Jerome Mayhew is the Conservative MP for Broadland and Fakenham.
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We are no strangers to hyperbole in this Chamber, but I think the exaggeration of the importance of this Bill in the debate has surprised even Government Members. To hear Opposition Members, we would think that the Government have made a bold announcement to reject their policies on climate change, to deny the science and to minimise the impact of climate change, and to say that we are no longer committed to decarbonising by 2050. None of that is even remotely true.
Nothing has changed in relation to the Government’s policy on climate change, and decarbonisation in particular. In fact, the Prime Minister recently reaffirmed that. The United Kingdom recently passed the substantial marker of being the first of any major economy to more than halve its emissions. That is a huge milestone, and that is the kind of climate leadership that is important; not making virtue-signalling announcements in this Chamber or elsewhere. Countries around the world look at us because of what we do, and we are decarbonising and leading by example.
I will take no lessons from the Labour party. I looked this up during the debate: in 2010, on Labour’s watch, the economy emitted 495.8 million tonnes of CO 2 equivalent; now it is 320 million tonnes and declining. That is as a result of Conservative policies in action, where we accept the science on climate change but take positive actions on the really important thing: it is the amount of oil and carbon we use that is important, not where it comes from.
The Conservative record is incredibly strong, but we still recognise, as does the Climate Change Committee, that we need oil and gas as part of our long-term future. Currently, as my hon. Friend the Member for Banff and Buchan (David Duguid) pointed out, about 75% of our energy comes from hydrocarbons—oil and gas. That is reducing, but it is on a trajectory to get to about 25% even in 2050 and beyond.
The hon. Member is taking the Climate Change Committee’s name in vain. It does not say that we need new oil and gas. It says categorically that new explorations of oil and gas are not compatible with our net zero obligations. I do not understand why he is claiming something that is different from what the committee says. He compared emissions under a Labour Government with those under a Tory Government. I am no apologist for the Labour Government, but I wonder whether he put consumption emissions into those calculations. Did he work out whether emissions have gone down in the UK because we have outsourced even more of our manufacturing to countries on the other side of the world?
I am grateful to the hon. Lady for that intervention. The Climate Change Committee gives us the science, and the political decisions are taken in this House. We are not talking about an increase in exploration; we are talking about a managed reduction of 7% per annum.
Moving on, the question is not whether we have oil or gas, yes or no. We need oil and gas, certainly for the transition period between 2024 and 2050, and even beyond—according to the Climate Change Committee, around 25% of our energy will still come from oil and gas. The question is: where should that oil and gas come from? If we need to supply this economy with oil and gas, it is my belief that we should use UK oil and gas, and there are reasons for that. The first is that the industry employs 200,000 people. I would prefer that employment to remain in the UK economy, rather than export it to Russia, Qatar, Saudi Arabia or other oil and gas producing countries. That is a reasonable position, given that our consumption is required for the future.
For those four reasons, I am wholly in favour of the ambitions behind this short Bill. Climate change will be solved by reducing demand for hydrocarbons, not by reducing supply. We will solve the demand problem by providing cheap alternatives, which the Government are doing. Members who have contributed were quite right to highlight that. We need renewables.
Full debate: Offshore Petroleum Licensing Bill
I am grateful to my right hon. Friend for those excellent points. They highlight one reason why the merging of the Department for International Development with the Foreign and Commonwealth Office to form the Foreign, Commonwealth and Development Office has the potential to link those two areas of policy. The challenge with push factors is substantial and it is that they have only just started. He is right to refer to malign actors such as Russia in the short and medium terms, but there is a much bigger factor that this House needs to consider over the next 20 to 50 years: climate change. The likelihood is that there will be very significant mass migration from sub-Saharan Africa when large areas of countries, perhaps entire countries, may become functionally uninhabitable through water scarcity and heat. What we have seen currently in push factors will be nothing compared with what we see in the future, so it behoves us, as a responsible Government, to design and implement an immigration policy that is fit for purpose, not just for now, but for the future.
