Carbon Budget Order 2016 — House of Lords, 2016-07-19
Topic: Environment
Lucy Neville-Rolfe (Conservative, Centre-right): I thank noble Lords for their contributions to this my first debate on what is indeed a very complicated subject. Perhaps we could have done with more time to address some of the issues, but I shall try to answer where I can on this my first day I start by thanking the noble Baroness, Lady Featherstone, my noble friend Lord Ridley, the noble Lord, Lord Teverson, my noble friend Lord Lawson, my neighbour the right reverend Prelate the Bishop of Salisbury, the noble Baroness, Lady Worthington, my noble friend Lord Howell of Guildford and the noble Lord, Lord Grantchester, because they were united in their kindness to me, even though there is clearly a lively difference on this important area of policy, which I look forward to discussing on a number of occasions. This is actually my first day because, some noble Lords may be glad to know, I was in Slovakia at the Competitiveness Council until last night, engaging, as we should, with the EU while we remain Climate change has not been downgraded as a threat; it remains one of the most serious long-term risks. The title of a department matters far less than its DNA and what it does, as I explained this afternoon to the assembled former DECC staff in the building in Whitehall Place—where I originally started my Civil Service career. Energy and climate change will be at the heart of the new department. For example, I can confirm that this Government remain committed to ratifying the Paris agreement, which was agreed last year by 195 countries, as soon as possible. Our policy will also look at affordable and reliable energy, and generally join things up in the way that I described in my opening remarks At the heart of our commitment is the Climate Change Act. While the vote to leave the European Union is hugely significant, the Government will continue to play their part in tackling the energy and environmental challenges our country faces. My noble friend Lord Ridley—well-known for his views in this area and, as always, the source of some very telling questions—suggested that the referendum result might invalidate the budget, as there was no mention of Brexit. I remind my noble friend that carbon budgets are UK-specific targets, based on UK legislation. The referendum result does not change the validity of the budgets or, by extension, the impact assessment I hear what has been said about the impact assessments, which, as some noble Lords will know, is an area I always take a great interest in in any of my policy areas. I look forward to discussing them with our economists—including the points about price assumptions and the points made by my noble friend Lord Howell of Guildford—to learn from this exchange In other areas, we will also engage in the opportunities and challenges of the seismic change that Brexit represents. I am always keen to emphasise the opportunities, being a glass-half-full person The noble Lord, Lord Grantchester, asked about the delay in the laying of this order. I am sorry we missed the due date. There were some rather disruptive events in the last few weeks, but I understand there is no question of the legality of the order being put into doubt by the process The proposed fifth carbon budget is in line with the advice of the independent Committee on Climate Change and has been widely welcomed by the business community. I am from business, as the right reverend Prelate the Bishop of Salisbury reminded us. Indeed, I used to run a carbon reduction programme across the world when I was at the Tesco supermarket chain. It actually saved us money. I also know from being in business that we need a certain amount of consistency and ambition on climate change if we are to support investment. The carbon budgets provide this My noble friend Lord Ridley said that UK action went further and was faster than in the EU. The UK’s domestic target is to reduce emissions by 80% on the 1990 level by 2050. The EU has a comparable target of 80% to 95% by 2050. As I understand it, other countries are taking comparable action Businesses have of course been calling for consistent ambition on climate change, which is what the proposed fifth carbon budget, far ahead though it is, now achieves. The Government have listened to the concerns of energy-intensive industries, such as steel, and are providing relief to mitigate policy costs on their electricity bills The noble Lord, Lord Teverson, said that carbon budgets account for only 50% of emissions. He is right that the budgets do not bite on the power sector, but the EU ETS does. So does the overall 2050 target. There are, of course, pros and cons to different accounting methods. We will keep this under review—a point raised by others. Our commitment to decarbonisation is clear. We have also set out funding to be provided through future auctions in this Parliament to support up to 4 gigawatts of new offshore wind and other renewable technologies The right reverend Prelate asked about shipping and aviation. There is currently no internationally agreed solution to allocating emissions to specific countries in shipping. How do you deal with a British ship going from Rio to Naples? We are working, through the International Maritime Organization, to provide a way forward. We believe that unilateral action could undermine our ability to get the right agreement. The Committee on Climate Change did not recommend that we include aviation emissions in our budget at this stage, but that is not to say that we will not do so in due course when the International Civil Aviation Organization has agreed how they should be accounted for. So I can see some very interesting accounting issues in my new job What else are we doing to head off an energy gap and decarbonise? First, we are making real progress to deliver new nuclear power in the UK for the first time in two decades. As the noble Baroness, Lady Worthington, mentioned, with her great knowledge of the area, we have announced record investments in new heat networks in our towns and cities to enable lower-carbon ways of heating our homes and businesses while keeping energy bills low, and we have committed over £600 million up to 2020 to support early market uptake of ultra-low and zero-emission vehicles in the UK Electric cars are, in my view, a vital aspect of our future industrial strategy, drawing on our strength in the British car industry and on digital, which is a well-known passion of mine I was interested in the various ideas set out by the noble Baroness, Lady Featherstone, and others, which are all food for thought. I particularly appreciate the point made by my noble friend Lord Howell of Guildford about the impact of engaging with major emitters overseas. I very much agree with that. I have spent a lot of time thinking about international matters, and I think this is very important Emissions are coming down. Provisional statistics indicate that UK emissions in 2015 were 38% lower than in 1990 and more than 3% below those in 2014. This was one of the greatest annual emissions reductions against a backdrop of a growing economy To respond to the noble Baroness, Lady Worthington, we continue to make good progress, but we recognise that the 2020 target is challenging. However, the Government have achieved the interim renewable energy target for the last two years. Our new plan will be informed by analysis and economics to ensure that we are on our way to meeting our 2050 target while keeping costs low for consumers and businesses, a point of concern also to my noble friend Lord Ridley We have been working with other government departments to identify potential policy proposals from across homes, businesses, transport, land use, waste, agriculture and industry, all mentioned by the right reverend Prelate the Bishop of Salisbury. As I have already said, the machinery of government changes give us a new opportunity to be joined up. To respond to the noble Lord, Lord Grantchester, Defra is, indeed, an important participant on climate change and industrial policy, and I will certainly be engaging with it With regard to the third carbon budget, the Government’s projections suggest that we are on track to meet our target. It is prudent to retain the flexibility of a 2% credit limit to account for uncertainty. I am glad that the noble Lord, Lord Teverson, does not feel that that is a fundamental point. In conclusion, these orders have been welcomed on both sides of the House. There are always differences but I believe that they provide the right level of certainty for the future while allowing the flexibility to manage any uncertainties that we may face.