Carbon Budget Order 2026
House of Lords · Lords Chamber · 23 Jun 2026 · 25 speeches · Official Report
Motion to Approve
Moved by
That the draft Order laid before the House on 2 June be approved. Relevant document: 5th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)
My Lords, I thank the committee for its consideration. The draft Carbon Budget Order 2026 was laid before the House on 2 June and the draft Climate Change Act 2008 (Credit Limit) Order 2026 on 14 April. Given that we are sitting here this evening on the second of the four hottest days there ever have been in June, after a similar number of hottest ever days in May, we may think that the question of whether we should debate doing anything about climate change answers itself. We have a far more scientific way to act on climate change at the moment, as this Carbon Budget Order sets a science-led budget to reduce emissions by about 87% for the period 2038 to 2042 compared to 1990 levels. This is in line with the level recommended by the independent Climate Change Committee and endorsed by the Environmental Audit Committee. The detailed impact assessment published alongside the Carbon Budget Order provides a rigorous assessment of options, all showing significant benefits of continuing towards net zero over abandoning it. The proposed seventh carbon budget sets a pragmatic and achievable path that will enable the UK to continue seizing the benefits of clean energy and climate action, including energy security, lower bills, good jobs and growth, and health and nature benefits. This is also consistent with the action needed globally to meet the goals of the Paris Agreement, building on the UK’s 1.5 degree-aligned nationally determined contribution for 2035. We can fight for our...
Amendment to the Motion
Moved by
At end insert “but this House regrets that the draft Order will increase the UK’s reliance on intermittent renewables, causing higher energy prices, further deindustrialisation and lower economic growth; is contingent on retaining a carbon tax which will impoverish households and industry; requires a reduction in livestock numbers and meat and dairy consumption; and will encourage the offshoring of emissions to countries with more polluting energy systems.”
My Lords, while preceding my noble friend Lord Deben, I pay tribute to his lifetime work on climate change and, while our views will certainly differ this evening, I share with him a passionate belief that we should work towards tackling climate change-he will agree that there are many different routes to achieving that goal. We are meant to be the revising Chamber, capable of detailed consideration of government measures, yet we have just six minutes each and, as the Minister has shown, that is insufficient. As Minister for Energy in the salient benchmark year of 1990, I launched the first renewables round, the non-fossil fuel obligation, while encouraging the growth in offshore gas, with strong environmental prerequisites to ban non-essential flaring, and securing gas to CCGTs, thus creating firm low-cost power to generate economic growth, jobs and prosperity. Low-cost electricity is the lifeblood of a successful economy. My business career and time in politics have taught me that a headlong rush based on DESNZ zealotry will be costly and unattainable; it will not just jeopardise but destroy economic growth. The UK produced circa 367 million tonnes of CO 2 equivalent in 2025, meaning that by 2039 we will have to reduce our annual emissions by more than two-thirds, with all the low-hanging fruit already picked. The capital and finance costs alone are estimated to be £880 billion. Government claims for the benefits are all target-derived prices to justify the policy, and we...
My Lords, I declare an interest as having been chairman of the Climate Change Committee for 11 years. I also chair a company advising on sustainability, business continuity and risk, and I am a partner in a small organic arable and livestock farm-so it may be said that one knows a little bit about what we are talking about. I say to my noble friend that I listened to him make a brilliant speech yesterday on sport, and the brilliance of it was that he explained, first, why the Government had got it wrong and, secondly, how to put it right. The problem with his speech this evening is that neither of those has been part of it. It is no good standing up and saying that they do not like this or that. The truth is that a Conservative Government, when previously in opposition, were the creators of the Climate Change Act and they turned it into a cross-party agreement. Every Conservative Government have supported these policies to end up with meeting the Paris Agreement, which a Conservative Government signed. Yet at the moment all we hear is opposition to what is being proposed by the Government, on the basis of the very best advice that they could have. There are a number of things that I think the Government are getting wrong. Any idea of loosening the movement to EVs is a great mistake, and the Government are also spending too much money on carbon capture and storage, as a matter of fact. But those are reasonable arguments to have from the point of view that we actually have to...
