Does Rishi Sunak care about net zero?

— Following a week in which his strategy came under attack from all sides, Rishi Sunak faces senior MPs’ questions on net zero.

— The ‘lethargic’ rollout of smart meters is bad for emissions — and bad for people’s pockets.

— The U.K.’s emissions trading scheme is changing. We have the rundown on this week’s announcements.

Good Tuesday morning and welcome to POLITICO Pro Morning Energy and Climate UK. Abby’s off for the rest of the week, enjoying a break in Amsterdam — a city confronting an uncertain climate future which is also a pioneer of circular economy practices. We’ve heard it’s got a few good bars, too, but Abby says she is going for the energy geekery.

RISHI’S NET ZERO GRILLING: So, is Rishi Sunak — in the words of ex-minister Zac Goldsmith— “simply uninterested” in environmental politics? Today he gets a chance to prove otherwise. The prime minister is up in front of MP supergroup the Liaison Committee at 2 p.m. today — where net zero is on the agenda.

That was the week that was: The hearing comes after a week in which the government’s official climate advisers lambasted ministers over unsatisfactory progress toward the U.K.’s net zero goal … a former prime minister said the U.K. was “falling behind” in the global green economic race … and one of the Conservative’s leading pro-green voices quit the government accusing the PM of, basically, not caring. There is plenty to discuss.

Get it Dunne: Net zero questions will be led by Environmental Audit Committee Chair Philip Dunne, plus the PM will be asked about preparations for the COP28 UN climate summit. After last year’s prevarications, perhaps the first question might be: do you even plan to go? Follow the hearing live here.

ENERGY IN THE COMMONS: As if that wasn’t enough net zero parliamentary action, Energy Secretary Grant Shapps and his ministers will be taking questions in the House of Commons from 11.30 a.m. Here’s a preview of some of the topics coming up …

Onshore wind: Alexander Stafford, Conservative MP for Rother Valley, is asking how the government will ensure local communities are engaged in onshore wind proposals, telling MECUK that these farms “have the potential to massively reduce our carbon emissions in the long term and our electricity bills in the short term.”

Battery storage: Another Tory MP, Maria Miller, has a question on storage facilities for industrial lithium-ion batteries. “Although we only have a handful of operational sites in the U.K., we have already seen one major battery fire. With hundreds of proposed sites already in the planning system, we must act now to ensure that they are safe and appropriately located,” she said. 

Amendments ahead: Miller also told MECUK that she plans to table an amendment to the upcoming Energy Bill requiring all industrial lithium-ion battery storage systems to have an environment permit.

Nuclear: John Spellar, the Labour MP for Warley, is asking when the department plans to complete its competition for small modular reactor technologies. 

Spellar speaks: “Just to replace existing reactors they need a very intense program, but there seems to be no urgency in the government and no understanding firstly of the need for modular nuclear in order to meet their targets, but also its potential for [the] British engineering industry,” he said. 

STEEL SCHEDULE: And Labour MP Bill Esterson wants to know what DESNZ is doing to stump up aid for energy intensive industries. “The U.K. is the only country in the G20 where steel production is declining. We are the only country in the G7 where the government doesn’t insist on using domestically produced steel in defense contracts,” he told MECUK, adding: “UK steel producers pay 62 percent more for their energy than their German counterparts.”

FLAMING JUNE: The Met Office confirmed on Monday that 2023 saw the hottest June on record in the U.K. The average mean temperature was 15.8C — the highest since records began in 1884, and 0.9C higher than the previous record.

No, it’s not just normal weather: “Alongside natural variability, the background warming of the Earth’s atmosphere due to human induced climate change has driven up the possibility of reaching record high temperatures,” said Chief Meteorologist Paul Davies.

SMART METERS SAVINGS LOST: The slow roll-out of smart meters isn’t just bad for the net zero push — it’s bad for household budgets. Analysis by the House of Commons Library, commissioned by the Liberal Democrats and shared with MECUK, suggests that failure to hit last year’s installation target cost billpayers millions.

Recap: The National Audit Office said last month that suppliers installed 3.7 million smart meters in 2022 but missed their target of nearly 5 million. Billpayers would have saved a total of £41 million if the goal had been reached, the research suggests, with the missed target equating to an extra 49,000 to 53,000 tonnes of CO2 over the year.

Step it up: Lib Dem Climate and Energy Spokesperson Wera Hobhouse said the “lethargic rollout” was costing people money during a cost-of-living crisis: “Ministers must focus their efforts on accelerating the smart meter rollout, starting with the most vulnerable, driving down their bills, hitting our vital net-zero goals and modernising our energy system.”

