Asked by
To ask His Majesty’s Government, further to their consultation on
‘Addressing carbon leakage risk to support decarbonisation’
published on 30 March, what assessment they have made of the case
for extending green procurement targets beyond steel and cement
to include other carbon-intensive sectors covered by the UK
Emissions Trading Scheme, such as paper and power, and products
made from materials covered by the UK ETS, such as vehicles.
The Parliamentary Under-Secretary of State, Department for Energy
Security and Net Zero () (Con)
My Lords, the Government are currently exploring options for
utilising public procurement to create demand for green
industrial products. We have sought views via consultation to
help develop proposals for policy measures that support the
growth of low-carbon industries. The Government’s Construction
Playbookadvises that projects should be accompanied by a
whole-life carbon assessment and PPN 06/21 requires suppliers
bidding for major government contracts to commit to net zero by
2050 and to publish a carbon reduction plan.
(Lab)
My Lords, I am grateful to the Minister for his response, but I
wonder whether I can press him a little further. In the
Government’s consultation, they propose to use minimum product
standards to protect just two or three sectors from unfair
competition from overseas and not to bring in these measures
until late in the 2020s. Should not the Government be setting
minimum product standards across a wider range of sectors, and
sooner, to protect domestic manufacturing from unfair
competition, especially from China, where grid electricity has
twice the carbon intensity and is half the price compared with
the UK?
(Con)
The consultation only closed at the end of last month, so the
noble Baroness will need to give us a bit of time to analyse the
hundreds of responses that we received. It is a complicated
issue, and we of course understand the desire for quicker action,
but there is a whole range of factors to be taken into account.
We have to be very careful not to indulge in some form of green
protectionism, where we incentivise lower-standard products
against others that are better performing. Across a whole range
of sectors and procurement areas, it is a complicated issue that
deserves to be studied properly.
(Con)
My Lords, the essence of climate change is that it is global and
does not recognise borders. It is very disappointing that we have
so many calls for responses that are essentially protectionist,
introverted and selfish. Will my noble friend confirm that, just
because our allies in the United States—and indeed in the
European Union—are going down the road towards protectionism,
carbon adjustment taxes and so on, this country will not
disadvantage itself or raise the price of the green technologies
that we need to combat this global problem?
(Con)
My noble friend has been steadfast for many years in his support
for free trade—a cause that I manifestly agree with. But it is a
complicated issue. It looks as though the EU and US are going
down the road of carbon adjustment mechanism taxes, but, as I
said in my Answer to the noble Baroness, Lady Blackstone, it is a
complicated issue. For instance, do we want to incentivise the
installation of poorer-quality solar panels that may be
constructed with lower carbon intensity, or better-quality solar
panels? That is one example of millions that I could give.
(Lab)
My Lords, does the Minister acknowledge that, while we need green
policies, there is a major problem concerning the British steel
industry? Successive Governments have imposed what have been, in
effect, green taxes on a great foundation industry. Now, very
little of the steel industry remains. For example, does he
realise that the great integrated steelworks—the only remaining
integrated steelworks in Britain—is hanging on by its fingertips?
The ailing steel company Tata calls for more investment. How can
he see his Government urgently giving more investment to save
Britain’s steel industry? If Britain is to remain a great nation,
as she must, she needs the foundation industry of steel. If ever
there shall be war, you need steel.
(Con)
I totally understand the point that the noble Lord is making. He
highlights the dilemma of carbon-reduction policies in these
areas, where we impose carbon taxes and emissions trading systems
and schemes, and of course that has an effect on domestic
industries that emit a lot of carbon—the so-called carbon leakage
problem. We are working closely with the steel industry to try to
help it adjust to greener manufacturing methods, and of course it
receives free emissions permits.
