12:39 The Minister of State, Department for Business, Energy and Industrial Strategy (Greg Hands)

With permission, Mr Speaker, I will make a statement on the net zero strategy and the heat and buildings strategy—but first, if I may, I will congratulate my right hon. Friend the Business Secretary and his wife Harriet on the birth of their daughter on Friday. I can report to the House that both mother and baby are healthy and doing well, as is the Secretary of State. I am sure that the whole House will join me in offering our congratulations. [Hon. Members: “Hear, hear.”]

The statement is all about future generations as well, because we know that we must act now on climate change. The activities of our economies, communities and societies are changing our environment. If we do not take action now, we will continue to see the worst effects of climate change.

We have already travelled a significant way down the path to net zero. Between 1990 and 2019, we grew our economy by 78% and cut our emissions by 44%, decarbonising faster than any other G7 country. Since 2010, the UK has quadrupled its renewable electricity generation and reduced carbon emissions in the power generation sector by some 70%. In the past year alone, we have published the Prime Minister’s 10-point plan for a green industrial revolution, the energy White Paper, the North sea transition deal, the industrial decarbonisation strategy, the transport decarbonisation plan, the hydrogen strategy and more. Earlier this month, we unveiled a landmark commitment to decarbonise the UK’s electricity system by 2035.

But there is still a substantial length of road to travel. We must continue to take decisive action if we are to meet our net zero goal, so today I am pleased to announce two major Government initiatives: the net zero strategy and the heat and buildings strategy. This is not just an environmental transition; it also represents an important economic change, echoing even the explosion in industry and exports in the first industrial revolution more than 250 years ago.

This plan is also our best route to overcoming current challenges. The current price spikes in gas show the need to reduce our reliance on volatile imported fossil fuels rapidly. Although there is a role for gas as a transition fuel, moving away from imports quickly is in the best interests of bill payers. With our ambitious set of policies, the strategy sets out how we meet carbon budgets 4 and 5 and our nationally determined contribution. It puts us on the path for carbon budget 6 and ultimately on course for net zero by 2050.

We are now setting up the industrial decarbonisation and hydrogen revenue support scheme to fund these business models and enable the first commercial-scale deployment of low-carbon hydrogen production and industrial carbon capture. We have also announced the HyNet and East Coast clusters as track 1 economic hubs for green jobs.

We have previously announced that we will end the sale of all new non zero emission road vehicles from 2040, and the sale of new petrol and diesel cars from 2030. The strategy explains that we will also introduce a zero emission vehicle mandate that will deliver on our 2030 commitment to end the sale of new petrol and diesel cars and vans.

To increase the size of our carbon sinks, we will treble the rate at which we are planting new trees in England by the end of the current Parliament. We will be a global leader in developing and deploying the green technologies of the future. The strategy announces a £1.5 billion fund to support net zero innovation projects, which provides finance for low-carbon technologies across the areas of the Prime Minister’s “Ten Point Plan”.

We have also published our heat and buildings strategy, which sets out our plans to significantly cut carbon emissions from the UK’s 30 million homes and workplaces in a simple way that remains affordable and fair for British households. We will gradually move away from fossil fuel heating and improve the energy performance of our buildings through measures such as grants of up to £5,000 towards the costs of heat pumps, a further £800 million for the social housing decarbonisation fund to upgrade social housing, and a further £950 million for a home upgrade grant scheme to improve and decarbonise low-income homes off the gas grid.

The year 2021 is a vital year for action on climate change. In just two weeks’ time, the UK Government will host the crucial United Nations COP26 conference in Glasgow. As the Prime Minister has said, it needs to be a “turning point for humanity”, the point at which we pull together—and pull our socks up—to keep 1.5 °C in reach. Hosting COP26 will also give the UK a huge opportunity to showcase our world-leading climate credentials and set an example to other countries to raise their own ambitions. The net zero strategy will take centre stage in our display, setting out our vision for a UK that is cleaner, greener, and more innovative.

