Business, Energy and Industrial Strategy Committee
Oral evidence: Clean Growth Strategy and International Climate Change Targets, HC 871
Tuesday 16 July 2019
Ordered by the House of Commons to be published on 16 July 2019.
Members present: Rachel Reeves (Chair); Drew Hendry; Stephen Kerr; Albert Owen; Antoinette Sandbach; Anna Turley.
Questions 404 – 502
Witnesses
I: Chris Skidmore MP, Interim Minister of State for Energy and Clean Growth, Department for Business, Energy and Industrial Strategy; Ashley Ibbett, Director, Clean Electricity, Department for Business, Energy and Industrial Strategy, and Tim Lord, Director, Clean Growth, Department for Business, Energy and Industrial Strategy.
Examination of Witnesses
Witnesses: Chris Skidmore MP, Ashley Ibbett and Tim Lord.
Q404 Chair: Thank you, Minister, and Ashley Ibbett and Tim Lord, for coming in to give evidence to the Select Committee today on net zero. Minister, I will start by asking what analysis the Government have done to check the net zero target represents a fair contribution from our country to limiting global warming to 1.5 degrees.
Chris Skidmore: Thank you for the opportunity to speak to the Committee. I am delighted to be here as the interim Minister for Energy and Clean Growth on behalf of Minister Claire Perry, who I am sure would dearly like to be here, being grilled by the Committee this afternoon. I hope I am an appropriate compensation in her place.
Chair: We look forward to future opportunities to grill Minister Perry.
Chris Skidmore: I have had the privilege of being able to legislate for net zero back on 27 June. The Government’s decision to legislate and to move the dial in the Climate Change Act from 80% to 100% was informed by the Committee on Climate Change report, which was published in May. When we look at our emissions contributions globally, we recognise we only make up 1% of all global emissions. We are keen to ensure we can continue to demonstrate our leadership on a global stage, using net zero as a policy commitment, as the first G7 country to legislate. Within the Committee on Climate Change report, there are differentials in terms of the devolved nations, Scotland in 2045 and Wales perhaps slightly later. We recognised in legislating that we have the review mechanisms already in place for the Act.
Q405 Chair: Yes, that is what I was getting to. We have taken evidence from various people during the course of this inquiry, including last week from David Attenborough. One point that was made on many occasions is that we have some historic obligations, because so much carbon in the atmosphere has come from this country, even if we are not the biggest emitter today. I wondered whether you have given any thought to a fair contribution. We are leading the way in this area in some ways. That is very welcome for a whole range of reasons. In terms of the fairness of our contribution, should we be doing more than other countries?
Chris Skidmore: What is important to reflect upon in the report is that just transition, making sure we take a whole-of-society approach so that no one gets left behind in the transition to a green economy, and we have that principle of clean growth embedded in our national conversation. The last thing I would want would be to set artificial targets that we were not able or that it was not sustainable to meet, and to lead the country down a false path.
Q406 Chair: Okay. You think this is a fair contribution. Net zero by 2050 is a fair contribution from the UK.
Chris Skidmore: We follow the Committee on Climate Change advice that this is the fairest and most sustainable path to delivering it, in terms of following existing legislative infrastructure of the Climate Change Act.
Q407 Chair: You have already mentioned the five-year review mechanism. What do you see as the purpose of that, to look at going further, or to see whether other countries have done enough, and perhaps to relax our target if other countries have not adopted a similar one?
Chris Skidmore: My officials may want to come in on this point. When we look at the review mechanisms that have been announced, there is the five-year review mechanism as part of the Act. That has been put in place. As the right hon. Member for Doncaster North sagely mentioned in the debate on net zero, this could be used to move towards 2045 at a later stage if we felt that somehow technologies had advanced and we had the ability to move further, faster. There is the Treasury review that is ongoing this summer, and a potential Treasury review is linked in with the five-year process again. That is to do with competitiveness and to look at how we are moving in comparison with other neighbours internationally. I am keen that it is the former that we focus on. It is how we can keep up the pressure in demonstrating our ambition on climate change.
Q408 Chair: On balance, do you think in five years’ time we will be sticking with 2050, moving that forward, or pushing back that deadline?
Chris Skidmore: When we look at other countries, European and non-EU counties, Norway has made a commitment, I think, to 2038. When I was at the British-Irish Council—was it Guernsey or Jersey?—I think Guernsey made a commitment to 2030. Anyway, its Parliament has come quite far out. I guess the question here is also one the EU is looking at, and 24 out of the 27 EU countries were looking to sign up to 2050 just recently at the EU Council. Some countries, like Poland or Hungary, are further behind.
Q409 Chair: For us, do you think in five years’ time we might move that forward or back, or do you think 2050 is probably where we will stay?
Chris Skidmore: In the context of the carbon budgets, the advice we have received from the committee is that we work within those envelopes. Carbon budget 6 needs to be agreed by, I think, mid-2021, or legislated on by mid-2021. We have had the impact assessments. We have had the secondary legislation that has gone through Parliament already. It makes sense that we work with an existing carbon budget framework, as advised by the Committee on Climate Change. The question is going to come around the nature of carbon budget 6 and potentially carbon budget 7. If carbon budget 6 is then 2033 to 2038—
Tim Lord: 2037.
Chris Skidmore: That is where you could be looking potentially at saying, “For the future, if we move faster in the longer term, where do we go?”
Q410 Chair: Will you ask the Committee on Climate Change to advise you ahead of setting that, so in five years’ time the Committee on Climate Change will come back with some further analysis about whether 2050 is still appropriate or perhaps, as I hope, it might be sooner than that?
Chris Skidmore: It is being informed by the science and by the opportunities to know where the targets are with respect to new data that has been produced. On that point, if it is okay, I might bring in Tim Lord.
Chair: Okay, briefly, and then we will move on.
Tim Lord: Exactly as you say, we would expect to ask the CCC for advice. The review is under section 2(2) of the Act, which, as the Minister says, talks about evolution in international ambition, evolution in the science and changes to cost. Given how quickly all those things are moving, we would expect, within five years, for that to be a sensible point to look at that and for the CCC to look at that question again.
Q411 Albert Owen: Good afternoon. You will be aware that the CCC has added aviation and shipping in its latest report. What practical commitments will you be pushing for from the International Civil Aviation Organisation, for example, to reduce emissions from international aviation so the UK can deliver net zero?
Chris Skidmore: There is a key point here around setting our domestic commitments but then going further internationally and the synergy between those two. We hope the successful bid on COP 26 will allow for that, if successful. We have already shown leadership on international aviation when it comes to the carbon offsetting reduction scheme for international aviation, CORSIA. We have worked with the International Maritime Organisation on helping to set out plans to reduce shipping emissions by 50% by 2050. It must be through international partnerships and channels that we look at going further on this.
