13:30 Mr Charles Walker (in the Chair)

Despite such progress, there is still more to do. Progress on energy efficiency has slowed. Between 2012 and 2015 the annual investment in energy efficiency fell by 53%; and in the same period there was an 80% reduction in improvement measures, with the Committee on Climate Change warning us that that will decline even further by 2020. Fuel poverty remains a stubborn problem that we must continue to address. It is all very well giving assistance with bills, but a long-term solution—insulating houses—is surely the way forward.

The clean growth strategy is a welcome addition to the debate. I support its proposals to combat fuel poverty and to promote energy efficiency, but I hope that the Minister can be more specific about the Government’s plans today than they were six months ago. The Committee on Climate Change assessment of the clean growth strategy found that three actions were expected to deliver, six actions had delivery risks, or were rated amber, and seven proposals were without firm plans, or rated red.

It has never been more important to tackle climate change and to decarbonise the economy. However, the potential rewards have never been so great. A building energy performance programme could save households £270 a year on bills. Over the long term that would save even more than the current proposed cap on energy bills, and it would also make a large contribution to hitting our climate change goals. Bringing every household up to an EPC band C by 2035 would save 25% of the energy used by the UK, which is the equivalent of six nuclear power stations the size of Hinkley Point C. The net economic benefit of such a programme would be between £7.5 billion and £8.7 billion, according to macro- economic analysis by the UK Energy Research Centre, and that figure does not include the wider secondary benefits in growth, jobs or health. With cold homes in England costing the NHS an estimated £1.36 billion, such a programme would have a considerable impact on health budgets, as well as on the wider economy.

The economic and social case for increased energy efficiency measures seems unarguable. We must focus on how to deliver them. Throughout recent history, we have seen that the fight against climate change is most effective when Government and private industry work together. The Government can lead the charge, but we need to harness the innovation and energy of the private sector to truly succeed. That is why I want to suggest one way in which the private sector can step up. It is one way for the Government to make a change that can expedite energy efficiency improvements. Mortgage providers should give people more incentives to purchase energy efficient homes.

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13:47 Anna Turley (Labour)

The Committee on Climate Change has cautioned that there are policy areas where the Government need to flesh out the detail of how they will deliver on those aims of cutting our carbon emissions. We all know that there is no path to meeting our carbon emission target that does not involve the decarbonisation of industry. I want to focus on that in particular.

In 2016, industrial emissions fell, but largely due to the closure of the SSI steelworks in Redcar. Actually, energy prices played a huge role in the 2015 steel crisis. In the UK, our steel companies were paying 80% above the EU median cost for energy—that is a huge factor in one of the challenges that our steel industry faces—but we know that we cannot meet our emissions targets without looking at industry. No one wishes to see a repeat of the 2015 closure of the SSI steelworks in Redcar, which ended 175 years of a major industry that built the world by providing the steel that forged everything from the Sydney harbour bridge to the new Wembley stadium. The loss of 3,000 jobs had a devastating impact on an area with a proud heritage and a proud history of driving the industrial revolution through steel production and its many other energy-intensive industries. We do not want to reduce our emissions through that kind of crisis. Industrial decarbonisation, done in a properly sustained, managed and strategic way, is the way forward, and it is a clear priority in the Government’s strategy.

We already have good energy efficiency action plans for several sectors, including cement, ceramics, oil and chemicals. That is a really positive start, but we need to go much further to meet the challenge. One of the easiest and most cost-effective solutions is carbon capture and storage. As the Minister knows, Teesside is hugely ambitious about becoming one of Europe’s first clean industrial zones and using CCS to drive that. The Teesside Collective in my constituency is ready and waiting to start decarbonising UK industry.

The chemicals sector is up against strong international competition. NEPIC estimates that CCS could create and safeguard almost 250,000 jobs in the next 30 to 40 years. The Committee on Climate Change has shown that CCS could virtually halve the cost to the UK of meeting emissions targets. The UK is especially well placed to be a leader in the industry, not least because of the storage space in depleted oilfields just off our coast. The Library estimates that CCS could sustain up to 60,000 jobs and deliver a £160 billion economic boost by 2050 if it were delivered along the east coast.

