Asked by
To ask His Majesty’s Government what assessment they have made of
(1) the environmental provisions of the Inflation Reduction Act
2022 in the United States of America, and (2) the Green Deal
Industrial Plan announced by the European Union in January; and
what plans they have to prevent any resulting leakage of future
green investment from the United Kingdom.
(LD)
My Lords, I ask to give leave to ask my Question standing on the
Order Paper to the Minister.
Noble Lords
Oh!
The Parliamentary Under-Secretary of State, Department for Energy
Security and Net Zero () (Con)
I think that the noble Lord wants to ask the Question standing in
his name on the Order Paper; I hope so, anyway. The Government
welcome international action on climate change, and work closely
with allies and partners to ensure that we can collectively drive
global decarbonisation. We continue to assess the impact of
international policies on UK investment to ensure that we meet
our net-zero and economic growth ambitions. The UK has made
significant progress in decarbonising and growing our economy,
and we will continue to back our ambitious targets with impactful
domestic policy and targeted funding.
(LD)
My Lords, I will try to be a little more fluent in my follow-up
question. This is very serious. Industry and many people see the
Inflation Reduction Act and the EU response as a real threat to
us—piggy in the middle—as an economy and on where we need to go
on green investment. I do not get the impression that the
Government have a plan here. It looks like we are a rabbit frozen
in the headlamps of trucks coming in both directions. Is there
really a plan coming for how we will survive this onslaught from
our economic neighbours?
(Con)
The short answer to the noble Lord’s question is yes, in essence.
He is right to point to both these actions as potential threats,
significantly so in the case of the US. The protectionist
measures are the problem; we have no problem with it finally
coming to the decarbonisation table. We are still waiting to see
the details from the EU and will know more next week, but it does
not look as though there will be much protectionism there:
certainly, from the outline that I saw, none of the items listed
is a particular threat. We are looking at this very closely
across the Government and will be responding in due course.
(Con)
My Lords, is this so-called Inflation Reduction Act not in fact
an outright protectionist measure, very much pointing the wrong
way for those of us who want freer trade worldwide? The Secretary
of State says that she has been talking with like-minded
countries about what to deal with and how to face the problems
that the noble Lord, , has raised. Can the Minister
assure us that, in the United States, we are talking to a
like-minded country—we thought that it was—and explaining to it
the collateral damage, which could be considerable, from this
ill-considered measure?
(Con)
I assure my noble friend that we are talking to the US about the
provisions, but the legislation is the legislation. We all know
the history of why it ended up as it did in the US Congress.
Nevertheless, we will continue to engage the US, make our points
and argue for open, free and fair competition.
(Lab)
My Lords, yesterday, Platform and Friends of the Earth Scotland
published a report which showed how oil and gas workers could
lead a just energy transition, with a training scheme that was
standardised between offshore oil and gas and the new offshore
industries, including wind, tidal and wave, to allow workers to
take their skills to the new sectors. Will the Government act on
those recommendations?
(Con)
The noble Baroness has an advantage on me as I have not seen that
report, but we have the North Sea transition plan, which does
many of the same things that she talked about. As I have said
before, we still have a need for oil and gas in the medium term
during the transition, but the essential skills that many of
those workers bring will be very useful in the new economy.
The (CB)
My Lords, the Government have adopted a state-level strategy,
signing memoranda of understanding with various states: Indiana,
South Carolina and North Carolina. Their focus is on clean tech
and green trade. What other states are the Government currently
in negotiations with, what are the expected benefits, and why
should we be negotiating with individual states rather than the
United States on this front?
(Con)
The noble Earl raises important points with regard to trade
negotiations. I am not familiar with the details so I will have
to write to him.