In terms of ensuring we reach net zero by 2050, we have already stated that when it comes to domestic flights and domestic shipping that is included in the target. We made headroom within the existing carbon budgets for international aviation and shipping coming from the UK.
Q412 Albert Owen: Can you explain what the carbon offsetting means, in this very practical way? If we have flights coming from the Caribbean, eastern Europe or whatever, how do we measure that? How do we offset it? Is it not just neutral at the end of the day? We are just moving carbon credits around the world.
Chris Skidmore: That is a question the Committee on Climate Change is keen to continue exploring. That is one of the key problems.
Q413 Albert Owen: Sorry, I do not know if you heard the first part of the question when I asked you how this affects our carbon zero targets internationally. Are we going to say to these airlines that are travelling from those countries, or this shipping—and I worked in shipping for some time myself—that comes into our ports, that they have to have domestic reduction targets when they come into either European waters, or, if we are not in the European Union then, into UK waters?
Chris Skidmore: That also raises a question around offsetting, and where offsetting is appropriate and where it is not appropriate. The Committee is keen to ensure offsetting is not used somehow to rely on our mainstream carbon reductions. There are examples where potentially there is a role for offsetting within the framework of the Climate Change Act to allow for issues specifically to do with that.
I would also make the point that we cannot just focus on existing shipping and existing aviation. We are covering science and innovation. There is a role for looking at the future of flight. We have made a £3.9 billion commitment when it comes to developing new aircraft technology. It is going to be the same for shipping. This is what we really have to hook in here in our narrative: it could be planes and ships that are designed in Britain, made by British workers, that are then being taken out across the world. That is the argument we have to make here. By making the net zero commitment, we are re-engineering our economy and redesigning our economy. It will allow at a global level for us to have these new ships and planes.
Q414 Albert Owen: I get that, but in the short term, if a vessel comes in and is pumping out all sorts of fumes in a port, that is not very healthy for the neighbourhood. Do you think BEIS and the Department for Transport should be issuing licences or preventing this from happening? In continental Europe and in Scandinavia they have these policies in place.
Chris Skidmore: Looking at the maritime sector you are mentioning, I know Maritime 2050 was published in January 2019. When it comes to a clean maritime environment, I think a clean maritime plan is due for publication.
Tim Lord: Yes, I am not sure precisely when.
Chris Skidmore: I hope some of those issues will be raised in there.
Q415 Albert Owen: Something that is the responsibility of the UK Government is the potential case for a third runway at Heathrow. How is BEIS involved in the decisions to exclude carbon emissions there, for instance?
Chris Skidmore: When it comes to looking at transport, we are working quite closely on the future, and mobility issues are one of our key grand challenges. Any future runway at Heathrow will be designed to ensure that future planes, future flights, are low noise and low carbon. That is the key point, coming back to the third runway at Heathrow. We cannot deny or close down the potential to continue to grow our economy where it is needed.
Q416 Albert Owen: I understand that. I am asking for a friend here. Somebody who has voted for this in principle has now been given new evidence from the CCC to say aviation is a big polluter. What can the Government do to help my friend in voting in future for the Heathrow expansion?
Chris Skidmore: When you have any legislation that comes forward, as with the expansion of Heathrow, making sure the full impact assessments are in place, as they will be for carbon budget setting for the future, is something we take very seriously.
Q417 Albert Owen: Do you not have to go further now this report has come out? That is my question.
Tim Lord: It might be worth adding, on Heathrow and aviation more broadly, that the CCC is due to bring forward further advice on that, so a refresh of the advice it has given. It should be doing that relatively shortly. We have published an aviation Green Paper and we will have a White Paper coming soon. When we do that, we will be looking at the CCC’s advice in the round. Individual projects operate within an overall envelope and, ultimately, not just at sectoral level but at national level. We will be working very closely with DfT to make sure the decisions that are made are compatible with us being able to deliver a net zero target, as we have set out in legislation.
Q418 Chair: Are you suggesting, Minister, that the decision about Heathrow could change if new evidence is coming?
Chris Skidmore: No. It must be delivered within the context of our international obligations.
Q419 Chair: Tim Lord just referred to a review the Committee on Climate Change is doing. Is it on Heathrow?
Tim Lord: Sorry, not specifically, but on aviation more broadly.
Q420 Albert Owen: The big political issue is Heathrow extension.
Chris Skidmore: The key point with all these policy decisions is stability and certainty for business. When you look at what happened with the power sector, providing those opportunities for systematic change of large systems is a very similar approach. This is something the Committee on Climate Change has picked up when it comes to delivery of taking coal off the grid and the success that has happened there. It is because we provided long-term policy certainty for business to make those business investments for the future. A comparable example is taking Heathrow forward, making sure we have long-term certainty of understanding that we are not looking to shut down flight paths or prevent people from going on holiday. When we come to looking at connecting the UK globally, we recognise that there are other airports opening across the world—airports are being opened in China every single month—but, at the same time, we recognise the leadership role we can play in delivering a clean and green airport as part of the third runway.
Q421 Antoinette Sandbach: Minister, the carrier bag tax was a very effective way of reducing plastic waste. Is the Department considering lobbying the Treasury to have a sliding scale on flights? You would not stop somebody going on their summer holiday, as you put it in your evidence to us, but you might stop somebody flying in and out of the UK 20 times in a year.
Chris Skidmore: I would refer back to the scale by which the Committee on Climate Change looks at what is needed to deliver net zero. I think there was a scale roughly breaking down how we get to 80%, 90%, 95%. Focusing on aviation, which we know makes up roughly 2% of global—
Tim Lord: I think it is about 9% of UK emissions.
Chris Skidmore: So aviation obviously has a significant role to play, but I am very keen, in order for us to have this national conversation and embrace the just transition, to make sure that we are not seen as a Government who are taking measures that will be overly punitive.
Q422 Antoinette Sandbach: Is that a no?
Chris Skidmore: It is an understanding that, in delivering net zero, the priorities must be about recognising where the significant shifts in systems must take place. When it comes to energy systems reform, we very much appreciate the work the Committee has taken forward on energy efficiency. It is very important. That makes up 25% of the carbon emissions we are producing at the moment. When it comes to aviation, the large gains will be found in delivering clean aircraft for the future, which is why we have invested £3.9 billion in that, and reducing the weighting of planes. There are technological solutions as well that we must explore, rather than creating a scenario in which there is a hostile environment bearing down on individual freedom. Also, when it comes to individuals, it relates to what flights they take versus what other actions they take in their own lives to offset that.
Q423 Antoinette Sandbach: Polluter pays is not the principle you were looking at.