ELECTRIC CAR ROW: Electric vehicles featured in the daily Westminster lobby press briefing Monday, after the Daily Mail splashed on polling which found just one in four people back the planned 2030 date for banning new petrol and diesel car sales.

Charging on: The paper’s headline urged the government to “put the brakes on” the ban. But the PM’s spokesperson said yesterday there were “no plans” to change course. “We think the commitment … will provide certainty to industry and it puts us ahead of European competitors,” he added.

Infrastructure worries: Drilling down into the polling, it’s clear that doubts about vehicle charging is one of the biggest factors putting people off. Fifty percent of respondents said they weren’t confident that Britain will have “the necessary electric vehicle infrastructure” by 2030. Twenty-one percent said they were confident it will, and 23 percent were neither here nor there (always a fan of those people in poll data).

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PARLIAMENT: Energy questions in the Commons kick off at 11.30 a.m. Then Rishi Sunak is at the Liaison Committee at 2 p.m.

SKIDMORE’S SPEECH: Former government net zero czar Chris Skidmore is speaking in Brussels today, where he will be discussing areas for future cooperation between the U.K. and EU on energy and climate. These include a Carbon Border Adjustment Mechanism (CBAM), support for new industries such as hydrogen and carbon capture, and the future of renewables in the North Sea.

Net zero, not not zero: “There is a net zero path, with a prize of up to £1 trillion in inward international investment, and up to 480,000 new additional jobs at stake, or there is the not zero path, where not to set off, to delay and dither, is as consequential as a wrong turning, deciding to shun this investment and growth,” he will say.

Context: Skidmore will warn that governments must show themselves “willing to back the renewable and clean energy industries required for our future energy mix,” or face losing investment. He told MECUK that he hopes to encourage energy and climate dialogue between European policymakers and U.K. parliamentarians, and aims to organize an initial meeting in London later this year.

EXTENDING THE ETS: The U.K.’s emissions trading scheme (ETS) will be extended to domestic shipping from 2026 and to waste management from 2028, the U.K. and devolved governments confirmed in an early morning, market-sensitive announcement on Monday. Both new sectors gave the news a cautious welcome.

Billions: A spokesperson for the U.K. Chamber of Shipping said it was a “significant step forward in the journey to reach net zero emissions from domestic shipping.” But they added that ETS payments — which raise billions for the Treasury every year — should be used by the government to fund “the development of zero emission vehicles, fuels and technology.” Extending the scheme to the waste sector, meanwhile, represents “the most significant regulatory intervention” in the industry “for a generation,” said Charlotte Rule, climate and energy advisor at the Environmental Services Association.

Net zero “consistent”: The governments also laid out details of how the overall cap on emissions under the scheme will remain “consistent” with net zero goals.

The complicated bit: ETS is notoriously complex, but the changes basically mean there will be greater demand for a smaller number of allowances and therefore the carbon price should rise — increasing the cost of polluting and incentivizing firms to cut emissions.

Cutting your allowance: The overall number of “allowances” — the permits for emissions up to the cap level, which can be traded under the scheme — will be at “the top of the net zero consistent range” at 936 million for the period 2021 to 2030, the consultation response says, 30 percent down on the existing number of allowances. 

Analysis: Josh Buckland, a former U.K. government energy adviser and now a partner at Flint Global, described confirmation of a net zero-consistent cap as a “welcome development.” He said: “Ultimately, carbon pricing is one of the ways you reduce the public subsidy cost of reaching net zero and also ensure that an incentive is placed on the private sector and industry to act.”

Wings clipped: Another big change will see the “free allocations” given to the aviation sector — basically emissions permits they don’t have to pay for — phased out in 2026.

Leak-free: This is to ensure they’re not at a competitive disadvantage to overseas rivals, which would lead to economic activity moving abroad where emissions might be even higher (known as carbon leakage). The governments said there was “minimal risking of carbon leakage” in the aviation sector. 

Err, CBAM? Speaking of carbon leakage, there was little on proposals for a U.K. carbon border adjustment mechanism (CBAM) — essentially a carbon tax on imports — in the response. This matters for the ETS because many experts think that an effective CBAM would remove the need for free allocations. (I did say it was complex).

Steely response: The steel sector has warned of the dangers of the U.K. not having its own CBAM in place alongside the EU’s. Gareth Stace, director general of U.K. Steel, blasted the government for issuing “one-off policies without a strategic plan for capital expenditure and aligning ETS regulations with CBAM implementation.”

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