My Lords, I declare my interest as co-chair of Peers for the Planet. I welcome the Minister to what I believe is her first full debate in the House and I thank everyone in the staff administration who has made it possible for us both to be present in the Chamber today.
“This crisis offers us a once-in-a-lifetime opportunity to rebuild our economy in order to withstand the next shock coming our way: climate breakdown. Unless we act now, the climate crisis will be tomorrow’s central scenario and, unlike Covid-19, no one will be able to self-isolate from it.”
Those are not my words but those of Mark Carney, the former Governor of the Bank of England, his successor, Andrew Bailey, and other European bankers who argued this week for a recovery that places our net-zero objectives at its heart.
The last three months have been transformative, not just for millions of individuals and families but for institutions—look around this Chamber today—and for the entire governance of our country. The crisis has made us examine what and who we really value, recognise better the people on whom we depend and, amid the pain of separation, sickness and bereavement, appreciate the kindness of strangers and acknowledge our shared fragility and vulnerability.
While individuals have often felt powerless, unable to live their normal lives, the Government themselves have in many ways been empowered by an overwhelming threat and the public response, so unprecedented restrictions have been imposed and unparalleled amounts of public money spent to save lives and support jobs and businesses. Not just the extent but the speed of decision-making, innovation and delivery has been transformed. Government, organisations and individuals have made changes in days that in normal times would have taken years to achieve.
The fight against Covid-19 is far from over, but the first phase and the economic measures that anchored it are coming to an end. We need now to replace those short-term measures with a long-term strategy to rebuild the shattered economy, to replicate the sense of determination, to act at speed, to do whatever it takes.
The pandemic has distracted attention from the climate change crisis, but the imperative of tackling that overwhelming threat has not diminished. Without urgent and radical action, the world faces a dystopian future: extreme weather events; forest fires and melting ice caps; the spread of disease vectors; mass climate migration; and threats to the very existence of countries and communities vulnerable to sea-level changes.
The need for urgent and sustained action has been acknowledged internationally, but reaching the targets set out in the Paris agreement will be extraordinarily challenging. This year, CO2 emissions are expected to fall by 8% because of the global downturn that coronavirus has brought. To achieve our 2050 targets, we need to replicate that fall every year until then—and without bringing the world to a standstill.
After the last recession, there was a sharp rebound in emissions due to a wave of carbon-intensive stimulus packages. While it is tempting to rely on familiar levers, these would in reality bring lower returns and lock us into unsustainable models. Nor, particularly given the disproportionate effect in health and economic terms that Covid has had on the most disadvantaged—the poor, the sick and ethnic minorities—can another round of austerity be contemplated. The 2008 crisis taught us that recovery policies focused on investment were more effective at restarting the economy than austerity-based approaches.
Fortunately, when looking at investment choices and stimulus policies, we do not have to choose between tackling the climate crisis and rebuilding the economy. In fact, the evidence suggests that clean stimulus strategies are likely to result in net positive gains for the economy and for society. This is increasingly recognised through the strategies being pursued across the world, with ambitious and extensive green stimulus programmes. It is also why the business community is restructuring its investment plans accordingly. In the wake of Covid-19, global businesses worth $2.4 trillion have called for a green recovery plan, and over 200 leading UK businesses, investors and industry networks, ranging from Lloyds Bank to Greggs, from Tesco to Sky, have stated publicly:
“Efforts to rescue and repair the economy in response to the current crisis can and should be aligned with the UK’s legislated target of net zero emissions by 2050 at the latest … we must use the recovery to accelerate the transition to net zero.”
So what are some of the practical, high-potential policy opportunities? Renewable energy in the UK has showcased what is possible, making renewables the cheapest form of new power in virtually every major economy. At midnight on Wednesday this week, Britain passed the milestone of having gone two full months without burning coal to generate power; 10 years ago, we depended on coal for 40% of our electricity. As electricity demand bounces back, our energy sector is set to create 400,000 new, clean jobs between now and 2050 to meet our net zero target. Our wind sector has already established pools of technology excellence in former coal communities, while further jobs will open up across the UK requiring a diverse mixture of skills, including, importantly, in rural and coastal areas. But to capitalise on this potential, we need to address barriers such as planning policies which create obstacles to onshore wind projects and the clean electricity they produce. Perhaps I might recommend my Private Member’s Bill on onshore wind to the Minister.
In transport, there are myriad possibilities, from electrifying railways and having overhead cabling on highways for HGVs to investing in clean public transport. Networks for walking and cycling have already been scaled in cities such as Manchester and London since the lockdown. Transition to electric cars needs to be fast-tracked. We need to drive both supply and cost reductions, offer financial incentives to replace polluting vehicles with electric ones, and accelerate plans for a national network of charging points.