Chris Skidmore: I am very conscious, being an interim Minister and coming to this relatively recently, that we will be responding to the Committee on Climate Change progress report in October. I would love to be able to make up policy on the hoof and suggest lots of different ideas that might be there for the future. I cannot rule anything out but I cannot rule anything in on specific policy areas. I want to get across to this Committee that, when it comes to immediate priorities, moving forwards with carbon budgets 4 and 5 and those envelopes, it will not be until we get to the later carbon budgets around individual action that we will be focusing detailed attention.
Q424 Chair: Can I be a bit clearer about what is included in our carbon budget? Does the carbon emitted from any flights out of Heathrow contribute to our carbon budget?
Tim Lord: Domestic flights are included in our carbon budget, and similarly domestic shipping within UK waters is included in our carbon budgets.
Q425 Chair: Any flight that goes to Germany, France, the United States, China or elsewhere is not included
Tim Lord: International flights currently are not included.
Q426 Chair: If the number of flights out of Heathrow doubled, trebled or quadrupled, that would not affect our carbon budget, would it?
Tim Lord: As you say correctly, they are not legislated for within the carbon budgets. We preserve space for them to be brought in later, so effectively headroom in the way the carbon budgets are set. That is what the CCC has recommended in the advice it has given to us on carbon budgets. Similarly, the CCC, in its previous advice, set out a planning assumption for emissions from international aviation. That is the planning assumption we have used in setting that.
Q427 Chair: This allows us to expand Heathrow, or indeed any other airport, without it showing up certainly in our third carbon budget, and possibly our fourth and fifth, and beyond. Is that right at the moment, under the carbon budgets we set?
Tim Lord: We preserved headroom in those carbon budgets for aviation emissions, in order to put us on a path to 2050.
Q428 Chair: What does headroom mean?
Tim Lord: It means that, when we look at what we need to do to achieve the 2050 target, we assume those emissions will come in at a later point. When they come in later, we do not have to drop very significantly in other sectors.
Q429 Chair: Will they be backdated? Will we update the first, second and third carbon budgets?
Tim Lord: They would not be backdated. Headroom for international aviation and shipping was included in the setting of those budgets. We have continued to do that with carbon budgets 4 and 5. As I say, the CCC is preparing further advice, revisiting its previous advice on aviation overall, which it will give us later this year.
Q430 Chair: If we are including domestic aviation, presumably we could include international aviation if we wanted to.
Tim Lord: At the moment, there is not an international methodology for doing that, in terms of where and how those emissions are attributed, to which countries, which airports, the issues around flights connecting to different places and so on.
Q431 Chair: Basically, we want the additional runway, but we do not want to have to count the emissions.
Tim Lord: That is not what we are saying. We have said we will preserve the headroom within our carbon budgets for international aviation emissions to enable them to be brought in.
Q432 Chair: How much headroom is there in this budget?
Tim Lord: I would have to come back to you on the level of headroom.
Q433 Chair: What proportion of our carbon emissions do domestic flights account for?
Tim Lord: I will come back to you with a breakdown.
Q434 Chair: I believe it is quite a lot less than 2%.
Tim Lord: It is significantly lower than the overall envelope for international aviation. You are absolutely right. Through the international organisations, we were the first country to call for them to work in alignment with Paris.
Q435 Chair: I would like to know what our carbon emissions would look like in our first, second and third carbon budgets, and what you would forecast they would look like in the fourth and fifth, if we included all flights from the UK. Can you do that?
Chris Skidmore: On that point, the Aviation 2050 Green Paper proposed accepting the Committee on Climate Change recommendation that emissions from UK departing flights should be at or below 2005 levels in 2050, which was 37.5 megatons of CO2. I am not sure if that is helpful.
Tim Lord: That is the assumption we are working on, in terms of the headroom we allow in the carbon budgets. As I say, the CCC is revisiting that advice.
Q436 Chair: Why do we pay fuel duty, Minister? When I fill up my car with petrol or diesel, why do I pay that?
Chris Skidmore: Why do we pay fuel duty?
Chair: Yes.
Chris Skidmore: When it comes to a principle of ensuring everyone recognises they have a responsibility to the environment and the maintenance of our road networks, the taxation system is a significant part of that.
Q437 Chair: Why do we not pay tax on aviation fuel?
Chris Skidmore: When it comes to aviation fuel and sustaining our aviation sectors, each tax represents the calculated effect on those sectors. We allow for fuel duty for individuals because we recognise that it produces a significant resource for the Treasury to help mitigate some of the impacts of cars. When it comes to aviation, I am not sure. I have not done the calculations of what the impact might be on the aviation sector. We have had a sustainable balance, by which fuel duties are able to be held at a level, at a freeze, so far.
Q438 Chair: Most people have no choice but to use their cars to get to work, sometimes to take their children to school, to go to the shops, especially when public transport is not always available. We all have a choice about whether we take our summer holidays in Scarborough or Marbella, and yet we are charged a lot of money to fill up our cars and do not have to contribute towards the carbon emissions when we fly. It seems quite regressive that we would tax one sort of fuel but not another. Does that seem slightly odd? Can you confirm that it is regressive to tax one and not the other?
Chris Skidmore: No. I would not say it is regressive
Q439 Chair: By definition it is regressive.
Chris Skidmore: The headline coming from the Committee is that the Chair is saying she does not want hardworking families to have that opportunity to go abroad and wants them all to go to Scunthorpe instead. I would disagree with the premise of your question. It was Scarborough, sorry.
Chair: I said Scarborough.
Chris Skidmore: I cannot commit to that policy headline. You are saying, “Ensure the hardworking families go to Scarborough instead of Marbella”. I cannot commit to that.
Q440 Chair: Sorry, Minister, I am only putting a question to you. I am not putting my view. I am putting a question to you. I am asking you simply whether it is regressive to tax the fuel we use to fill up our cars but not the fuel for aircraft. I am not making a point about my view or the Committee’s view. I am asking you a simple, and I think factual, question.
Chris Skidmore: In terms of ensuring people have the opportunity to travel and that those people—
Q441 Chair: With all respect, Minister, that is not my question. My question is whether it is regressive.
Chris Skidmore: But it is the premise of the question.
Q442 Chair: No, there is no premise to my question. I am asking a question about whether it is regressive or not. If you cannot answer it, perhaps you could come back in writing and do an analysis on the income distribution of the tax on the fuel we use to fill up our cars and what it would look like if you had a similar tax. If you do not want to answer that question now, you can come back with that detailed analysis, Minister.
Chris Skidmore: The key point on the analysis, which we are happy to do, is when it comes to the freeze in fuel duty it is far less regressive than the previous Labour Government, who would have had it far higher than a third.
Q443 Chair: With all respect, I know you have not been to our Committee on many occasions, but we decide the questions we want to ask you and we look for answers to those questions. I did not ask about the freeze in fuel duty.
Chris Skidmore: But you asked about the fuel duty.