Full debate: Safety of Rwanda (Asylum and Immigration) Bill
This Bill creates a mechanism to boost United Kingdom construction while driving down our greenhouse gas emissions, which is key to delivering UK growth in a manner aligned with the country’s net zero targets. The proposal has come from the industry, which supports the Bill wholeheartedly. The industry is working to reduce these carbon emissions voluntarily, but it needs the Government to take the lead and accelerate the work that it has started.
The Bill tackles an area of greenhouse gases called embodied carbon. Every year, our buildings and construction are responsible for the emission of more than 150 million tonnes of greenhouse gases, fully a quarter of our country’s total carbon footprint. Two thirds of those emissions are due to the lighting of buildings, their power and their water—the heating and cooling—and bear the tag “operational carbon”, and the Government have taken bold steps to reduce them as part of the net zero strategy. The building regulations, under part L, effectively address the reduction of operational carbon. As a direct consequence of the regulations and, importantly, the decarbonisation of the electricity supply, it is anticipated that by 2035 the emissions related to the services side—the operational carbon side—of buildings and construction will have fallen to an almost negligible level.
Let us think about how much effort we put into the control and planned reduction of those emissions. We have the sustainable aviation fuels plan, we have jet zero, and we have plans for corridors for emission-free shipping based on ammonia and hydrogen. We take all those plans very seriously, but what are the Government doing, and what are we doing as a nation, to deal with embodied carbon from construction? With 50 million tonnes of embodied carbon emissions a year, we might expect that the Government would already have plans to direct a reduction in line with our legally binding net zero targets.
The truth is that embodied carbon remains completely unregulated, and it shows from the data. Operating carbon emissions are dropping rapidly because of part L and the decarbonisation of our electricity supply, but the data on embodied carbon shows no current trend towards any reduction at all. In 1995, there were 43 million tonnes of greenhouse gas-equivalent emissions; by 2018, emission levels, far from reducing, had crept up to 49 million tonnes and were approaching 50 million.
To be fair to the Government, their net zero strategy sets out an intention to
“the requirements to report whole life carbon, and set informed limits on embodied carbon, would help the real estate sector to decarbonise.”
My Bill would enable the Government to catch up on the issue, directly amending the building regulations. It will require the reporting of carbon on significant building work, both new projects and refurbishments, from 2023 in the large-building, non-domestic sector, and by 2025 for housing in developments of more than 10 dwellings. It will then move to introduce limits on the embodied carbon emitted through construction from 2027—something that can be ratcheted down over time, in line with our net zero targets.
A clear policy signal on the direction of travel is what the industry needs to accelerate its development and the large-scale use, and more efficient use, of lower-carbon products. Just as how the policy statement that vehicles will not be sold with an internal combustion engine post 2030 has transformed the car manufacturing market, the construction industry needs that kind of market signal to invest in lower-carbon alternatives and take the next step to the wider adoption of what are currently niche products. By sending a clear policy signal from Government to industry, we will enable the sector to grow ahead of time. We must signal the road map to the end of high-carbon construction in the United Kingdom to enable the building industry to take the needed steps towards zero-emission construction.
When the Government say that they want to consult on their approach on measurement and reduction of embodied carbon, we may be beginning to wonder who else is there that they are intending to consult. The sooner we start this process, the sooner we can reduce our emission of 50 million tonnes of carbon every year. My Bill will reduce the construction industry’s carbon footprint, while sending certainty to UK industry that investing in decarbonisation is economically sound. It will bring economic growth and it will save the taxpayer money by standardising the decarbonisation process. The Government have great ambition to decarbonise. We all support it, and they should be commended for their ambition and for the many actions they have already taken in this field. The construction industry has the appetite, tools and skills to match that ambition. We have here a tremendous opportunity to make a significant impact on the UK’s carbon emissions and ensure that the UK remains a global leader by regulating embodied carbon in construction. I commend this Bill to the House.