The Government have promised a CCS demonstration project, which I really welcome. Of course, I sincerely hope that it will be in Teesside, but wherever in the UK it is based, the most important thing is that it comes to fruition. We cannot lose another opportunity. The new £100 million commitment is a significant downgrade from the £1 billion of funding that the Government pulled from CCS in 2015. It is a cautious investment in a crucial technology, but I welcome it as an important step forward.

On Teesside, we are taking a couple of other approaches to improving energy efficiency and decarbonising. District heating has huge potential. I welcome the Government’s recognition of the role that it can play in reducing bills for both homes and businesses, and we are keen to deliver it on Teesside. We want to use our vast renewable energy resources, which the wind turbines off our coast make very visible, to support our energy intensive industries, and we want to continue to innovate, as we have done for more than 200 years. We want to use the carbon dioxide that is produced for useful projects, such as replacing oil with bio-resource. We have a huge number of plans afoot in Teesside. We are looking to work positively and constructively with the Government, and we welcome all the positive signals we have had from them so far.

Finally, let me say something about our potential. Energy efficiency and clean growth are not only priorities for tackling climate change and poverty, but offer huge economic potential in jobs and investment in the UK. In areas such as mine, which lost 3,000 jobs overnight, every job is critical. We desperately need investment and growth. The UK energy efficiency sector already turns over £20.3 billion, employs 144,000 people and sells exports worth more than £1 billion. We are in a prime position, particularly in Teesside, further to increase the market and to export our skills and technology to the world. This is a chance to future-proof our industries, protect our jobs and create new ones, and ensure that areas such as Teesside can play as big a role in the industry of this country and the world in the future as they did in the past.

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13:55 James Heappey (Wells) (Con)

The other reason why we need a more efficient system is that, over the next 15 years or so, we will increase by an order of magnitude the demand we place on our electricity system. As we decarbonise heat and electricity, we will find ourselves significantly increasing the load, and the answer to that increased load cannot exclusively be more generation. We must seize the opportunity to create a more efficient energy system to meet that increased demand. For that, we must recognise that all of the clean tech coming along that allows for decentralised generation allows us to generate locally and use locally.

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14:14 Steve McCabe (Birmingham, Selly Oak) (Lab)

The recent report by the independent climate change think tank E3G has highlighted the fact that public investment in energy-efficient homes in England has fallen; I think the figure I saw was that it had fallen by about 58% since 2012. That seems to flow from the coalition Government’s decision to end the Labour Government’s Warm Front scheme, which offered support to poorer households for better insulation and things such as boiler upgrades. Of course, we also experienced what I can safely call the disaster that was the green deal. According to E3G, Wales now spends twice as much as England per person on insulation, Northern Ireland three times as much and Scotland four times as much.

Energy efficiency is obviously a key part of the Government’s wider decarbonisation plans, as well as being one of the better ways to tackle fuel poverty. I hate to think what will happen when fuel bills land after the recent cold snap, and I wonder what we will learn in the coming months about the people who suffered during that period because of their fears over fuel poverty. I was grateful to the Minister for her clarification on the gas scare story, but one thing it exposed is how reliant we in this country have become on gas and how much of a need there is for greater diversity in our energy supply.

In its response to the clean growth strategy, the UK’s Committee on Climate Change said that an ambitious energy efficiency action plan for able-to-pay households is urgently needed, as well as a robust policy framework including incentives and firm commitments. It also recommend that we need some concrete proposals in place by 2019 if we are going to make real progress. I will be interested to hear the Minister’s response to those points.

As well as setting targets, the Government need to provide effective legislation and regulation, ensure that the financial frameworks are in place to incentivise able-to-pay households and ensure that private landlords are obliged to invest in their properties. It seems to me that there is a degree of agreement across the House on these matters. If we saw some progress on them, we could have much greater confidence that the Government would achieve their ambitions, and the twin aims of decarbonisation and energy efficiency, with the knock-on effect on the fuel-poor, would be things on which we could realistically expect to see significant progress.

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14:34 Luke Graham (Ochil and South Perthshire) (Con)

The clean growth strategy was introduced last year by the Department for Business, Energy and Industrial Strategy with the express intention of accelerating the pace of clean growth, allowing the UK to meet its greenhouse gas emissions targets while ensuring that we maintain the strong economic growth that has been a key success of the Conservative Government during the past eight years. It is worth noting that the clean growth strategy has been introduced not to address an issue, but to improve, accelerate and maximise an already successful set of Government policies.

