Kerry McCarthy is the Labour MP for Bristol East.
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I thank my hon. Friend for her continued interest in this issue. Despite significant challenges, COP29 agreed a new climate finance goal and finalised guidance on international carbon markets. We would have liked more progress in certain areas, such as on mitigation outcomes. We look forward to playing an important role in the run-up to COP30 in Belém, to ensure that more progress is made.
Full debate: COP29
My hon. Friend is right: we earn the credibility that enables us to show international leadership by delivering at home. In due course we will publish a cross-economy plan for meeting our climate targets, which will outline the policies that are needed to meet our 2035 nationally determined contribution, and we are engaging with a range of stakeholders on delivery through, for instance, the Net Zero Council, which has a very busy work programme, and the local net zero delivery group.
Full debate: COP29
It is always a pleasure to answer questions from the hon. Member. We remain committed to international climate finance, and to the new climate finance goal agreed at COP29. The level of the UK’s contribution will be considered in the spending review, when we will also consider how we can maximise investment from the private sector.
Full debate: COP29
I can give the hon. Member for Strangford, who has raised the question of the CfD regime before, the assurance that the Lords Minister from the Department for Energy Security and Net Zero met his Northern Ireland counterpart before Christmas to discuss it; I am told that that dialogue continues. The hon. Gentleman will also, I am sure, be pleased to know that the Minister for Energy will be in Belfast tomorrow—we have an inter-ministerial group from the devolved Administrations that moves around. I discussed the agenda with the Minister for Energy last week and the Department of Agriculture, Environment and Rural Affairs will be very much involved in those discussions. I can assure the hon. Gentleman that we are not ignoring Northern Ireland; it is very much on our radar.
On grid capacity, we know that grid capacity is a real issue, in terms of both our ambition for clean power by 2030 and our wider industrial decarbonisation. The Secretary of State likes to talk about the “four horsemen” standing in the way of us getting there, and grid is very much one of those. We have brought in Chris Stark, the former chief executive of the Climate Change Committee, to head up mission control on that issue, and he is working daily on how we can unblock and accelerate projects within the grid.
Turning to the actual debate, the experience of recent years has reinforced what we already knew: we cannot rely on fossil fuels. We need clean power to reduce vulnerability to volatile global fossil fuel markets, to give us energy security and reduce the cost of energy, and to tackle the climate crisis. That is why one of the Prime Minister’s five missions is to make Britain a clean energy superpower by delivering clean power by 2030 and accelerating to net zero. Electricity generated by renewables and nuclear power will be the backbone of a clean electricity system by 2030.
I have told the hon. Member for West Suffolk (Nick Timothy) how disappointed I am with the Opposition’s U-turn on this issue. I understand the position they are coming from and that there has been a change from the stance that they adopted in Government, but I have not heard from him what the answer is for our future energy security. What is the answer to dealing with the global fossil fuel markets? What is the answer to tackling the climate crisis? What is the answer to bringing down bills in the long term?
My hon. Friend makes a valid point. I wonder whether the Opposition spokesperson has spoken to businesses on this matter because, in all my conversations with businesses, both in opposition and now in government, it is clear that they want certainty. They need a stable investment environment if they are to make long-term decisions. They cannot invest in renewable energy, in industrial decarbonisation or in the economic growth this country needs without certainty. We know that one reason why we are in the economic situation we are is the lack of stability and the economic chaos at times under the previous Administration, particularly under the predecessor of my hon. Friend the Member for South West Norfolk. Therefore, certainty is what we need to have. Business is crying out for that.
The scheme played a fundamental role, as already noted, in getting the UK to where we are now on renewable energy generation. Combined, the UK-wide RO schemes support nearly 32% of the UK’s electricity supply, providing millions of UK households and businesses with a secure supply of clean energy. The scheme is now closed to new capacity, for reasons I will come on to.
Thetford power station, in the constituency of my hon. Friend the Member for South West Norfolk, has been accredited since the first day of the RO, back in April 2002, so it has so far received Government support for nearly 23 years. Over that time, it has generated more than 5.8 TWh of low-carbon baseload generation. That has been a valuable contribution to our transition to net zero. It has also increased our security of supply by generating home-grown energy. As he said, the station has provided 100 jobs in his constituency and co-benefits in handling poultry litter.
The station has another two years of support before its time under the RO ends, in March 2027. We are aware of the concerns about the future of the station once that support ends and my hon. Friend has done an excellent job in outlining those concerns today. My officials have repeatedly engaged both with the owners of the Thetford plant, Melton Renewable Energy, and with DEFRA officials to discuss those concerns.
To explain the overall context, as I have said, the RO has done sterling service in bringing forward the successful large-scale renewable energy sector that we see in the UK today. That has paved the way, as my hon. Friend the Member for Great Grimsby and Cleethorpes (Melanie Onn) said, for the cost reductions that we have seen over the last few years under the contracts for difference scheme, but its time has passed. The energy landscape has evolved since the scheme was launched in 2002 and it no longer provides the market incentives or the value for money that the transition to clean power requires.
The RO was designed to support renewable energy-generating stations during the early stages of development and generation, and to allow the recovery of high capital costs. For that reason, RO support is often significantly higher than that provided under successor policies such as contracts for difference. We must always bear in mind that consumers pay for the scheme through their electricity bills, and delivering value for money for them is essential. For that reason, we do not plan to extend RO support.
I appreciate that Melton Renewable Energy and my hon. Friend the Member for South West Norfolk are looking for early answers, but I must stress that no decisions have yet been made and we are happy to continue the conversation with him.
