The Government is committed both to this target and other international agreements – but in a more proportionate way. For too long, politicians from all parties have not been honest about costs and trade-offs. The Government's revisions do not signify a loss of ambition or that it is abandoning commitments, far from it. The UK has set the most ambitious target to reduce carbon emissions by 68 per cent by 2030 compared to 1990 levels – and is the only major economy with a target of 77 per cent by 2035. Already, the UK has cut emissions faster than any other G7 country (by 48 per cent, compared to 41 per cent in Germany, 23 per cent in France and zero in the United States). This rapid progress allows a more proportionate and realistic approach.
As a country, we must put our long-term interests before short-term political needs. The revisions include: easing the transition to electric vehicles from 2030 to 2035, in line with other similar countries; giving families far more time to transition to heat pumps while significantly increasing grants to upgrade boilers; scrapping onerous energy efficiency requirements and not forcing people to make alterations; no new rules on carpooling, on households rubbish and recycling bins and on more expensive meat; and supporting new oil and gas in the North Sea. These revisions will ease the burden on working people; our net zero target will only be achieved if public support is maintained.
Finally, the Government is embracing the opportunities of the green economy to create more well-paid jobs, with further funding to support green research and development, and more onshore and offshore wind with an improved auction round. I can assure you that the UK will continue to make progress on the most ambitious, stringent de-carbonisation targets in the world - even after these changes are made.
Calls for a referendum on net zero -
While I recognise that there is a wide variety of different views in relation to net zero, I know that the Government does not have any plans to hold a referendum on its net zero policy.
Windfall Tax -
It is only fair that companies that have made genuine windfall profits as a result of the fallout of the war in Ukraine contribute more to fund the Government’s cost-of-living support.
The Government introduced the Energy Profits Levy (EPL) from 26 May 2022 in response to sharp increases in oil and gas prices in the preceding year and to help fund cost-of-living support for UK households. It was initially levied as a 25 per cent surcharge on UK oil and gas profits, taking the combined headline tax rate for oil and gas companies operating in the UK and on the UK Continental Shelf to 65 per cent. On 1 January 2023, the EPL rose to 35 per cent and applies through to 31 March 2028.
The Chancellor has also introduced a levy on the profits of electricity generators. Currently, our energy prices are set by the wholesale price of gas. This means that generators of renewable energy, which have far lower production costs, have been making extraordinary windfalls. The 45 per cent levy on these low-carbon producers took effect on 1 January 2023.
On 9 June, the Government announced a new Energy Security Investment Mechanism, which is designed to give the oil and gas sector certainty to raise capital and invest in new and existing projects. It means that if prices fall to historically normal levels for a sustained period, the tax rate for oil and gas companies will return to 40 per cent, the rate before the EPL was introduced. Based on the independent Office for Budget Responsibility’s forecast, the Energy Security Investment Mechanism will not be triggered until before the tax’s planned end date in March 2028.