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Lembit Öpik (Montgomeryshire) (LD): On economic cost, is my hon. Friend aware that a Friends of the Earth report in 1997 predicted that, by 2030, the period between storm surges of the magnitude previously expected once every 100 years will be reduced to 12 years in Holyhead, five years in Cardiff and three and a half years in Milford Haven? The resulting damage will give rise to untold economic costs, and investment now is likely to pay for itself many times over in preventing damage in the first world, let alone the third.

Norman Baker: That is right, and there are two equations. The first is the cost of doing nothing. Those who say, "Let's not take action because it would damage the economy," fail to cost in the effects of doing nothing, which are significant. Flood defence work is required in this country, but that is not the only example. Doing nothing will have huge economic costs. Parliamentary answers I have received have suggested that the total cost of damage to the environment in 2004 was £67 billion. Not all of that arose from climate change, but much of it did. That is the cost of doing nothing.

Mr. Gummer: Does the hon. Gentleman accept that another argument is that the United States Department of Energy showed that it could meet its Kyoto targets without harming its economy or changing the lifestyle of its people? The problem is that the targets are not high enough, but it is an absolute lie to suggest that they cannot be met other than by damaging the economy.

Norman Baker: The right hon. Gentleman is absolutely right. I note that Spencer Abraham has left the US Department of Energy since that report was issued, and those two facts may not be unconnected.

The right hon. Gentleman may want to refer to what Bill Clinton said in 1997 when he was President:

That is right and those who are concerned about the economic impact of tackling change should realise that it is not damaging, but an opportunity.

Mr. Peter Ainsworth: I agree with the hon. Gentleman. Has he seen, by any chance, the report sponsored by the World Wildlife Fund, "Cry Wolf", which charts the way in which industry has consistently exaggerated the costs of incoming environmental legislation? Is he aware that Digby Jones came before the Environmental Audit Committee recently and could not name a single British company that had left the United Kingdom because of environmental laws?

Norman Baker: The hon. Gentleman is right to draw attention to that report. I am glad that not all parts
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of industry are negative. Some are forward-thinking and the work of the Carbon Trust is useful in that connection. For example, BP spent $20 million to implement its energy reduction strategy between 1998 and 2001. It embarked on that for environmental reasons, but released almost $650 million in financial savings in just three years. There is no doubt that such action can be economically as well as environmentally beneficial.

Dr. Alan Whitehead (Southampton, Test) (Lab): Does the hon. Gentleman agree that one of the most important elements of ensuring that industry does not lose out economically from the business reaction to climate change is the security of forward signals for its future business? In that context, would he comment on the wisdom of abolishing some of those forward signals—for example, the climate change levy?

Norman Baker: It would be extremely detrimental if the climate change levy were abolished and not replaced with something as or more effective—we would argue for a carbon tax. Pressure is being applied gently and should be increased, and it would send entirely the wrong signals to industry if that pressure were removed. All political parties should think carefully about manifesto proposals that might send the wrong signals for tackling climate change.

I could give other examples, but will not do so for the good reason of lack of time. However, there is no shortage of businesses that have taken action on the environment, often because they believe that they should do so for reasons of conscience, and have seen large consequential increases in their productivity and profits.

Mr. Gummer: Does that not lead the hon. Gentleman to be displeased with the Government for going back to the European Union and reneging on their original proposal? They pretended that that had something to do with bureaucracy in the European Union, but the reason was that the CBI was leaning on the Prime Minister and the Prime Minister gave way, as he always does on this matter.

Norman Baker: One of the joys of making speeches on the environment in the presence of hon. Members who are well aware of the facts is that they anticipate my points, although that is sometimes unhelpful to the continuity of my speech.

I agree that the position on the national allocation plan is unfortunate. The Government have reneged on the original targets and pulled back from them. That sent exactly the wrong message to countries in the EU that have not yet signed up. It is unhelpful if we send out conflicting messages saying that it is a good scheme but that we shall partly renege on it. The Government say that they have more information, which caused them to change their view. How convenient. That might be true, but does not seem convincing on paper.

I understood that the outcome of the dispute between the European Union and the Government was going to be cleared up this week. However, The Daily Telegraph, which I always read because it is a most reliable newspaper—I am sure that hon. Members agree, tongue
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in cheek—said today that the European Commission has forced Ministers to delay an announcement yet again until the matter is sorted out. When the Secretary of State or the Minister replies, perhaps they will clarify where we are with a national allocation plan, whether agreement has been reached and, if so, on what basis. If we have reduced our target—the reason would probably be pressure from uneducated elements of business—it would be unfortunate and unhelpful to the international efforts of the Prime Minister to convince others to treat climate change seriously.

On the international situation, first, I welcome the fact that the Prime Minister and the Government have made climate change one of the two priorities for our EU and G8 presidencies. That is absolutely right and if we were in government, we would probably have picked the same two priorities. We are pleased that that is the Prime Minister's approach and it is clear that he is giving time to it and that a lot of work is going on behind the scenes with the Secretary of State for the Environment, Food and Rural Affairs and others in difficult negotiating territory. We support them in their negotiations and I hope that we can provide constructive support, as well as constructive criticism in an attempt to be helpful.

The United States Administration are the predominant problem, but we also need to accept the situation in developing countries, such as China, India and Brazil, whose economies are fast-growing. China has an immensely fast-running economy; it is almost unbelievable how fast it is growing. The result will be an increase in energy consumption, and we have a key role to play in such countries' choice of whether they will base their energy needs on renewable resources, fossil fuel, or nuclear options. If those developing countries ask why they should sort out the mess created by the western world and suffer the brunt of the problem, as they might, we must have a good answer. We must make it clear that we got it wrong in many ways, but that we now have collective responsibility throughout the world to try to sort it out. If we do not sort it out, they will suffer even more than we will.

Richard Ottaway (Croydon, South) (Con): The hon. Gentleman referred to developing countries, the central feature of which is population growth. The world's population is increasing by around 250,000 a day and the main growth is in India and China, but they are not using modern renewable technologies. Does he acknowledge that population growth is a key factor in climate change?

Norman Baker: All human activity is key in climate change, and population growth is one factor. It is important that as far as possible our international development and other policies encourage sustainable living. Population growth is best tackled by providing security and a decent standard of living in developing countries. That will take pressure off population growth, as we have seen in Europe, where it is much lower than in Africa. The way forward is to take an enlightened approach to those countries.

I want to touch briefly on the tactics adopted by the Government towards their partners in the EU and the G8. In December, my colleague the right hon. and
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learned Member for North-East Fife (Sir Menzies Campbell), the Lib Dem shadow Foreign Secretary, and I wrote to the Foreign Secretary about the tactics to be deployed in negotiations with the United States. I appreciate that the Secretary of State for Environment, Food and Rural Affairs will not want to lay bare those tactics before the House, but it is important to understand that there are two possible ways to proceed. The first is to assume that the United States genuinely does not believe the science, and to spend much time and effort to persuade the US that the science is there. The alternative is to assume that the US knows the science but pretends not to—which is where I think we are—and that it is stalling for time in an effort not to bring in measures that are inevitable. I am frightened that the British Government are spending too much time taking the American position at face value and thus neglecting the opportunity to make more progress. Kyoto will come in next week, in the teeth of US opposition, so it is important that those who have signed up to Kyoto take this opportunity to go forward together. If we go forward together strongly, the US will follow at some point. Furthermore, without causing diplomatic incidents, we should work with individual US states—in the north-east, California and elsewhere—which are actually doing good stuff.

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