Kerry McCarthy MP: speeches

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Speeches

12 Feb 2025 · Energy Infrastructure: Chinese Companies · Hansard source
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As I have said, I cannot comment on individual cases, but there are processes to ensure that our national security is protected as we look ahead.
12 Feb 2025 · Energy Infrastructure: Chinese Companies · Hansard source
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As I have said, we are going through the robust processes to try to make absolutely sure that our national security is not compromised by investment from overseas, and we will continue to do that.
12 Feb 2025 · Energy Infrastructure: Chinese Companies · Hansard source
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My hon. Friend has been a real champion for Grimsby, and I was glad to see her returned at the recent election, so that she can carry on championing all the potential that Grimsby has to offer, not least in the wind sector. It is important that we link up skills and capacity—that is one of the obstacles. We talk often about how grid capacity and planning issues can hold up the roll-out of clean power, but we have to have the skills base as well. We are working with the Department for Education on how we can train and develop capacity within the existing workforce through things like the growth and skills levy to work on these exciting new projects.
12 Feb 2025 · Energy Infrastructure: Chinese Companies · Hansard source
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My hon. Friend is absolutely right that dealing with capacity issues in our supply chain is a crucial part of getting this investment into infrastructure. It is one of the reasons why, through the national wealth fund, we invested in lithium in Cornwall last week. Through the critical minerals strategy, we want to maximise the natural resources that we have, where we can. As I have said, we want to make absolutely sure that security concerns are addressed as well when we look at which investors invest in our new economy.
12 Feb 2025 · Energy Infrastructure: Chinese Companies · Hansard source
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We believe that the best route to energy security is through our clean power by 2030 mission and further investment in renewables. That remains our stance.
12 Feb 2025 · Energy Infrastructure: Chinese Companies · Hansard source
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I thank the hon. Lady for bringing the urgent question to the House. The protection and security of the energy sector is an absolute priority for this Government. We have a range of effective measures in place that give the Government powers to balance an open investment environment to facilitate growth with protecting the areas of our economy that are most sensitive to national security. The Government firmly believe that the biggest risk to our energy system and energy security is remaining dependent on international fossil fuel markets, controlled by petrostates and dictators. That is why we have a mission to make Britain a clean energy superpower to end that dependence. We have a world-leading offshore wind industry in the UK and international investment plays a crucial role in supporting jobs across the country. As part of that mission, my Department engages in discussions with a wide range of investors, including those from other countries. We are also clear that alongside that, the growth of UK supply chains is critical. That is why we have set out plans for a clean industry bonus to drive investment in manufacturing, as well as setting up Great British Energy and the national wealth fund. The Government will not hesitate to use our powers to protect national security whenever we identify concerns, and we will take a consistent, long-term and strategic approach to managing the UK’s relations with China, rooted in UK and global interests. The Government will co-operate with China where it can, compete where it needs to and challenge where it must.
12 Feb 2025 · Energy Infrastructure: Chinese Companies · Hansard source
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I recognise that the right hon. Member has long-standing concerns about the role of China and its investment in our economy. He has been a great champion of raising concerns about forced labour, and he is right to do so. We have set up the solar taskforce, as I am sure he is aware, to look at whether there is forced labour in our solar supply chains. As I have said, a supply chain mission will be launched as part of the global clean power alliance. This is not something that one country can tackle by itself; we all need to be alert to the risks of slave labour. I know that an amendment was passed in the House of Lords last night that means the issue will come back to this Chamber soon, and I look forward to the discussion then.
12 Feb 2025 · Energy Infrastructure: Chinese Companies · Hansard source
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On the one hand, Conservative Members raise concerns about critical minerals being imported from abroad. On the other, when my hon. Friend, who is a real champion for her area, praises the investment that we have put into lithium extraction in Cornwall, they start jeering. We will continue to invest through GB Energy and the national wealth fund.
12 Feb 2025 · Energy Infrastructure: Chinese Companies · Hansard source
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The hon. Lady raises important concerns that we are very much alive to. As I said in my first answer, energy security is critical to the Department’s work and that is why we have the clean power mission to end our dependency on fossil fuels. International investment is a crucial part of that and helps to support growth and jobs across the country. As part of that, we have discussions with a wide range of international investors, but we absolutely recognise that this needs to be balanced against national security implications. We work on that constantly across Government with input from a number of Departments, and I am pleased to see my hon. Friend the Minister for Security from the Home Office here for the urgent question. The Government have to consider both those aspects together: the need for investment and for greater capacity in our supply chains, and the security risk. While I cannot get into the details of the individual case, given the nature of the ongoing discussions, I reassure the hon. Lady that we are taking these factors into account. We do want to make sure that the most robust processes are followed as we look at the details of this particular issue.
