Action on Climate Change and Decarbonisation

Debate between Philip Dunne and Richard Fuller

Tuesday 5th July 2022 Commons Chamber

[Philip Dunne]

The hon. Lady makes a very important point, and she made a strong contribution to our Committee’s report on the inquiry into the energy efficiency of existing homes. I will comment on that in my remarks, but I broadly agree with her.

It is right that the Government do what they can to align their spending priorities to support all those who are being squeezed, but as the CCC reminded us last week, we are also in a future of living crisis. Large-scale changes in climactic conditions are undeniable, and they have the potential to make parts of the globe uninhabitable, provoking a crisis of barely imaginable severity. So it is entirely appropriate, in Net Zero Week, that the House consider in a little more detail the spending that the lead Department on net zero is proposing in the current financial year to tackle climate change and to address decarbonisation of the economy.

In October 2021, just before the COP26 conference in Glasgow, the Government produced their net zero strategy. This is an ambitious document, ranging widely across all areas of Government. It presents the first wide-ranging plan across Government to build on the initial 10-point plan for the green industrial revolution, which the Prime Minister presented in November 2020. It demonstrates that the Government are in the business of climate mitigation and climate adaptation for the long term. I would argue that there is broad consensus across the parties in the House that this has to be the direction of travel. It also reflects the broad scientific consensus that the planet is under threat from climate change as never before in recorded history, and that our behaviour must change in certain ways if we are to be able to avoid the worst effects. However, my concern is that the Government’s strategy seems, in too many areas, to defer substantive action and to leave real expenditure to a future date—and, dare I say it, possibly to a future electoral cycle. The warning from the Committee on Climate Change last week surely demands that more immediate action is taken to achieve the Government’s priorities and net-zero ambition.

My Committee had an interesting exchange last week with my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs. He disagreed with the thrust of the CCC’s conclusions, which he thought did not make sufficient allowance for the potential contribution of technology to mitigation of the climate crisis. That is a perfectly reasonable debating point. Indeed, our Committee has looked at a number of technologies that can play their part in achieving our net-zero ambition. However, I say gently to those on the Treasury Bench, that waiting for the right technology to turn up is not a strategy.

The Committee has been looking at potential solutions to help decarbonise the economy, from tidal power to offshore wind—there is significant emphasis on that in the Government’s strategy—and heat pumps, where there is ambition, but currently a significant gap in delivery. As the Secretary of State for Business, Energy and Industrial Strategy, and the Minister for Energy, Clean Growth and Climate Change will know—we wrote to them about this—the current state of development of negative emissions technologies does not promise a “silver bullet” from carbon capture and storage plants, which by 2050 will snatch carbon from the air and allow us all to go on as before. It is simply not there yet.

The Chancellor’s spending review last autumn gave a breakdown of the Government’s expected expenditure on net-zero measures in each year to 2024-25. In total, the Government plan to spend £25.6 billion on net-zero measures over that period, with £5.5 billion to be spent in the current financial year—subject, of course, to the House’s approval of these spending plans tomorrow. There are concerns about how effective that spending will be, and the Public Accounts Committee has recently been critical about the overall funding of the net-zero transition. The House is right to be concerned about the value for money of such approaches, and I commend the National Audit Office for its detailed and expert analysis of the Government’s plans.

The excellent briefing on the Department’s estimate, produced by the House of Commons Library for this debate, indicates that £21.8 billion—20% of the Department’s budget for this year—is dedicated to reducing UK greenhouse gas emissions to net zero. I do not include in that figure the £11.6 billion for the reduction in energy bills announced as part of the Government’s measures to address the cost of living crisis. Although the Government list that as a measure contributing to the net-zero target, I do not think that short-term energy bill reductions should be treated as a net-zero measure, unless somehow they are linked to fossil fuel reduction measures more directly.

I will focus the remainder of my brief remarks on the points that my Committee made last session in its report on the energy efficiency of existing homes, to which the hon. Member for Brighton, Pavilion (Caroline Lucas) referred. It seems that this is the area where greatest progress can be made towards the net-zero target, and in the shortest time. It was also the area that many witnesses before the Committee identified as a missing component from the recent energy security strategy.

