From carbon tax to nuclear power - the battle to reach net zero

Grant Shapps has insisted the ban on petrol and diesel cars will still come in from 2030 - despite calls from Tory MPs to delay it.

The Energy Secretary said the Government had no plans to follow the European Union and exempt synthetic fuels, known as e-fuels, from the ban.

At the weekend the European Union announced, under pressure from Germany, that it will introduce a carve-out to a planned ban on new combustion engine vehicles from 2035, meaning that such cars can still be sold provided they rely on e-fuels.

E-fuels are made from CO2 captured from the atmosphere and hydrogen, so are claimed to be carbon-neutral by their backers.

It prompted calls from Sir Iain Duncan Smith, the former Tory leader, to delay the planned UK ban from 2030.

But, speaking as he unveiled new details of the Government’s plan to meet its emissions goals, Mr Shapps said the UK had always been more “forward-leaning” on net zero than on the continent - adding: “We are not in Europe, we don’t have to do what Europe does on this stuff.”

Asked whether the UK would bring in a German-style carve out for e-fuels, Mr Shapps said: “I appreciate the German car industry has its own particular take on this.

“We have set out our path, which is by 2030, the end of the sale of pure petrol and diesel, there’s a five-year transition period.

“We’ve yet to describe the details and actually the policy is held by the Department for Transport. They’re working through the detail of that.

“They’ll also wrap up what’s called the ZEV [zero emission vehicle] mandate, which is the number of zero cars you can sell before you can sell regular cars. All of that position remains the same.”

Under the ZEV mandate, it is a requirement for manufacturers to ensure that an increasing proportion of the vehicles that they sell in the UK are electric.

Mr Shapps added: “We’ll always have a look at what’s developing elsewhere. But our policy doesn’t change as a result.

“This is not a change of policy. We’re sticking with our plans. We are not in Europe, we don’t have to do what Europe does on this stuff. We’ve always been more forward-leaning on this than the EU.

“We believe that the future is by and large the EV or at least zero carbon - it could be a hydrogen vehicle out the other end.”

Polluting imports face taxes

Imports of products from polluting industries could face taxes at the border to help protect British industries.

A border tax could apply to imports from heavy industry such as iron, steel, cement and aluminium, which are subject to a carbon tax in the UK.

Carbon taxes are intended to help protect greener British industries from being undermined by imports from countries without carbon taxes.

They are also intended to encourage other countries to move faster to decarbonise.

The Government has said it wants to move in tandem with other countries and may align the UK with the EU, which has said it will introduce border taxes from 2026.

A carbon border tax is likely to cause friction with the US, which has not introduced its own carbon taxes.

The Government has also committed to consulting on expanding its existing domestic carbon tax system to cover other sectors, which could include meat and dairy.

Hydrogen plants to get funding boost

Efforts to produce more clean hydrogen are getting a push, with £240 million of funding.

Projects that have secured money under the Net Zero Hydrogen Fund are to be announced on Thursday.

Hydrogen does not produce carbon emissions when burned, and so is seen as a potential replacement for natural gas in areas such as heavy industry.

The Government wants about 10GW of low carbon hydrogen production capacity to be installed in the UK by 2030.

However, it is currently a niche product that is expensive and difficult to produce.

Hydrogen needs to be extracted, either from water using electrolysis, or from natural gas.

Extracting it from natural gas leaves behind carbon dioxide emissions, which will need to be captured and stored.

Producing it through electrolysis will require vast quantities of clean electricity.

Alongside support for hydrogen, the Government is also announcing support for carbon capture technology.

It is expected to approve a new gas-fired power plant with carbon capture equipment attached.

Carbon dioxide emissions from the planned Net Zero Teesside plant will be stripped and stashed under the North Sea.

The plans, led by the oil and gas behemoth BP, are a boost for Teesside, with up to 5,500 jobs expected to be created during construction.

Details are also expected on which other projects are in line for government support.

Carbon capture and storage is at a relatively early stage, but is being relied on by the UK and governments around to meet net zero targets.

Rishi Sunak, the Prime Minister, said “new thriving industries like carbon capture” would create jobs and opportunities.

However, Ruth Herbert, chief executive at the Carbon Capture and Storage Association, the trade group, said the Government needed to “move forward boldly” on the technology or risk investment going elsewhere.

“If the project list published today is too timid, we may well see investment in the wider project pipeline fall away,” she said.

Nuclear power will make up 25 per cent of electricity by 2050

Ministers want nuclear power to account for a quarter of Britain’s electricity supplies by 2050 as part of the net zero push.

Mr Shapps said the Government was enthusiastic about traditional large plants, as well as the smaller reactors being developed by companies including Rolls-Royce.

He said: “We have a big advantage in that we are one of the very few countries in the entire world who've been running small modular reactors for decades, actually under the sea in our nuclear submarine fleet. So we have expertise in this area.”

Nuclear power currently supplies about 15 per cent of Britain’s electricity, with several ageing plants closing in recent years.

Supplying 25 per cent by 2050 will require a significant increase in capacity, with demand for electricity expected to have leapt by then due to the rise of electric cars and heat pumps.

However, securing investment for new plants has proven difficult. Only one new nuclear power plant is currently being built, Hinkley Point C in Somerset, which is delayed and over budget - with current estimates of up to £32.7 billion to finish the plant by mid-2027.

Developer EDF is planning to build a second, Sizewell C in Suffolk, but still needs to raise the funds to do so.

Mr Shapps said the Government would run a “pretty quick” competition in the autumn to allocate some government support for small modular reactors.

He will visit nuclear fusion developers in Oxford on Thursday to announce a new government body, Great British Nuclear, to help push nuclear projects forward.

Port infrastructure

A new promise of £160 million investment in port infrastructure is expected to help support the growing floating offshore wind industry.

The renewables industry has said the UK’s ports need to be expanded to be able to handle giant wind turbines that are now being installed offshore.

Without upgrades, the UK’s ports will struggle to handle the giant floating bases and 150m hubs needed for floating offshore wind turbines, which can be installed in deeper waters where wind speeds are higher.

A report this month said £4 billion would be needed to transform 11 of the UK’s ports into new industrial hubs.

The pledge comes two days after Labour called for more port investment and said it would ring-fence £1.8 billion for the project.