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12:46 Ed Miliband (Labour)

Let me start by saying that it is good that tackling the climate crisis is a shared national objective across the House, and that we want the Government to succeed at COP26 in just ten days’ time. However, there are two central questions about the strategy that has been published today: does it finally close the yawning gap between Government promises and delivery, and will it make the public investment which is essential to ensure that the green transition is fair and creates jobs? I am afraid that the answer to both questions, despite what the Minister said, is no. The plan falls short on delivery, and while there is modest short-term investment, there is nothing like the commitment that we believe is required—and we know why. When asked at the weekend about the Treasury’s approach to these issues, a source from the Department for Business, Energy and Industrial Strategy said:

“They are not climate change deniers but they are emphasising the short-term risks, rather than long-term needs”.

According to the Government’s own target, we need 600,000 homes a year to be installing heat pumps by 2028, but the Government are funding just 30,000 a year, helping just one in 250 households on the gas grid. Why does the Minister’s plan on heat pumps fall so far short of what is required? As for transport, we agree with the transition to electric cars—and I support and welcome the zero emissions mandate—but we need to make it fair to consumers. We should at the very least have had long-term zero-interest loans to cut the costs of purchasing electric cars. What is the plan to make them accessible to all, and not just the richest? Will the Minister tell us that in his reply? On nuclear, I was surprised, given the advance publicity, that the word did not even cross the Minister’s lips. We have seen a decade of inaction and delay on this issue, so can he tell us why there is still no decision on new nuclear?

The failure to invest affects not just whether this transition is fair for consumers but workers in existing industries. Take steel: it will cost £6 billion for the steel industry to get to net zero over the next 15 years. If we want a steel industry—as we do across the House—we will need to share the costs with the private sector. However, there is nothing for steel in this document, and a £250 million clean steel fund some way down the road will not cut it. Can he give us his estimates of the needs of the steel industry and how he thinks they can be met?

Finally, it was noticeable that the Minister did not say that the plan would meet the target for the 2035 sixth carbon budget, but surely that is a basic prerequisite of the strategy to 2050. At less than halfway to net zero, do the policies in this document meet the target, or fall short of it? Despite hundreds of pages of plans, strategies and hot air, there is still a chasm between the Government’s rhetoric and the reality? My fear is that the plan will not deliver the fair, prosperous transition that we need and that is equal to the scale of the emergency we face.

I thank the right hon. Gentleman for his warm words of congratulation to the Secretary of State and for his intention to join us in showing real leadership. I agree with him that this should not be a particularly partisan matter. The UK as a whole country expects to see our politicians working together, particularly in the run-up to our hosting the vital COP26. I will deal with his various points in turn.

On power, it is worth pointing out the success that we have had on renewables. The right hon. Gentleman was Secretary of State for Energy and Climate Change up to 2010. When he left office, renewables were only about 10% of our power mix; now the figure is around 43%. Offshore wind costs have come down by two thirds. He mentioned nuclear, but I am just about old enough to remember the 1997 new Labour manifesto, which stated that there would be no new nuclear projects. It took Labour 10 years to do anything at all on nuclear.

On the right hon. Gentleman’s final comment about 2030, our commitment is unchanged, but let us look at his commitment for a moment. [Hon. Members: “It was 2035.”] His leader, the right hon. and learned Member for Holborn and St Pancras (Keir Starmer), backed a 2019 manifesto commitment to go to net zero by 2030. Such a commitment would cripple the hard-won economic growth that we have achieved over the past 30 years through our steady approach of growing the economy and reducing emissions at the same time. Even the GMB has said:

The CBI has said that there is no credible plan to achieving net zero by 2030. This Government have the right ambition. This is a transition, and it is full of opportunities for jobs and low and zero carbon growth across the UK. The right hon. Gentleman should be backing it in full in the lead-up to Glasgow.

The Minister keeps going on about nuclear, but the reality is that, at £23 billion, Hinkley is the most expensive power station in the world. Its strike rate is £92.50 per megawatt-hour, compared with offshore wind at less than £40 per megawatt-hour. What is the capital cost in billions of pounds that the Government are willing to commit to, given that it could be better spent elsewhere? What funding is coming to Scotland on the back of the announcement of the social housing decarbonisation fund and the home upgrade grant schemes?