Full debate: Carbon Emissions (Buildings) Bill
If the SNP was really worried, it would reduce its income tax, which costs £800 million more to taxpayers in Scotland than the rest of the United Kingdom—I was shocked to hear that it applied to taxpayers earning just over £27,000 a year and above—support continued access to North sea oil and gas reserves, and regret Nicola Sturgeon’s assertion that she would not give the go-ahead to the Cambo oil field. We need security of supply and we need to support domestic extraction during the period of transition between now and 2035. That supports our domestic prices and helps us in our transition to net zero. The Committee on Climate Change itself recognises that we need oil and gas resources between now and 2035
Full debate: Cost of Living Increases
However, I approach this matter from a slightly different perspective—albeit arriving at similar conclusions—because I see this as the role of the free market. As a former businessman and entrepreneur, I want to unleash the power of the free market to help solve some of the problems that its historical performance has helped create. Too often, the market has been seen as the villain. We talk about business profiteering at the expense of the environment, or businesses trashing the world’s resources, and that applies not just to carbon net zero but to biodiversity. As Professor Dasgupta noted in his report earlier this year, in terms of the biosphere our current practices are using the resources of 1.6 worlds.
What are we left with? At governmental level, we all know that the climate change crisis is a huge problem, so we have plans from Government, who are picking technology winners by investing in hydrogen, for instance. I hope that hydrogen will be a key part of the solution in our progress towards net zero by 2050, but it might not be. The real problem is that we are currently relying on the Government to take those kinds of decisions because the market is substantially blind. We need to unleash its power through a price for carbon.
Our biggest challenge in creating a price for carbon is that the United Kingdom economy is not self-contained; we are part of a global economy. If we increase the price of carbon in this country, which is really another name for increasing the price of energy, that will have a very direct and immediate risk to our domestic economy, particularly our manufacturing base. Increasing the price of energy in our domestic economy would result in an increase in the costs of our manufacturing base, which would then either go offshore and relocate to a lower-cost environment abroad, or it would stay and get undermined by the sucking in of lower-cost, higher-carbon imports. That would result in the worst of all worlds: the destruction of our own economic base and an actual increase in greenhouse gas emissions as transport costs are added to the costs of production.
In my submission, we have a political opportunity now not just with the advent of COP26, but, more significantly perhaps, with the publication of a draft Bill by the European Union. This gives us an opportunity to address one of the key challenges to a CBAM, which is how we deal with the concern or disapproval of large exporting countries that have a high carbon input—for instance, China. We have an opportunity to join forces with the European Union and have a more internationalist approach to the introduction of a CBAM now. It would not hurt given that, dipping into another language, we have a certain froideur across the channel currently, and sticking to the same approach, what about a bit of rapprochement?
Full debate: Carbon Emission Charges
The Government are right to focus on defending fair competition while supporting our steel industry to adopt low-carbon energy sources as we move toward renewable supplies, supporting our producers to the tune of £500 million since 2013 so that our cleaner energy does not disadvantage them. In the long run though, we need to move away from clumsy and expensive state support. Rather than costing our Treasury money to compensate industry, a carbon border adjustment mechanism would raise income from high-carbon imports, providing funds to invest in our own decarbonisation plans. Those are supports that can work within WTO rules, not in flagrant breach of them, as Labour wants.
Full debate: Protecting Britain’s Steel Industry
I ask hon. Members to imagine that, as they settle down in their beds, they start to wonder how we could create the economic environment for levelling up in our manufacturing heartlands, giving them a low-carbon head start on the rest of the world. As they turn over and start to count the fluffy sheep jumping over a fence, they catch sight of a free market that naturally seeks out the most effective way to reach carbon net zero and deliver on the Prime Minister’s 10-point plan. Finally, just as they drift off to sleep, they glimpse, as in a glass darkly, a Government leading the world at COP26, achieving an international approach that brings co-operation and rapprochement with our European and American friends and allies. Could this be real, or must it evermore remain but a dream?