12 Feb 2025 · Energy Infrastructure: Chinese Companies · Hansard source
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I thank my hon. Friend for her question. We have launched the clean industry bonus, which will be crucial in protecting our supply chain. We are investing through GB Energy and the national wealth fund—I have already mentioned lithium in Cornwall. Through the global clean power alliance, which we launched at the end of last year, we will bring together our counterparts from other countries, including at the International Energy Agency conference in April, to look at a supply chain mission to deal with these issues. These issues do not just affect us in this country. As other countries seek to decarbonise and increase the role of renewables, we will all need to co-operate and deal with the capacity issues across the supply chain.
4 Feb 2025 · Topical Questions · Hansard source
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Last week, the UK formally submitted its NDC to the United Nations framework convention on climate change. It is a world-leading, ambitious target that we hope will demonstrate ambition to other countries. In that NDC, we have a youth clause for the first time, and I am very keen to talk to Members across the House about how we can better engage with schools, communities and young people to bring them on board with us as we seek to achieve our ambitions.
27 Jan 2025 · Draft Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2025 · Hansard source
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I beg to move, That the Committee has considered the draft Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2025. It is, as always, a pleasure to see you in the Chair, Mrs Harris. The draft order was laid before Parliament on 3 December 2024. I will set out some of the background. The UK emissions trading scheme was established under the Climate Change Act 2008 and the Greenhouse Gas Emissions Trading Scheme Order 2020 as a UK-wide greenhouse gas emissions trading scheme, to contribute to the UK’s emissions reduction targets and net zero goal. The scheme is run by the UK ETS Authority, a joint body comprising the UK and devolved Governments. Our aim is to be predictable and responsible guardians of the scheme and its markets. Under the UK ETS, operators are required to monitor, report on and surrender allowances in respect of their greenhouse gas emissions. Most allowances are purchased at regularly held auctions, but operators in certain sectors at risk of carbon leakage are given a number of allowances free, to manage their exposure to the carbon price and the risk that business decarbonisation efforts could be undermined by higher carbon imports. Under the UK ETS, an “operator” is the person who has control over an installation. An “installation” is a stationary unit at which regulated activities take place, and sub-installations represent operations carried out at an installation in respect of which free allocation operators are required to report activity levels for ETS purposes. The draft statutory instrument introduces the final year rule. We introduced it to enable important changes and improvements to be made to the scheme. Under previous UK ETS policy, when a sub-installation ceased operation, the free allowances were no longer distributed in respect of that sub-installation in the year after the year in which it ceased operation, but the operator was entitled to retain the full amount of free allowances made available in respect of the sub-installation, without recalculation to account for the permanent cessation of the sub-installation within the scheme year. In other words, if it ceased operations during a year, it still got the free allowances for the whole year. That had the potential to result in the over-allocation of free allowances beyond the volume required for carbon leakage mitigation, and in the distribution of free allowances that were no longer associated with an activity resulting in emissions. The draft order ensures that the volume of free allocation that an operator is entitled to in the final year in which operations are carried out at one or more sub-installations is calculated by reference to the level of activity at the relevant sub-installation in that year. That is the final year rule. To facilitate this change, the draft statutory instrument will require the operators to prepare an activity level report in respect of the final year in which operations are carried out. That activity level report will be used to recalculate the volume of free allocation that the operator is entitled to in the final year. Any over-allocation will be recoverable in accordance with the existing scheme rules. There is an exception to the final year rule in circumstances where the permanent cessation of operations at a sub-installation is part of a series of changes that has resulted in a material reduction in the specified emissions per unit of production of those pre-cessation products which continue to be produced at the installation. The exception will incentivise decarbonisation, as operators that can demonstrate that the relevant requirements are met will continue to be entitled to the free allocation calculated in accordance with existing UK ETS rules, which is calculated in advance on the basis of historical activity levels. The draft instrument also amends the circumstances in which an installation or sub-installation has “ceased operation” for these purposes. The previous definition was: at the point in time when it became technically impossible to resume operation. That definition was difficult to apply consistently in practice, though. The updated definitions provide that an installation has ceased operation when: all regulated activities in the case of an installation, or the relevant operation in the case of a sub-installation, have permanently ceased to be carried out at the installation. That