Question for Short Debate (Lords) on Net Zero - Jan 26

Asked by

Baroness Hayman

To ask His Majesty’s Government what steps they plan to take in response to the report by Chris Skidmore MP Mission Zero: Independent Review of Net Zero, published on 13 January.

Baroness Hayman (CB)

My Lords, I declare my interest as co-chair of Peers for the Planet and express a debt of gratitude to Chris Skidmore MP and his team for providing the important, detailed and comprehensive report that we have before us today. I am also grateful to all noble Lords who will be speaking and to the Minister himself for being here to respond, given his prodigious workload in your Lordships’ House

It is worth emphasising at the outset that the Mission Zero report was not asked to provide a stocktake of the Government’s progress on net zero—that is a job for the CCC. Rather, the exam question the review was set was whether, given the recent dramatic global changes, particularly in energy, the UK can meet its net-zero ambitions in a way that is affordable and efficient and encourages business and enterprise. The report’s answer is an emphatic, “Yes, we can”, but with the crucial caveat that we will achieve sustainable growth only if we are given the right leadership and policy responses from government. To quote Energy UK, the industry body,

“the Government must seize this golden opportunity to drive a broad economic recovery and become a global leader in new technologies for years to come. Based on the evidence set out in today’s report, further delay would both be inexplicable and hand that economic opportunity to other countries.”

The effects of a once-in-a-generation cost of living and energy crisis have, as we know, been profound. The global dynamic has shifted, and a great industrial race to decarbonise has been triggered, with the US, China and the EU leading the way. The private sector understands this very well, which is why industry and business leaders across all sectors are urgently calling for clear, consistent and stable policy direction, effective regulation and sectoral plans so that they can plan and attract investment for a pro-growth transition.

However, the business community is increasingly concerned that the opportunity to keep up with those leading this global growth race is slipping away from us. As the director-general of the CBI warned this week, a lack of government strategy risks “haemorrhaging” business investment and green growth to other markets. He flagged that at the very moment the US and the EU are going bigger and harder, we are seeing very little “urgency and boldness” from the Government. If economic opportunities are not to be lost and investment decisions delayed, we need an urgent government response to the call made in the review for greater certainty, consistency and clarity across net-zero policy. If we embrace that strategic approach, the UK has every opportunity not only to keep up but to lead.

We have already seen how forward-looking, well-balanced government policies and regulation can support the development of new low-carbon industries and British success stories. For example, we invented the contracts for difference model that has powered the breakout success and cost-competitiveness of the onshore and offshore wind industry. Such innovative models can ensure that we steal a lead in other technologies as well, including solar, geothermal, battery storage and carbon removals. Policy intervention and smart investment could also provide breakthroughs in other areas, from low-carbon steel to plant-based alternatives to meat; from electrified kilns for brickmaking and ceramics to green fertilisers.

While the next stage of the transition will undoubtedly require careful management, the UK has proven that it can pioneer complex system change and create world-leading sectors in the process, where well-constructed, practical policy is in place from government to support that process. At the World Economic Forum in Davos last week, the noble Lord, Lord Stern, chair of the Grantham Research Institute, said:

“The world has in its hands a new growth and development story driven by investment and innovation in green technology … it is a much more attractive and inclusive story than the dirty and destructive paths followed in the past.”

However, to capitalise on these opportunities, we need to confront another major message from the report: at the moment, we simply do not have the necessary strategic planning, infrastructure and delivery mechanisms to nurture sustainable growth. It is evident that private and public sector stakeholders have little confidence that the Government are actually making good on the Prime Minister’s welcome promise to ensure that UK climate leadership

“pervades all aspects of Government now”.—[Official Report, 9/11/22; col. 263.]

The report highlights that we do not have the whole-government approach that such a multifaceted and complex challenge as the transformation of our economy—because that is what we are talking about—requires.

Of course, political leadership at the very top of government is essential, and the disappearance of the Cabinet committee chaired by the Prime Minster is hardly encouraging. However, we also have to recognise that policy change and delivery have to take place at every level, and that not only businesses but civil society and, crucially, local government all have pivotal roles to play. If we are to achieve the Government’s aim of

“matching world-leading ambition with world-leading delivery”,

we need the structures in place to realise that commitment and secure the opportunities of net zero.

