First, let me thank noble Lords for their valuable contributions to the debate. I hope that I will be able to provide in my response all the necessary assurances that will enable noble Lords to approve the statutory instrument before us.
As I stated in my opening speech, this SI will set a world-leading target in line with the independent expert advice of the Climate Change Committee and is supported by all four Governments of the UK nations. Carbon budget 6 is an important step towards meeting our 2050 net-zero target, building on our NDC to reduce our emissions in 2030 by at least 68% compared to 1990 levels. It will strengthen our position as a global climate leader going into our G7 and COP 26 presidencies, highlighting our commitment to taking decisive action against climate change. In addition to showing the world that the UK is serious about protecting the health of our planet, it will help to seize the opportunities and benefits that the net-zero transition will bring, not only reducing the risks of catastrophic climate change but leading to economic growth and jobs in new green sectors. The UK can position itself as a global leader in green technologies of the future.
My noble friend Lord Lansley made a number of important points on how we will implement the range of ambitious policies that will be needed as we transition to net zero. He rightly highlighted the need for a clear focus on the delivery of new measures across, for example, carbon capture, energy efficiency and hydrogen. He also highlighted the importance of using all possible policy levers across government to meet our ambitious targets. I agree with him that targets are in and of themselves insufficient. Our net-zero strategy, which is to be published before COP 26, will set out bold proposals to make progress across the economy. We will also set out further proposals throughout the year—for example, our heat and buildings strategy and the transport decarbonisation plan. This will be a bold and ambitious programme of the co-ordinated action needed to end the UK’s road transport greenhouse gas emissions by 2050 and, at the same time, ensure that the transport sector plays its part in delivering our legally binding carbon budgets.
My noble friends Lord Lansley and Lord Moynihan raised the important issue of carbon pricing. The UK is a strong supporter of carbon pricing and a pioneer of carbon markets through both domestic action and our support for the uptake of carbon-pricing schemes around the world. Putting a price on carbon is recognised as an important element of climate change mitigation. It provides a cost-effective and technology-neutral
way to reduce emissions, mobilising the private sector. It can of course also offer social and biodiversity benefits.
As COP president, the UK is fully committed to reaching a successful outcome on carbon trading rules at COP 26. This is a fundamental element of the Paris Agreement, enabling parties to co-operate to achieve higher ambition in both adaptation and mitigation actions. We will build on the good progress made at COP 25 in Madrid, working with all parties towards a successful outcome in Glasgow.
In response to my noble friend Lord Lilley, who rightly raised issues about the costs of the transition, I can say that the costs cited in the impact assessment include the full costs and benefits of the transition to net zero. I recognise that we need to manage the costs of this significant transition carefully but, overall, we expect the costs to be outweighed by significant benefits: reducing polluting emissions as well as bringing fuel savings and improvements to air quality and enhancing biodiversity.
It is of course important that we consider the impacts on the most vulnerable when decarbonising our homes. We are offering additional protections to the vulnerable and fuel poor. The expanded warm home discount and the energy company obligation will provide around £6 billion of support to low-income and vulnerable households between 2022 and 2026—an increase of more than £1.7 billion over that period. Over the last year, we have committed over £1 billion of energy-efficiency funding through the local authority delivery scheme, the home upgrade grant and the social housing decarbonisation fund. This will fund home improvements for low-income households now and over the next two years. Her Majesty’s Treasury is soon to publish its net-zero review and BEIS a call for evidence on energy consumer funding, fairness and affordability, on the costs of reaching net zero and ensuring fairness and affordability in the energy system. These will all inform the Government’s approach to achieving transition in a way that works for households, for businesses and, of course, for the public finances, while at the same time maximising our economic growth opportunities.
In response to the noble Lord, Lord Sarfraz, who asked about carbon off-sets, the UK is working through international fora to set the foundations for a credible global carbon trading system rooted in environmental integrity. As COP president, the UK is fully committed to reaching a successful negotiated outcome on carbon trading rules at COP 26. The UK’s international climate finance is strengthening the international carbon market, helping to reduce emissions and leverage additional investment.
In response to the noble Lord, Lord Oates, who highlighted the importance of delivery and some important considerations, again, we know that setting a target is only a first step and that further action is of course needed. Ahead of COP 26, we are setting out ambitious plans across many key sectors of the economy. These will build on strong recent progress on the Prime Minister’s 10-point plan and will culminate in our net-zero strategy, to be published later in the year.
I am pleased that the noble Lord welcomed the inclusion of international aviation and shipping in the carbon budget, as that of course allows for those
emissions to be accounted for consistently with others. The Government take the matter of aviation and their commitments on the environment extremely seriously and the expansion of any airport must always be within the UK’s environmental obligations. By taking immediate steps to drive the uptake of sustainable aviation fuels and investments in R&D to develop zero-emission aircraft, and developing the infrastructure of the future at our airports and seaports, we will make the UK the home of green ships and green planes.
Through the Aerospace Growth Partnership, industry and government have made a joint funding commitment of £3.9 billion for aerospace research and development from 2013 through to 2026. This includes the FlyZero project to study in depth the potential for zero-emission aircraft. We are also investing £125 million in the future flight challenge to enable the use of new forms of green and autonomous aircraft. Further work on sustainable aviation fuels and air traffic control is co-ordinated by the Department for Transport and our partnership with industry through the Jet Zero Council. The Government are planning to consult shortly to update our position on aviation and climate change.
In response to the points made by the noble Lord, Lord Grantchester, who emphasised the points that a number of other noble Lords made about the importance of policy action, I agree that urgent action is needed to address the threat and help secure the UK’s long-term economic security. That is why we are committed to these world-leading targets, and we will bring forward further plans shortly to meet them.
The independent advisers, the Climate Change Committee, are clear that their recommendations have been explicitly designed to reflect the UK’s highest possible ambition within the UK’s particular capabilities as required by the Paris Agreement. Our sector decarbonisation strategies will contain further proposals to put us on track for meeting our carbon budgets and to provide clear direction for different sectors of the economy.
The comprehensive net-zero strategy ahead of COP 26 will set out the Government’s vision for transitioning to a net-zero economy. It will outline our path to meet net zero by 2050 and our emission targets along the way. We are in no doubt about the challenge that this target presents, but it is right that we pursue the highest possible ambition in the face of climate change. This target ensures that we are playing our part in meeting the Paris temperature goal, and we will be urging other countries to follow us and do the same. It is in line with the level recommended by the CCC and it is feasible to meet with substantial efforts across every sector of the economy.
I set out in my opening speech what we have already achieved, and we can make considerable progress in the power sector as we now boast the world’s largest offshore wind capacity. Now we look at the even greater benefits that net zero can bring, such as protecting the planet for future generations, through economic growth and jobs in the new green sectors. This statutory instrument will keep the UK on a credible path to meeting that 2050 net-zero target, seeing well over half of the emissions reduction needed by 2050 in the next 15 years. It will build on the recent momentum to
capitalise on the vast opportunities of net zero and will strengthen our ability to urge countries to go further in delivering net zero globally. I commend the draft order to the Committee.