Green Finance

Debate between Lord Teverson and Lord Bates

Wednesday 31st October 2018 Lords Chamber

[Lord Teverson (LD)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I bring to the House’s attention my non-financial interest as a trustee in the Green Purposes Company.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, the Government place a high priority on green finance and take extremely seriously the UK’s position as a leading centre. To support these efforts, the Government will publish a green finance strategy in spring 2019. The strategy will set out the Government’s green finance ambitions as well as new actions that the Government will take to complement existing efforts.

[Lord Teverson]

I thank the Minister for that reply. In many ways, I welcome the Government’s enthusiasm in this area, but a great opportunity was lost this week in the Budget when the Chancellor did not announce that the UK would issue a green sovereign bond. If we exhort that corporate green finance bonds should be issued in this country, we should be an example and issue a green sovereign bond. Does the Minister get that?

[Lord Bates]

I get the question, but I do not necessarily agree with it. Green finance is exciting and is growing, and the City of London is at the forefront internationally. We are ranked third in the league table that the noble Lord mentioned, but first for the quality of the green finance. Our approach is that where the private sector—the City—provides leadership in developing these investments, that is the best outcome and the Government should support it through our strategy but should not necessarily participate and potentially crowd it out.

International Solar Alliance: Framework Agreement

Debate between Lord Teverson and Lord Bates

Wednesday 24th October 2018 Grand Committee

[Lord Bates]

The noble Lord, Lord Teverson, asked specifically about the British Indian Ocean Territory and the Chagos Islands. We have regular dialogues with the overseas territories: there are Joint Ministerial Councils that are chaired by my noble friend Lord Ahmad and which I attend as the Minister responsible for some of the islands that are eligible for overseas development assistance. Of course, their attentions have been focused on the consequences of climate change, including hurricanes in the Caribbean last year. There was certainly a lot of interest and support for doing more on this. We are having discussions on the development of geothermal on Montserrat and about solar and wind on St Helena. These are very important elements.

It might be helpful for the Committee to note that at the ISA General Assembly on 3 October the restriction on members having to have a territory within the tropics was removed from the original provision. It is correct that France and India established the ISA in 2015 in Marrakesh, but it is incorrect to suggest that the UK is slipping behind France. More solar is installed in the UK than in France. Significantly, 49% of all EU solar investment is from the UK. In the first half of this year, one in five EU electric vehicles was sold in the UK, second only to Germany.

Internationally, we do more too. The Powering Past Coal Alliance has been launched with Canada. Over the weekend I was in Copenhagen at the partnering for green growth summit. The initiative is being led very powerfully and effectively by the Prime Minister of Denmark. There was significant recognition on the international stage of the contribution that the UK is making in terms of green growth finance. One of the delegates specifically mentioned the Powering Past Coal Alliance which was launched around a year ago, and of course the International Climate Finance facility.

As for how this links with the SDGs, we had a light grilling by the Environmental Audit Committee just a couple of days ago on our readiness for the SDGs. What I was able to say there I also say to the Committee, which is that we view these issues through the lens of the SDGs: they are the best hope we have and they must be applied rigorously, as the noble Lord, Lord Collins, said, domestically as well as being the focus of our efforts internationally.

The noble Baroness, Lady Jones, spoke about fracking. In the UK we have been regulating for gas and oil drilling for many years and we have tough regulations in place to ensure on-site safety, prevent water contamination and mitigate air pollution. All projections suggest that the UK will require gas for decades ahead. By 2030 we could be importing three-quarters of the gas we need, and that is the rationale for exploring an alternative section of development.

We welcome the IPCC report on 1.5 degrees. We are a world leader when it comes to cutting carbon intensity but the evidence is clear: Governments, businesses and communities must take further action to confront this challenge. That is why we are asking the international climate experts of the Committee on Climate Change for a road map to a net zero economy, including how emissions might be reduced and the expected costs and benefits of doing so. Those will also be followed up at the next meeting, which will take place in Katowice in December.

The noble Baroness, Lady Jones, asked what we are doing domestically. The UK was the first country to introduce legally binding emission-reduction targets through the Climate Change Act of the previous Labour Government 10 years ago. Our current 2050 target is to reduce greenhouse gas emissions by at least 80% relative to 1990 levels. That was set in 2008 and we are already making progress, as evidenced by our strong domestic performance. However, there is more to do. Low-carbon innovation is at the heart of the Clean Growth Strategy published last year, and over £2.5 billion of government investment in low-carbon innovation from 2015 to 2021 is a key part of delivering that. This forms part of the largest increase in public spending on UK science, research and innovation in almost 40 years.