If we look at Scotland in the round, we see that it has contributed £350 billion in oil and gas revenues over the years. Where is the UK Government’s match funding for the £500 million just transition fund that the Scottish Government have committed to the north-east of Scotland? The Minister talks about levelling up, but his levelling up does not include Scotland. We have the highest electricity grid charges in Europe, which puts renewable energy in Scotland at risk, as it is 20% more expensive than in the south-east of England. That also affects the UK’s net zero trajectory. Scottish energy consumers are now made to pay for their nuclear, which we do not want, and Peterhead has been sacrificed for the red wall constituencies. When it comes to Scotland, the UK Government are not helping us tackle climate change but are instead adopting a scorched earth policy as we head towards independence.

Finally, on the North sea transition, energy in Scotland and the move to net zero, I urge the hon. Gentleman for once to take a more positive approach and get with us, particularly as we prepare to host the world in Glasgow in just two weeks’ time.

Levelling up is very important, and it means all parts of the country, including rural areas, having the ability to become net zero. In constituencies like mine, many homes are not capable of being brought up to very high levels of energy efficiency and are not on the gas grid. What is the solution to make sure owners of those homes, who are perhaps not on the highest of incomes, can decarbonise their heat at an affordable price?

There are two problems with the Government’s net zero strategy: “net” and “zero”. The latter because it is not zero—we know there are sectors, such as aviation, that will be pumping out millions of tonnes of emissions into the atmosphere beyond 2050—and the former because we know the Government are relying on negative emissions technologies that, frankly, are based on science fiction and for which there is no prospect of mass roll-out. We are banking on this to rescue us from the climate crisis, but it is a “burn now, pay later” strategy that is not fit for purpose.

That is sort of a question, for which I thank the hon. Gentleman. He might be a proponent of the Labour party’s net zero by 2030 policy. I am not sure whether the shadow Secretary of State supports that policy, which I think was ratified at the Labour party conference.

We have already talked about carbon capture, utilisation and storage, which is a sound technology in which the UK will look to be a world leader. The Climate Change Committee itself has said that it will not be possible for every single part of the UK economy to be net zero. That is the importance of the word “net” in all of this. It is about making sure that we get to net zero by 2050, so it does not have to apply across all sectors. Of course we want it to apply across all sectors, and the North Sea transition deal for the oil and gas sector has a commitment to go to net zero, but overall it is about making sure the country gets to net zero by 2050.

My hon. Friend and I spent many happy, productive years working together in the Department for International Trade to market our technological breakthroughs in clean energy, particularly in offshore wind. He makes an extremely strong point about CCUS. When I talk to people in the sector, one of the points they make most frequently is about the UK’s ability to be an early mover, to get in quickly and to take advantage of export capabilities. I completely agree and commend my hon. Friend for the work he did over quite some time as our exports Minister.

The steel industry’s transition to net zero requires £6 billion of investment, yet the clean steel fund provides only 4% of that. Does the Minister really think that is enough?

I welcome the steps set out by my right hon. Friend to unleash the potential of our whole country. Can he reassure my Ynys Môn constituents that they will benefit from the 440,000 net zero jobs being created by 2030 and the £90 billion of private investment? Will he accept my invitation to visit Wylfa Newydd and see at first hand why the Prime Minister is such a fervent supporter?

I thank my hon. Friend, who is a tireless advocate for Ynys Môn, particularly on the economy and jobs. Of course, Ynys Môn, the whole of Wales and north Wales will benefit from the new green jobs that this net zero strategy will help to foster. The new money announced today for the future nuclear enabling fund is for optionality for the future, so that we can make future decisions based on good information on nuclear. Obviously, that includes potential for sites such as Wylfa.

The Minister talks, in effect, of crumbs for Scotland, the renewable energy capital of Europe, with a few jobs as technicians offshore, whereas my constituency is the fourth most impacted by the cuts to working tax credit and universal credit. We can couple that with the escalation of fuel prices, so I want to know: why do the UK Government insist on levying connection charges not to France or the Nordic countries, but uniquely to Scotland, driving away investment, jobs and ambitions for our green future and for an end to fuel poverty in Scotland?