My Lords, as a Member of Parliament, I was unable to vote for the original climate change legislation. It seemed to be totally unrealistic, it was likely to be extremely expensive, and I thought it would be self-defeating. It was quite obvious that a large number of important economies around the world would not adopt this. It was extremely likely that an economy such as China would use the huge opportunity of our self-inflicted wound to export more and more to us-burning lots of coal and gas and marine diesel to get it here-and that we would deindustrialise too rapidly. Of course, that is exactly what is happening. My noble friend on these Benches has just asserted that we have not deindustrialised, but he needs to look at the facts. We are losing massive amounts of traditional industry in petrochemicals, ceramics, glass and glass fibre. Many companies have gone down, many plants are being closed, and we are losing our traditional steel industry. It is true that we have had great success in industries such as pharmaceuticals. That may have been what my noble friend had in mind with the figures he was quoting, but he cannot get away from the fact that this is now doing huge damage: closing factories, closing plants, and causing a loss of jobs. My first objection to the Government’s proposal tonight is that we should not adopt a very tough national carbon budget without knowing what the impact is going to be on carbon dioxide produced elsewhere in the world. You need to look...
My Lords, this has been a very interesting debate so far. I thank my noble friend for his very detailed explanation of the order before us. I am not sure that we are spending much time on the detail of the order, as he requested, and we are clearly turning this into a debate about net zero and climate change. Although the noble Lord, Lord Moynihan, acknowledged climate change, I must say that, as the noble Lord, Lord Deben, said, it is very difficult to square what is being said tonight by Members of the party opposite-and, I suspect, by rather a few more of them as the debate ensues-with what the Conservative Government did. After all, it was the Conservative Government who legislated for net zero. I know that the noble Lord, Lord Redwood, did not vote for it, but it was their responsibility. They signed the Paris Agreement. The Sunak Government made a bold statement that “energy transition and net zero are among the greatest opportunities facing this country”, as indeed they are. We may hear a little bit about North Sea oil and gas, as the party opposite now seems obsessed with that. It is worth pointing out that, between 2010 and 2024, production in the North Sea halved under the Conservative Government’s stewardship. I come back to the pertinent point made by the noble Lord, Lord Deben. Both the noble Lord, Lord Moynihan, and the noble Lord, Lord Redwood, have criticised carbon budgets and the whole net-zero approach by the Government, but what is the alternative? It is...
My Lords, I will address carbon pricing in the UK, its unfortunate consequences for policy-making, and its devastating results for the public purse and the future of our economy. This confusion is embedded in these instruments, so I speak in support of my noble friend’s amendment. I refer the House to my registered interests as an owner and developer of wind and solar energy generation projects, and as an owner and developer of forests that target carbon sequestration under the Woodland Carbon Code, as well as growing timber that addresses the UK’s structural deficit in construction-grade timber. I am also a partially regenerative dairy and beef farmer. Our carbon pricing in the UK is muddled. UK Woodland Carbon Code units trade at around £30 per tonne; the UK Emissions Trading Scheme is trading at around £55 to £60 per tonne; the Government’s internal valuation for carbon emissions, used in calculating the relative merits of policy and projects, ranges from a low case of £130 to a high of £390 for this year, and that rises to £568 in 2050. The average carbon emissions per head in the UK are nine tonnes per annum, and that includes scope 2 and scope 3-so offshore emissions. That can be offset for a total cost of £270 through woodland carbon units or £510 through the emissions trading scheme, yet the Government’s cost, used for policy, implies up to £3,510 per head. The first two figures sound reasonably affordable to me, the third does not sound at all affordable. I believe...
My Lords, it is a pleasure to follow my noble friend. I declare my interest as the owner of a Welsh upland portfolio with agricultural tenancies, livestock, woodland and heritage assets serviced by renewables. I am therefore someone who lives with both the duty of stewardship and the economics of the transition we are debating. Let me say at the outset that I am not going to deny the science nor unpick the architecture of the Climate Change Act: climate change is a real and present threat to our food, our water, our coasts and our security, and the Conservative tradition of conservation demands that we take it seriously. My concern today is not with the direction of travel, it is with the means. The means before us are too reliant on central direction, too costly and too inattentive to the people and the industries asked to carry them. Let us consider the foundation of this budget. The Climate Change Committee tells us that electrification must deliver around 60% of the savings through heat pumps in our homes and electric vehicles on our roads. Yet we ask families and businesses to electrify while our electricity remains among the most expensive in the developed world. The ratio of electricity to gas prices in this country is roughly 4:1, against the European average of 3:1. If we want people to make the switch, the most effective step this Government could take is to make clean electricity cheaper, through levy reform, market reform and competitive auctions, rather than...