I therefore hope that the Minister will take very seriously the recommendations in the review aimed at overcoming the current lack of joined-up policy-making and to embed action across all levels of government, all nations and all departments. The Government should look urgently at two specific proposals in this area, put forward both by the review and by committees of this House and the other place: a net-zero test across government policies and legislation, and an office for net-zero delivery to drive policy in areas where progress, frankly, is painfully slow at the moment.

As the review says, unless the Government take a strategic and holistic approach to both policy and delivery:

“Climate commitments and net zero targets remain just words on a page without a clear, consistent, and stable transition plan.”

It is clear to me from reading the report and from all the briefings I have received in the run-up to this debate, particularly from business, that not acting risks costing far more than the necessary investment to make the transition and the growth that will follow.

As an immediate positive response, the Government could show their direction of travel in areas where we actually have legislation going through this House and the other place. Energy efficiency is a no-brainer for most people. There are amendments to both the Energy Bill and the Social Housing (Regulation) Bill which could transform both cost and quality of life, yet we are not making progress. Also, there is wide-ranging support from all sectors for giving Ofgem a regulatory duty to support the net-zero transition, so why are the Government opposing such amendments?

At COP 26 in Glasgow, Rishi Sunak pledged to make the UK the world’s first net-zero financial centre. Yet the Financial Services and Markets Bill totally fails to take the opportunities to make that pledge a reality, and we are told that amendments are not necessary. The levelling-up Bill could catalyse action to support net zero by fundamentally reforming the planning system through the development of green skills and ensuring that our climate and nature objectives are in place, while also delivering the cheapest forms of energy generation: onshore wind and solar. Amendments already made to the Procurement Bill present opportunities to stimulate the innovative businesses and supply chains of the future. I therefore hope for a positive response from the Minister on these immediate issues and on the longer-term strategic direction.

We often discuss climate change in terms of the moral imperative we have to safeguard the future for our children, our grandchildren and the planet. For me, that imperative is overwhelming. However, I hope that for those who are anxious about the costs entailed in attaining net zero, this report will provide some comfort that at this global tipping point, responding to the climate and nature crisis is not only the right thing to do but the right economic strategy.

2.59pm
Lord Whitty (Lab)

My Lords, slightly to my surprise, I very much welcome this report by Chris Skidmore and I agree with pretty much everything the noble Baroness, Lady Hayman, said. Chris Skidmore has performed two key changes in mindset on this for us—if we are prepared to follow them.

First, it is now very difficult for the darker sides of His Majesty’s Treasury and other bits of Whitehall—and, indeed, the less progressive elements of industry—to claim that there is a conflict between government intervention to improve economic performance and intervention contributing to our environmental target of net zero. Net zero is an economic strategy; it is the only one in town. The environmental is economical. What is good for carbonisation is good for economic progress and Britain’s economic leadership.

Secondly, the report finds that the present policies for reducing greenhouse gases are clearly nowhere near sufficient—or, more accurately, are not yet being pursued sufficiently vigorously and in sufficient detail to add up to an effective net-zero pathway. We need to confront these big points. It is not news that we are falling short on a lot of our environmental targets; the Climate Change Committee points this out regularly. What is new is that we must now recognise that these failures are also profound economic failures. They will affect us economically in terms of our prosperity as well as being a setback to our achievement of the net-zero strategy.

We must recognise that, although dramatic changes in technology may come through in the coming decades and help us meet our net-zero goals, most of the progress we make until at least 2035 will have to be done with technology that we already have or is already pretty close to proving. This means that we will need a much clearer map of technological choices and government decisions. For example, we need big early decisions on fuel and energy; on the deployment of new forms of nuclear power, including SMRs; and on the role of hydrogen.