I did not quite understand the hon. Gentleman’s point about connectivity, but what I will say to him is this: Scotland is vital for the UK’s energy needs, both currently and in the future. On oil and gas, 50% of the gas currently consumed in this country comes from the UK continental shelf, and Scotland is vital for that. It is also vital for our future offshore wind capabilities, and other low-carbon and renewable energies. That is exactly the technology, capability and capacity that I saw last week in Aberdeen. Perhaps he might get a little more optimistic about Scotland’s future when it comes to energy, because I certainly am.

I welcome my right hon. Friend’s statement and the Government’s commitment to helping all industrial clusters to decarbonise as we transition to net zero by 2050. As an energy-intensive sector, the decarbonisation of the ceramics industry will play a crucial role in this transition, which is why I am delighted to back the British Ceramic Confederation’s plans for a virtual ceramics sustainability hub, based in Stoke-on-Trent, to develop new decarbonisation technology, including carbon capture and storage. Does the Minister agree that Government support is vital to help the ceramic industry decarbonise by 2050? Will he meet me and other Stoke colleagues to discuss these ambitious plans for the creation of a virtual ceramics sustainability hub?

My hon. Friend is tireless in his ability and desire to get to the bottom of what lies behind Government figures. Perhaps I might commit to meet him, as, having taken on this brief four weeks ago, I know he takes a strong interest in all aspects of energy and climate change. Perhaps I might agree to meet him to discuss his concerns first, before committing to a new, huge audit of anything.

I welcome the Government’s setting an end date for the use of gas boilers, but of course switching to electricity for heating our homes makes sense only if the electricity used is not derived from fossil fuels. Because of the Lib Dems in government, the renewables sector has made big strides, but it is by no means accelerating in the way it should be. So will the Government take the opportunity before COP26 to announce an end date for using fossil fuels in the production of electricity?

We already have, as I mentioned in the statement, our commitment to a decarbonisation of our electricity system by 2035. However, may I take issue with her about renewables because we have had a massive amount of success, particularly since 2015? The cost of offshore wind, for example, has been reduced by two thirds since 2015, when there was a sole Conservative Government. We also have the commitment to have a really big increase in renewables. We currently have the world’s largest installed offshore wind capacity, at about 10 GW. We are committed to not resting on our laurels and to quadrupling that capacity in the next 10 years, to 40 GW.

The UK Government should be roundly applauded: we continue to be one of the nations in the world that decarbonises at one of the fastest rates, as my right hon. Friend has said. Operational carbon is just one of the pieces of the jigsaw, as is embodied carbon. What assessment has he made of regulating embodied carbon in the construction sector?

My hon. Friend makes a good point on the importance of the construction sector. Obviously, there has to be a read-across between Government policies, our commitment to infrastructure, our commitment to new homes and so on. So I will happily meet him to discuss the construction sector and its carbon footprint. On decarbonising the fastest in the G7, I thank him for his words of support. This has been a huge UK success story, particularly over the past 30 years. In the first half of my adult life, we have done really well as a country overall. I recall that in 1989 the Green party ran on a manifesto that said we could take action on global warming only if we either froze or reduced the size of the economy. This country, with its 78% increase in the size of the economy, while reducing emissions by 44% in the first half of my adult life, has shown the world the way forward to reaching net zero at the end of—well, I hope not at the end of the second half of my adult life, but in the second half of my adult life to come.

My hon. Friend makes a good point. Of course, gas has a substantial future in our energy supply, certainly in the short term. Currently, 50% of our gas comes from the UK continental shelf, so it is very important for us, notwithstanding high international wholesale gas prices. The Climate Change Committee has itself said that it is not inconsistent with net zero for there to be a contribution from the oil and gas sector, even in 2050. It is now a question of working with the sector, which is why we have done the North sea transition deal. We are working with the industry, in partnership with the Oil and Gas Authority, to make sure that we make the necessary transformation. A lot of the skills in the oil and gas sector are transferable to, for example, offshore wind.