(Con)
My Lords, there is a grotesque misnomer here. The Inflation
Reduction Act will in fact raise trade barriers, push up prices
and thus increase inflation. Worst of all, like the Smoot-Hawley
Tariff Act, it is likely to set off a series of
beggar-my-neighbour retaliatory measures, not least from the
European Union. Will my noble friend the Minister confirm that
this country remains wedded to the principles of free trade and
that, if others put rocks in their harbours, we will not
retaliate by putting rocks in our harbours?
(Con)
My noble friend makes an important point. I know how committed he
is to and how hard he works for the principle of international
free trade, which we totally support. We want to engage with the
US on these matters but we need to convince it and, of course,
the EU that free, fair and open trade benefits everyone. That is
the key point that we need to put across to them.
(Lab)
My Lords, the scale of potential investment in both the US
Inflation Reduction Act and the EU green deal shows a key
recognition of just how much opportunity there is in investing in
net-zero projects. The European Commission cites 35% to 40% of
all jobs as potentially affected by the green transition, while
analysis by Princeton University’s REPEAT project suggests that
the policies in the US Act will create hundreds of thousands of
jobs. Any leakage of investment away from the UK will also leak
jobs, as the Question from the noble Lord, , suggests. I ask the Minister
to be specific about what steps the Government have taken to
protect these opportunities for our communities to level up. For
example, can we expect to see reference to this in next week’s
Budget?
(Con)
The noble Baroness would not expect me to go into detail but we
will set out our plans shortly. However, it is important to
recognise that the UK has made excellent progress in attracting
private investment into low-carbon sectors. PwC’s 2023 annual
global CEO survey found that the UK is now in the top three in
the global investment market, second only to the US and China.
Bloomberg New Energy Finance estimated that, in 2021 and 2022,
the UK saw £48 billion of net-zero investment coming into the
UK.
(CB)
My Lords, while I recognise the concerns about the
anti-competitiveness issues with the Inflation Reduction Act, I
wonder whether the Minister has looked at the specific provisions
in it in relation to onshore wind. There is support for
investment and production, whereas in this country we make the
infrastructure of onshore wind subject to far more difficult
provisions than any other sort of infrastructure and we have kept
it out of investment incentives. When are we going to change
those policies?
(Con)
The noble Baroness is dogged in her support for onshore wind and
makes an important point. She will know that it is now eligible
for CfDs and we are looking at how we can ensure more onshore
wind investment with the support of local communities.
(LD)
My Lords, given the Minister’s positive reply to his noble friend
Lord Hannan, do the Government retain an open mind with regard to
Tata, or other organisations not based in the UK, seeking up to
half a trillion pounds of taxpayers’ subsidy money?
(Con)
The noble Lord would not expect me to comment on detailed
negotiations with particular companies. We have long had a policy
of open and free trade, but we have some relatively limited and
targeted investments, including in the automotive sector, which
have proved very successful. We are not going to follow the lead
of the US and close our borders to foreign competition.
(Con)
I congratulate the Government on the investment in National
Savings bonds. Will my noble friend tell us what the level of
investment has been and what type of projects have benefited from
them?
(Con)
I am afraid I do not have that information to hand. I will need
to write to my noble friend.
(Lab)
My Lords, is it not the case that the American policy is being
driven by the fact that living standards in America—and in Europe
and here—have been dropping? The gap between rich and poor is
getting wider, and Governments have so far failed to address that
problem.
(Con)
I do not agree with the noble Lord. There are reasons why the US
adopted its policy —investment, which we welcome, into green
renewable energy, et cetera. Of course, the US is starting from
an awfully long way behind the UK. One of the reasons it has to
put in such large subsidies is that it has not provided the
long-term legislative certainty that we have.
(Lab)
My Lords, mention of rocks dropping into harbours by the noble
Lord, Lord Hannan, brings to mind ships. On protectionism, what
is our view of the latest legislation being passed by the EU,
which seems to indicate that defence procurement will be from
countries remaining in the EU and not go more widely?
(Con)
The noble Lord is always ingenious at getting defence and ships
into every Question. I would need to speak to my Ministry of
Defence colleagues for their response to that.