Hydrogen is seen as a solution to our most acute problems in replacing fossil fuels. We probably need to use hydrogen for heavily energy-intensive industries and heavy transport such as marine, road, rail and, possibly, aviation. However, we cannot expect hydrogen to be produced in a green form that is also sufficient to provide a basis for heating our buildings. As the noble Baroness, Lady Hayman, said, we probably need instead to mandate heat pumps or some other technology, such as district heating, together with a proper, solid, greatly enhanced energy efficiency programme, national installation standards for all new build and substantially greater, more targeted resources for retrofitting buildings. The other thing we need is a greater emphasis on land use and agriculture than is in the Skidmore report; not enough of it focuses on how we produce our food and use our land.

Thirdly, we need brave decisions on road vehicles. This means getting rid of all petrol and diesel cars more rapidly, probably with road rationing—by price or by zoning—as well.

Lastly, as the noble Baroness, Lady Hayman, said, we need coherence in government. We need proper cross-government machinery. A shadowy committee about which none of us knows and which has no clear conclusions and no clear strategy is not enough. We need a proper office for net zero, and it has to transcend the whole of Whitehall and, indeed, the whole machinery of government at all levels in this country.

3.03pm
Baroness Worthington (CB)

My Lords, I thank the noble Baroness, Lady Hayman, for securing this debate. I echo her comments about the sheer number of opportunities ahead of us in the near term to address some of the recommendations in legislation before us, whether that is the Energy Bill, the Procurement Bill or the financial services Bill.

I also congratulate Chris Skidmore on not just the nature of the report but the process he undertook to gather evidence, which was comprehensive and cross-party—and done in such a short space of time as well. I have not heard a bad word said about it. There is absolutely no way one can do justice to the sheer weight of the report’s recommendations in four minutes, so I will focus my comments on a specific, interesting issue in the report: the definition of net zero.

One of the recommendations that your Lordships will read features a new phrase, “geo zero”, meaning that we must unpick the concept of net zero to better understand what we are talking about when it comes to addressing fossil-based emissions—which are essentially bringing emissions out from under the ground, out of the lithosphere, and leaving them in the atmosphere for 1,000 years—and what we are doing with our biosphere, which is changing our land-use patterns. Altering that is a very dynamic process of changing over time and in accordance with weather and climatic conditions. That is a very different set of uncertainties and data about how reliable that portion of our carbon account is.

The lithospheric, or geospheric, balancing act that we need to do to make sure that any fossil brought out of the ground is neutralised by permanent storage in the lithosphere must be addressed. It is a recommendation of this report. It is incredibly forward-thinking of Chris to have got his head around not only the day-to-day but this fundamental problem. It is important because increasingly we are seeing concerns about the sheer number of claims around carbon neutrality—“I’m net zero” or “I’m carbon neutral”—even to the extent that we have had coal mines approved based on being carbon neutral. No real standards apply to what that really means. Coal mines really cannot be equated with the vague planting of some trees somewhere in the world which may or may not survive. It needs some definition. This is an opportunity for the UK, because we happen to have some of the world’s leading scientists, land-use experts, agricultural colleges and carbon accountants, with probably a higher concentration of them here than anywhere else. So it is within our capability to do this.

We also have a tall tower network of very clever and very sensitive monitors that allow us to see what is happening in our atmosphere. People perhaps do not understand that when we submit plans to the UN or targets and budgets to the CCC, we are doing so on the basis of an inventory, which is essentially a spreadsheet, with people putting in numbers and hoping that those numbers are correct. However, we have these tall towers with sensors on them to cross-check whether that inventory appears to be correct. We have a proper, real-world, empirical backstop to our carbon budgeting. We are possibly the only country that does this. The only of two that have invested in this are New Zealand and Switzerland—so we are in a very fortunate position.

Therefore, with our desire to become a centre for green finance, our efforts to green the financial markets, and the fact that we have a huge number of people who are talented on this issue, we could start to develop proper, regulated standards that govern the market in carbon offsetting and carbon neutrality claims. We can do this. We should do this. It is in this report. I wish that I had more time to go into it. It is something that I strongly recommend that the Government take very seriously.