I was pleased that late last month Ministers laid before Parliament the draft legislation needed to implement the fourth energy company obligation scheme. That hugely successful scheme has driven energy efficiency improvements in a great many domestic properties. Such improvements will reduce consumer bills. They will also reduce energy consumption, and thereby emissions from power generation. In the nine years of the scheme’s operation to date, it has supported cavity wall insulation in over 1 million properties. That is impressive, but there are still some 19 million homes that need upgrading to energy performance certificate band C. The cost estimate on which our Committee received evidence averaged £18,000 per property. Our Committee, I am afraid, found that the Government estimate for decarbonising Britain’s housing stock by 2050, at some £65 billion overall, was highly likely to be a significant underestimate. Welcome though the ECO is—last month, the chair of E.ON told the Committee about industry support for the scheme—it represents only a small fraction of what is genuinely necessary to achieve domestic energy efficiency. Will the Minister be in a position to elaborate further on the Department’s plans to drive energy efficiency in existing homes? It is not immediately apparent in the spending plans that the House is examining.

It is unlikely that the average householder will be able to afford a one-off payment of about £20,000 to upgrade their property without some incentive from the centre. I do not want to hark back to the green homes grant voucher scheme, but I hope that the Government have learned the lessons from its introduction. It was a well-meaning scheme that could have kick-started energy efficiency improvement, but it was strangled by red tape and ultimately abandoned in less than a year, having reached only a fraction of the homes that it was expected to improve.

[Richard Fuller (North East Bedfordshire) (Con)]

I wonder whether my right hon. Friend might address community-led schemes, which were the other thing that the hon. Member for Brighton, Pavilion (Caroline Lucas) mentioned. Is not one reason why costs are so high because the Government’s strategy is focused on individuals making a decision about their house, rather than being a more comprehensive approach that could achieve better economies of scale, certainly in service delivery?

[Philip Dunne]

The Government have been focusing on social housing, which is typically owned in relatively large unit blocks together in a street or an estate. In many cases, such schemes are community energy schemes. For example, I have seen geothermal being introduced across an entire estate in my constituency. The Committee is looking at the prospects for geothermal to provide community-based schemes. There is a big role for that to play, but it is a part of the whole that will not be suitable for every area or every housing type.

The Government are taking steps, but I see them as overly cautious. However, I strongly welcomed the Chancellor’s announcement in the spring statement that removed VAT on energy efficiency measures for domestic homes. I expect that Ministers will be measuring its impact in the expectation that it will be a pathfinder to extensively rolling out similar support—for example, on batteries for domestic energy storage, which, as I understand it, are currently excluded from the scheme.

It is clear that the current energy cost crisis is leading to soaring public interest in energy efficiency measures to cut bills. For a Government willing to invest wisely, that represents a real opportunity for substantial returns not just to the Exchequer, but to the householder through cut bills and to the planet in reducing emissions. I do not expect the public sector to pick up the bill for energy efficiency improvements, but, with the right support, the private sector can be properly incentivised to take the lead.

In closing, I will raise one further issue concerning the Government’s approach to energy efficiency and the funding of measures to improve it. I would like Ministers to undertake a thorough review of the impediments to introducing innovative schemes that encourage home improvements. Just last week, I was alerted to how an innovative domestic solar panel installer’s business model is being constrained by provisions in the Consumer Credit Act 1974 designed to protect both consumers and suppliers from theft or loan default on portable consumer goods, such as cars. It seems problematic that those provisions should also apply to home insulation schemes, which are not portable—or, if they are, they are very expensive to move—and therefore are not a good asset on which to lend subject to those provisions. I strongly ask Ministers to examine such issues with some urgency. It may well be appropriate to do so when the UK Infrastructure Bank Bill comes to this House, to ensure that the bank is not similarly hobbled in making investments in energy efficiency projects. Thanks to the Department, those are one of its core remits.