Examination of Witnesses (Questions 100
- 117)
TUESDAY 4 APRIL 2000
MR STEPHEN
TIMMS MP, MR
JOHN HALL
AND MS
HEATHER MASSIE
100. Thank you. If I could just raise a different
issue and that is the question of the emissions trading regime.
In the original report by Lord Marshall, as I recall, he did flag
up the difficulty of establishing an emissions trading system
quickly. My understanding is that we are looking to have such
a trading system in by 2001 and there is already a group of companies
who are working through the system in great detail. Are you confident
that the trading system will be in place for April 2001?
(Mr Timms) I think the position that Lord Marshall
took on this is that he saw the Climate Levy and emissions trading
as complementary and that is very much our view as well. We do
believe that emissions trading has a very important role to play
in the long-term reduction of greenhouse emissions. We have gone
further in the Budget of last month in that we have also said
we see merit in the case for some form of financial incentive
that would be offered in response to companies taking on binding
emissions targets that generate additional emissions savings.
There is, as you have said, a very active group led by the CBI,
chaired by Rodney Chase of BP/Amaco, working through all the details
of how an emissions trading scheme could work. I do not think
we are yet in a position to state definitively when the scheme
could be up and running by, but I think everybody involved thinks
that there is some urgency about this. That is certainly my view,
not least because if we are able to establish an early emissions
trading scheme in the United Kingdom, then we are likely to have
a very strong influence on what happens elsewhere in the EU and
there could well be some significant commercial advantages for
us as a result of that. So it is urgent but precisely what form
this financial incentive that I referred to might take, precisely
when a scheme could be in place by, those are details still to
be finally resolved.
101. Thank you. If I could just come back to
the question of rebates which we touched on earlier. My understanding
is that now 60 per cent of manufacturing industry is covered by
rebates on energy. How do you deal with the criticism that the
rebate system has been extended to such a point that it fundamentally
weakens the original purpose of the levy in generating significant
net reductions of carbon emissions?
(Mr Timms) I would not agree with that criticism.
Indeed, of course, the negotiated agreements that you have referred
to are on the basis of some quite demanding energy reductions
that have been signed up to by the industries involved and we
put in table 6.2 (which we were talking about earlier) the beneficial
impact of those negotiated agreements. We are now confident that
we are going to secure at least 2.5 million tonnes a year of reduced
carbon dioxide emissions as a direct result of the negotiated
agreements. So in terms of environmental effectiveness we are
able to go a good deal further now than we were when the levy
was first announced. I think the trick in this has been both to
maximise the environmental effectiveness of the levy and ensure
we are protecting competitiveness of UK firms, and I think we
are doing both.
102. There has been no reduction in the total
emissions target from the point at which the levy was first announced
to the point we have now reached?
(Mr Timms) Quite the reverse. We are able to be confident
about a significantly higher level, five million tonnes a year
in total, which is two and a half times what we started off with.
Chairman
103. That claim you are making now and the claim
you made earlier about the effect of the Climate Change Levy on
carbon dioxide emissions are rather contradicted by the table
on page 108 of the Budget Report, chart 6.2.
(Mr Timms) No, it is not contradicted by that.
104. Can I just explain my point. As you see
from that, it shows million tonnes of carbon coming down very
sharply between 1999 and 2000, very sharply indeed, and then flattening
off. Is not the reality here that what has been achieved has been
achieved by the dash for gas? That made a significant effect on
reducing carbon dioxide emissions. What you are now doing with
the Climate Change Levy is more or less preventing progress from
slipping back. As you see, the line is flat, it is not being reduced,
it is actually flat so the whole effect of this has been to prevent
a slipping back. Just to follow my point through, if you had carried
on with the dash for gas and never had the Climate Change Levy
you would have achieved even more progress. In fact, some experts
in this field would argue if you had carried on with the dash
for gas none of this would have been necessary.
(Mr Timms) I would like to respond to you with a number
of points. Certainly the change to gas has had a very marked effect
and I think that is largely what is reflected in the steep downward
part of that curve, but I do want to take issue with your point
about there being contradictions between table 6.2 and chart 6.2.
There are no such contradictions. The savings I have referred
to spelt out in table 6.2 will be achieved and they are reflected
in chart 6.2. What is happening in chart 6.2 is that there are
the projected significant additional emissions arising from transport
primarily and we therefore have needed to take action—
105. To offset those.
(Mr Timms) Yes, to ensure there are savings in other
areas. That is what we have done and that is the basis on which
we are now reasonably confident we are now going to hit the Kyoto
target and still be below the threshold set by the year 2010.