My Lords, I declare an interest as an unpaid director of the company Net Zero Watch. It was 10 years ago today that we had the referendum that decided whether we would be governed from Britain or the EU: “Who Governs Britain?”. However, when I look at the carbon budget and the piece of legislation before us today, I wonder whether the actual Government of Britain is the Climate Change Committee. I do not make that point rhetorically; I make it seriously. Once the carbon budget is in place, it affects every aspect of what the Government and much of the private sector do. It constrains activity and shapes what can and cannot be done. It is an essential feature of the way this country is governed, and we are just waving it through tonight on the basis of a piece of secondary legislation. The noble Lord, Lord Hunt, said that we were not paying enough attention to the detail. Well, perhaps the Government would like to provide some time to debate the detail. The carbon budget is 400 pages long and there is a supplement of 60 pages. We are spending an hour and a half discussing something that will affect the entire UK economy, if we are to believe it, for a period of five years-so let us get serious about this. There are a number of problems with the carbon budget and this legislation which have been mentioned to some extent by others. First, even on their own terms, the Government are not choosing the cheapest path. Probably all the figures before us are completely worthless, but...
My Lords, I declare my farming and forestry interests as set out in the register and will speak in support of the amendment from my noble friend Lord Moynihan. I also associate myself with the comments made by my noble friends Lord Harlech and Lord Roborough. There are a few challenges with the proposed Carbon Budget Order 2026. The issues I have are not so much ideological and technical as more practical. In the wider context, if passed, the Carbon Budget Order will increase the UK’s reliance on intermittent renewables, causing higher energy prices, further accelerating deindustrialisation and driving lower economic growth, as we have heard many times this evening. Even the Climate Change Committee has estimated that British industry would face net costs of up to £3 billion per year every year between 2025 and 2050. Clearly, this will make UK businesses uncompetitive and add to the general cost of living for the British public. The area I would like to focus on is the impact it will have on British farming, particularly livestock farming, and the UK’s future food security. Two weeks ago in this Chamber, we debated the impact of Labour Party policy on the rural economy, and it was widely agreed that a number of policies that have been introduced-such as the family farm tax, national insurance increases and the hike in the minimum wage-have had a strong negative impact on sustainable farming and food production across the UK. With this in mind, further negative impacts should...
My Lords, I will focus on the unintended consequences that flow from the 16 words in the order that place an arbitrary cap on our nation’s economic potential. There are hard truths that need to be told about the practical effects, which include incentivising the importation of the most polluting products while jobs are lost at home. I do not deny the importance of decarbonisation-the oil is going to run out eventually-but setting a cap of 535 million tonnes of carbon dioxide equivalent from 2038, more than a whole decade away, in a world of uncertainty is to take a path that makes our people poorer and, counter- intuitively, makes global emissions worse in the rest of the world. I declare my interest as someone involved in the fertiliser trade. While I do not produce it, I am involved in the trade that brings it to our shores. It is always useful to follow the money. From 2013 to the end of last year, EU ETS auctions have raised over €258 billion in revenue for the EU. In 2025 alone, EU ETS revenues totalled more than €43 billion. This is a tax gusher dressed up as environmental virtue signalling. On that basis, it is hardly surprising that the EU has introduced trade barriers to keep everyone else out, and now the UK wants to follow suit. Let us deep dive into the industry I know best, which will be subject to insane fertiliser taxes from next January. I know about carbon budgets and the paraphernalia that flow from them: the emission trading schemes, the carbon border...
My Lords, I wish to express my regret at these statutory instruments. Let me begin by recognising that carbon budgets are a vital part of the UK’s approach to tackling climate change. They provide long-term clarity on the pathway to net zero at some future date, set a direction of travel for policy and investment, and signal the seriousness of our ambition. My concern lies not only in the pace, the manner and the potential consequences of the course now proposed but on the realism of the pathway itself and the practical deliverability of the measures that underpin it. The Carbon Budget Order sets an exceedingly ambitious and legally binding cap to reduce emissions to little more than a quarter of their current level for the period 2038 to 2042-a period still far removed from present realities. In doing so, it risks committing the United Kingdom to a trajectory of decarbonisation so steep as to be impracticable. It is one thing to aspire, quite another to legislate, for a future shaped by uncertainties in technology, economics and geopolitics. Today in this country, oil and gas account for roughly three-quarters of our own energy demand, and they will remain a significant part of our energy mix for decades to come. This very evening, about 50% of our power is generated from gas. We already use roughly 10% fewer hydrocarbons than the global average consumption by country, and make no use of coal, which remains a substantial contributor to energy consumption worldwide....