amendment increases certainty for the scheme regulators and the operators. The draft instrument also introduces a requirement for operators to notify the relevant scheme regulator of circumstances in which all regulated activities cease to be carried out at an installation by the end of the scheme year in which the cessation occurs, or within one month of the date of cessation, whichever is later; and to confirm whether the operator intends one or more regulated activities to resume at the installation. Operators are similarly required to provide details of the cessation of operations in respect of a sub-installation in annual activity level reports prepared in relation to the 2025 scheme year and thereafter. Requiring those reports will facilitate the application of the new final year rule. The statutory instrument introduces a new power for regulators to issue a notice to an operator that determines that an installation or sub-installation has ceased operation for the purposes of UK ETS legislation. The new power is available in circumstances in which the regulator is not satisfied that the operator intends regulated activities to resume at the installation, or intends regulated operations to resume at the sub-installation level. That change will increase certainty for operators and facilitate equivalent treatment for all installations undergoing a cessation. The changes follow comprehensive engagement and consultation with stakeholders. Between 18 December 2023 and 11 March 2024, the UK and devolved governments ran a consultation seeking views on proposals to alter the free allocation methodology for the UK ETS stationary sectors to better target those most at risk of carbon leakage and to ensure that free allocations are fairly distributed. The UK ETS free allocation review covered the provisions included in the statutory instrument on permanent cessations. The responses to the consultation were broadly in support of the proposed technical changes to the treatment of permanent cessation. The authority response to the consultation will be delivered in two parts. An early response to the proposals on permanent cessations was published last November. The changes in the draft order will deliver on commitments made by the UK ETS Authority, improve the operational fairness of the scheme and increase certainty for both regulators and operators; and the alterations to the UK ETS will support its role as a key pillar of the UK’s climate policy. These measures show that we will take action to extend and improve the scheme when necessary. I commend the draft order to the Committee.
27 Jan 2025 · Draft Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2025 · Hansard source
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I suppose I should welcome the shadow Minister to his place, but it is a bit depressing to hear him outline the Opposition’s position. In the last year or two that the Conservatives were in government, we saw them U-turn and row back on getting to net zero. We recognise that it is an integral part of our growth and industrial strategy, which will protect jobs and investment in this country, so to hear the Opposition’s position spelled out in such stark terms is disappointing. Net zero is part of our growth strategy, and energy security is very much at the heart of what we do in the wake of Putin’s illegal invasion of Ukraine and other global factors. The shift away from volatile fossil fuel markets is not just about a desire to reach net zero, although of course that is really important—we see evidence of what happens if we do not tackle climate change around us every day. It is about protecting our security. The UK emissions trading scheme is a key pillar of the climate and net zero policy regime and our industrial strategy. It sets a cap on emissions in the sectors covered, which currently represent about a quarter of the UK’s emissions, and guarantees that those sectors will reduce their emissions in line with our world-leading net zero target. We believe that maintaining a strong UK ETS will play a key role in making Britain a clean energy superpower, delivering on our mission of ensuring secure and clean electricity by 2030 and cutting bills. The ETS makes fossil fuel electricity generation face the costs of its pollution. It is only a small component of electricity bills, especially compared with wholesale gas prices. As power generation continues to shift to renewables and nuclear, and as we reduce our reliance on volatile international gas markets, the impact on bills will fall and the costs to consumers will be reduced. Only fossil fuel electricity generation will be captured by the UK ETS, so the increasing uptake of renewables and nuclear power will reduce the costs for consumers. By driving green investment as part of our industrial strategy, the UK ETS will also help to deliver a just transition, growing the UK’s economy and securing good jobs for people across the country. I think the shadow Minister is arguing that decarbonisation is coming too fast, but we are absolutely at the forefront of the new technologies and industries. My hon. Friend the Member for Redcar could wax lyrical about what that means for a constituency such as hers. Redcar has a strong industrial base but its future will be built on decarbonisation technology and the accompanying jobs. Delivering an industrial strategy is the centrepiece of the Government’s growth mission. It will make us energy independent while creating jobs and providing investment in communities across the UK. A key part of that will be investing and creating the right conditions so that the green industries of the future can flourish, and the UK ETS is a vital element of that approach. It sets out a clear trajectory for emissions from the sectors covered and drives investment in decarbonisation. In November 2024, the UK ETS Authority set out an early response on its proposals on