Net Zero Carbon Emissions: UK’s Progress

Debate between Ed Davey and Anna McMorrin

Thursday 28th February 2019 Commons Chamber

[Sir Edward Davey]

No, because Hinkley Point is a low-carbon asset—and I did not actually sign it off; I did the heads of terms agreement. It was the current Government who signed it off. We could have a discussion about nuclear, but the difference between Hinkley Point and the fossil fuels investment to which I am referring is that Hinkley Point is low carbon.

The real issue that I am trying to bring to the House’s attention is the huge number of vested interests in the fossil fuels sector that seep throughout economies and finance. If we are to be really radical, we need to decarbonise capitalism. We need new regulations and new laws to change the incentives completely, so that any investor will need to factor in climate risk. Let me give some practical examples.

I hope to meet the Governor of the Bank of England in due course. It will be a private meeting. What I want to say to Mark Carney—whom I consider to be a hero in this area—is that I think the Bank of England should include in its reserve requirements a requirement for banks to be weighted according to how carbon-intensive their investments and portfolios are. That will encourage banks to lend to green initiatives.

I want to ensure that the pension regulators are looking at the pension portfolios and determining which are low carbon and which are high carbon, and supporting the low-carbon initiatives. I want to ensure that, through corporate governance, there is complete disclosure in a company’s accounts and its assets and liabilities of how much of that involves fossil fuels, so that investors can decide whether they really want to invest in a company that is so exposed to carbon risk. I want to ensure that if a company wants to be listed on the UK stock exchange, it must be transparent and disclose how much of its activities will be in fossil fuels.

I want a new treaty to back up the Paris treaty. I would call it a fossil fuels non-proliferation treaty. It would be a global treaty, and it would say, “We have enough fossil fuels. We do not need any more. In fact, we will not be able to use those that we have.” That is the sort of radical change that we need if we are to tackle climate change. This is not just about the policies in this country, although we have made some real progress.

[Anna McMorrin]

Does the right hon. Gentleman agree that UK Export Finance should also consider ceasing to invest in the fossil fuel infrastructure throughout the world, on which it is largely focused?

[Sir Edward Davey]

I do agree. I do not think the position is quite as the hon. Lady has described it—I think that that investment has been dramatically reduced—but it still needs to be go down further.

[Anna McMorrin]

We are looking at this in the Environmental Audit Committee, and that is not the case. The investment has gone up hugely, and we think the Government need to put a stop to it.

[Sir Edward Davey]

If the investment has gone up, I am very alarmed about that and will want to read the Committee’s report in due course.

The agenda I am putting to the House tonight is radical. It would mean that we needed a system-wide review through the Bank of England, the Prudential Regulation Authority, the Financial Conduct Authority and others to make sure we have the right incentives and regulations in our country to change this 200-year relationship between finance and fossil fuels.

The climate change agenda is also significant globally. If we get this right, we can take a major step forward in tackling human poverty, because we will bring electricity to rural Africa and rural India, and the children and families there will have the light and be able to keep their food and medicines cool, to educate themselves better and to be part of the global economy. So this is one of the biggest ways, particularly through solar energy, that we can tackle poverty. But it is even better than that: this is a way of promoting peace and reducing conflict and tensions throughout the world. Fossil fuel control is held by a small number of men in our world: Vladimir Putin, the dictator in Venezuela and so on. If we can get renewable energy, we can take the power away from those people and give it to all people—to all humanity.