Q444 Chair: Minister, I am asking my question. I asked you whether it is regressive or not. If you do not want to answer that question, that is your prerogative. I will ask you to come back in writing with analysis of it. We will move on because you clearly do not want to answer this question.
Chris Skidmore: No, I am happy to mention the modelling.
Q445 Chair: Okay, well then answer the question on whether you think it is regressive or not.
Chris Skidmore: In terms of the relative regressiveness of fuel duty for cars versus the lack of tax on aviation, I am happy to try to provide some kind of analysis. It would be around the sustainability of the plane itself, the cost and the weighting of the fuel, what that would mean in terms of the additional economic analysis of a flight, the cost of the tax on top of a flight, what that would mean for the ticketing price of the planes, and how that would affect the wider aviation economy. I am not sure about the weighting of the fuel and what that would mean for the fuel duty on top of that, with the number of passengers per plane.
Chair: You are answering a question, but not the one I asked. We will move on.
Q446 Stephen Kerr: I am going to go back to what Albert was talking about earlier in terms of offsets and the principles the Government have set out for the guidance of how those offsets would be used. You have been in robust form earlier today in the Chamber, so I am going to ask you a very straightforward question for a robust answer. Can you confirm that the Government will set out plans to meet the UK’s carbon budgets, including any amendments to the fourth and fifth carbon budgets necessary to bring these in line with net zero, without the use of international credits?
Chris Skidmore: When it comes to the use of international credits, we are keen that we continue to ensure that, where possible, we are not using international credits. We are maintaining the opportunity of keeping the legislation in place. We are not legislating against international credits, but we will look, as a priority, at not using the international credits where possible.
Q447 Stephen Kerr: My question was whether you can confirm the Government will set out plans to meet the UK’s carbon budgets to get us into the right trajectory for 2050 without the use of international credits. Was that a yes?
Chris Skidmore: This is where we wrote to Lord Deben about taking forward work with the committee for it to see where the budgets for the future might or might not work. With additional things like the international credits, we are keen to explore that. We just have not made a legislative commitment.
Q448 Stephen Kerr: I am reading your response to mean that it is the Government’s intention to have plans to hit these budgets without the use of international credits, without the offsets.
Chris Skidmore: Yes.
Q449 Stephen Kerr: Am I right in my summary of your response? Yes. In your letter to us earlier this month, you said, “We are already working with other countries to shape the future design of international carbon markets”. You went on to say, “The integrity of carbon markets depends on them delivering high-quality emissions reductions and removals, including the principle that they must be additional. The UK is working for robust rules at the international level to ensure that only good-quality units are generated under the UNFCCC framework”. Have the Government established principles for what a robust system of international credits should look like, and what are those principles?
Chris Skidmore: This is work ongoing. I will quickly turn to Tim here.
Tim Lord: As you said, we are working on the development of robust international credit markets. The intention is that the initial set of rules is completed at COP 25 in Chile later this year. We are doing that through our International Climate Finance and the World Bank. In terms of what good-quality credits look like, it is principally about additionality. Making sure those carbon savings are genuinely additional is the critical point.
Q450 Stephen Kerr: Is that it?
Tim Lord: I do not have the list of criteria in front of me. We would be happy to share that with the Committee. The key thing is around the additionality of those credits and ensuring those carbon savings are actually delivered.
Q451 Stephen Kerr: It would be good to have more information about the principles that the Department has applied in order to define what a robust and quality system for international credits looks like. If you would do that, that would be great.
Tim Lord: Yes.
Q452 Anna Turley: One of the common criticisms of the Climate Change Act from 2008 is that there is not really any means of enforcing it through UK institutions. Although it is legally binding on the Government, there is not that practical enforcement route. Now we have the draft Environment (Principles and Governance) Bill coming before Parliament for a post-Brexit landscape. That establishes an Office for Environmental Protection, but there are still no enforcement powers in that Bill. No powers have been given specifically to the Office for Environmental Protection in terms of enforcement against our climate change targets, which is something that has been recommended by the EFRA Select Committee. Why have we excluded climate change from the remit of the Office for Environmental Protection? What was behind that?
Tim Lord: The Climate Change Act is a very robust legislative mechanism. It is still world-leading and being replicated in other parts of the world. In particular, the scrutiny the CCC provides is a critical part of that, as well as the scrutiny Parliament provides. You mention the Office for Environmental Protection. Other elements of environmental protection did not have such robust legislative mechanisms around them as the Climate Change Act, which has functioned pretty effectively to date. As you say, the EFRA Select Committee has looked at that issue and given its view on the inclusion of climate change within the scope of the Office for Environmental Protection. That is something we are looking at and will set out a view on in due course.
Q453 Anna Turley: In principle, you would accept the idea of some kind of independent body scrutinising and enforcing the net zero target.
Tim Lord: We are looking at that at the moment. We already accept the principle of independent scrutiny of the targets through the work the CCC does.
Q454 Anna Turley: But what about actual enforcement?
Tim Lord: We are looking at that at the moment.
Chris Skidmore: The key point here is that, when it comes to public perception, the Committee on Climate Change has played a critical role in developing and shaping the narrative. If there happened to be a new body, how would you balance the CCC with that sort of enforcement mechanism? It happens elsewhere. If you had a regulator, what would it be? I am sure it is something we are open to discussing further. With respect, you are correct when it comes to the next stages of understanding how we can enforce some of the measures. We have been able to go so far using market mechanisms. The next stage will be where an increased regulatory approach is most suitable.
Q455 Stephen Kerr: Going back to your letter of 8 July, you told us, “Projections show that we are on track to deliver over 90% of our required performance against 1990 levels for the fourth and fifth carbon budgets, even before many of the policies and proposals in the clean growth strategy are taken into account”. This is, in effect, a repetition of statements that have been made to our Committee in the past from BEIS, which we have challenged, on the basis that this is a statement that disguises what the CCC has said in its own report, which is that we are falling short of where we need to be in order to hit our carbon budgets. Do you accept what I have just said?
Chris Skidmore: I can only go on the figures I have seen. When we come to meeting carbon budgets 4 and 5, we believe we are 90% of the way towards meeting that and that we are on track towards meeting carbon budget 3.
Q456 Stephen Kerr: That is not what the committee says. It says there is a gap. It says there is a gap of about 10%. You have acknowledged that, even though the phraseology in the report is what we have come across and challenged before. What is your plan to get us on track, given the fact that we are falling behind where we need to be?
Chris Skidmore: I fully recognise that, when it comes to the work the committee has done, and the Committee here, it has demonstrated there are a number of areas where we need to significantly improve. The net zero legislative commitment now clearly makes this an area of policy that is going to ramp up over coming months to put areas where the Government need to take more concerted action in the spotlight. I fully accept that. The report that has been published has demonstrated that, out of 25 areas over the last year, the Government have not met the significant majority.