3.07pm
Lord Grantchester (Lab)

Chris Skidmore’s Mission Zero review is a very good sense check, an appreciation of the delivery of the measures that are needed and that are being undertaken in the UK at the moment, as the Government continue to undertake the huge challenge needed to cut back carbon emissions that are leading to the quickening of climate change. His voice adds encouragement to what Labour and many other concerned participants have been expressing for some time. Net zero, decarbonisation and clean energy growth will happen only if they deliver economic and other benefits throughout communities and modern life.

For this to happen requires consistency and clarity in purpose and policies, and certainty for businesses and local authorities that the constant switch on and switch off of measures must not persist. Continuity in the length of funding commitments must be assured. The crippling of the solar industry that happened in 2015 under the Cameron Conservative Government must never happen again. The most important message is that a stability of approach requires long-term planning and a constant regulatory environment for our ambitions to have any chance of delivery. These important guardrails on page 40 must be heeded.

The second important message that this review underlines also chimes with Labour’s message. It is that delay creates new consequences, costs are increased more than previously anticipated, and inaction or doing little and more slowly is more costly than any disruption to the status quo, because the status quo is already adding to the problem.

The Government have been slow in their decision-making, leading to delay in crucial areas, slow in encouraging future investment from industry, slow in their recognition of their mixed messages, and slow in their recognition of the importance of behaviour change needed, as shown in your Lordships’ Environment and Climate Change Committee report.

The UK’s comparative advantage of offshore wind and green finance is being eroded, especially through skills shortages and inconsistent policy commitment towards infrastructure. The UK could have an extra 2% of growth in GDP through new jobs and reduction of fossil fuel imports. The UK is suffering from an antiquated approach of grid connections to the nearest point on the onshore network, when the need is to transport electricity around Great Britain. The Minister will know that the holistic network design requires concerted investment of some £60 billion over the next five to 10 years. Is he able to update the House on the Government’s plans to achieve this today? Labour has committed to some £28 billion a year for 10 years to get the UK nearer to net zero.

The Climate Change Committee and the Government need to review the fourth and fifth carbon budgets, in view of the increased pace needed for the net-zero commitment by 2050, and the announcement of the UK’s nationally determined contributions in Glasgow. The Climate Change Committee has already reported to Parliament that the Government are not on track to deliver on all their commitments.

To update on where the UK now stands, the review also calls, under objective 16, for a land use strategy. The House has been well served by the specialist inquiries committee’s recently published report Making the Most Out of England’s Land, drawing attention to the importance of the multifunctionality of land, and a modern planning approach across all government departments. Can the Minister commit the Government —with BEIS and Defra in mind—to producing this strategy this summer, alongside a refreshed net zero strategy, as necessitated by the courts during spring this year?

3.12pm
Baroness Scott of Needham Market (LD)

My Lords, I too thank the noble Baroness, Lady Hayman, for securing today’s debate so soon after the publication of this excellent report. In his report, Skidmore says that

“there must be more place-based, locally led action on net zero. Our local areas and communities want to act on net zero, but too often government gets in the way. The Government must provide central leadership on net zero, but it must also empower people and places to deliver.”

I could not agree more. At this point, I should declare an interest as President of the National Association of Local Councils, the representative body for town and parish councils. They cover everything from the tiny parish in which I live, with a precept of a few thousand pounds. to some of our largest towns with budgets of many millions.

So, as the first tier of local government, they should not be overlooked in the delivery of net zero. Many are already providing place-based, locally led action. Many have put climate change on their agenda and are actively looking for ways in which they and their communities can play their part in delivering net zero. If time permitted, I would share with the House some of the many case studies of strong local leadership and practical projects, such as tree planting, recycling schemes, car charging points and much more.

With their clear place-based remit, they are uniquely positioned not just to act themselves but also to act as a catalyst for community and faith groups, local businesses and local government at other levels. Crucially, they can ensure that action is not just concentrated in large urban centres, and that even rural parishes can play their part. So, when the Government come to consider recommendation 20 on the establishment of trailblazer net-zero communities, I do hope that at least some of them will be led by ambitious town and parish councils with a proven track record. But they could do more. These councils need to be empowered by extending the general power of competence, and by the removal of administrative barriers.

