Lord Callanan interview: the business of reaching net-zero
As BEIS minister, Lord Callanan is juggling climate change and corporate social responsibility. But amid rumblings the government is dragging its heels on the journey to net zero, he insists criticism is unfair and the department has bold plans for Britain’s greener future
“The thing about the Lords is that it contains lots of experts in every subject. You’ve got to make sure that you know your subjects, otherwise they’ll have you out on the policy detail.”
Such is the challenge for peers serving as government ministers, according to Lord (Martin) Callanan. He is one of seven ministers in the Department for Business, Energy and Industrial Strategy (BEIS), but covers the parliamentary work of his five Commons colleagues when it comes to the upper House. “Unfortunately, you have to make yourself expert in it,” he explains with a smile.
He says he is not intimidated by the multitude of climate change experts on the red benches he has to face. “They know what they’re talking about, you just have to convey to them that you have an understanding of the issue and understanding of the subject.
“The Lords is less party political, more issue-focused than the Commons. In the Commons you’ll see trading of political slogans across the dispatch box. It doesn’t really work in the Lords, you’ve got to go into the detail of issues.”
After unsuccessfully standing for election as an MP three times in his native north-east, Callanan ended up in Brussels for 15 years as the MEP for the region, including two and a half as leader of the European Conservatives and Reformists group.
Within four months of losing his seat to the UK Independence Party’s Jonathan Arnott in 2014, Callanan was elevated to the House of Lords, joining the government in 2017. His current role as parliamentary under secretary of state for climate change and corporate social responsibility – which he has held for just over a year – is his third ministerial role.
“We’re about to become one of the first major economies to mandate climate financial disclosure”
This year is undeniably huge for the government on the climate and ecological emergency – from fleshing out the Prime Minister’s Ten Point Plan for a Green Industrial Revolution, to delivering COP26 in November. The Climate Change Committee has called for a “decade of action”, but as it stands, BEIS’s own projections show the government missing its earlier emissions reduction targets, let alone the new target of a 68 per cent reduction from 1990 levels by 2030.
Despite the ambition, it is the questions of detail and the scale of investment which is leading some to query the government’s approach.
I put that criticism of the government’s performance to him. “I’d certainly agree that it needs to be the decade of action, and I think you’re being slightly unfair,” Callanan tells me. “We are doing an awful lot. We’re publishing a lot of different strategies at the moment.”
He points to the challenges Covid is putting on the work. “We as a department have to compete with all the other departments for precious resources, and we have to demonstrate to the Treasury that we have ambitious plans and good projects they can spend on. It’s not my job to look after the nation’s finances, that’s for the Chancellor. But I don’t think it’s any secret that money is tight at the moment, clearly.”
BEIS has made a number of announcements recently, including the recent North Sea Transition deal, published at the end of March. “We’ve become the first G7 country to set out an ambitious partnership that will help the oil and gas industries transition to green energy and to continue to support the tens of thousands of good quality jobs that already exist offshore.”
Other recent policies include the Industrial Decarbonisation Strategy (“a very bold new vision for the competitive, greener future”); the £12bn of government funding committed in the Ten Point Plan for low-carbon technology infrastructure, such as carbon capture usage and storage, and offshore wind; and March’s energy white paper (“if you’ve seen how big the energy white paper is, 120 pages of it, there’s lots of detail”, Callanan says).
Before the end of the year, another seven strategies and plans are expected across the government in the quest to reach net zero. Of those, Callanan is responsible for the Heat and Buildings Strategy, which he tells me is in its final draft – currently, buildings account for 16 per cent of the UK’s emissions.
What lessons, then, have been learnt from the failures of the £1.5bn Green Homes Grant – the government’s flagship home and heating upgrade scheme, which was scrapped in March after only six months, plagued by administrative errors, red tape and low take-up?
I don’t think it’s any secret that money is tight at the moment
Callanan admits the scheme “faced a number of challenges”, but points to other parts of the stimulus package that worked “very, very well”, including an £800m investment in delivery via local authorities for low-income households, and the £1bn public sector building decarbonisation scheme.
“The Heat and Buildings Strategy will set the framework on how we get to the targets to decarbonise heating in buildings. This will be the private rented sector, it will be owner-occupiers and commercial buildings as well. But for the details, I’m afraid you’ll have to wait for the white paper itself.”
One element will be the installation of 600,000 heat pumps per year in homes by 2028. The CCC has advised that, by then, there should be 600,000 being installed in existing homes and 300,000 in new homes, however Callanan is firm that the government’s 600,000 per year target is all-encompassing.
“At the moment, even that’s going to be a stretch. We are currently installing about 30,000 a year. So we have to massively build the supply chain, get more installers into the market, try to build consumer acceptance.”
Callanan’s climate innovation brief also means he is heavily involved in another hot topic: the role of hydrogen. “Our strategy is pretty much that we continue to develop and support electrification of heat through things like heat pumps, but also continue to keep hydrogen as an option to support a number of innovative schemes. [Then we will] take a view, probably in the middle part of this decade, about the long-term future of hydrogen and the exact role it will play.”
As well as challenges in producing hydrogen, and the related development of carbon capture technology, there are also obstacles in terms of the UK’s current heating systems.
“You can do a small proportion of hydrogen in the gas ring main, which we are doing, but in order to completely replace [natural gas with hydrogen] you need to upgrade. You need to change every appliance in the country because virtually no appliances at the moment – gas boilers, cookers, heaters – will work on hydrogen, so they will all have to be modified.
“Which is why we’re working with the gas boiler manufacturers – we have a number of very innovative ones in the UK – in order to help them develop the products. They are doing that, and they are already becoming available,” Callanan says.
Given the government’s emphasis on the role of business in reaching net zero, Callanan says the two parts of his role – climate change and corporate social responsibility – mesh well. He is currently bringing through an audit reform package to expand the role of auditing from purely financial matters, to considering these environmental factors as well.
“We’re about to become one of the first major economies to mandate what’s called climate financial disclosure. So all major companies from 2025 will have to disclose in their annual reports in an audited fashion the impact of their operations on climate and on their CO2 emissions and what they’re doing to reduce them, so investors can take a view on how investable the company is and how resilient and future-proof they are.”
As the November COP deadline draws closer, it’s clear that Lord Callanan’s required areas of expertise won’t be shrinking any time soon.