to 4 GW of new offshore wind and other renewable technologies, and with the potential for deployment of up to 10 GW in total between 2020 and 2030 if the costs continue to come down. We are also making real progress to deliver new nuclear power in the UK, addressing a legacy of underinvestment. We have announced record investment in new heat networks to enable innovative ways of heating our homes and businesses. And we will lead the world by consulting on closing unabated coal-fired power stations. That commitment has been praised across the world, and we will be setting out further details of it soon.

All those commitments remain in place. They will help us to dramatically rebuild our energy infrastructure and they are underpinned by our commitment to carbon budgets, which is why the CBI, the EEF, businesses and investors from a wide range of sectors were all so supportive of our decision to set the fifth carbon budget.

We have a proud history of energy innovation. The world’s first coal-fired power station was built on the banks of the Thames in the late 1800s. The world’s first nuclear power station was opened by Her Majesty the Queen in Cumbria in 1956. And well before the EU referendum had begun in earnest, my Department was making sure that this country would remain at the forefront of energy and climate change innovation. That is why, as a Government, we have committed more than £500 million over this spending review to supporting new energy technologies. That means supporting entrepreneurs as they look to develop the innovations of the future—in storage, in energy efficiency and in renewables. As part of that programme, we will build on the UK’s expertise in nuclear innovation. At least half our innovation spending will go towards nuclear research and development. That will support our centres of excellence in Cumbria, Manchester, Sheffield and Preston. Our nuclear programme will include a competition to develop a small modular nuclear reactor—potentially one of the most exciting innovations in the energy sector.

Although I have focused primarily on energy and climate change, we must not forget the trade and businesses surrounding the environment and agricultural sectors, which are so profoundly affected by our decisions on tackling rising global temperatures. The Department for Environment, Food and Rural Affairs continues to engage with farmers, businesses and environmental groups to ensure that their voices are heard. It has been made clear to them that there will be no immediate changes and my hon. Friend the Under-Secretary of State will address the environmental issues later.

Trading energy within Europe and being an entry point into Europe for the rest of the world has provided significant advantages. Europe has led the world on acting to address climate change. The economic imperative that drove those relationships has not changed and openness to trade remains central to who we are as a country. As the Prime Minister has repeatedly said, we will work towards the best deal for Britain. As I have said, our challenges remain the same: securing our energy supply, keeping bills low, building a low-carbon energy infrastructure, and protecting the environment and farming. Our commitment to them is unbowed.

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[David Mowat (Warrington South) (Con)]

It was a pleasure to hear the hon. Member for Tooting (Dr Allin- Khan), whose speech was excellent, in both content and delivery. My son is a junior hospital doctor and I know how hard doctors work. We need more scientists and doctors in the House of Commons, so for that reason, too, she is really welcome. I congratulate her.

The implication of the Opposition’s motion is that somehow, by leaving the EU, we will become the dirty man of Europe and that, without the glad hand of European legislation, we will go back to our dirty ways.

I want to talk about climate change police, particularly how far ahead we are of the rest of the EU, and how Europe’s slow pace is causing increasing difficulty for the rest of the world.

People are right that environmental protection and policy is cross-border. We produce 1.3% of global emissions. Since 1990, the UK has decreased its carbon emissions by 28% and the EU has decreased carbon emissions by 21%. That figure includes our contribution of 28%, so the rest of the members have done a bit worse; although that in itself is not a disaster. What is extraordinary is the variability between different countries in Europe on carbon emissions since 1990: Austria has increased emissions by 14%, Ireland by 7% and Poland by 14%; Germany has decreased emissions, but not by anything like as much as we have. It is really quite bizarre.

Quite often, people talk about countries such as China as being the issue when it comes to emissions. However, the reality is that the Chinese are taking the whole issue a great deal more seriously than a number of OECD countries are. China has 40 to 50 nuclear power stations under construction. It increased its proportion of energy from nuclear by 30% last year, and from renewables by 20%. That is a huge effort. The truth is—

[Philip Boswell]

I take the hon. Gentleman’s point that China is making commendable progress in respect of nuclear construction. However, is it not also the case that, along with India, it is constructing up to several thousand coal-fired power stations? The argument, as was well put by the Prime Minister of India, Mr Modi, is this: why should we come to the banquet, have only a dessert and be presented with the bill?

[David Mowat]

I have a lot of sympathy for that argument, and that is why we have to cut more slack for these developing countries. I am going to come on to talk about coal, but in November the Secretary of State in this country said that we were going to phase out coal by 2025. The following week, Germany commissioned a brand new lignite-burning power station. That sort of behaviour plays to the point just made by the hon. Member from the Scottish nationalists that it is very hard to lecture the Indians and the Chinese on coal when there are countries in Europe, this year, commissioning brand new coal power stations.