During the current crisis, remote working has revolutionised how we participate in the economy. Many people have no desire to return to the tyranny of the five-day office commute and flights to non-essential meetings. We need to build on this. Investment in full- fibre broadband could be one of the most important enablers for behaviour change, reducing journeys, emissions and pollution while promoting social inclusion. Efficiency in housing and building offers another strategy area where what is good for the economy is good for net zero. Retrofit is a resource-intensive job creator, and one of the cheapest ways to reduce emissions, but has suffered from an uncertain policy framework. Fixing that can offer a quick first wave of demand for the construction sector, with knock-on benefits throughout the supply chain, as well as addressing fuel poverty. Public buildings, including schools and educational facilities, could lead the way.
Others will speak, I am sure, of the possibilities that the UK’s world-leading track record in R&D innovation can open up in areas such as hydrogen, batteries, carbon capture and storage, circular business models and much more. Our natural assets also hold immense potential, where investing in large-scale mixed tree planting, creating productive forests, and restoring carbon-rich peatland and marine environments, can act as critical carbon sinks while supporting countryside and coastal communities.
Not all this is down to government alone; our financial system must also play an instrumental role. We already know that, in the last decade, listed companies with green activities have performed better than fossil-fuel stocks and that, during the pandemic, ESG portfolios have fared better than conventional ones. Investors need to align their investments to our obligations under the Paris agreement, report on climate risks and set strategies to mitigate those risks. The pensions industry could and should make a game-changing contribution by setting a trajectory to redirect the $2.9 trillion in pension funds—our money—into sustainable investment.
Clean stimulus strategies have many attractions as a route to recovery. They bring substantial benefits, such as clean air quality, without the restrictions and sacrifices that the pandemic demanded and without a requirement to slash public spending. They generate high returns while many are mature, proven industries and technologies, not risky ventures. They are labour intensive, creating more jobs than traditional stimuli. Renewables projects have been shown to create twice as many jobs as the equivalent investment in fossil fuels.
Jobs matter enormously, particularly to the young, who face the worst prospects in the projected recession and its horrifying unemployment levels. The OECD report this week made very grim reading. The elderly have suffered most in health terms, but the young are most at risk economically. We need to re-gear our national approach to education, apprenticeships, reskilling and life-long learning, not only to ensure a sustainable future but to support workers whose sectors cannot be sustained, and in regions which need regeneration.
In recognising the profound damage done to our economy and the challenges there will be in rebuilding it, public support will be essential. Public support has been shown, in survey after survey across the globe, for Governments to act to avert climate catastrophe. But to maintain that support, the measures taken will need to be seen to be fair. We need fairness between generations, between regions and between industries. The IFS warned in its report today:
“Britain risks entrenching deep class, ethnic, gender, educational … and geographical divides unless the government acts to tackle inequality.”
Public assistance for conventional industries must be transitional and accompanied by obligations to disclose climate-related financial risks and clear decarbonisation targets. Fairness will also need to govern our tax and benefits regimes. That includes how we tax income and wealth, looking at bold new funding mechanisms for social care and, yes, looking at the triple lock on pensions.
The Prime Minister and other Ministers—the noble Lord, Lord Agnew, did it this morning—have spoken enthusiastically of their commitment to greening our economy, but in practice there remains a frustratingly piecemeal and inconsistent approach to policy-making. The urgency of transformation calls for a coherent vision and steely determination to deliver. Will the Minister indicate today that the Government are committed to placing a climate lens on every policy and Bill they introduce and that they will be explicit and transparent about the contribution each of their proposals will make to getting us to net zero?
I have focused so far on UK strategies, but if we did not know before we certainly know now that we are part of a global community. The world will not come out of recession, any more than it will address the climate crisis, by raising drawbridges and retreating into narrow nationalism.
The UK has an historic opportunity to lead concerted international action through our presidency of COP 26 and our hosting of the G7 next year. I have said before that I believe this country’s contribution to the fight against climate change will be measured not only in the scale of our national emissions reduction but, crucially, in the quality of our global leadership. I hope we will hear from the Minister today that the UK is already working to secure international support and co-operation for a global road map to net zero and the philosophy of building back better.
Clean, fair and sustainable strategies offer strong alignment between tackling the climate emergency and generating prosperity for all parts of our country. They will support structural changes that deliver social, regional and intergenerational gains. They can reskill affected workers, improve physical infrastructure, enhance environmental assets and promote well-being for current and future generations.
I end with a question posed recently by Sir David Attenborough: do we invest money into the practices that take us deeper into this crisis or the solutions that get us out of it? The answer this Government give to that question will define the shape of our economy and society for decades to come.