Government funding streams are, frankly, a mess. Across government, there are too many funding streams that are too complex, too expensive to administer and deliver and often incoherent. That is not just my view but that of the NAO. Indeed, the Climate Change Committee has made many of the same points on this agenda. Local authorities now find that they cannot bid because they simply cannot afford to. The Government should undertake a massive simplification, particularly with regard to net-zero funding, and ensure that, this time, town and parish councils are entitled to bid and play their part, because they are often denied access.

I would add the Levelling-up and Regeneration Bill to the list of Bills that have already been mentioned. There is an opportunity to do some of this quite quickly, since what I have said reflects not just what Skidmore said but what all the organisations that gave evidence to him said. Parish and town councils are leading the neighbourhood planning revolution, and they will be vital to the next stage of delivering net-zero neighbourhood plans with their communities and their buy-in. However, that Bill offers some challenges to the neighbourhood plan process, and we will explore that as it progresses. Can the Minister assure us that the levelling-up Bill will be assessed against Skidmore’s report to make sure that it is not actively working against it?

Polling shows that there is a great public appetite to do more, but people are unsure about how best to contribute. It all feels somehow remote and too big for them as individuals to make a difference, but local action can bridge that gap by involving people and communities and making a real contribution to net zero.

3.16pm
Baroness Bennett of Manor Castle (GP)

My Lords, it is a great pleasure to follow the noble Baroness, Lady Scott of Needham Market, who picked up many of the points that I will seek to expand on. I declare my position as a vice-president of the LGA and of the NALC. I will focus on larger councils, as well as town and parish councils. There are 129 recommendations to debate in this hour. I will focus on two of them.

The first is the recommendation to end the disjointed mess of short-term, competitive local authority funding pots. As the Skidmore report says, that would enable communities to maximise the economic and social benefits of net zero while using resources most effectively. As Professor Tony Travers often points out, local government is a very efficient spender of funds, often more efficient than central government. The Government need to sit down with local government and ask it—not tell it—how to achieve net-zero targets, starting at the local level, and realise that this is the way resources can be put to best use.

The second point the Skidmore review highlights is also a story of localism: the importance of the community energy sector, which the report says is “neglected by government” and

“a distilled example of energy security and sovereignty”.

The Local Electricity Bill has been tabled in the other place. In your Lordships’ House we have an amendment that I tabled to the Energy Bill in Committee that will come back on Report. This is a huge opportunity—dare I say an oven-ready plan?—to unleash community energy, with possibilities for net zero and local prosperity. It is sitting there; the Government simply need to pick it up. I note that there is very strong Tory support for it in the other place.

However, as the noble Baroness, Lady Scott, just said, all this crosses over very much with the Levelling-up and Regeneration Bill. The levelling up fund disasters we just saw were hugely wasteful, yet we see the same model in the social housing decarbonisation fund, in various schemes for private home energy efficiency, such as home upgrade grants, and in transport decarbonisation funding. Central government throws out a random pot of money and says, “Bid for this quickly”, and local government at all levels has to scramble. That is not an efficient model. It has always been a problem, with turnarounds on bidding and spending that drive inefficiencies rather than efficiencies, but it is even more of a problem now, with inflation meaning that, for example, capping rules on spend per house have made it even more difficult to spend the allocations because the cost of insultation is going up so fast.

We saw that in the levelling up fund only shovel-ready projects were able to bid, so councils had quickly to scrape together ideas and things that were already in the pipeline rather than planning for the long term, which is what the efficient use of money and the delivery of net zero and workable schemes demand. We need the Government to allocate money strategically on the basis of need and on a long-term basis. This is the case for local government spending. In terms of community, it is simply a case of setting people free to do what they are desperate to do. Communities want to get together, find good uses for local money, build local prosperity, supply local energy and get on with tackling the net-zero challenge. A climate emergency has been declared by 409 principal authority councils. They want to act and communities want to act. As this review makes clear, the Government have to let them.

