Examination of Witnesses (Questions 40-61)
MR JOHN
LANCHBERY AND
DR PAUL
JEFFERISS
17 NOVEMBER 2004
Q40 Mr Chaytor: You argue that you are
achieving less in the European Union?
Mr Lanchbery: Yes. We argued as
the UK for a cap on the amount of about 1% or so.
Dr Jefferiss: We argued that the
CDM should be a mechanism within Kyoto trading and that it should
not be linked at all to the Emissions Trading System in Europe
or that if it was then the percentage that should be allowable
should be capped. In the event neither of our recommendations
was accepted.
Chairman: I fear that we need to break
again.
The Committee suspended from 4.02 pm to
4.09 pm for a division in the House.
Chairman: Colin Challen?
Q41 Mr Challen: I was just thinking of
Winston Churchill's comment that democracy is a bad way of organising
society but all the other alternatives are worse. Picking up from
your submission, is that your view about emissions trading systems?
Mr Lanchbery: Yes, it probably
is. A lot of claims are made for emissions trading, for example
that it provides certainty. No, it does not provide certainty
unless you have got an absolutely rock-crushing compliance regime,
and there are always bound to be a few things that do not work
very well depending on the players, so we have highlighted the
EU scheme deficiency which is setting the cap. That is also a
deficiency in the Kyoto Protocol one. I do not know of an example
of an ideal trading scheme and you can almost never have one.
I think the only one I can think of was the old BP one and that
was within the company and it had the God-like figure of the chief
executive in charge of it and he could say whatever he liked to
make it a perfect scheme, but apart from that I cannot think of
a "perfect" scheme. So I think we have to live with
imperfections. Assuming you have got penalties and stringent targets
it is more certain of delivering than a typical tax where there
is a considerable amount of uncertainty as to what it delivers.
I think you are right, it is the best thing we have got at the
moment.
Q42 Mr Challen: Your submission does
say that no pre-conditions regarding organising principles such
as contraction and convergence or delivery mechanisms such as
emissions trading should be at the start of these negotiations.
That does beg the question what should be at the start of negotiations
post-2012?
Dr Jefferiss: Agreement generally
on the way forward but, specifically, targets.
Mr Lanchbery: I think that remark
was made in the context of just getting the negotiations started.
One of the difficulties there is, quite apart from the United
States which we have talked about, is getting the developing countries
to commit to anything at all and getting them involved, so initially
the focus should really be on just getting the people around the
table which at the moment has not proved possible.
Q43 Mr Challen: You mean the key players
around the table, the absent friends?
Mr Lanchbery: Yes, like China.
They have not participated at all, they have refused to discuss
it.
Q44 Mr Challen: If we were to take that
tack would we not be back at square one? Why can we not build
on the albeit very modest success of Kyoto and say, look, we started
with 10% down the road or 2% down the road and there are more
and more people?
Mr Lanchbery: I think we can with
countries like India and China. They are already party to the
Kyoto Protocol so they do not fundamentally disagree with it;
they just do not want big commitments for them. They agree with
the principles in it. The point we were trying to make was the
first thing we want to do is get everybody around the table which
we have not got at the moment on discussions on what happens post-2012.
I suppose the second point is that it would better if the United
Kingdom or Germany or the EU as a whole or any developed country
did not come up with a solution. It would be better if one of
the big developing countries proposed a solution. If they come
up with contraction and convergence or whatever it is, then fine,
but it would be nice and much more diplomatic if the solution
came from them.
Q45 Mr Challen: I am taken by this notion
that Australia did very well at Kyoto and had permission to emit
more and yet they have not signed up to it. I guess you have got
Australia and the United States and one or two other countries
(no longer Russia) in a coalition of the unwilling and perhaps
if that coalition was reduced and especially with a major Western
economy saying, "We have seen how Kyoto is working. We have
not done badly by it," if they had been a fully participating
member then perhaps we can peel off and build on Kyoto in that
way and isolate the United States, and by their isolation perhaps
then seek to bring them in. It seems to me we are being driven
by the United States in so many ways. Going back to an almost
square one position is dangerous.
Mr Lanchbery: It was not meant
to imply a condemnation of Kyoto at all. I am sorry, if it was
read that way that was not what was intended. We are very pro-Kyoto.
We were just saying for the next round we should have no pre-conditions.
One of the pre-conditions is that you should use the Kyoto process.
Dr Jefferiss: I think we took
that as read and made that assumption. It is no criticism of Kyoto,
no criticism of trading, and no criticism of contraction and convergence.
It is just that given the extreme political sensitivities at both
ends of the spectrum, from the US on the one side and developing
countries on the other, negotiations with as few preconceptions
as possible seemed the most likely to happen to possibly make
some progress. Having said all that, we would hope that Kyoto
would form the basis of the way forward. It is likely that trading
would be the mechanism. Contraction and convergence is less clear
but I hope that clarifies what we were saying.
Q46 Mr Challen: I think it does to a
certain extent. Perhaps I will come back to contraction and convergence.
Just remaining on emissions trading per se, do you think it is
a possible strength of them that they could allow or even encourage
many different policy mechanisms to appear (a market-driven approach)
or is it a weakness that we are maybe putting too many eggs in
one basket and that is what is obscuring all the other possible
routes?
Mr Lanchbery: It is a possibility.