Well, this is no dream, and we can turn it into reality with a border carbon adjustment. We know we need to reduce carbon to net zero by 2050, and centuries of experience have taught us that the free market is without equal in being able to solve challenging economic problems such as this. Yet, right now, our free market stands helplessly by, its creativity and innovation useless.
Border carbon adjustment can transform that process: charge imports from a high- carbon economy the same carbon cost as we impose on our domestic industry via a BCA and the problem is solved. There would be no incentive for our manufacturers to base production abroad, since the costs would be equalised. Foreign companies would no longer have an unfair trade advantage. In fact, it would provide them with a direct incentive to reduce carbon usage in their domestic environment to avoid corrective tariffs. From a policy perspective—I am using China as an example—the Chinese Government would have a choice: either their exports pay a carbon price at our border and the money goes to our Exchequer; or they create a carbon price in their domestic market and they get to keep the money themselves. There is, therefore, a really positive incentive internationally for carbon reduction and the benefits to be spread. After all, climate change knows no borders. Better still, using the same calculation for border carbon adjustment but this time in reverse, our own factories would get the benefit of a carbon cost rebate at the border when they export, making their exports both cheaper and more profitable, increasing our competitiveness already on the international market.
Moving on to energy, we naturally assume that we create all the energy that we use in this country domestically, but that is not the case. On average, we import, via undersea interconnectors, about 7% of the electricity that we use in this country. Members may recall that, last May, we trumpeted in the press that we had a two-week period in which we were coal free. We had coal-free electricity for two weeks. That was very exciting, but what the newspapers failed to mention was that, during that two-week period, we imported from Holland 40 GW of coal-fired electricity. The reason that we did that was not that we lacked generating capacity in the United Kingdom, but that it was cheaper to import coal-fired electricity from mainland Europe than it was to use our own. The reason why it was cheaper was that it was entirely tax-free, whereas we imposed a carbon tax on the generation of our own domestic electricity. Unbelievably, we actually incentivise the importation of high-carbon coal-generated electricity at the expense of our domestic manufacturing processes. How can that be right? A border carbon adjustment would sort that out in a jiffy.
What single better way is there to forward this Government’s levelling-up agenda than by putting in place the economic conditions for the market to want to re-industrialise in the UK, and all that with no need for Government subsidies. In fact, not only does it not require Government subsidies but it will actually produce an annual windfall for the Treasury year after year. Working out how big that windfall might be has a number of imponderables in it, but the Grantham Research Institute of Climate Change and the Environment has produced a report on this and, again, using the assessment of a carbon price between £50 and £75 a tonne, starting in 2020 and working up towards 2030, it assessed that the gross amount that the Treasury could recover under this process would max out at £36.7 billion a year. I stress that that is the gross amount. Members may well take the view that, rather like VAT, this is a tax that is consumer based and would impact poorer households disproportionately as a percentage of their gross income. The Government might very well want to use some of that £36.7 billion to cushion the blow and to make it more acceptable for lower-income families, perhaps by investing in insulation for their houses or other measures.
My hon. Friend is making a fascinating speech—despite starting off talking about sheep, he has managed to keep everyone’s enthusiastic attention throughout. A lot of emissions-intensive British industries will already find it difficult to compete in the global marketplace. As we begin to encourage the use of carbon capture and clean hydrogen by heavy industry, they will face higher production costs. Would a border carbon adjustment enable heavy industry to decarbonise while preventing job losses, and is that something the Treasury would also find attractive?
My hon. Friend has hit the nail on the head, because one of the key benefits of a border carbon adjustment is that it would allow us to decarbonise, and allow our heavy industry to accept the pain of higher energy costs, therefore letting the market work in our domestic market to incentivise the development of lower-carbon technology, while at the same time protecting it from being undercut by countries that are taking a little longer to go on the low-carbon journey.