permanent cessations. This draft statutory instrument will implement those changes and improvements to the scheme, following detailed consultation. These changes have the support of the four Governments of the UK. I think Scotland and Wales have already approved them, and Northern Ireland is about to consider them in the next few days, so there is consensus on advancing carbon pricing policy, which adds to the strength of the UK ETS. The shadow Minister mentioned the need for close co-operation with the EU, and we certainly want to achieve that. To ensure the scheme continues to remain a key driver of decarbonisation, our intention is to expand its scope further. We have recently consulted on proposals to expand it to energy from waste and waste incineration, and we have recently consulted on expansion to maritime operators and on a regulatory framework for integrating non-pipeline transport for carbon capture, usage and storage. Beyond those new sectors, we are exploring options to build the UK ETS into the world’s first integrated market for carbon emissions and carbon removal. Subject to consultation, our intention is to include engineered greenhouse gas removals. That would support the new technologies we need to reach net zero while providing a sustainable path for industry to decarbonise and flourish. We recognise the importance of long-term certainty to decarbonisation planning. The authority’s intention is to run the scheme until at least 2050. The authority published a long-term pathway for the UK ETS in December 2023, outlining our intention to consult on extending the scheme beyond its current date of 2030. We will consult on that and on any cap for future scheme phases in due course. We are committed to being attentive to views and to bringing forward changes as required to ensure the scheme operates efficiently and achieves emissions reductions. It is an integral part of our journey on our path to decarbonisation coupled with industrial growth. I commend the order to the Committee. Question put and agreed to.
17 Dec 2024 · Climate Change: Nature-based Solutions · Hansard source
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I am aware of the excellent work being carried out at Lochwinnoch. We know that protecting and restoring our peatlands is essential for tackling the climate crisis. We are committed to restoring approximately 280,000 hectares of peatland. We are also looking at innovative ways of getting funding into those nature-based solutions so that they can thrive.
17 Dec 2024 · Climate Change: Nature-based Solutions · Hansard source
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We are not convinced that the Bill is necessary as a well-developed legislative framework with legally binding targets is already in place, including, of course, the Climate Change Act 2008 and the carbon budgets. However, I appreciate the action on both climate and nature and the hon. Member’s commitment to both. I believe that our offices are already trying to find a date for us to meet.
17 Dec 2024 · Climate Change: Nature-based Solutions · Hansard source
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We know that nature-based solutions have a key role to play in climate mitigation and keeping to 1.5°C at home and abroad. I have met the Minister for Nature, my hon. Friend the Member for Coventry East (Mary Creagh), and the Government have appointed two special representatives for climate and for nature, who will be working closely together too.
10 Dec 2024 · Cleve Hill Solar Park · Hansard source
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It is always a pleasure to see you in the Chair, Dr Huq. I begin by congratulating the hon. Member for Faversham and Mid Kent (Helen Whately) on securing the debate and giving us a chance to discuss an important topic, not just for her constituents. I hope she will understand, however, that due to the quasi-judicial role that my right hon. Friend the Secretary of State plays in taking decisions on applications for development consent for energy infrastructure proposals, it would not be appropriate for me to comment on matters related to any specific proposals. Although the development consent order for Cleve Hill solar park was granted by the previous Government in 2020, as she said, the Department for Energy Security and Net Zero may still be involved in any proceedings relating to the implementation of that order. As a result, I cannot comment today on the details of that project. The reasons for the decision and details of supporting plans are available on the Planning Inspectorate’s website, as the hon. Lady knows. I am afraid I cannot elaborate or speculate on that published material. The hon. Member spoke eloquently about the importance of the site to her constituents—the views, the biodiversity and the birds, and the importance of wetlands. My colleagues in the Department for Environment, Food and Rural Affairs and I are working closely on nature-based solutions to climate change, and wetlands play an important role. I am also glad that the hon. Member acknowledged the importance of reaching our net zero objectives, with that mission for clean power, by 2030. As I said, I cannot speak specifically about Cleve Hill, but I hope I can reassure her by speaking in general terms about Government policy. First, it ensures that all local impacts are considered in the planning process. Secondly, it makes a steadfast commitment that those who host clean-energy infrastructure should benefit from it. In order to achieve our goal of clean power by 2030, we will need to deploy various renewable energy sources. According to the recent National Energy System Operator clean power pathway report, we need to increase solar deployment from 15 GW to 47 GW. Along with onshore wind, solar is the cheapest clean power option available to us right now, making it an essential part of the UK’s energy mix. Without a substantial