As chair of the all-party parliamentary group on CCUS, I am delighted by today’s announcement that the Tees, along with our Humber colleagues, will lead the way on CCUS and hydrogen production. In the past, we have had several false starts, with the Government withdrawing funding, so I hope we get it over the line this time. How will the Minister ensure that Teesside workers will get the jobs and skills to develop the new industries and that the people of Teesside get a real dividend?

The north-east of Scotland is the home of the offshore industry and the obvious location for a carbon-capture project. Years ago, the Tories pulled the plug on the carbon capture and storage competitions before Peterhead won through, and it is now clear that the UK Government have put the holding of seats in the red wall of northern England ahead of saving jobs in Aberdeen and the north-east. How can the Government say they are delivering a just transition if the Tories put pork barrel politics ahead of supporting the ideal location for CCUS at St Fergus?

On behalf of Cornwall—no, I rise to speak on behalf of my constituency of Banff and Buchan, to which I shall turn in a moment. First, I thank my right hon. Friend the Minister for his visit last week to Aberdeen, where he expressed the Government’s ongoing and continuous support for the oil and gas sector and its valuable role in the energy transition to net zero. The North sea transition deal includes carbon capture and storage; far be it from me to correct the hon. Member for Kilmarnock and Loudoun (Alan Brown), but the hon. Member for Edinburgh North and Leith (Deidre Brock) got it right: it is St Fergus, not Peterhead. Is it not entirely predictable from SNP Members? They have been practising their script since before the bids even came in—they gleefully declare betrayal.

Many of us on the Labour Benches, including my right hon. Friend the Member for Doncaster North (Edward Miliband) and my hon. Friend the Member for Stockton North (Alex Cunningham), have been articulating the case for carbon capture, usage and storage for many years. Despite the shortcomings of the statement, including any clarity on whether the net zero strategy will meet the 2035 sixth carbon budget, the east coast cluster announcement is most welcome. Will the Minister ensure that the collective voice of working people, through their trade unions, is heard, and that all stakeholders, including Ben Houchen, the mayor, part company with the anti-trade union rhetoric and work in an inclusive and co-operative manner to ensure that the economic and employment opportunities are fully delivered for working people in my Middlesbrough constituency and across Teesside?

I absolutely agree with the hon. Gentleman on working with workforces. The commitment to net zero is a huge, country-wide endeavour and we must carry everybody with us. May I perhaps suggest that he has a word with the trade unions, because they have been extremely critical of Labour’s official policy, which is to get to net zero by 2030? As I have mentioned, the GMB has said that nobody thinks that 2030 is a “remotely achievable deadline”. Another said that it would be a huge upheaval, leading to job losses in the industry. I agree with what he has to say, but perhaps he might have a word with those on his Front Bench as well.

The transition to net zero emboldens politicians to use ambitious rhetoric, but they cross their fingers that the reality of implementation will be as planned. That is because, as my right hon. Friend knows, he is dealing with tremendous amounts of uncertainty over the fact that chosen technologies may not work or may be superseded, that anticipated unit cost reductions may not be achieved and that the first-mover advantage may result in heavy costs but illusory or temporary sources of competitive advantage. Can he advise me on what his Department is doing to calibrate correctly the extent of the use of taxpayers’ money, the extent of additional levies on business and the extent of additional burdens on householders in the achievement of his strategy?

Obviously, £450 million for heat pumps across England and Wales is a good thing, but it is set to benefit only 0.3% of Welsh households, while the future generations commissioner calculates that the cost of decarbonising Wales’s housing stock stands at £14.75 billion. The Treasury has resisted every step on the road to COP26. Our economy, our environment and our communities need Treasury funding to step up to the mark to lead the transformational investment. That will give the private sector confidence. How confident is the Minister that this news will reach us within the next 10 days?

The Minister talks about ending the sale of petrol and diesel cars by 2030. To do so, we will need drivers to switch to zero-emission vehicles over the next decade. Despite the upfront costs of electric cars still being significantly higher, the financial incentives to switch continue to be diluted. I welcome the shadow Secretary of State’s support for the SNP Scottish Government’s interest-free loan scheme for new and used zero-emission cars, but the Government’s zero-emission vehicle mandate will not even be legislated on until 2024. Nearly half the decade will be behind us when the mandate comes in. Why are the Government moving this policy forward in first gear?