With regard to Scotland, energy efficiency was of course devolved in 2016, but energy policy is still a reserved matter. Particularly important for Scotland is the recognition of the importance of carbon capture and storage to decarbonising UK heat, industry and power. That has been mentioned by Opposition Members. For Scotland, CCS is a vital tool to reduce emissions, and the Minister should be commended for putting it firmly back on the Government’s agenda.

In the UK, we have world-leading oil and gas skills and infrastructure—predominantly based in the north-east of Scotland—which could be perfectly suited to CCS. However, the opportunity to repurpose many of those assets before decommissioning is diminishing. That is why putting the clean growth strategy into action now is vital for the UK as a whole. The economic benefits of CCS to Scotland and the east coast of England combined have recently been estimated at more than £163 billion during the next 60 years, making it imperative that we maximise this opportunity.

It is therefore worth considering the Caledonia Clean Energy Project, which could be well placed to kick-start the UK CCS industry. The Caledonia Clean Energy Project would see the development in Scotland of crucial low-carbon infrastructure that not only provided clean, reliable power to up to 1.3 million homes, but facilitated the decarbonisation of Scotland’s major industrial hub, Grangemouth. If that were not enough, the project could also produce enough clean hydrogen every day to power about 500 hydrogen-fuelled buses.

It is clear that Scotland specifically has the exciting potential to be a major part of the clean growth strategy, but if there is one criticism that can be levelled at the strategy, it is that it does not provide the sufficiently clear policy signal that investors in CCS need to justify what could be multiple billions of pounds of inward investment in the UK and Scotland. It is important to remember that although energy efficiency is devolved—we have heard here today examples of best practice in England and in Scotland—energy policy is still a reserved matter. That is why having a joined-up strategy that goes across the UK is so important—to ensure that we can pool our resources.

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14:43 Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)

The hon. Lady also mentioned energy efficiency and the massive strides that need to be taken towards climate change goals. I was interested in her proposition about mortgage providers providing an incentive. That merits investigation, but I would insert a word of caution there. The measures used would have to be carefully thought out, because we do not want to see the unintended consequence that people who are trying to get on the housing ladder and get their first home are effectively priced out of the market by measures that may not be appropriate for their area and its housing stock. It is worth investigating, but I urge some caution.

The hon. Member for Redcar (Anna Turley) talked about not being able to meet emissions targets without taking on the industrial effects, and she was absolutely correct. Industrial decarbonisation has to be accelerated. The whole strategy needs to be given a lot more—if Members will pardon the pun—energy, and the attention that it needs.

The hon. Member for Redcar talked about district heating, which has to come through far more importantly and strongly to support communities. There are great benefits to district heating schemes if they are got right. She and the hon. Member for Wells (James Heappey) also talked about renewable energy, which is very important in both industrial and domestic energy in taking the challenge forward.

The hon. Gentleman and I debate Acorn and St Fergus frequently. I will double-check the numbers, but my understanding is that the UK Government have put in £1.6 million and the Scottish Government have committed a welcome £100,000. We are absolutely keen to support those projects and we continue to be a major investor in all sorts of levels of carbon capture and storage; I will address CCS and its future in my closing remarks. I will double-check those numbers and write to him, but I am confident that we have already committed several multiples of what the Scottish Government have to that project—and quite rightly.

To aid the debate, I will cast aside some of my notes. As we have heard in this debate, much more needs to be done on energy efficiency. In my meetings with energy companies and climate change activists, they all agree on one principle: not enough is done for energy efficiency in our homes and businesses across the nations of the UK. Old housing stock is part of that huge challenge.

My conclusion will not be too lengthy, but I will touch on some things that are happening in Scotland. Energy efficiency has been mentioned several times; it is fundamental to Scotland’s meeting its ambitious climate change targets. The Scottish energy efficiency programme route map—I am sorry to tell the hon. Member for Wells that its name is now SEEP rather than HEEPS—will be published in May 2018.

Last December, the Scottish Government published their energy strategy, which will strengthen the development of local energy projects, empower customers and support Scotland’s climate change ambitions, while tackling poor energy provision. Our ambition to improve the energy efficiency of Scotland’s buildings is central to our efforts to tackle fuel poverty.