increase in solar deployment, the clean power mission becomes very difficult. That is why my right hon. Friend the Secretary of State relaunched the solar taskforce earlier this year. It is also the reason that the Under-Secretary of State for Energy Security and Net Zero, my hon. Friend the Member for Rutherglen (Michael Shanks), who has this portfolio, cannot reply to the debate, because he is at a meeting of the solar taskforce. The taskforce brings together the industry and Government to discuss the actions needed to rapidly increase the deployment of solar panels on rooftops and in solar farms, and it will publish its recommendations in a solar road map very soon. We should never lose sight of the core motivation behind our clean energy mission. Clean power generated here in Britain will reduce our dependence on volatile imported fossil fuels. It will provide lower bills in the long term and create thousands of highly skilled future-proofed jobs across the country. Delivering those benefits for the British people requires the development of new infrastructure. We accept that a top priority should be the deployment of solar on rooftops. That is why we are bringing forward new standards to ensure that all newly built houses and commercial buildings are fit for a net zero future. We will encourage the installation of solar panels on those buildings where appropriate. But we know that our mission will require more ground-mounted solar too, and decisive reform to the planning system is urgently needed to support that. As the Prime Minister said last week, we will streamline the approval process in the forthcoming planning and infrastructure Bill. As part of the new plan for change, in which the Prime Minister set out the milestones in how the Government will deliver on our national missions, we will work towards the new target of 150 major infrastructure projects, including energy projects. That will mean tripling the number of decisions on national infrastructure, compared with the previous Parliament. We recognise the impact that such new energy projects can have on local communities and the environment. The Government are committed to striking the right balance between those considerations when delivering the clean power mission. All proposed solar projects are subject to a robust planning process. Most projects are assessed by local planning authorities themselves, and those assessments are governed by the national planning policy framework, which encourages developers to engage with local communities before submitting an application. Local planning authorities will continue to seek representations from local communities and will continue to weigh local considerations against the need for renewable energy. As the hon. Member for Faversham and Mid Kent said, larger projects such as the Cleve Hill solar park are decided centrally through the nationally significant infrastructure regime. That is a rigorous process. Developers whose projects qualify for the assessment must complete considerable community engagement before any decision is taken, and decision makers take into account its level and quality. We recognise that new infrastructure can have an impact on the local community, and the planning system is designed to take account of the social, cultural, economic and environmental effects. Indeed, all large-scale solar developers are legally obliged to complete an environmental statement as part of any application for development consent. The hon. Members for Faversham and Mid Kent and for Strangford (Jim Shannon) raised disruption, which will be considered as part of the environmental statement. The statement requires the developer to consider the potential environmental impact of a project, not just during the construction phase but during its life. It spans pre-development, construction and operation, all the way to decommissioning. The statement is a helpful tool that allows planning authorities to review any significant effects on biodiversity or the environment. I know the hon. Member for Faversham and Mid Kent is committed to improving the natural environment, and she spoke eloquently about her vision for that part of her constituency. There is some evidence to suggest that solar can improve biodiversity when installed and managed appropriately. The environmental management plan for Cleve Hill includes commitments to build a habitat management area of 56 hectares, which is predicted to increase on-site biodiversity by 65%. I want to touch briefly on the use of agricultural land for solar. I hope I can reassure the hon. Lady that the Government recognise that food security is linked to national security, and that we will always back British farming. In previous years, we worked together on the all-party parliamentary group for fruit and vegetable farmers, which she chaired, so I gained some knowledge of the importance she attaches to standing up for farmers in her constituency. Planning guidance makes it clear that developers should situate their projects on brownfield or industrial sites whenever possible. Where the development of agricultural land is shown to be necessary, developers are steered away from using the best and most versatile land, and we have no plans to change that. We do not believe, however, that the accelerated deployment of solar power poses a threat to food security. The total area of land devoted to solar farms nationally is very small. Even in the most ambitious scenarios, less than 1% of the UK’s agricultural land would be occupied by solar farms. My colleagues at the Department for Environment, Food and Rural Affairs are developing a land use framework, which will consider issues such as food security and how we can expand nature-rich habitats. The framework will work hand in hand with the strategic spatial energy plan. May I just ask, Dr Huq, will the hon. Member for Faversham and Mid Kent be given a minute to respond?