3.20pm
Viscount Stansgate (Lab)

My Lords, in my experience it is relatively rare to have the opportunity to debate a report so soon after its publication, so I congratulate the noble Baroness on securing the debate. I hope we will learn a little more about what the Government think of it when the Minister comes to wind up.

It is 27 years until we reach the legal requirement to reduce our emissions by 100% from the 1990 levels, although it has been only 15 years since our Climate Change Act set the UK on the road to being the first country to introduce legally binding targets. In this context, Chris Skidmore has done a very good job and performed a very useful role in the short space of time given to him, even in the light of his “pro-business, pro-enterprise and pro-growth” remit. It may be that his report is one of the enduring legacies of the short premiership of the previous Prime Minister.

In the very short time we have, I will make only a few points. First, this report takes into account major recent developments, such as Ukraine and its consequences, and hence emphasises the links between net zero, future UK energy security and the infrastructure needed to support new and greener fuels, but we are lagging behind on the infrastructure, and I am not even sure whether the country yet grasps the upheaval needed to adapt the national grid to enable renewable sources of energy to be fed back into the system.

Secondly, some of the specific recommendations are welcome—for example, the creation of an R&D road map to ensure that priority technologies can deliver the UK’s net-zero and growth ambitions. I hope that in his reply the Minister can tell the House whether the Government endorse this approach and, if so, what action they intend to take accordingly.

Thirdly, the report emphasises that:

“Net zero is the economic opportunity of the 21st century.”

That is true. To adapt a well-known marketing phrase, “The future’s bright, the future’s green”, but it is also true that the world is a highly competitive place and the UK risks falling dangerously behind when our major competitors, such as the USA, the EU or China, are fast developing their green economies. You have to hand it to the Biden Administration. Under the heading of the Inflation Reduction Act they are now investing staggering sums in clean technology, and significant investment is also being made by France and the EU. Talking up our opportunities is one thing, but if we cannot even get a gigafactory for batteries built in Blyth, we will not reach first base.

Fourthly, the report calls for

“clarity, certainty, consistency, and continuity”.

I entirely agree, but it is easier said than done. It is critical that the next steps we take have sufficient bipartisan support to enable them to survive beyond the next general election and to be continued and expanded by the next, perhaps very different, Government. Between now and 2050, how many general elections and future Governments will we have? How much risk is there that the sustained progress we need will not be sufficient? I mention this because on the long road towards net zero we have to have a change in attitudes and approach, and it has to be sustained and embedded over the next three decades, no matter what Government we have.

Finally, we do not have the option of not taking action. This is one of those subjects, and one of those reports, where not taking any action is nevertheless tantamount to making a decision. In this case, not taking action is the wrong decision.

3.24pm
Baroness Blake of Leeds (Lab)

My Lords, I declare my interest as a vice-president of the Local Government Association. I add my sincere thanks to the noble Baroness, Lady Hayman, for her excellent introduction and for securing the debate today. As the noble Baroness, Lady Worthington, has said, with over 300 pages and 129 recommendations, we are not going to get into the detail that some of us might have liked to today, but I will add to the comments that the review is welcome. I thank the many external organisations that have sent us all briefings, and of course the House of Lords Library for its informative and detailed briefings. It is good to follow on from last week’s debate on the report from the Industry and Regulators Committee. I think we are starting to get a head of steam, if that is the appropriate term, around this debate when it comes to securing interest.

The report is timely and welcome. Given that the author, Chris Skidmore, remains a sitting Member of Parliament for the party in government, there is an obvious question for the Minister: does it have the support of the current Prime Minister? I have to say it is concerning that the report might not even have been produced had the High Court found that the Government’s net-zero strategy was lawful. With the nine-month period that the court gave to amend the strategy soon to elapse, we are hoping and expecting to hear that the Government have listened.

What strikes me about the report is the positive tone throughout, as we have heard, emphasising the opportunities that lie ahead. We have a duty to ourselves and to each other to achieve net zero and halt the impact of global warming, but too often the debate focuses only on the challenges, costs and inconvenience, and fails to acknowledge the opportunities that net zero can bring. Not only does that approach miss a large piece of the picture but I am sure that it is not the most effective way to motivate people to make significant changes in the way that they live and work. At the very least, presenting both the urgent requirements for change and the opportunities is vital.