There is an overlap between the work the CCC is doing and the work the Government are doing. When we have a number of areas where it is shown that progress has not been made, it is the case that the Government are working on or are about to publish work to demonstrate action that is going to be taken. That is a case in point. We published the green finance strategy and we have the energy White Paper, which is due to be published very shortly. That will set out some of the areas around moving further towards carbon budgets 4 and 5.
Q457 Stephen Kerr: You have yourself highlighted the fact that one out of 25 headline policy action areas is the only delivery the Government have had in the last 12 months. For the other 24, they are off target or, in some cases, nothing much seems to have happened, according to the CCC. When will we actually get detail on what remedial action the Government are proposing to take now in order to get us back in line? Will it be in the autumn? The sooner the better.
Chris Skidmore: I believe the Government will respond to the CCC’s progress report in October. I hope that the energy White Paper will be published before then. I certainly hope it will, and that will begin to set out a wider framework on the areas that focus on energy in the home and energy in industry, subject to further consultation. We want to be able to have this rapid pace evolving. It is right that CCC and the Committee hold our feet to the net zero fire, as it were. The 25 areas that were set out are not targets that were set. They are recommendations to be followed and there is slight disjoint in terms of where the Government are going to be. It has picked up on areas where The Road to Zero has been published by the DfT. There are future publications from BEIS that we hope will demonstrate where we are going to be taking action to help.
Q458 Stephen Kerr: The key thing from the conversation we are having now is that you accept, as the Minister, that there is a gap. You acknowledge what the CCC is saying. You are looking to these future publications of policy to set out in detail what the Government will do to get us back on track.
Chris Skidmore: We have made significant progress. We are leaders in the G7. Putting that aside, we have to keep on moving further, moving faster. We have to have a cross-Government approach. When you look at some of the issues raised in BEIS Select Committee reports, raised in this report, I do not disagree with this. We need to do more. It will be for the future Prime Minister, I hope, to demonstrate a cross-Government approach, almost a new green deal, that we need to firmly plant our flag on how we are going to deliver.
Q459 Stephen Kerr: Thank you. What conversations has the Department had with the Treasury on funding for net zero across Government? You mentioned across Government.
Chris Skidmore: Getting net zero over the line involved a significant number of conversations with Treasury to be able to deliver on that. The Treasury is now taking forward its review, which we want to ensure we are involved with as a Department. Obviously there is the CCC. We play a critical role as the convenor in demonstrating that as a policy challenge, outlining what the implications for policy are and where we need the funding, in terms of delivering on energy efficiency obligations for the future, but also on science and technology, and balancing that across the portfolio.
We have the spending review. It has yet to be announced when that is coming. Spending review policy work is ongoing. I have certainly seen it, from my science and technology perspective, around some of the clean growth grand challenges, because I chair the grand challenge delivery board, and the future of mobility. That is looking at putting together cross-departmental spending review bids. I hope that, by several Departments coming together with a spending review bid, as opposed to just BEIS, you are going to have more clout to be able to demonstrate to the Treasury the reason this needs to come forward now.
Q460 Stephen Kerr: Again, the theme that you struck there is cross-Government. Can you confirm that the Treasury has estimated that the cost of net zero to the public purse would be £1 trillion?
Chris Skidmore: I cannot speak for the Treasury on that particular figure. I have said also in the House of Commons Chamber that this is not a cost. This is an investment. Making these decisions to be able to re-engineer our economy towards net zero allows for a transformation. We have new green jobs, going from 400,000 to 2 million.
Q461 Stephen Kerr: We agree with the way you describe what we need to do in terms of investment, re-engineering the economy and all the things you just said. On 25 June, the Chair of our Committee wrote to the Chancellor, from whom this £1 trillion number is said to have come, asking for the details of how the calculation of £1 trillion had been come to. What was the basis of the calculation? What did it include? What was within scope in the content of this sum of money? Did BEIS contribute analysis to this Treasury forecast of the cost to the public purse?
Tim Lord: I would say a couple of things. I am sure the Treasury will write back to you on that point. We have done analysis looking at the CCC’s conclusions. Its advice was that the cost envelope for a net zero target of 1% to 2% of GDP in 2050, which is the comparator they use, is comparable to the 80% target in 2008, when it was set. As the Committee has recognised many times, there are a wide range of benefits to taking action on climate change, economically, health‑wise and so on, which also apply.
There is one point I wanted to clarify. I understand that the £1 trillion figure, and indeed the figures the CCC has used in its report, are not costs to the public purse. They are overall costs across the economy, which, as the CCC has noted, in comparison to GDP are very similar to the 2008 target when it was set.
Q462 Stephen Kerr: You are saying the £1 trillion is not a cost to the public. It is going to cost somebody.
Tim Lord: Sorry, the public purse. It is not necessarily an Exchequer cost. That is the point I am making.
Q463 Stephen Kerr: Do you accept the £1 trillion figure, as you have defined it?
Chair: Minister, you are saying no.
Chris Skidmore: No.
Stephen Kerr: No, you do not.
Q464 Chair: Do you want to elaborate on that?
Chris Skidmore: We row in behind the CCC. When we look at the changes in cost, this can be done within the envelope of the 1% to 2% of GDP that was recommended for the 80% reduction.
Q465 Chair: It is not an additional cost on what we were already factoring in. Is that right, Minister?
Chris Skidmore: Absolutely, yes.
Q466 Stephen Kerr: The Treasury is signed up to all this, the net zero. It is fully signed up to this.
Chris Skidmore: Treasury is conducting a review this summer, looking at the impact on competitiveness and on business and industry.
Q467 Stephen Kerr: That is in the light of the fact that there was an announcement and we have changed the law. It is fully signed up to supporting what is now the law.
Chris Skidmore: Yes, with the review to look at where action will need to be taken to have that just transition.
Q468 Chair: Do we know more of the details, Minister, of what that review is going to cover? Is it purely a Treasury review?
Chris Skidmore: I think it is a Treasury review that we will be working with. It has to report into the spending review.
Tim Lord: It will be a Treasury-led review, which was the CCC recommendation. We and other Departments in Whitehall will be contributing to it. They will be setting out their plans for it in due course.
Q469 Chair: One thing that concerns me with the £1 trillion number is that it was not a net cost. As the Minister says, it is not an additional cost because we are now able to do things more cheaply that we thought were going to be more expensive, which means we can go further. Also, as you, Minister, and Tim Lord have said, there are benefits from doing these things. There are economic benefits and health benefits, which also result in economic benefits because there is less Government spending if fewer people are suffering from chronic lung diseases, asthma and respiratory diseases. Will this review look at some of the benefits from acting on carbon emissions as well?