On 28 February, the Scottish Government’s Cabinet Secretary for the Environment, Climate Change and Land Reform published the “Climate Change Plan, Third Report on Proposals and Policies 2018-2032”, which details how the Scottish Government will meet their emissions target of 80% by 2032. With the Climate Change Bill, Scotland is sending a message that it is the place to do low-carbon business, which seems to be endorsed around the Chamber.

Energy efficiency is fundamental to Scotland. Heating and cooling Scotland’s homes and businesses costs £2.6 billion a year, and accounts for just under half the country’s greenhouse gas emissions. In June 2015, the Scottish Government announced that they would take long-term action to reduce the energy demand of residential services and industrial sectors by designating energy efficiency as a national infrastructure priority. Again, something that has been called for in the debate has already been done in Scotland. That was subsequently confirmed in the Scottish Government’s “Infrastructure Investment Plan 2015”.

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15:08 Dr Alan Whitehead (Southampton, Test) (Lab)

What happens to fuel poverty, if we systematically insulate our homes to an acceptable standard? What happens to bills in the future, and what happens, as the hon. Member for Eddisbury pointed out, to the amount of fuel that we are consuming in our homes? She estimated that a 25% or so reduction in gas as a result of insulating our homes to an acceptable standard has all sorts of knock-on effects for the wider climate change debate. As she also said, that is reflected in the clean growth strategy ambition and targets that ideally we should be aiming for as far as insulation in all homes is concerned, and in the earlier target of insulation up to band C for homes in fuel poverty.

Having congratulated the hon. Member for Eddisbury on her contribution, I want to add a slight note of sadness. Perhaps we should have all sat on one side of the Chamber this afternoon and addressed our comments to all the rest out there who did not turn up to the debate and who quite often do not engage with this issue. We might have collectively addressed the importance of energy efficiency not only in domestic buildings but in commercial and industrial buildings. It is important to work together to address climate change, fuel poverty and all those other targets to make sure we sort them out. Today’s debate has reflected the collective and consensual activity that we ought to organise among all of us, provided all those other people along the road support the Minister in what she is doing for energy efficiency. The Opposition party must have the very best policies so that when our turn comes to govern, we have a clear understanding of where we need to get to, what we have to do and how we support and fund it. That is a job of work for all of us in this Chamber to get ourselves involved in.

I surely do. On the basis of what the Committee on Climate Change says, the current ECO commitment falls way short of the levels of treatment we need if we are to get anywhere near our 2035 targets. Even the £1.8 billion figure that has been cited will not cover a complete series of treatments for houses in the UK. I suggest that making our treatments much more efficient—by doing them on an area basis, for example—would allow us to get much closer to our target for the same money. We can probably agree that £1.8 billion will be the sort of money that will get us there, but an efficient approach could get us so much further, which I would completely support.

I appreciate that I have gone on rather longer than I intended, but let me briefly say a few words about the speeches of my hon. Friend the Member for Redcar (Anna Turley) and the hon. Member for Ochil and South Perthshire (Luke Graham). They both drew attention to the role that CCS can play, as did the hon. Member for Wells—or rather for HEEPS. I thoroughly endorse that line of thinking on CCS, but I must point out that as far as the clean growth strategy is concerned, £100 million will not get us anywhere near our CCS target, just as our ECO commitment will not get us anywhere near our energy efficiency target.

I congratulate Teesside on its comprehensive approach, in which my hon. Friend the Member for Redcar has been centrally involved. Teesside could be an absolute exemplar for the rest of the country in its combination of intensive industry with CCS and its by-products. That is very important for realisation of the clean growth strategy and we need to incorporate it in all our future clean growth plans.

I congratulate all hon. Members on their contributions to the debate. They all faced in exactly the same direction, acknowledging the importance of energy efficiency in homes, for a variety of reasons including climate change and fuel poverty, and the prominence that we need to give it in our policy debates. If this afternoon’s debate has hastened that process, we will have done a very good job between us.