To conclude, renewable energy is critical to our mission to make the UK a clean energy superpower. We understand the concerns of some generators coming to the end of support under the RO and we are looking at ways to maximise the output and potential of those RO sites, while also considering the impact on consumer bills.
Full debate: Renewables Obligation Certificate Scheme
I hereby give notice of the Department for Energy Security and Net Zero’s intention to seek an advance from the Contingencies Fund of £55,000,000 for the UK Atomic Energy Authority pension schemes. This is a cash request to enable pension payments to be made as they fall due.
Full debate: Contingency Fund Advance: UKAEA Pension Scheme
Last week, the UK formally submitted its NDC to the United Nations framework convention on climate change. It is a world-leading, ambitious target that we hope will demonstrate ambition to other countries. In that NDC, we have a youth clause for the first time, and I am very keen to talk to Members across the House about how we can better engage with schools, communities and young people to bring them on board with us as we seek to achieve our ambitions.
Full debate: Topical Questions
That the Committee has considered the draft Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2025.
The draft order was laid before Parliament on 3 December 2024. I will set out some of the background. The UK emissions trading scheme was established under the Climate Change Act 2008 and the Greenhouse Gas Emissions Trading Scheme Order 2020 as a UK-wide greenhouse gas emissions trading scheme, to contribute to the UK’s emissions reduction targets and net zero goal. The scheme is run by the UK ETS Authority, a joint body comprising the UK and devolved Governments. Our aim is to be predictable and responsible guardians of the scheme and its markets.
Under the UK ETS, operators are required to monitor, report on and surrender allowances in respect of their greenhouse gas emissions. Most allowances are purchased at regularly held auctions, but operators in certain sectors at risk of carbon leakage are given a number of allowances free, to manage their exposure to the carbon price and the risk that business decarbonisation efforts could be undermined by higher carbon imports. Under the UK ETS, an “operator” is the person who has control over an installation. An “installation” is a stationary unit at which regulated activities take place, and sub-installations represent operations carried out at an installation in respect of which free allocation operators are required to report activity levels for ETS purposes.
There is an exception to the final year rule in circumstances where the permanent cessation of operations at a sub-installation is part of a series of changes that has resulted in a material reduction in the specified emissions per unit of production of those pre-cessation products which continue to be produced at the installation. The exception will incentivise decarbonisation, as operators that can demonstrate that the relevant requirements are met will continue to be entitled to the free allocation calculated in accordance with existing UK ETS rules, which is calculated in advance on the basis of historical activity levels.
Full debate: Draft Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2025
I suppose I should welcome the shadow Minister to his place, but it is a bit depressing to hear him outline the Opposition’s position. In the last year or two that the Conservatives were in government, we saw them U-turn and row back on getting to net zero. We recognise that it is an integral part of our growth and industrial strategy, which will protect jobs and investment in this country, so to hear the Opposition’s position spelled out in such stark terms is disappointing.
Net zero is part of our growth strategy, and energy security is very much at the heart of what we do in the wake of Putin’s illegal invasion of Ukraine and other global factors. The shift away from volatile fossil fuel markets is not just about a desire to reach net zero, although of course that is really important—we see evidence of what happens if we do not tackle climate change around us every day. It is about protecting our security. The UK emissions trading scheme is a key pillar of the climate and net zero policy regime and our industrial strategy. It sets a cap on emissions in the sectors covered, which currently represent about a quarter of the UK’s emissions, and guarantees that those sectors will reduce their emissions in line with our world-leading net zero target.
Only fossil fuel electricity generation will be captured by the UK ETS, so the increasing uptake of renewables and nuclear power will reduce the costs for consumers. By driving green investment as part of our industrial strategy, the UK ETS will also help to deliver a just transition, growing the UK’s economy and securing good jobs for people across the country.
I think the shadow Minister is arguing that decarbonisation is coming too fast, but we are absolutely at the forefront of the new technologies and industries. My hon. Friend the Member for Redcar could wax lyrical about what that means for a constituency such as hers. Redcar has a strong industrial base but its future will be built on decarbonisation technology and the accompanying jobs.
Delivering an industrial strategy is the centrepiece of the Government’s growth mission. It will make us energy independent while creating jobs and providing investment in communities across the UK. A key part of that will be investing and creating the right conditions so that the green industries of the future can flourish, and the UK ETS is a vital element of that approach. It sets out a clear trajectory for emissions from the sectors covered and drives investment in decarbonisation.
To ensure the scheme continues to remain a key driver of decarbonisation, our intention is to expand its scope further. We have recently consulted on proposals to expand it to energy from waste and waste incineration, and we have recently consulted on expansion to maritime operators and on a regulatory framework for integrating non-pipeline transport for carbon capture, usage and storage. Beyond those new sectors, we are exploring options to build the UK ETS into the world’s first integrated market for carbon emissions and carbon removal. Subject to consultation, our intention is to include engineered greenhouse gas removals. That would support the new technologies we need to reach net zero while providing a sustainable path for industry to decarbonise and flourish.
We recognise the importance of long-term certainty to decarbonisation planning. The authority’s intention is to run the scheme until at least 2050. The authority published a long-term pathway for the UK ETS in December 2023, outlining our intention to consult on extending the scheme beyond its current date of 2030. We will consult on that and on any cap for future scheme phases in due course.
We are committed to being attentive to views and to bringing forward changes as required to ensure the scheme operates efficiently and achieves emissions reductions. It is an integral part of our journey on our path to decarbonisation coupled with industrial growth. I commend the order to the Committee.
Full debate: Draft Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2025