Chris Skidmore: I cannot give you a straight answer on that because the review will, I imagine, produce terms of reference. Can I write back to you on the specifics?
Q470 Chair: Yes. Can I urge you, Minister, as the Department with policy responsibility for this, to urge the Treasury to look at this in a more rounded way? You can put a cost on things but a benefit is the other side of the ledger. It is really important that we understand that. Otherwise, you are not really understanding the net costs of achieving net zero.
Chris Skidmore: Yes, absolutely. I will take that away. I am happy to make that case.
Chair: Thank you very much.
Q471 Drew Hendry: Minister, you have said a number of times that you are acting on the recommendations of the CCC. The Committee on Climate Change has said that there will be unprecedented changes to infrastructure required in order to hit the 2050 target. How will BEIS work with other Departments, including the DfT, Defra, MHCLG and the Treasury, to ensure a swift adoption of policies to adopt net zero? What will you do to ensure net zero becomes a first order priority for Ministers across Departments?
Chris Skidmore: In terms of trying to foster that cross-departmental activity and trying to ramp that up, we have re-established the Inter-Ministerial Group on Environment and Clean Growth, which met on 22 May. Going forwards, as I am sure you are aware, we have domestic policy challenges but also the opportunity for COP 26 and then leading into the UK presidency of the G7 in 2021. We have two key years to use our international reputation and our international opportunities at COP 26 to forge an inroad into domestic policy.
Q472 Drew Hendry: Is that not being led, rather than leading?
Chris Skidmore: No, not at all.
Q473 Drew Hendry: I am looking for clarification on what you are saying. Are you saying you rely on international pressures in order to make your own Departments adopt this?
Chris Skidmore: No.
Q474 Drew Hendry: What would you do to make sure this is a first-order priority?
Chris Skidmore: We have a key number of documents that are going to come out of the net zero pathway that we now want to re-establish, as I mentioned around the energy White Paper. I apologise as I am not able to give you a fixed date of its publication, but it will be this summer. Then there is where we go with the spending review and putting pressure on the cross-departmental working of Departments to focus on some of those missions we have established on clean growth, whether it is buildings or the future of mobility, focusing on electric cars, but going wider than that for the future. We have the environment Bill that has been tabled for the future. There are moments, legislatively and in terms of policy frameworks, that are coming up in the next six months.
Q475 Drew Hendry: What does pressure look like? You said you wanted to put pressure on other Departments. What does that look like? What does that mean? Does it mean cajoling them or does it mean taking any kind of action at all?
Chris Skidmore: We are working across the inter-ministerial group now. If there are any future forums by which we can work more quickly and closely with Departments, I would welcome that. The existing infrastructure is established, with an inter-ministerial group, with the bids into the spending review. Those are quite key levers, particularly with the spending review and this opportunity within the financial framework to pull a lever to create programmes that are going to deliver change. Now is the moment to use net zero as a thread across a lot of these spending review opportunities.
Q476 Drew Hendry: I am struggling to get any sense of urgency, but let me turn the question to something international. What discussions have you had with the Department for International Trade on the implications of net zero for post-Brexit trade policy? You must have had some conversations about that.
Chris Skidmore: In terms of post-Brexit trade policy, discussions continue to be had at Cabinet level on this, and obviously I attend Cabinet. We want to make sure that, when we come to looking at our trade policy for the future, we work with developing economies, with other countries, to demonstrate the benefits of new technologies. Recently we had an announcement with the Colombians where we announced a memorandum of understanding on looking at protecting against deforestation. That is building on a growing and strong relationship. We had the bilateral with China recently where we looked at taking forwards work around offshore wind and an offshore wind sector growth partnership deal, which is focusing on exports of offshore wind. I have had a number of ministerial visits where we have tried to focus on the export potential for green technology.
Q477 Drew Hendry: On that, can you give us an example of where you have had a discussion with the Department for International Trade to ensure that future trade policy does not undermine the UK’s climate change targets?
Chris Skidmore: I have not had any specific discussions in the past seven weeks with DIT Ministers personally. It is not to say that my Department does not work closely with DIT regularly on these specific issues when anything comes up.
Q478 Drew Hendry: Can you give us any examples of the Department doing that?
Tim Lord: We engage with DIT a lot, in particular through the industrial strategy and the clean growth grand challenge. They have increased their resource of, for example, people working on renewables and low carbon technologies in terms of inward investment and export opportunities. As the Minister says, post-Brexit trade is something the Cabinet will no doubt consider. DIT is very focused on developing those opportunities for UK businesses.
Q479 Drew Hendry: There has been no specific work on post-Brexit trade in this context.
Tim Lord: There is work going on across the piece in terms of post-Brexit trade. This forms part of that work.
Q480 Drew Hendry: You cannot tell us about any specific issues you have taken up on this.
Tim Lord: Other than that we are having conversations with them about the UK’s approach to post-Brexit trade and this is part of the discussions.
Q481 Drew Hendry: Let me move on again to talk about the Committee on Climate Change recommendations, which you said you are following. The Committee on Climate Change says that policy implementation continues to be insufficient to meet the 2050 targets. What is your plan to implement policies that can deliver net zero emissions? When will you update the clean growth and industrial strategies to make these net zero compatible?
Chris Skidmore: In terms of the potential update for the clean growth strategy, the Committee on Climate Change very clearly states in its recent report that the clean growth strategy, the UK’s plan for emissions reduction, provides a solid foundation for the action needed to meet net zero. We believe we have created the framework, so we will not be revising the clean growth strategy in light of net zero. It allows us to continue on a pathway. The nature of the work we are taking forward is focusing on how we can do more to achieve carbon budgets 4 and 5. The committee has advised that we do not reopen the carbon budgets. We believe we have the strong framework in place to continue along a path to do more.
Q482 Drew Hendry: Following on from that, which of the committee’s recommendations on carbon capture, utilisation and storage will the Government be taking forward?
Chris Skidmore: When it comes to carbon capture, utilisation and storage and the committee setting out that that makes up approximately 50% of reaching net zero, we understand that the UK has fallen behind other international countries when it comes to CCUS. We need to invest in this, in terms of innovation policy, but also to look at how we could be mainstreaming this across business and industry. We have announced the CCUS action plan. That was announced, I think, in December 2018.
Q483 Drew Hendry: I understand that.
Chris Skidmore: I want to make the point that there is a slight overlap.
Q484 Drew Hendry: My question was quite specific on the Committee on Climate Change recommendations. Minister, I was asking which of those you are taking forward.
Chris Skidmore: In terms of the CCUS, we have set out a plan and we will continue on our plan for delivering. That is where there has been an overlap. We totally recognise this. We have just committed an initial £26 million out of a £50 million pot to nine key projects. I went up to Tata Chemicals in Cheshire to see the potential realisation of what that can mean. It is absolutely vital and we would not deny that more needs to be done on CCUS.