The noble Lord, Lord Teverson, asked about the specific bodies that might be involved in the ISA. We have a list that I am happy to provide to him, but the one that he may have been referring to is the India/UK virtual clean energy research centre, UK Research and Innovation India, formerly RCUK India, one of those announced some time ago by my colleague Sam Gyimah, a Minister at BEIS.

On what we are doing domestically about renewals and emissions reduction, we are committed to maintaining our position as a global leader in renewable energy. We hope that the ISA will present opportunities for British business abroad. Private sector investment, subsidy-free, may soon be a viable option for technology. The key message here is that the SDG gap in terms of funding to meet the SDG goals is running at some $2.5 trillion per year, and therefore it is impossible for $150 billion of aid flows to go anywhere near meeting that. That is the reason why we need to use vehicles such as the CDC, the City of London and the ISA to leverage in private sector capital investment. Of course, that is now available because the technology is now so advanced that solar-powered energy is indeed competitive and economic and can provide a return on investments.

We are pleased to see that the establishment of technologies such as onshore wind and solar is reducing the cost. If this continues, they may have the capability to play a significant role in the generation mix in future. No decisions have been taken about the future of CfD allocation rounds for established technologies but it is right that we should focus support on those technologies where the need is greatest.

[Lord Teverson]

Perhaps I can give the Minister good news. He may not be aware of this but UK Climate Investments is the organisation in question. The British Government, along with Lightsource Renewable Energy and UK Climate Investments, part of the Green Investment Group, are putting in the seed asset for the partnership that will lead to a 60-megawatt project in the Indian state of Maharashtra. The Government have made that investment this year and I congratulate them on that programme, but I was interested to understand what else they would manage to deliver in future.

[Lord Bates]

The noble Lord’s skills know no bounds. Would he like to take a place in the Box behind me? That is very good research and I am grateful for it.

Solar PV is a UK success story. The last eight years have seen the technology deployed rapidly, with over 99% of the UK’s solar PV capacity deploying since May 2010. In 2015, 49% of total EU investment in solar PV occurred in the UK. We have installed more than twice as much capacity as any other European country—more than Germany, France and Australia combined.

On how the UK is contributing to the environment of climate change following the IPCC report which the noble Baroness, Lady Jones, asked about, we have launched our 25-year environment plan. It sets out how we will replenish depleted soil, rid seas and rivers of rubbish and cut greenhouse gas emissions. We have talked specifically about eliminating avoidable plastic waste and supporting the creation of a new northern forest. We have embedded environmental net gain principles for development, including housing and infrastructure. We have created a new network of sites covering 500,000 hectares where nature and wildlife can thrive, and we have implemented a sustainable fisheries policy.

Those are the main points that were raised during the debate, but of course I will review the Official Report and write to noble Lords should there be any gaps.

[Lord Teverson]

Can I clarify a point? The report says that all the overseas territories were consulted. As the British Indian Ocean Territory is on that list, who do the Government consult with?

[Lord Bates]

The noble Lord makes a very specific point. He will be aware of some of the challenges we are currently facing in our consultation with the Chagossians, who are based largely in Mauritius. I do not have the name of a specific individual, but I can certainly undertake to write to the noble Lord and set out any other points that have not been covered.

Green Finance

Debate between Lord Teverson and Lord Bates

Monday 5th March 2018 Lords Chamber

[Lord Teverson]

To ask Her Majesty’s Government what plans they have to issue a sovereign green bond to support the United Kingdom’s position in the global green finance market.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, the Government support development of the corporate green bond market. The Green Finance Taskforce is considering recommendations in this field. The Economic Secretary and the Minister for Energy and Clean Growth met the task force on 26 February to discuss emerging recommendations.

[Lord Teverson (LD)]

My Lords, I understand the point about corporate green bonds, but a year ago France issued a €7 billion green sovereign bond, and Poland did so before that. We are starting to lose our position in this market, not just in Europe but globally. Surely at this time it is really important that the City leads in this area. This would be simple and getting on with it now would involve no extra cost. Will we do so?

[Lord Bates]

We have said that we are open to that. It is one option being looked at by the Green Finance Taskforce, and it feeds into the work of the Green Finance Initiative in the City of London, which is doing great work in this area. However, we should not overstate the extent to which we are being left behind. We are in a position where some 63 green bonds in seven currencies listed on the London Stock Exchange, amounting to £20 billion—that figure represents an increase of 93% between 2016 and 2017. However, we will keep all options open and listen to the advice that we are given.