10 Dec 2024 · Cleve Hill Solar Park · Hansard source
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Okay. I come on to the issue of battery safety. I note that the hon. Member for Faversham and Mid Kent said that members were given some reassurance at the community meeting she held but still have significant concerns about fire safety. As she knows, batteries are regulated by the Health and Safety Executive. The framework requires battery designers, installers and operators to take the necessary measures to ensure health and safety through all stages of the system’s construction, operation and decommissioning. The Government have updated the planning practice guidance to encourage battery storage developers to engage with local fire and rescue services and for local planning authorities to refer to guidance published by the National Fire Chiefs Council, which I note the hon. Lady said was represented at the meeting she held. The health and safety framework for batteries is kept under review to respond to changing circumstances. In 2018, the Department for Business, Energy and Industrial Strategy set up an industry-led electricity storage health and safety governance group, whose members include the National Fire Chiefs Council, the Environment Agency and DEFRA. That group is responsible for ensuring that an appropriate, robust and future-proofed health and safety framework is sustained. My Department worked with it to develop and publish health and safety guidance for grid-scale batteries that aims to improve the understanding of existing health and safety standards, which the battery storage industry should apply to its own processes. The hon. Member for Faversham and Mid Kent mentioned DEFRA. As I understand, DEFRA is considering further options, including environmental permitting, for managing the environmental and public health risks from fire at grid-scale sites. I am happy to speak to my colleague in DEFRA who is responsible for that and get back to the hon. Lady on her specific question—she will appreciate that I cannot answer on their behalf today. If her constituents require any further reassurances on the safety issue, my hon. Friend the Member for Ashford (Sojan Joseph) will be happy to follow up on that in writing. In the few minutes I have left, I turn to community benefits. We absolutely understand that we need to fully engage with communities and bring them along with us on our clean power mission, which includes public engagement and consultation. The hon. Member for Faversham and Mid Kent asked specifically about community benefits. We know that communities are providing a service to the country as a whole when they host clean energy infrastructure, so there need to be benefits for them. Sometimes there is a direct benefit where the infrastructure is owned by the community—the benefit goes straight back into the community, whether it is through solar panels on a village hall or one of many other examples—but we are considering how best to deliver those community benefits to host communities. That includes looking at existing examples in Europe and further afield to see what has worked well. A wide variety of community benefits can be delivered, including funding for local projects, investment in the local area, direct benefits to individuals and, as I said, opportunities for community ownership. Great British Energy will build on existing community energy schemes, helping communities to unlock opportunities through the local power plan. In the hon. Lady’s constituency, up to 1,400 homes are powered by Orchard Community Energy, which is a community-owned solar farm near Sittingbourne that provides power to Swale and Medway. That puts communities at the heart of the energy transition and gives them a stake in the transition to net zero as owners and partners in clean energy projects. As I said, the Secretary of State for Energy Security and Net Zero, my right hon. Friend the Member for Doncaster North, is today at the meeting of the solar taskforce, which brings together industry and Government. It is considering the question of how a community can benefit from the infrastructure that is hosted on their patch, and its recommendations will be published in the solar road map. To conclude, the Government are committed to considering the interests of local communities affected by proposed energy infrastructure. I thank the hon. Member for Faversham and Mid Kent for securing the debate and for giving me the opportunity to set out the Government’s vision. We will work to balance the local impact of new projects with the delivery of our clean power mission. The renewable energy transition will always be done through co-operation rather than coercion, ensuring that all parties benefit on our journey to net zero. Question put and agreed to .