As we have heard, the review is positive about the economic opportunities that the agenda presents to this country in the years ahead, as my noble friends Lord Whitty and Lord Stansgate have mentioned. We are talking about £1 trillion-worth of goods and services to enable global net-zero transition, 500,000 quality jobs by 2030, and increased energy independence and therefore security. These are transformational benefits for all, while reducing the catastrophic level of damage that global warming can and will cause if left unchecked.

It is disappointing that the report states that the UK’s ambition has not been matched by delivery and is slowing progress and missing opportunities. We have long called for progress in this area. The four Cs of clarity, certainty, consistency and continuity asked of government would be useful in most situations but, when it comes to net zero, they are essential. I therefore ask that, today, the Minister gives us a detailed update on where the Government are up to with the delivery of their strategy and plan for net zero. We do not need another tour around the different, and of course very welcome, investments already being delivered. The problem is that they are not joined up, the approach remains piecemeal and fragmented, the communities strategy is still not developed and the question of leadership remains unresolved. The Government’s lack of coherence, and therefore the impression of a lack of grip and urgency, needs to be dealt with at pace.

3.28pm
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)

My Lords, I pay tribute to the noble Baroness, Lady Hayman, for securing this important debate today, and to the excellent contributions that we heard from all parts of the House on this extremely important issue.

I start my response by answering directly the question of the noble Baroness, Lady Blake, on the UK Government’s plans. These plans are already well advanced. We have made great strides in our actions to tackle climate change, as the noble Baroness and other noble Lords will be aware. In 2019, the UK was the first developed economy to set a legal commitment to reach net zero by 2050. This was followed by the 10-point plan, published in November 2020, which sets out our plans for what was then termed a green industrial revolution.

Building on the momentum of that plan, in October 2021 we published the Net Zero Strategy, setting out a detailed pathway to meeting our carbon budgets and net-zero targets. This was in turn followed by the British Energy Security Strategy in April 2022, accelerating our ambitions towards cleaner energy. It is well worth remembering that, since publishing the net-zero strategy, economic conditions have of course changed significantly due primarily to the Russian invasion of Ukraine. Energy prices and inflation have both risen sharply—the former, as we know to our cost, to record levels.

In the light of all that, in September 2022 the Government appointed Chris Skidmore MP to chair an independent review of our approach to setting our net-zero 2050 target, to ensure that we deliver our legal commitment to reach net zero by 2050 in a way that is pro-business and pro-growth, given the tremendous changes that we have seen in the economic landscape. The review heard from businesses, academia, individuals and local government across the country that net zero is in fact creating a new era of change and opportunity. It explains the opportunities and benefits of net zero for individuals and the economy, and specifies the actions needed to catalyse change in individual sectors of the economy, through to how we enhance the role of local authorities, communities and individuals—all to help deliver a just transition.

The review confirms what the Government have understood for years now: that the benefits of net zero far outweigh its costs. As the noble Lord, Lord Grantchester, observed, the costs of global inaction significantly outweigh the costs of action. Delaying action will only put future generations at risk, and the UK’s approach demonstrates that green and growth can go hand in hand. The UK’s net-zero transition provides lots of exciting investment opportunities for the private sector, all of which we are doing our best to leverage.

The noble Viscount, Lord Stansgate, pointed out the risks of the UK falling behind in the global race to net zero, and was right to do so. The Government are committed to ensuring that the UK remains an attractive destination for private investment, and we have an excellent story to tell on attracting that very green investment which we need to see. Bloomberg New Energy Finance estimates that, in 2021 alone, around £24 billion-worth of new investment was committed to the UK across our low-carbon sectors. Done right, the net-zero transition will provide huge opportunities for jobs, investment, innovation and exports. While the noble Viscount was right to point out the disappointment of the Britishvolt situation, the site remains an excellent location for a battery gigafactory and the Government stand willing and able to commit substantial levels of investment and support, if the right investment opportunity comes along. I know that the local authority is also committed to that, so we remain optimistic on that site.