106. The overall effect of the Government's
measures, taking into the account the Climate Change Levy and
what is happening on the gas and coal front and transport, is
not to carry on with the progress that was being made in the 1990s.
(Mr Timms) I think there have been quite a number
of changes since then. Of course, the stricter consents policy
we have said will be re-examined when the new electricity trading
arrangements are in place. The point I would want to emphasis
is that the Climate Change Levy will make a very significant contribution
to achieving our Kyoto goals.
107. I accept that. What I am worried about
is the other aspect of government policy which because of your
change on the gas front actually meant you are relying on one
particular thing, the Climate Change Levy, doing most of the work
for you and the net result is that you are only just achieving
the Kyoto targets. What about the Government's own target of a
20 per cent reduction in carbon dioxide emissions, are you still
committed to that?
(Mr Timms) That remains our aim, but I think one of
the interesting features of chart 6.2 is that it indicates we
have been able to decouple economic growth from carbon emissions.
We are obviously expecting very significant growth in the period
referred to in that table.
108. Not decoupled as much as they were in the
1990s.
(Mr Timms) Indeed, there were certainly very substantial
and very welcome reductions in that period but what we have to
do is to make sure that we keep below the Kyoto threshold and
do not fall foul of our legally binding Kyoto goals.
109. You can do that and the chart shows you
are doing that but, nevertheless, you are not achieving your 20
per cent reduction on these figures.
(Mr Timms) The 20 per cent reduction remains our aim.
110. It is an aspiration, is it?
(Mr Timms) It is an aim or aspiration, indeed, and
there will no doubt be further measures needed towards achieving
it but the central concern that is set out in chart 6.2 is ensuring
we meet our Kyoto objectives and we are in good shape, I think,
for doing that.
111. Minister, we have had a very interesting
session. Can I just ask you one or two questions about your role
as the Green Minister. The Committee of Green Ministers does not
meet that often, I think three times a year. Have you been to
a meeting yet?
(Mr Timms) Indeed I have. Unfortunately, I missed
the first one I was invited to because it occurred on the same
morning as the Pre-Budget Report announcement.
112. Were you substituted by a civil servant
from the Treasury or nobody?
(Mr Timms) I am not sure but I was at the most recent
meeting, I am pleased to say, and it was a very useful meeting.
113. How do you regard your role as a Green
Minister in the Treasury?
(Mr Timms) I regard it as an important part of my
brief. We do have quite demanding targets for environmental performance
within the Treasury and that is a significant part of my role
as a Green Minister. Of course, at the meeting of the Green Ministers
I am there to talk about how wider, Treasury-led government policies
are being taken forward from a green perspective, so I see it
as both an internal role within the Treasury but also a wider
role with other colleagues on the Green Ministers Group.
114. Have you been set any targets by the Green
Ministers Committee or have they collectively agreed to set themselves
targets in terms of environmental improvements?
(Mr Timms) We have talked about the process that we
will be taking forward, for example in the spending review, in
the public service agreements, and of course there are lots of
targets being developed in the context of those discussions. I
cannot think of any targets that have been imposed by the Green
Ministers Group across government but I do not think that is how
that group is intended to work. It is much more a forum for Ministers
from individual departments to report on what has been happening
and to share best practice. We had a very useful presentation,
for example, by Mike O'Brien from the Home Office at the last
meeting setting out at a range of initiatives that are being taken
there and I think the intention is that we can learn from what
is happening in other departments and ensure that best practice
is shared as a result.
115. Are there any specific civil servants who
are remitted to have responsibilities as regards your Green Ministers
Committee?
(Mr Timms) Do you mean Treasury civil servants?
116. Yes.
(Mr Timms) Certainly there are Treasury civil servants.
I think there are a number of them whose responsibilities have
an impact on what happens. The Green Ministers Group has a very
wide agenda. For example, the 2000 Comprehensive Spending Review
is an important issue in Green Ministers' discussions and there
are on the one hand civil servants dealing with that—those
who have drawn up the guidance on that for example—which
would be a very different set of civil servants who are concerned
with energy efficiency within the Treasury.
117. Thank you very much indeed, Minister. We
have had a very useful session and it is a delight to see you
once again.
(Mr Timms) Thank you very much indeed.
| 