25 Nov 2024 · Draft Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2024 · Hansard source
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I am glad the shadow Minister agrees on that. He asked a specific question about the pricing. As the market conveners, we cannot comment on the price. I will leave it at that, other than to say that the market determines the price of the allowances, and opting for the top of the net zero-consistent range means that more allowances will be available while we can still deliver against our net zero trajectory. The shadow Minister also brought up some broader issues about carbon leakage. Again, there will be plenty of opportunities to debate the issue, but we are absolutely committed to providing certainty to industry about the steps we will take to protect against carbon leakage. That is why in July 2023 the overall level of free allocations that will be provided from 2026 were set out. We have since consulted on how best to target those free allocations from the next allocation period, to ensure the smooth functioning of the market and the continued protection of at-risk sectors. As the shadow Minister will know, the UK Government have announced that from 2027 a UK carbon border adjustment mechanism will be in place for certain at-risk sectors, and the authority has consulted on aligning free allocation charges with the start of that CBAM. I assure him that the UK ETS Authority will work the UK Government to ensure that a CBAM will work cohesively with the UK ETS, including with free allowances. No doubt that will be revisited—perhaps in this very room —over the coming months. The draft order is a key part of our net zero policy regime. We believe that the maintenance of a strong UK ETS will play a key role in making Britain a clean energy superpower and in delivering our mission of having secure and clean electricity by 2030. By driving green investment as part of our industrial strategy, the UK ETS will also help to deliver a just transition, thereby growing the UK’s economy and securing good jobs for people throughout the country. As I said, the changes proposed in the SI will bring in a net zero-consistent cap. I remind the shadow Minister that it was his Government who legislated for net zero, and at one point they were proud of having done that. The SI will also alter the industry cap and expand the scope of the ETS to the venting of CO2 in the upstream oil and gas sector. The change follows a comprehensive consultation on developing the UK ETS that was carried out in 2022. The proposals deliver on commitments made in the response to that consultation in July 2023, when the UK ETS Authority set out a comprehensive package of reforms to the scheme. The proposals have the long-standing support of the four Governments of the UK. We, as part of the UK ETS Authority with the devolved Governments, are determined to manage and improve the scheme effectively. Our aim is to be predictable and responsible guardians of the scheme and its markets. We are committed to being attentive to views and to carrying forward changes as required to ensure that the scheme operates efficiently to achieve emissions reductions. The changes to the UK emissions trading scheme in the SI will support the scheme’s role as a cornerstone of the UK’s climate and net zero policy. I therefore commend the draft order to the Committee. Question put.
25 Nov 2024 · Draft Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2024 · Hansard source
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I beg to move, That the Committee has considered the draft Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2024. As always, it is a pleasure to see you in the Chair, Sir Roger. The draft order was laid before Parliament on 22 October 2024. To give a bit of background, the UK emissions trading scheme was established under the Climate Change Act 2008 by the Greenhouse Gas Emissions Trading Scheme Order 2020, as a UK-wide greenhouse gas emissions trading scheme contributing to the UK’s emissions-reduction targets and net zero goal. The scheme is run by the UK ETS Authority, a joint body comprising the UK Government and the devolved Governments. Our aim is to be predictable and responsible guardians of the scheme and its markets. We have introduced this statutory instrument to enable several important changes and improvements to the scheme. It resets the UK ETS cap to be in line with the top of the net zero-consistent range. The cap sets a limit on how many allowances can be created over the trading period, which runs from 2021 to 2030, and in each year. That level reduces over time to drive down total emissions. When the scheme was established, the cap for the legislated period of the UK ETS—from 2021 to 2030—was set at 5% below the UK’s expected notional share of the EU ETS cap for the same period. However, that was not consistent with the UK’s net zero trajectory for the traded sector. This statutory instrument brings the overall UK ETS cap in line with our net zero target and carbon budgets under the Climate Change Act. The statutory instrument also reduces the industry cap, which is the total number of allowances that can be made available to existing installations for free if no cross-sectoral correction factor mitigation is applied. The SI reduces the absolute level of the industry cap while increasing its proportion of the overall cap. While the share of allowances set aside for this purpose will increase from 37% to 40%, the reduction in the overall UK ETS cap means that the industry cap will fall. That will help to mitigate the risk of carbon leakage across participating sectors while maintaining an effective incentive to decarbonise. The statutory instrument creates a flexible reserve of allowances for maintaining market stability and sufficient carbon-leakage mitigation. In addition to allowances specifically created for the reserve, unallocated free allowances from the industry cap and designated free allowances that are returned by operators due to changes in participant eligibility or activity level reductions will also stock the flexible reserve. The flexible reserve can be used to increase the allowance supply for market-stability purposes if the cost-containment mechanism is triggered. The flexible reserve can also mitigate the application of the CSCF through a uniform reduction to all eligible existing participants’ free allocation if the eligibility for free allocation exceeds the industry cap. I will move on to venting and flaring. Under current legislation, carbon dioxide released through flaring in the upstream oil and gas sector is included in the UK ETS, as it is within the scope of the regulated activity of combustion. This SI introduces CO 2 that is released through venting in the