More practically, if the UK were to join the United States of America, our friends in the European Union and other countries to establish the principle of BCAs at COP26, that would be a game changer, because that would ensure their practical acceptance. Others worry that putting forward such an ambitious proposal at COP26 runs the risk of failing to achieve the consensus that would allow the PR men to claim a stunning success. It might, but the risk of failure is the price of ambition, so should we give up on our ambition? Of course not.
Is there international support for this approach? Do we have a realistic prospect of bringing the world community together and with us at COP26? I say that there is, because President-elect Biden has already spoken about “carbon adjustment fees” against
That is a clear indicator that the incoming Administration in America is taking this seriously. I know that there is many a slip between a statement of intent and action, but it is something that we can potentially get behind at COP26. The European Union, as has been mentioned, just this July launched a formal consultation on the implementation of a border carbon adjustment, and it is worth noting that for the President of the Commission—I think it was part of her manifesto when she was first appointed— this is one of the key objectives for her presidency.
The hon. Member recognises that we are on a journey in our decarbonisation of industry. I would be delighted if I managed to persuade the Minister to accept this one element of the policy without rewriting the entire economic agenda for the next period, but it is clearly true that, over time, we will be moving away from petrochemicals, and the economic case—the business case—for subsidising what will soon become stranded assets becomes less and less clear.
Our hosting of COP26 would be the perfect forum to crystallise these disparate movements that we have already identified around the world into a coherent whole. What better objective for the conference could there be? Politics is full of mis-steps and compromise. Very rarely do the stars align in favour of a truly inspiring act of political and economic leadership—one that can transform the future of our country and the world for the better. The stars are aligning for border carbon adjustments, if only the Government will believe in the Prime Minister’s vision of a post-Brexit Britain and be bold.
Full debate: Border Carbon Adjustment Tariffs and Decarbonisation
Having now seen the assembly’s output, I recognise that my first impression was wholly a wrong one. Although the assembly’s work can in no way supplant the role of this House in formulating and then enacting public policy, its report has added greatly valuable insights to the debate on the mix of policies required to achieve our common goal. The standard answer to the question which technologies should be used to get to net zero is “all of them”, and that is still likely to be the case, but the Government should take note of the assembly’s views, and take note very seriously, given that public acceptance of the huge changes required will be critical to their success. If we do not bring the public with us, the best laid plans will be doomed to failure.
It is for that reason that I was so glad to read the Prime Minister’s 10-point plan for the green industrial revolution. I do not believe that it is serendipity that this key policy announcement mirrors so closely the Climate Assembly’s conclusions: increasing our target for offshore wind capacity from 10 GW to 40 GW by 2030; promoting the hydrogen generation market; accelerating the transition to electric vehicles, as has already been referred to during this debate; pushing additional investment into public transport, walking and cycling; and researching zero-emission aviation and shipping. The list goes on. It shows that the Government have been listening, and listening hard, and that they are seeking to reflect many of the Climate Assembly’s key objectives. It is a testament to the value of this process, and all those who were involved should recognise the impact that their work has already had. But there are some interesting differences.
There is a desire to use our response to climate change as an opportunity to address what kind of relationship we should have with our natural surroundings—less an industrial supremacy and more, perhaps, of a collaborative symbiosis. Although it is my view that we will certainly need all our technological ingenuity in carbon capture and storage, and probably in nuclear, to achieve net zero carbon by 2050, as policymakers we should seek to understand and reflect this deeper and wider need. It is this more mature relationship between us and our environment that sets the current generation apart from its predecessors, and gives me such hope for the future.
Full debate: Climate Change Assembly UK: The Path to Net Zero
What progress the Government has made through international co- operation on tackling climate change. ( 905665 )
Full debate: Climate Change: International Co-operation
If we are to achieve our goal of carbon net zero by 2050, some form of effective carbon taxation that takes account of the challenges of international trade will be necessary. Given that, what negotiations has the Department had with our European partners on the establishment of an effective system of carbon border adjustment payments?
