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Net-zero Test for New Policies

Volume 817: debated on Tuesday 11 January 2022


Asked by

To ask Her Majesty’s Government what assessment they have made of the letter from the Confederation of British Industry, Trades Union Congress and others, to the Prime Minister on 3 December 2021; and in particular the recommendation to establish “a new overarching Net Zero Test for new policies”.

My Lords, the Government are ensuring that decision-making across government is aligned to deliver net zero. This includes establishing two Cabinet committees to co-ordinate action across government and strengthening official-level governance. The Net Zero Strategy includes a commitment to:

“Ensure that decisions taken on government spending are informed by their impact on meeting net zero.”

The Government have also committed to publishing

“an annual progress update against a set of key indicators for achieving our climate goals.”

My Lords, I declare my interests as set out in the register. I am grateful to the Minister for that Answer, but it is very similar to the Answer he gave me some months ago when I asked about the recommendation that the Climate Change Committee made to Parliament that there should be a net-zero test on all government policies. Last month that recommendation was endorsed in a letter to the Prime Minister by the CBI, the TUC, UK corporate leaders’ groups and others. They see the benefits of a comprehensive approach not only in achieving our net-zero targets but in providing a coherent and transparent framework from government for the efforts of business and industry to fuel the green growth we so badly need. Will the Government now accept the advice they have been given so broadly?

I thank the noble Baroness, but the reason my Answer was very similar to a few months ago was that the Question was very similar to the one she asked me a few months ago. We have taken new approaches to embed net zero in spending decisions, including requiring departments to include the greenhouse gas emissions of their spending review bids and their impact on meeting carbon budgets and net zero. There is a huge amount of co-ordination taking place across government and between this Government and the devolved Administrations in helping us to meet our goals.

Does the Minister agree with the same letter where it says that we must

“ensure the competitiveness of UK businesses is not disadvantaged by imports that do not have the same carbon costs”?

If so, why is it that the only thing the Treasury’s Net Zero Review has to say in the way of action on carbon leakage is that

“a case for conducting a formal call for evidence may emerge.”

Is that not a woefully complacent approach which puts at risk British industry and British jobs?

I agree with the noble Lord that the competitiveness of UK industry is extremely important. The question he is asking is effectively about the carbon border adjustment mechanism which the EU and others are considering. I am sure that the noble Lord would be the first to accept that this is a complicated and difficult policy area. It cuts across various WTO and international trade commitments. I can see in principle the case for what he is saying, but it is a complicated area.

Does the Minister agree that new nuclear has an important part to play in achieving our net-zero targets? Will he indicate what the UK Government are doing in relation to that in England, and will he arrange to meet with Scottish Ministers to try to persuade them of the importance of new nuclear?

I agree completely with the noble Lord for a change. He is quite right to make the case for new nuclear. Indeed, the other place passed the nuclear Bill just yesterday, so it will be coming to this House shortly; I look forward to debating it alongside the noble Lord. I already meet with Scottish Ministers, although I fear that my efforts to persuade them of anything are very much in vain.

My Lords, I take the Minister back to his own reference to the key commitment that the Government made under the heading of “Embedding Net Zero in Government” in the Net Zero Strategy; the commitment that he referred to was to publish an update of progress against a “set of … indicators” for achieving our climate change goals on an annual basis. What progress is being made in taking forward this commitment, and what scrutiny will there be of the agreed indicators?

We are indeed committed to publishing this, exactly as I said, and we are making a considerable commitment towards meeting our targets. We have the most ambitious programme of emissions reductions in the whole of the G7. Let me give an example of how difficult these areas are. It is easy to say that, yes, we must embed net zero in all our policies, but the other place is currently having a debate brought forward by the noble Lord’s party on removing VAT from domestic fuel. Everybody can see why that might be important at the moment but, arguably, such a test would fail the commitment on net zero, since most fuel is still produced by carbon-intensive methods. These are difficult policy areas; we have to balance the overarching aim of net zero with other commitments on fuel poverty, et cetera.

Anyone watching the Government can see that there is no coherence and that they do not understand net zero. That is why it is so important to take up this idea. Any Government who understood net zero would not have made a deal with the Australian Government for lamb and similar things. That is not a net-zero deal. At the same time, they are condemning British farming to sometimes going out of business. Does the Minister agree that the Government have to step up a bit and be a little more ambitious on net zero?

I understand the point that the noble Baroness is making—I know that she is very passionate on this subject, and we have debated it many times—but we have the most ambitious net-zero goals of all of the G7. The noble Baroness puts her head in her hands, but that is true. Of course, you could always argue that we should go further or faster, but that would be expensive and would affect our competitiveness. At the end of the day, the UK is responsible for 1% of worldwide emissions. We need to make sure that we go forward in a co-ordinated manner with other countries across the world and approach this problem together.

My Lords, before Christmas, I fed my noble friend the Minister what he took as a helpful line. I will try to do it again: where are we with tidal power?

The answer I gave my noble friend then was that tidal power is included in the latest contracts for difference round; I think the figure is £20 million that we propose to expend on it. My noble friend makes a good point that there are some very feasible tidal power projects, but we need to be realistic—tidal power will not contribute more than a small percentage of our power needs.

My Lords, does the Minister agree that the current levels of spending on climate-positive measures are far below what the Climate Change Committee has recommended to achieve net zero? If so, what plans do the Government have to increase expenditure so that we have a greater chance of achieving their net-zero target?

The noble Baroness makes an important point but it is not just government spending that contributes to net zero. Regulatory policies also have an impact. We are spending considerable sums; certainly, within my department we could always do with spending more, but the difficult job that the Treasury and Chancellor have is balancing tax income with net expenditure. Many government departments would, I am sure, prefer to be spending more money at the moment.

My Lords, just before Christmas, the Government launched a consultation with oil and gas companies on the design of the UK policy for the sector. Can the Minister say, first, whether the consultation will be carried out in accordance with the consensus between scientists and the International Energy Agency that new oil and gas production is incompatible with net zero by 2050? Secondly, how are the Government proposing to give voice to other stakeholders?

The noble Baroness and I have also debated this topic at length before. The point she needs to recognise is that, during the transition, there is still a requirement for oil and gas products in the United Kingdom. Liberal Democrats might not like that but it is a fact—unless you are going to stop people driving their cars and turn their gas boilers off tomorrow, and I do not see that being produced on a focus leaflet any time soon. We need to transition to net zero. During a transition period, therefore, the choice is: do we use oil and gas products we generate, creating jobs and paying taxes from UK assets, or do we get them from Russia or Saudi Arabia? I know what I would prefer.

My Lords, of the gaps identified by this letter still needing to be filled in the urgency of the climate challenge in the Glasgow climate pact, perhaps the one identified on adaptation and resilience has received least attention. Little progress is being made. What increases in adaptation policy ambition have the Government determined are needed from the reports of the adaptation sub-committee of the Climate Change Committee?

I have not seen the particular report that the noble Lord refers to but I shall certainly have a look at it, take it back to the department and write to him on that subject.

My Lords, in respect of developing strategies for nature-based solutions, what advice are the Government developing to help farmers meet their responsibilities?

The noble Lord makes a good point. Emissions from agriculture and farm animals, et cetera, are a considerable component. These matters are of course addressed in the Environment Act, and there is no question that we are taking a whole-economy approach. Every sector needs to do its bit; food and farming production certainly need also to do their bit towards net zero.