The noble Baroness, Lady Blake, asked me whether the review has the support of the Prime Minister. I can certainly confirm that the net-zero strategy remains government policy and has not been quashed. There was no criticism of the substance of our plans, which remain well on track; in fact, the claimants themselves described them as laudable during the proceedings. The review even confirms that the net-zero strategy of 2021 is still the right pathway.

The noble Baroness, Lady Worthington, commented on the definition of net zero itself. I was very interested in her remarks, and I know that Chris Skidmore talks about this. The Committee on Climate Change agrees that greenhouse gas removal technologies will be essential for reaching net zero, balancing residual emissions from hard-to-decarbonise sectors, while providing, at the same time, new economic opportunities. It also recognises that we have made a great deal of progress.

As the noble Baroness, Lady Hayman, says, we have delivered innovative policy mechanisms. She referred to the contracts for different scheme and I totally agree with her: the officials who dreamt up that scheme deserve whatever bonuses they received, hopefully, that year, because their scheme has been so successful that the rest of Europe is now seeking to follow on from the success of our offshore wind programme—in fact, to such an extent that constraints will probably be put on the supply chain in our attempt to ramp up production even further. It has contributed to a 500% increase in renewable energy since 2010 and helped us to become a world-leading country in offshore wind and advances in transformative technologies such as carbon capture and electric vehicles. One in six new cars sold in this country is now electric.

The noble Baroness, Lady Hayman, and the noble Lord, Lord Whitty, referred to the ways government is set up to deliver net zero. In the past few years we have gone further than ever before to ensure that the climate is at the heart of our decision-making. For example, we have taken new approaches to embed net zero in spending decisions, including requiring departments to include greenhouse gas emissions in their spending review bids and their impact on meeting carbon budgets and net zero. We continue to build on the strong progress we have already made. Certainly, we have many exciting policy announcements in the coming year—if the House will have a little bit of patience. As many Members know, we already have the Energy Security Bill in Parliament, which will help deliver an energy system that is cleaner, more affordable and more secure.

The noble Baroness, Lady Worthington, and the noble Lord, Lord Grantchester, both rightly mentioned our world-leading centre for green finance. Both will therefore be very happy to hear that we are committed to publishing an update to our Green finance strategy early this year, setting out how we will continue to mobilise finance for the UK’s energy security, climate and environmental objectives and maintain our position as a leading green finance hub.

I also recognise, as a number of noble Lords observed, that local authorities can and do play an essential role in driving local climate action, with significant influence in many of the national priorities across energy, housing and transport which will be needed to achieve net zero. They are delivering the vast majority of our energy efficiency programmes, such as the public sector decarbonisation scheme, the social housing decarbonisation fund and home upgrade grants. These are all delivered through some of our excellent, innovative local authorities.

The noble Baroness, Lady Scott of Needham Market, mentioned joining up net zero and levelling up. The levelling-up White Paper outlined that the new UK shared prosperity fund will support interventions which reinforce the Government’s commitment to reaching net zero by 2050. This includes providing up to £2.6 billion for investment for places, including for community infrastructure projects. As of January 2023, the local net zero hubs are working on a pipeline of projects with a projected total capital value of around £4.4 billion.

The noble Baroness, Lady Bennett, commented on the need for local delivery of net zero. As I have already mentioned, we work very closely with local authorities and their representative bodies to discuss their role in net zero. They are already contributing a lot, and I am sure we will want to examine how they can contribute even more in future.

As new technology will be critical to the transition, the Government are looking forward to publishing the net zero research and innovation delivery plan shortly. It will set out the Government’s current portfolio of research and innovation programmes, which are backing Britain’s most innovative businesses to develop the next generation of technologies needed to deliver our net-zero ambitions.

In conclusion, as I have set out today, our net-zero target remains a government priority. I can assure the House that we will carefully consider the recommendations made in Chris Skidmore’s review. We will of course provide a full government response later in the year. I thank the noble Baroness, Lady Hayman, again for securing this debate.