Full debate: Climate Change: International Co-operation
I also welcome the developing demonstration that this Government are really serious about reshaping the economy to achieve carbon net zero by 2050. We are on a journey of technological development to zero-emission energy and zero-emission land transport, and now is the time to tackle our buildings, which are responsible for 18% of all our emissions. Even with our increased appetite to “build, build, build”, 80% of all buildings likely to be standing in 2050 have already been built. The Chancellor’s £3 billion insulation schemes are a fantastic start, and I look forward to the publishing of the buildings and heat strategy later this year to see how this policy can be further developed.
However, as the Chancellor made clear, our response to the current crisis cannot all be about spending. In the medium term, we need to put our public finances back on a sustainable footing. Baldly, it is likely that ways in which to raise revenue will not be far from the Chancellor’s mind. Anticipating that, we should consider a carbon tax, together with a scheme for broader adjustment payments. Today, the full cost to the economy of carbon emissions is not included in the price of purchase, creating a false exchange. Put simply, when we buy something, we do not know what carbon cost we are responsible for. A carbon tax, adding that missing part of a transaction, would remedy the problem.
Such a tax would make the decision to take advantage of today’s grants for insulation even more attractive, and, rather than costing the taxpayer, could raise significant sums for the Treasury. Its enormous benefits can be summarised as follows: creating an efficient exchange where all the costs of production are reflected in a decision to purchase; creating stronger and more profitable business cases for the new green tech businesses that we want our economy to pivot towards, without having to attempt that by expensive and inefficient Government projects and grants; providing a cash incentive to all of us to reduce our carbon-emitting purchases in favour of lower carbon alternatives, thereby assisting the achievement of our legal obligation to reduce carbon emissions to net zero by 2050; and, in addition to all those public goods, generating a very significant income source for the Treasury at a time when everyone else is calling for increased spending. If anything will get the attention of the Minister, I hope that last point will.
Full debate: The Economy
I am delighted that the Government have introduced this Bill which, together with the Agriculture Bill and the Fisheries Bill, shows that we are serious in our resolve to improve the environment and tackle climate change. I congratulate the Secretary of State and his Ministers on creating a structure for long-term environmental improvement, on the application of the principle that the polluter should be financially responsible for the life cycle of its products, on ensuring an improvement in the air that we breathe, and on seeking to improve biodiversity through the planning system. I am sure that all those proposals have widespread support.
Full debate: Environment Bill
My hon. Friend the Member for North Norfolk (Duncan Baker), in his moving maiden speech, evoked the slower pace of life associated with our part of the world, which is epitomised, in his mind, by the village of Sloely. Well, once he has tired of Sloely, I invite him gently to join me in Little Snoring, or even in Great Snoring. But to talk of modern Norfolk in such terms is to ignore the dynamic businesses that thrive there, particularly in the farming, agri-science and green energy sectors. As a rural-based businessman myself, I know the desperate need for improved mobile phone coverage and broadband connectivity to allow the businesses of Broadland to thrive. That is why I wholeheartedly welcome the shared rural network agreement to provide 95% of geographical coverage by 2025, and I am already working with Mobile UK and Norfolk County Council to ensure that Norfolk is in the first phase of this roll-out. I also eagerly await the Government’s 1 gigabit broadband. Entrepreneurialism is alive and well in Broadland, and business there could have the best of both worlds—unrivalled quality of life, together with great connectivity—but we need the tools to do the job.
Full debate: February Adjournment
1. What steps she is taking to work with pension funds to encourage them to make investment decisions that help tackle climate change. ( 900392 )
Full debate: Oral Answers to Questions
I welcome the progress that has been made on pension funds addressing climate change and ask the Minister to meet me concerning a constituent who is unable to access her pension fund without paying in excess of £2,000 in fees for independent financial advice —money she does not have until she accesses her fund.
Full debate: Oral Answers to Questions