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15:34 The Minister for Energy and Clean Growth (Claire Perry)

Let me recap where we are. Based on 2017 data, the last time emissions in the UK were this low was in the year the Forth bridge was opened and “The Picture of Dorian Gray” was published, which was the year before penalties were introduced in football. I hope hon. Members from north of the border will already have got it, but in case not, it was the year 1890. When we consider the scale of the challenge, we should take a moment to think about just how far we have come: in a couple of decades, we have dropped our emissions to a level last seen in Victorian times. That has been achieved through cross-Government support for the Climate Change Act 2008, impressive work done by successive Governments on decarbonising parts of the economy, sustained investment and getting the costs of intervention to a market level, as we have seen so recently in offshore wind.

By the way, there are only 21 at-scale CCS plants working in the world today, 16 of which rely on capturing the carbon and using it for enhanced oil recovery. This is not a cost-effective technology that other countries are embracing with gusto. Even our friends in Norway, who are a little further along than us in building up the infrastructure, are struggling with precisely this point, which is, how much do we burden taxpayers or consumers to fund these projects? That is a real challenge. However, we are not going to bow down before it; we are going to embrace it.

That is why I have set up the carbon capture, usage and storage council—literally the best minds on this problem in the UK, and indeed around the world—to consider how we build strategically the case to carry out CCS in a more cost-effective way. We have also set up the CCUS cost reduction taskforce, emulating what was done in offshore wind, to drive prices down, not only in terms of the technology, but in terms of the financing, risk analysis and risk-sharing, which was one of the problems we had in the last project structure.

As the hon. Member for Redcar mentioned, I have set aside £100 million for CCUS innovation. That is not a subsidy and it is not putting money into a contract for difference; it is trying to create the innovation that we need. There are enormous opportunities to work with the hydrogen economy and with heating systems, to try to bring this work together. I accept that that news was a disappointment, but I would like colleagues to be reassured that we understand completely the need to decarbonise these industrial pools and to decarbonise further our heating system. Without CCS and CCUS, I do not believe that we can do that, which is why they are such vital technologies.

The hon. Member for Birmingham, Selly Oak (Steve McCabe) also spoke. I will try to reassure him that these things are not just warm words; they are actions. I think we are all apprised of the need to deliver and to continue to maintain the UK’s leadership position in this area, which is genuine. Now, when we go around the world and talk to other countries about what we are doing, people listen. There were 70 people at the event on this issue in Germany yesterday, according to my officials, who said people are really hungry to learn. That is because the strategy is not just a piece of lovely paper; it is trying to set out a cross-Government set of actions that we have to take. They are not optional, if we want to meet our targets, which we must do by 2032 and beyond to decarbonise.

My hon. Friend the Member for Ochil and South Perthshire (Luke Graham) again made a powerful case for CCS and its importance. I think he also referred to the “win-win” of clean growth. We are not looking forward, as some campaigners might want to look forward, to a kind of deep green “lights off” future, because we all know that recessions are the greatest thing for cutting carbon emissions. We want the economy to grow. As he said, we already have 400,000 people working in this sector, which is delivering jobs from Aberdeen to Aberystwyth to Cornwall, and to many places in between. People have only to go to the Humber area to see what is happening with the support and the manufacturing of the offshore wind turbines for the wind industry, which is hugely transformational.

The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry)—I normally never get a chance to say the full name of his constituency—gave a typically well-informed speech. We exchanged views on off-gas grid. I think that in both his constituency and mine, 15% of households live off the centralised grid, and we have to find cost-effective ways to provide them with more heating solutions in particular. Of course, all those people will benefit from the Domestic Gas and Electricity (Tariff Cap) Bill. Again, we exchanged views on CCS.

Indeed. I have met my hon. Friend the Member for Basildon and Billericay (Mr Baron) and some of those who support the Bill. I think it is an extremely interesting suggestion. I was able to reassure my hon. Friend that, given the work we are doing on ECO—I will come to that—and other measures, we will get there without legislation. That is always the preferred route, although having the overarching legislation of the Climate Change Act 2008 has meant that we have to deliver on these promises right across the economy.

We are also working hard with business and industry. While we have a real challenge in our homes, the biggest pool of emissions in the UK come from—it fluctuates a little bit between them—industry and transport. We have always found it difficult to decarbonise businesses. Part of that is process decarbonisation—as the hon. Member for Redcar knows, that is difficult to do without fundamentally changing the feedstock or heat source for a particular manufacturing sector—but a lot is just business premises. All the same issues we have in the homes sector absolutely apply to business premises.

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