upstream oil and gas sector into the scope of the UK ETS for installations already covered by the scheme. That means that such emissions will also be subject to a carbon price. The controlled processes of venting and flaring can sometimes be essential for safety purposes. They are also used in more routine situations where the oil and gas hydrocarbons are unable to be used, exported, or reinjected without CO 2 being removed. The removed CO 2 can then be released in the process of flaring, when waste gas, including the stripped-out CO 2 as well as combustible elements, is ignited, or in the process of venting, when unignited gas is released through a vent. The legislation will remove a perverse incentive whereby operators could routinely vent gas that contains carbon dioxide without it being subject to a carbon price, even though it would, if flared, constitute reportable emissions for the purpose of the scheme. I will now move on to Northern Ireland. In line with the original policy intent, the statutory instrument extends legislative amendments made by the Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2023 to Northern Ireland. The amendments include capping the aviation free allocation at 100% of emissions, clarifying the treatment of carbon capture and storage plants, and freeing the allocation rules for electricity generation. In 2022, a memorandum of understanding between the UK and Swiss Governments was signed, setting out the intention to include flights from the UK to Switzerland in the UK ETS. Such flights were brought into the UK ETS scope on 1 January 2023 by the Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 3) Order 2022. The statutory instrument extends the scope to cover flights that depart from an aerodrome in Northern Ireland and arrive at an aerodrome in Switzerland. Scheme regulators are responsible for enforcing compliance, including operational functions such as the issuing of penalties. The statutory instrument makes a number of amendments to the levels of scheme penalties to ensure the consistency and proportionality of enforcement for all operators. It also introduces a new deficit notice, with an associated penalty, to strengthen the enforcement of the fundamental scheme obligation to surrender allowances equal to an operator’s annual emissions. Finally, the statutory instrument makes several corrections and clarifications to existing legislation. The changes follow appropriate and comprehensive consultation with stakeholders. In the “Developing the UK Emissions Trading Scheme” consultation in 2022, the UK ETS Authority considered proposals on changes to the rules for sectors covered by the UK ETS to ensure that more greenhouse gas emissions were covered by the scheme, along with changes to the cap. The authority response to the consultation was published in two parts, in August 2022 and July 2023. A majority of respondents agreed with the UK ETS Authority proposals on creating a flexible share reserve of allowances, on bringing venting in the upstream oil and gas sector into the scope of the ETS, and on the addition of a new penalty and deficit notice. Several respondents expressed concern regarding the reduction of the cap and the changes to the industry cap; an assessment of these responses informed the decision to set the cap at the top of the net zero-consistent range. Between 23 February 2024 and 8 March 2024, the UK ETS Authority ran a targeted consultation on the minor penalty amendments. The responses to this consultation were in broad agreement with the proposals, or noted that they were not affected by them. The authority response has been published in advance of the laying of this statutory instrument. The changes in the draft order will deliver on commitments made by the UK ETS Authority and improve the operation of the scheme. The alterations to the UK emissions trading scheme will support its role as a key pillar of the UK’s climate policy. They show that we will take action to extend and improve the scheme where necessary. I commend the draft order to the Committee.
25 Nov 2024 · Draft Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2024 · Hansard source
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I thank the shadow Minister for his contribution. As I said, the UK emissions trading scheme is a key pillar of the UK’s net zero policy regime. I am slightly surprised by his decision not to support the SI —perhaps not from a political point of view, but because I am pretty sure that if he was still in the Department occupying the post I am in now, he would have supported the measures. As I said, they are just about ensuring that the scheme retains its credibility and moves forward and adapts to circumstances. With the Northern Ireland Assembly established, it is absolutely common sense that Northern Ireland should be treated in the same way with regard to venting and flaring—
12 Nov 2024 · Fusion Power Plants · Hansard source
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My hon. Friend is a great champion for her constituency, and I was pleased to meet her to talk about this issue and to hear her Westminster Hall debate. I look forward to visiting her constituency later this month to see the fusion café and to visit West Burton, the site of the STEP project, after which I hope to be able to share more detail on how we will support fusion.
12 Nov 2024 · Fusion Power Plants · Hansard source
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The final investment decision on Sizewell C, as I understand it, is expected soon. We will hear more about support for that in the next spending review. Fusion energy has huge potential, not just in the long term but from the innovation we are already seeing in that sphere, which I very much welcome.
12 Nov 2024 · Fusion Power Plants · Hansard source
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As I mentioned, I am very much looking forward to visiting West Burton soon. The Budget announced significant support for fusion energy in 2025-26 and, yes, we remain as ambitious as the previous Government for the potential of fusion energy.
12 Nov 2024 · Fusion Power Plants · Hansard source
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I think fusion has huge potential, and so many companies stand to benefit. It is not just about the ultimate goal of fusion energy; it is also about all the technological advances we will discover. I have spoken to fusion companies which are, for example, finding uses for cancer treatment. I am very interested to hear what the hon. Gentleman has to say about the possibilities of fusion in his constituency. We want to see this proceed. If he drops me a line, I will be happy to explore the opportunities in his patch.

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