My Lords, the Prime Minister’s 10-point plan demonstrates our commitment to net zero. It sets out £12 billion of new government investment in green industries. We have set up the UK Infrastructure Bank, backed by £12 billion of capital, to help unlock more than £40 billion of overall investment in infrastructure. Carbon pricing will play a key role in helping the UK achieve net zero, at the same time as raising funds to be invested in the Government’s spending priorities.
My Lords, our entire fiscal system is out of kilter with decarbonising the economy and achieving net zero. For example, look at the gas and oil sector: since signing the Paris agreement, the Government have given £4 billion to oil and gas companies. Can the Minister therefore commit, on the eve of COP, that this practice will be confined to the scrapheap of history and that those companies will receive no more funding through subsidies and tax breaks? If so, can this be included in the spending review?
My Lords, it is important to point out that we need to transition to a net-zero economy in an orderly way and that we cannot immediately switch on a full net-zero energy system. We are one of the fastest reducers of coal use in the world: our coal consumption has fallen by over 80% in the last 10 years, and we remain completely committed to accelerating.
My Lords, in order to avoid a disruptive transformation from our current carbon-intensive society, we need the Government to include fiscal measures to protect the poorest and most vulnerable households. Can the Minister confirm that the full Government road map to net zero will include a carbon fee and dividend element to cushion the blow for low-income households, as already successfully trialled in several Canadian provinces, Alaska and elsewhere?
My Lords, we already do a great deal to support those on lower incomes. We have a number of schemes to support those who are under pressure financially and at risk of higher energy prices. We will, of course, keep all those measures under review.
Will my noble friend ensure that the Government commit water companies to reach their net-zero targets by ending the automatic right to connect for massive new housing developments where water companies simply cannot accommodate the huge amounts of waste water required in antiquated Victorian pipes?
My Lords, there are currently no restrictions to water companies raising funds to make investments in reaching net zero, and water companies are able to submit plans for such investment to Ofwat as part of the price control. The Government are currently consulting on the strategic direction for the water sector. This consultation outlines the expectation that Ofwat will contribute towards protecting and enhancing the environment and will appropriately challenge water companies’ plans to deliver the change needed in the water sector to meet net zero.
My Lords, I am sure the Minister will agree that the Government need to take a joined-up approach to decarbonising the economy. Surely it is inefficient and wasteful to public funds to stimulate decarbonisation with some funds, while stimulating the creation of greenhouse gas emissions with others. When will we see subsidies for fossil fuels wound down?
My Lords, as I mentioned in an earlier answer, we need to do this transition in an orderly way. We need to ensure that our net-zero energy generation is sustainable. We are moving very quickly. We have seen, for example, the cost of offshore wind drop dramatically over the last five years, from over £100 per kilowatt hour to around £45, but we need to keep moving that along before we remove any more support to the traditional sources of energy.
My Lords, according to the CBI, the obstacle that most frequently holds back business from taking action towards net zero is uncertainty, especially about the Government’s fiscal policy on the environment. Can the Minister assure the House that the Budget on 27 October will provide a clear net-zero fiscal strategy and road map, with a consistent environmental tax policy outlined, including principles and goals that business can rely on for the long term?
My Lords, I cannot speak to the detail of the Budget in a few weeks’ time, but we have a strong message, which we have been consistent with over the last few years. We have made clear, for example, the recently announced emissions trading scheme, which provides a clear road map for heavy users of carbon. We are about to introduce the plastic packaging tax, which again is clear, for industry to get behind. We will continue to send those messages, but I think they are pretty clear. Indeed, we are seeing dramatic change by business. For example, coming up to COP 26, three huge companies have made very strong commitments: GSK, Hitachi and Microsoft have all committed to get to net zero in the next few years.
My Lords, ultimately, that has to be the direction of travel for us, but we cannot get there overnight. To implement that sort of stringent regime now would dramatically increase costs, which would then come back to consumers in other ways.
I have yet to meet a pensioner who has turned down free electricity. If the Government want to take the red wall with them on their environmental policies, why are they not bringing in again fiscal incentives for solar panels, giving some free electricity to households across the country?
My Lords, the market is playing its role. As the cost of solar panels declines, it becomes increasingly attractive for householders to implement those sorts of strategies. The cost of solar energy has declined dramatically over the last few years, and I think we will find that, very soon, it will be attractive for many households to take the route the noble Lord suggests.