We have talked about how important Paris is. The hon. Member for Swansea West (Geraint Davies) made the point that we may well be close to 1.5% anyway—it is a statistical model and it is quite hard to tell. However, the fact is that the INDC that the EU, including the UK, put into the Paris commitment is approximately half as onerous in terms of decarbonisation as that which the Climate Change Act 2008 requires us to do in the UK. We will reduce our emissions by the fifth carbon budget by 57% in 2030. The EU offering was a 40% reduction, which includes the UK’s 57%. We are seeing the result of this already. Last year, carbon emissions across the EU as a whole increased by 0.7%. I accept that that was only one year, and that this is not something to be looked at one year at a time, but 18 of the 28 countries in the EU either had no decrease in emissions or an increase. For completeness, in that same time the UK reduced its emissions by around 3%. Those statistics are from Eurostat.

I want to talk more widely about why it is that the EU has lost its way on climate policy. There is a fixation on coal in the EU. Germany is often regarded as being a leader on renewables, and it is; Germany has far more renewables than we have. However, it also has much higher carbon emissions than we do. The reason for that is the coal that it has: Germany has four times as much coal as the UK, and it is not four times more populous. There are parallels in other countries. Does it matter? Perhaps not, in one sense; someone has to lead, and it is us. However, the DECC website shows that electricity prices in the UK for domestic consumers are something like 50% above the EU mean—our gas prices are not—and our industrial prices are about 80% higher. Why does that matter? I come from a constituency in the north of England, where we still try to manufacture things. It is very hard to talk about rebalancing the economy and the northern powerhouse on the back of differentially high energy prices.

I do not think that the EU has taken the position that it has on purpose. So why is it that the policy objectives of reducing carbon have not been realised? The first error that was made—this is true of a lot of directives—is that there was confusion as to the target. A lot of the early EU directives were about renewables and not decarbonisation, which is a secondary target. The consequence is that CCS, which we have talked about, was not emphasised, gas as a transition fuel was not emphasised and nuclear was not emphasised—the biggest omission of all. Of all EU electricity, 30% comes from nuclear. The fact that, for many countries in the EU, that is not even regarded as part of the solution is quite bizarre.

Two or three hon. Members this afternoon talked about CCS, and I regret that the UK is not pushing ahead with that. However, it really beggars belief to say that that is a European issue when a number of countries in the EU, including Germany, have banned CCS. It is not a question of not developing it; they have banned it.

The other error that the EU has made is to create a general parity between different types of fossil fuels. Coal and gas are very different indeed in terms of their materiality on this. One reason why the UK does a lot better than the EU is the amount of gas that we use and the fact that we have displaced coal with gas. I like to quote this statistic: if the world were to replace all the coal that we currently burn with gas, that would be equivalent to five times, or a factor of 500%, more renewables. To pretend that that is not part of the solution is just plain wrong. One reason that people regard it as not being part of the solution is that the pathway has been mistaken for the objective.

Yes, at some point we need to get to an emissions level below that which is afforded by gas, but the truth is that emissions are cumulative. The hon. Member for Swansea West (Geraint Davies) said that we may well be close to the 1.5% in terms of particulates and all that goes with them. That is true and it is a cumulative effect. Carbon does not go out of the atmosphere for a very long time. It is not just about pathway. For that reason, gas should have been far more of a factor in this than it has been.

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[Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)]

When considering this question, and in respect of investor confidence, my concerns are as follows. Investment in oil and gas renewables, or any energy or environmental project or initiative, relies on, among other things, stable legislation. Investors must be able to rely on the conditions under which they are prepared to invest lasting for, preferably, the duration of that project or initiative. That has not been the case with this Government and previous Governments.

There have been about 18 legislative changes in the oil and gas sector in the past 15 years. Allied to that, there has been the withdrawal from green initiatives such as the zero-carbon home policy. The green deal home improvement fund was abolished. Solar subsidies have been cut and the onshore wind farm subsidy has been removed. The door has been opened to fracking and a cap for biomass fuel subsidy has been introduced. The UK Green Investment Bank has been privatised, the green tax target on renewable energy investment has been abandoned and green car incentives have been cut. Particularly significant for me, as I worked on one of the projects, was the cancelling of the competition for carbon capture and storage.

[Stewart Malcolm McDonald (Glasgow South) (SNP)]

My hon. Friend is illustrating the sorry place the Government have now taken the country. It is no longer Britannia rules the waves: it is Britannia waives the rules.

[Philip Boswell]

That is an excellent point well made by my hon. Friend.

The legislative changes in that short list can do nothing but discourage investors from investing in new energy production. The cancellation of the £1 billion carbon capture and storage competition initiative set out in the 2015 autumn statement will make it almost impossible for the UK to meet its climate change targets.

[Calum Kerr]

My hon. Friend highlights one reason why there is concern among Opposition Members. I have a degree of faith in the ministerial team who are sitting on the Treasury Bench. The Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Penrith and The Border (Rory Stewart), and the Secretary of State understand the challenges. In this place, however, all too often the Treasury decides. Will my hon. Friend join me in pushing for a member of the ministerial team in the Chamber to become Chancellor?

[Philip Boswell]

I thank my hon. Friend for his commendable comments. I agree with him wholeheartedly.