My Lords, we debate the seventh carbon budget on a day when our warming climate is making itself known. The Conservative Party may feel that fighting climate change is no longer urgent or possible, but the extreme heat begs to differ. We support the carbon budget and credit limit orders. We express our disappointment at the regret amendments. CB7 is not a discretionary gesture. It is a statutory requirement, setting the path to an 87% emissions reduction by 2040. To waver now, as these amendments invite us to do, is to ignore both scientific certainty and economic opportunity. Our ever-warming climate is an existential threat. Until recent times, we have all benefited from a cross-party consensus on climate change. It is regrettable to see the Conservative Party’s continued retreat from reality. The Conservative Party introduced the Climate Change Act and implemented half of our carbon reductions to date. In 2013, it introduced the carbon price support, and in 2019 the carbon emissions tax, which, in this very amendment, the noble Lord, Lord Moynihan, now seems to regret. There are real issues to debate, but the need to fight climate change is not one of them. To describe this transition as a threat to “industrial sovereignty,” or a cause of “impoverishment” is a serious mischaracterisation of the risks. It is the abandonment of the Climate Change Act, and its implementation, that would put our energy security at risk and strip away the legal certainty that investors in...
My Lords, first, let me thank noble Lords for their valuable-that is what it says here in my brief-contributions to this debate. I cannot say that I endorse that entirely. I also cannot quite get my mind around the parallel universe that some noble Lords seem to have been inhabiting while making their points this evening. On that parallel universe, I draw noble Lords’ attention to a very significant speech that was made today just a few hundred yards from this building. It was given by the Secretary-General of the United Nations, who, as part of London Climate Action Week, made an impassioned speech on climate change, including what we need to do about it, how quickly we need to do something about it, and what we need to do on electrification and low-carbon economies in particular. I hope that noble Lords will go away and look up that speech, because among other things it completely gives the lie to the idea that no one else in the world is terribly interested in this climate change business, that no one else is doing anything about it, that the activities we are undertaking on climate change are just blowing in the wind, and that we are giving away our industries to other people who will take advantage of them. A number of the industries that they are talking about are sunset industries that are being replaced by low-carbon industries which, if we are not careful, the rest of the world will run away with. They would then overtake the advantages that we have at the moment in...
Me.
Indeed, the noble Lord, Lord Lilley, is with us this evening. At least I can say that the noble Lord is consistent. He did not sign it in the first place and I do not think he would sign it now if he had the opportunity. That Climate Change Act, which requires us legally to carry out these carbon budget examinations, set up the Climate Change Committee to advise us on the science behind the proceedings and tell us what we need to be doing, not just now but in the future, so that we have time to make policy for what we will be doing to match what is required in those carbon budgets. We have that legal obligation, because we passed the Climate Change Act together in that year. It has stood us in very good stead. It has directed what this country tries to do, without telling us what we do in detailed policy. Some of the discussions this evening have set up what the Government are apparently going to do and then said, “We don’t like it very much”. No, the Government are not going to go around shooting cows and rounding up livestock for slaughter. The Government will be doing what it is doing now and investing £5 billion over two years in farming. This is perhaps the largest investment in sustainable food production and nature recovery in this country’s history. Alongside that, the Government are actively exploring ways to reduce livestock-related greenhouse gas emissions, including through scientific research on mitigation strategies and management, feed, such as the increasing...
I asked two specific questions relating to these orders. One was about the timing of the update and the valuations for carbon, and the second was whether the Minister would reconsider the faulty basis on which I think they are calculated. If he does not have answers today, would he commit to write?
Yes, indeed. The noble Lord makes those points, which I have taken well on board. The question of carbon pricing, of course, is a long-standing issue as far as carbon valuation is concerned, but I certainly will write to him about the particular points he raises as soon as possible.
My Lords, I disagree with the Minister on one thing: I think this was a valuable debate. I thought that contributions from every Member of your Lordships’ House have been helpful and constructive. I do not think it has been, to quote him, “a waste of time”. I do not think anybody who spoke this evening wasted anybody’s time. There is cross-party recognition of the importance of addressing these issues, addressing the carbon order and addressing climate change. The question before us this evening is about the Carbon Budget Order 2026. The Minister is completely right to say that we should address this in the context of the impact assessment, which he considers to show us the truth. He is completely right to have identified that importance. Everything in my speech related to that-everything. I say to my noble friend Lord Deben that the public and our grandchildren will never forgive us if we destroy our economy with high energy prices. That is a real concern across this Chamber. We currently have electricity prices that are four times higher than the United States. That is the issue that we need to address. The impact assessment shows us that prices will go even higher if we follow these measures. I say to the noble Lord, Lord Hunt, that we share this factor: neither of us is obsessed with anything. There is no obsession on this side of the House, but there is real concern. There is cross-party concern with what is being proposed. Tony Blair has said that the net-zero policies...
Motion, as amended, agreed.