(LD)
My Lords, recent reports that the Government are considering
rowing back on their flagship climate finance commitment of £11.6
billion to assist lower-income countries to reduce their
emissions, adapt to climate change and protect the natural
environment are to be deplored. Those global benefits affect us
all and would be lost to us all. Does the Minister agree that
using a proportion of the funds raised through CBAM, the carbon
border adjustment mechanism, to support low-carbon transition in
least-developed and climate-vulnerable countries would be
enlightened self-interest?
(Con)
The noble Baroness is asking me to comment on tax policies and
hypothecation of taxes, which are matters in the purview of the
Chancellor of the Exchequer. I shall make sure her views are
communicated to him.
(Lab)
My Lords, the Government’s IDDI consultation, which the noble
Baroness, Lady Blackstone, referred to, sets out four levels that
are being considered. The Government make a firm statement about
their policies achieving levels 1 and 2. With level 3, the
Government say that they are minded to achieve it. As for level
4, which is about achieving the UK’s decarbonisation objectives,
the Government say that they may commit to it. When can we expect
decisive leadership so that we commit to achieving all four of
these IDDI objectives?
(Con)
My Lords, I am slightly disappointed by the tone of the question.
We are already showing decisive leadership: we are one of the
only countries in the world to already have green procurement
strategies for major public procurement. This is a complicated
area, as has been illustrated by the questions from the noble
Lord’s own Benches. We need to make sure that we get it right and
do not disadvantage British industries or drive up the cost for
consumers.
(Con)
My Lords, while one of the advantages of carbon border adjustment
measures and other green taxes is that they tax negative
externalities, hopefully to encourage better green policies, one
of the downsides is obviously that that might then feed into the
cost of production and that cost is then passed on to consumers.
One concern for many people about green policies, even though
they support them, is that when we introduce green taxes, they
are often not fiscally neutral, so people end up paying more.
Have the Government looked at how they can balance these
challenges to make sure that, when a green tax is introduced, tax
is removed elsewhere to encourage better behaviour and have a
positive outcome for green policies?
(Con)
My noble friend makes an important point. On all these policies,
we have to make sure that we get the balance right between
fulfilling our legally binding commitments and making sure we do
not disadvantage consumers and drive up costs for ordinary men
and women.
(Non-Afl)
My Lords, does the Minister agree that emissions trading schemes
offer a very valuable opportunity for regions of both this
country and elsewhere that are essentially rural and
agricultural, away from centres of population and wealth at
present, to generate an income that they desperately need to
level up the living standards of people in these places to some
kind of equivalence with the richer parts of the country?
(Con)
I understand the point that my noble friend is making. A happy
by-product for the Treasury of the emissions trading scheme is
the considerable revenue that it generates, and I am sure that it
is spending all this money very wisely.
(LD)
My Lords, the EU-UK Trade and Cooperation Agreement, which the
Government negotiated, had a clause that said that the two sides
should talk further about the EU and UK emissions trading
systems, and that they should be connected and start to work
together. That has been strongly endorsed by most sectors of
British industry. Have those negotiations started? If so, great;
if not, why not?
(Con)
My Lords, I appreciate the desire of the Liberal Democrats to get
us into the EU regulatory orbit as quickly as possible. As with
many things, there are arguments for and against the linking of
the two ETS systems. They are equivalent—in fact, ours is
probably slightly more ambitious than that of the EU. We will
continue to explore this policy with the Commission.
(CB)
My Lords, I declare my interests as set out in the register. Does
the Minister agree that, far from investment in and nurturing of
green initiatives and technologies being detrimental to this
country—as the noble Lord, Lord Hannan, said—investing in green
technology for things such as steel and cement production not
only helps those industries in this country but helps our economy
and international competitiveness?
(Con)
I do not want to put words into my noble friend’s mouth, but I do
not think that he was attempting to argue that we should not
invest in green products and services. He was merely pointing out
the difficulties in international trade where, for some
countries, there will be a temptation to use green excuses to
introduce protectionist policies. Free trade has been an immense
benefit to all of us in the developed and developing world, and
we should be very careful to make sure that we maintain those
benefits.