Matthew Bell, the chief executive of the Committee on Climate Change, said:

“if you don’t have CCS, then you really need to virtually completely decarbonise your transport sector and completely decarbonise your heating sectors, in order to deliver on the 2050 ambition”.

Since both these sectors seriously lag behind in the decarbonisation of energy production, this seems extremely unlikely, to say the least. The underlying message of the changes is that the cost of subsidising renewable energy has been underestimated by the Government. That has led to the Treasury’s withdrawal of the green deals for consumers, housebuilders and energy investors alike. The Government have instead put all their eggs in the dual basket of fracking and nuclear energy, neither of which looks to be progressing very smoothly, and that makes achieving the UK’s mandatory climate change targets highly unlikely. My hon. Friend the Member for Aberdeen South (Callum McCaig) and the hon. Member for Brighton, Pavilion (Caroline Lucas), who is no longer in the Chamber, touched on the problems of Hinkley C. As anyone can see, this history of successive short-termist UK Governments continuously moving the legislative goalposts can only undermine investor confidence. Brexit will only serve to exacerbate that problem further, which was a point well made by the hon. Member for Brent North (Barry Gardiner), who is no longer in the Chamber.

On energy security, last year I was a member of the European Energy Market Design Committee. The Committee was at a very early stage of engagement, but the potential for cross-European energy sharing among EU members via interconnectors and the like was striking. I wonder if that Committee will even sit again this year, given Brexit. It should be obvious to all that an efficient interconnector network and shared energy design across Europe would benefit all. When the wind is blowing in Scotland, as it invariably does, the energy that is generated can be used elsewhere. If there is no wind, but the sun is shining in Spain, we can share that mutual benefit. I sincerely hope the Committee does meet again, but we have just made things much harder for ourselves as we try to co-ordinate European efficient energy supply from without the EU.

I should say at this point that Scotland has no intention of suffering the fallout from Brexit, the ramifications of which are still to be understood. As my hon. Friends the Members for Aberdeen South and for Berwickshire, Roxburgh and Selkirk (Calum Kerr) both pointed out, we are staying in Europe.

I, like most sensible politicians, turn to independent experts for opinions and answers to questions about complex matters such as the natural environment. My points about the circular economy have been well made by other Members, so I will skip on to my next point.

The Institution of Environmental Sciences is currently conducting a survey of its members, in which it asks:

“What impact do you think the UK’s decision to leave the EU will have on environmental protection?”

An overwhelming 81% of highly educated, experienced environmental professionals consider that

“Without binding EU law, it is likely environmental regulations will be weakened or scrapped in the UK.”

A pre-EU referendum survey of members of the Institution of Environmental Sciences showed that 68% were in support of the UK remaining in the EU. The UK has been disproportionately successful in securing funding for research projects in the environmental sciences and other sectors due to the strength of our science base. Under the seventh framework programme, FP7, which ran from 2007 to 2013, €1,704 million was spent on projects falling under the environment theme. Of the 4,055 projects funded under the FP7 environment theme, according to the Community Research and Development Information Services, 603 were based in the UK, which made us second only to Germany, with 645.

[Kerry McCarthy]

The hon. Gentleman makes a really important point about the contribution of EU funding to research. I recently visited the Plymouth Marine Laboratory. While I was there, it was announced that it would receive a significant six-figure sum from Europe to fund some of its research, but obviously it is now very worried about what Brexit will mean. I also went to Harper Adams agricultural University, which does amazing work with lasers, drones and all sorts of hi-tech research. Again, that is dependent on EU funding to a large extent.

[Philip Boswell]

I completely agree with the hon. Lady and share her concerns about funding when Britain leaves the EU. Brexit does not bode well for the future of positive environmental projects in the UK.

I want to ask a number of questions of the Minister and to make a final point. First, Scotland has an incredible opportunity to be a world leader in a range of renewable technologies that are a vital part of our energy supply in the UK. They help the environment and create jobs in communities across Scotland. What steps will the Secretary of State and her Government take to ensure that Scotland remains at the forefront of renewable and offshore industries?

Secondly, the recent vote to leave the EU has plunged the UK’s energy sector into further uncertainty. The SNP calls on the UK Government to halt their damaging programme of austerity and to inject the economy with the investment necessary to stimulate growth and create a healthy environment for investors and consumers alike. What will the Government do to protect businesses and consumers from the Brexit fallout?

Thirdly, the SNP believes that enhancing energy efficiency in homes throughout the UK can provide valuable benefits to individual consumers, from improvements to quality of life to reducing fuel poverty, which is a key issue that has not been touched on enough today. The energy efficiency of homes should be a top priority so, in that respect, what does the Secretary of State intend to do to reduce fuel poverty? Fourthly, what do she and her Government intend to do so that we will hit our climate change targets and keep the lights on?

Renewable energy storage and efficiency are key to the future of UK energy. More needs to be done on non-intermittent green energy, so I urge the Secretary of State to invest in pumped storage, particularly at Cruachan and Coire Glas in Scotland.