Q485 Drew Hendry: Let me ask that in a different way. How will you ensure sufficient commercial-scale CCUS facilities are operational to capture and store, at the very least, 10 million tonnes of carbon dioxide by 2030?
Chris Skidmore: There is a really interesting point on CCUS about what, for instance, will be bespoke to particular industrial plants. I asked this question. I was up at Tata. I said, “Could you take the technology they have developed and move it to another plant?” They felt that what they had designed did not have any intellectual property with it. It was specifically a one-off bespoke solution. That is a question that we want to be able to pose as part of our industrial clusters mission that we set out.
Q486 Drew Hendry: I am posing the question to you. Rather than you posing a question about it, I would like you to come up with an answer.
Chris Skidmore: I do not have the answers.
Q487 Drew Hendry: You do not have the answers on how to get to commercial scale.
Chris Skidmore: No. There are so many things around CCUS where the technologies partly have not even been developed. I know it is very unsatisfactory for a Minister not to be able to come here and lay out the full detailed roadmap and how to answer every specific question. Obviously, we will be responding in full to the net zero report in due course. I cannot come up today and say, “This is how we will be responding to that specific recommendation”. When it comes to CCUS, absolutely, there is going to be such a sea change in the opportunity as the technology comes on board that, on some of the things we will be looking at, it is not possible to give an answer, apart from to say, “This is what we want to do”. It presents further questions.
Q488 Drew Hendry: Sorry, Minister, a few minutes ago you admitted the UK had blown an international lead on CCUS to this Committee. Now you are telling us that you do not know how this is going to move forward to commercial scale. I do not understand that.
Chris Skidmore: I said the UK is not an international leader on CCUS, that we need to do more.
Q489 Drew Hendry: Yes, because the lead has been lost.
Chris Skidmore: Yes, so that is where we need to make up the ground.
Q490 Chair: What is the plan to make that up, Minister?
Chris Skidmore: We have set out a carbon capture and storage action plan. We have begun those investments in several different areas. Partly, there is an innovation question here, where ISCF wave 3 announcements have been made. There is a total pot of around £300 million investing in the new technologies. Some great work is going on across our universities, working with business on trying to take this from a demonstrator project into a commercial sphere. That is where there is an innovation challenge. The work we have set out is work that has begun this. We began it late and we want to do more. That may be a question that is not going to result in giving the hon. Gentleman a satisfactory answer, but it is the honest answer.
Q491 Drew Hendry: Minister, I appreciate your honesty. If I am honest in return with you, I do not think it gives me any satisfaction. Let us move to technology that we absolutely do know about. Everybody is aware of the potential, including the Committee on Climate Change, which says that onshore renewable energy is not only the cheapest form of electricity generation from renewable energy, but it is essential. Will the Government review their position on onshore wind?
Chris Skidmore: When we look at onshore wind, as I mentioned in BEIS orals, we have 13.8 gigawatts of energy, supplying 7.6 million households from onshore. This is a debate for the future. When we look at contract for difference schemes for the future, would we allow an onshore wind pot to be potentially achievable?
Q492 Drew Hendry: Would you?
Chris Skidmore: With the pace of change and the drive towards renewables, we have seen how the focus on offshore has allowed for the costs of offshore to come down, allowing it to be more mainstreamed into the energy supply. Demonstrating the success of offshore provides a strong basis by which, for the future, alternative energy supplies onshore might be possible.
Q493 Drew Hendry: We can agree that offshore is a great technology, but I was talking about onshore wind. I think you were close to saying that might be included in CfD. Would that not be a sensible idea, given what the Committee on Climate Change has said, about the fact that not only is it the cheapest form of electricity but it is also essential to meet those targets for 2050? To follow on from that, if that is the case, does that also apply to the Government changing their position in England on repowering, in terms of planning for existing wind farms?
Chris Skidmore: There is currently no change in the Government position that is set out in the manifesto commitments around planning regulations and needing the consent of local communities. Personally, I am relaxed about the potential to look at onshore for the future because, if we are honest with ourselves, we will need to expand the number of renewable energy sources. The political tension is around how support of local communities can be engaged, what the incentives for doing so are, without scaring people. We want to ensure that, when we look at expanding the source of alternative and green sources of energy, we do so in a way that can be taken up with enthusiasm.
Q494 Drew Hendry: It is fair to say that at the moment there is no change in the Government’s political, ideological opposition to onshore wind, even though the Committee on Climate Change says it is essential to move forward. Would that be fair to say?
Chris Skidmore: The Government’s manifesto commitment remains intact.
Q495 Albert Owen: You partly answered this in your last response, Minister, with your honesty that you do not personally oppose it and it is a Government commitment, but Parliament has declared a climate change emergency. Things have changed since the last election. The question from Drew was basically whether you are looking to review it. Wales and Scotland have a different planning approach to it. They are looking at it, so it is only fair that England should review its status and not hide behind a manifesto commitment. We are going to have a new Prime Minister in a few weeks’ time. This is an emergency. This is not us making it up. We did not have a vote, but you supported the climate change emergency. Now there is an emergency, Parliament needs to review its policies. This is an easy technology, it is a proven technology and it works.
Chris Skidmore: When you look at the issue of climate emergency, a number of local authorities, including my own, have voted themselves in council halls for a climate emergency.
Q496 Albert Owen: Yes, good point.
Chris Skidmore: That is helpful for demonstrating that local, bottom-up approach that says, “This is not just about Government doing something, forcing things on communities”.
Q497 Albert Owen: They are looking for leadership from BEIS.
Chris Skidmore: When it comes to demonstrating leadership on issues around community rule, energy schemes, smart export guarantee, we want to create that bottom-up mechanism. It is going to be vital if we are to expand beyond the subsidy process we had previously. I do not want to lose the argument and have the public turn against the process of declaring a climate emergency. They have to be able to accept that there will be changes in their local area. It is a transition. It is that just transition. On the issue of onshore, we recognise we could be in a place where we want onshore wind for the future, but it is not going to lead to hundreds of wind turbines being placed in someone’s backyard.
Q498 Albert Owen: I agree with you, but one question you did not answer is about replacing them. When many of them come to the end of their life in the same area, is there a possibility that you could review that planning? You would not need brand new planning regulations for that because they already exist.
Chris Skidmore: I will take that away.
Ashley Ibbett: Repowering is an issue that will be important in the years ahead. It is not a huge issue now. We found, with these technologies, onshore wind and offshore wind, that the lifetime of the asset is more than people thought. Maybe when projects come to the end of receiving subsidies they are able to continue generating and selling into the wholesale market. We have also seen onshore wind deploying without subsidy in places around the UK. That is an important development. Alongside that, we have said it is our intention to allow renewables to compete in the capacity mechanism.
