Lord Hunt of Kings Heath (Lab)

My Lords, I am grateful to the noble Lords who spoke in this short debate. I will first respond to the noble Lord, Lord Teverson, on international co-operation on carbon pricing. I certainly accept that, as we transition to net zero, it is important that we work across international borders to drive climate ambition. Under the terms of the trade and co-operation agreement, the UK Government and the EU agreed to consider linking our respective carbon pricing schemes and to co-operate on carbon pricing. The noble Lord will know that we are working to reset our relationship with the EU and strengthen ties and improve trade and investment relationships with it, including promoting climate, energy and economic security, while recognising that there will be no return to the single market or customs union. The Prime Minister visited Brussels on 12 December 2024, and the joint statement with President von der Leyen illustrated that the UK and the EU would take forward this agenda of strengthening co-operation at pace over the coming months. As set out in the TCA, carbon pricing remains an area where we will continue to co-operate, and it is right that we will continue to develop the UK ETS to support our climate goals and support sectors in the transition to net zero. The carbon price within the EU emissions trading scheme is determined by the market, and it is designed this way because competitive markets are likely to deliver the most efficient transition to net zero across the economy. This will give emitters the flexibility as to how they abate their emissions, thereby allowing businesses to cut carbon where it is cheaper for them to do so. I assure the noble Lord, Lord Offord, that, as I said earlier, we are here simply building on the work of his Government in just making a sensible adjustment to make sure that there is no free ride in removing the excess allocation of free allocations, as the noble Lord, Lord Teverson, suggested. When the production has been ended as part of a decarbonisation programme, allowing them those free allocations recognises that. We do not think that these rules will lead to disproportionate regulation or that there will be potential manipulation of the market. On oil and gas, I will write to the noble Lord with further details on his specific question.