I disagree with the hon. Gentleman. The transport section in the net zero strategy is very comprehensive on this and very extensive on how we get more people to switch to electric vehicles. In terms of some of the details, I invite him to ask my right hon. Friend the Secretary of State for Transport who leads on this at the next Transport questions.

The other week, Lord Deben, the chair of the Climate Change Committee, speaking at the Housing, Communities and Local Government Committee, indicated that, if we are to hit the Committee’s targets, local government has an incredibly important role to play in the retrofitting of existing homes, the building of new homes, local planning policies and local transport policies. Is it therefore not disappointing that there is not one single mention of the role of local government in the Minister’s announcement today? What has the Minister to say about that?

I refer the hon. Gentleman to the annex of the net zero strategy, which sets out in some detail our response to Lord Deben’s annual report earlier this year. I think he will find in the annex a lot of the good mentions of local government for which he has been looking.

The zero-emissions vehicle mandate is welcome, although, as the hon. Member for Paisley and Renfrewshire North (Gavin Newlands) said, the Government do need to get a move on. They have been cutting plug-in grants year on year, and there are now reports that the Chancellor wants to axe them all together. What in this strategy will actually help to make the purchase of electric vehicles more affordable for the average consumer?

Like the overall commitment, this commitment is very much on an ongoing basis. I refer the hon. Lady to the transport section of the net zero strategy and to the annex regarding the Climate Change Committee’s report.

The Minister says that he wants to work collaboratively, yet he did not reach out to the Welsh Labour Government or share plans, despite saying that he was going to. Of course, plans on net zero are welcome, but this is greenwash wrapped up with a great big green bow. Only the most well off will benefit from the heat pumps, and the Government have not made clear the new measures that householders will also need, including insulation, water storage and new radiators. The Government are also still building truly awful, inefficient homes. When are they going to step up and really take the action needed to meet the zero carbon commitment?

I expected to hear more in the Minister’s statement about partnership with local government. Local authorities up and down the country are trying to innovate and to pilot schemes to decarbonise homes. My own local authority is investigating the possibility of using green open space to have a district ground source heat pump scheme that would engage with private homes in the area; that is engaging with the private sector as well. Without local government, the Minister’s strategy is not going to work, so what is he going to do further to engage local government?

I welcome the hon. Gentleman’s approach. As I said earlier, this strategy is going to need all of us—central Government, our key city and regional Mayors, the devolved Administrations, businesses, local government and others—to work together to get to net zero. I would be delighted to work with the local government sector. My right hon. Friend the Secretary of State for local government—the Secretary of State for Levelling Up, Housing and Communities—takes a keen interest in this agenda. I am sure that we will work together to ensure that local government plays an important and crucial role in getting to net zero by 2050.

The Minister knows that steel made in Wales and the rest of the UK is half as carbon-intensive as undercutting steel from China. Moreover, our carbon footprint, although low on production at 4.8 tonnes per person is a much bigger 8 tonnes on consumption, because we now subcontract a lot of our manufacturing. Will he look carefully at pursuing a carbon border tax, so that we can play on an even playing field, support local jobs in manufacturing and steel, and help to tackle climate change? Will he announce and suggest that at COP26?

The chair designate of COP26 says that carbon border adjustment mechanisms will not be part of the discussions at COP26, but the UK is closely watching that debate. We are looking at the European Union proposals. Of course, we need to ensure that they are World Trade Organisation-compatible and that they do not discriminate against the developing world, particularly much less developed countries. The CBAMs debate is very much alive and we continue to study it very closely indeed.

In 2015, the UK Government pulled the plug on £1 billion of carbon capture and storage investment in Peterhead. Today, they have repeated that same mistake—a betrayal of the north-east of Scotland—by pulling the rug out from underneath the Acorn Project. The Minister knows that Scotland cannot meet its net zero ambitions without carbon capture and underground storage, so why is he shafting Scotland?

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