There are avenues for projects to come forward. As the Minister says, the planning regime in England has been changed. There is the twofold test, that it must be in a local plan and it must be locally supported, so that regime is there. We have seen some subsidy-free deployment, which is very welcome.
Chair: I do not think it is so much the subsidy. It is about whether it can compete in a contracts-for-difference auction. RenewableUK says that more than 8 gigawatts of onshore wind could be retired over the next two decades, so I would encourage you not to be too sanguine about this. I do not think we should be relaxed about this at all. It is 17.5% of our electricity we are talking about here.
Q499 Anna Turley: Picking up on an issue that was raised earlier today about aviation and the lack of rigour in the measuring, I want to raise an issue about imported emissions. We know the current process of carbon budgeting does not take into account imported emissions. We know that, while our own UK emission footprint has declined, imported emissions have in fact remained over 30% higher than they were in 1997. We are obviously failing on that. Theoretically, we could look at the net zero target by offshoring UK industrial manufacturing and importing goods and services, which would essentially be a cop-out. There is concern quite widely that the Government are not looking to address consumption and are purely focused on our territorial emissions. Do you think that is fair and are you looking to challenge that?
Chris Skidmore: When it comes to the reporting mechanisms, we are trying to balance what we want to take forwards domestically with our obligations internationally within the UN framework on climate change, and ensuring that reporting mechanism is uniform. It is important, in the same way as establishing the Climate Change Act provided that secure mechanism for confidence. That is not to say we should not play an important role in looking at how we can clarify those metrics for the future.
I know there are issues around the rulebook as part of the COP 25 in Chile. In COP 26, if we are successful in our partnership bid with Italy, we will want to set out a clear ambition five years on from Paris. That provides an opportunity to return to the nationally determined contributions. One of the issues is data and the insufficiency of data in certain areas. That is one reason that we have asked the Committee on Climate Change to look at some of the carbon budgets, because it recognises there are uncertainties that need to be resolved.
Q500 Anna Turley: Sorry to interrupt. Aside from the measurement, what are you doing to ensure that the policies we are undertaking, or the Government are undertaking, do not just result in offshoring and outsourcing our carbon emissions, and that there is a proper sustainable reduction?
Tim Lord: First, the CCC’s net zero report assumed that we maintain our industrial base in the UK, not that we deliver net zero by offshoring all those industrial emissions. That is a really important point. There are big challenges about how you do that with CCUS, with hydrogen, as you are very engaged in. That is a really important part. How do we decarbonise the UK with a strong industrial base?
Secondly, we clearly need to make sure we are a much more resource-efficient economy than we are at the moment. We published the resources and waste strategy last year. We set out some of the ways that we are looking to achieve that. How can we reduce how much we consume; how can we reuse more effectively, how can we deliver business benefit as a result of that?
The third point is on the importance of international action. Part of the reason that we set the net zero target is to demonstrate UK international leadership, to encourage others to increase their levels of ambition. We will of course always be purchasing from other countries. We will be trading with other countries in the future. We cannot directly control those emissions, but we can look through the international framework to make sure they are similarly upping their ambition and reducing the embedded carbon in what they produce.
Those three things are critical parts of the plan for how we address not just territorial emissions, which are very important and which we do control, but we would recognise the importance of looking to reduce consumption emissions and helping others to do that.
Q501 Anna Turley: Thank you, that is helpful. Going back to the first of those points you mentioned, which is about our own industry, your Government have said that clean growth is one of the four great challenges that you have identified, but you have not set any target on reducing emissions from industry, either industry as a whole in the UK or specific sectors. What were your plans to enable this industrial transition and to reduce industrial emissions in this country?
Chris Skidmore: We have established the Industrial Energy Transformation Fund of £315 million. Also, we have set aside £170 million for funding decarbonisation of industrial clusters, which is, again, part of the clean growth mission. Since 2013, I think we have spent about £900 million trying to support energy-intensive businesses to transition and reduce their energy bills. Focusing on the industrial clusters mission, it comes back to the point Mr Hendry made about how you take a demonstrator project and expand it at scale.
We are also keen, with the processes of the energy White Paper that will emerge, to demonstrate further consultations. The question in energy‑intensive industry is how you then look at the SME element within those supply chains and those SMEs that might be at greater risk, potentially, from the transition. That is something we will want to be able to take forward. It is coming, with further work through the White Paper. In terms of the announcements made so far, we recognise industry represents a quarter of UK emissions.
Q502 Anna Turley: I know you have said those thoughts are coming down the track, but is there anything you can share with us at the moment on the specific work you are doing around clusters? This could have a greater impact on some sectors than others. Some sectors are more polluting than others. Of course, there is then a geographical knock-on. There are areas, like my own, that are deeply energy-intensive and on which this transition will make a huge impact. How are you ensuring certain areas and sectors will not be disadvantaged by aiming for this target and decarbonisation?
Tim Lord: I would make two points on that. On the industrial clusters emission, we are having conservations with all the key clusters around the country to better understand the particular challenges and opportunities they have, in terms of what their transition looks like. As you say, those are, in some degrees, common, but in some ways quite unique and varied. We talked about CCUS. We are investing in hydrogen in a variety of ways. We have to look at how we can improve fuel switching. The Minister has already mentioned the work we are doing on industrial energy efficiency as well. Those are all critical components in how you vary your approach to those different clusters, while making sure they have a decarbonisation pathway, and one that delivers a competitive UK industrial base.
The Treasury review will also look at the competitiveness impacts. There are potential advantages in being early movers and developing the industries of the future that other countries will want to access. Also, we should not be naive about the fact that there are potential costs. We need to make sure we are managing those, in particular for sectors that are facing global exposure.
Chair: Thank you very much, Minister, Tim Lord and Ashley Ibbett, for giving evidence today. As you know, our Select Committee has done a number of inquiries looking at electric vehicles, carbon capture and storage and the report we published last week on energy efficiency. I would urge you to go back and review some of those. We are awaiting a response on carbon capture and storage. I think it is due on 2 September. We also look forward to the response on energy efficiency.
Now that your targets have changed, your policies need to change as well, Minister. We would very much support you in new policies to help us ensure we meet net zero. We have also discussed some of the issues today around onshore wind and the inclusion of international aviation and shipping in our carbon emissions. Our Select Committee, with five others, will be holding a series of citizens’ assemblies starting in the autumn. I hope they will also play a part, as you say, Minister, in taking people with us.
The role of Government is to lead and set the example for all of us, but also for businesses to make those long-term investment decisions in renewable technologies, energy efficiency measures, carbon capture and storage and all the rest of it. I believe we need more Government leadership and some clearer answers and clearer policy stability to help us achieve the ambitious targets that you are setting and which we all want to meet sooner rather than later.