Before Kyoto the European Union as a whole were very keen on emissions
trading. It has caused problems in some countries, notably Germany,
where they have had very good deals with their business people
which they are reluctant to give up, hence the number of conditions
in the EU Emissions Trading Scheme so again that is another one
of the reasons for not having too many preconditions on it. China
and India really do not want it. India has some very basic problems
with trading because they consider it as issuing permits to pollute.
We would not think of it that way but that is the way their representatives
had thought of it. It may be a complete non-starter with India.
Again, we should not try to force it on people if that is not
what they want.
Dr Jefferiss: I think while you
may be right that it has the effect of marginalising other options
which may actually be more effective, our judgment would be that
experience suggests that for all its flaws it is the most politically
acceptable of the various options and that it is important particularly
to bring the US in because although the US is not essential in
a global context without the US, a trading scheme would be weaker,
and obviously our global efforts to reduce emissions would be
significantly impaired. I think it also seems to be the most politically
acceptable option to business and again that must be a material
consideration because even if there are technically better options
if they are anathema and unacceptable to US and to business, then
however good they are they are not going to yield results either.
Finally, emissions trading schemes have been shown to work. The
SO2 trading scheme in the United States has worked and it has
revealed all sorts of interesting bits of information such as
the fact that early projections of costs are likely to be gross
over-estimates. So I think there are various reasons why trading
is beneficial.
Q47 Mr Challen: Given what you have just
said, the Kyoto Protocol is largely about the national targets
and countries joining. How about large businesses, multi-nationals,
or whoever, becoming direct participants in their own right? Is
that an idea that you consider worthy?
Dr Jefferiss: As we indicated
earlier, while it might technically be possible we think politically
it would be unacceptable because it is unlikely, particularly
in the case of the United States, that they would accept a situation
in which some supra-national body, an international body, were
to regulate trading amongst companies that included US-based companies
whereas national allocations which they can control are obviously
more politically acceptable.
Mr Lanchbery: I think it would
probably go down badly with most countries but the Kyoto Protocol
and the Climate Change Convention are United Nations conventions
so they automatically run on participation only by governments,
so it would require quite a major revision to the way the UN operates
to allow companies in.
Q48 Mr Challen: As we know, climate change
is not a concept, it is a proven fact, but it is still very difficult
to communicate, and recent surveys have demonstrated that the
general public all think that perhaps it is important but in their
own lives it does not really have much impact and talking about
contraction and convergence is quite difficult. Other things like
carbon taxation are quite easy to communicate, although usually
without any positive advantage to elected politicians. Do you
see any sort of role for national systems that we could introduce
within the UK? I am thinking specifically of domestic tradeable
quotas, which I imagine you will be aware of. Do you think there
is a way there in which we could get the wider public on board
and actually address one of the objection or concerns we have
in the submissions that you cannot apply Kyoto to motor vehicles,
for example? Each government, would you agree, should look at
how they can get their public on board directly rather than simply
saying this is an objective for our policy makers in Whitehall?
Mr Lanchbery: It is an appealing
concept. It was mooted some time ago. I remember having a meeting
with the European Commissioner at which it was mooted. I think
it is a matter of practicality really though. Although most well-educated
people again would be okay with it and you could see them using
their carbon credit, it might be difficult for an elderly person
to take any advantage of it. I can see the appeal of it, I just
wonder about the practicality of it.
Dr Jefferiss: It is an interesting
question. Getting the public on board and using fiscal instruments
to do that are not necessarily the same thing and your natural
response is to think fiscal instruments doing anything is likely
to alienate the public, but I think probably of all the mechanisms
available the notion of per capita allowances that can be traded
electronically through a credit card system—and I know the
Tyndall Centre for Climate Change Research has done some investigation
of this—is quite appealing if it is technically feasible
because as well as being economically efficient it is also socially
progressive in that a person who does not have many means and
does not travel very much at least has an asset that they can
sell to an affluent person who does wish to travel more. It has
some social progressivity about it, too. It is quite an appealing
way. There are obviously other fiscal measures, taxation in particular,
and we would all be in favour of a variety of fiscal measures
for achieving different purposes, so we argue, for example, for
a well-to-wheel carbon tax on vehicle fuels.
Q49 Mr Challen: Do you think that without
such measures as that—and that is music to my ears on DTQs
by the way—we could achieve any more stringent or radical
post-Kyoto targets because, after all, the domestic sector in
this country contributes about 40% of our emissions.
Dr Jefferiss: I think that there
are other policy mechanisms for driving reductions in the non-industrial
sector. It is really a question of whether the Government will
have the political will to implement them. Certainly, as you indicated,
energy efficiency measures in the domestic sector in particular
could achieve significant cuts but the fear, naturally, is a political
one and the fuel poor in particular will be adversely affected.
Our response to that would be that it would be much more politically
expedient and effective to tackle fuel poverty head on and remove
that as an obstacle to introducing a rational taxation system
for energy or for carbon use. I think it is really a question
of not whether there are other policy influences but whether there
is the political will to deploy them. The same with fuel duty
on transport fuel.
Q50 Mr Francois: Realistically, are only
the larger countries likely to be able to take advantage of emissions
trading? To what extent will the less developed countries be able
to take advantage? They do not have the mechanisms to allow them
to take advantage of the Clean Development Mechanism let alone
the opportunities that are offered by wider international emissions
trading as a whole. What is your view?
Mr Lanchbery: I do not think you
would really be asking poorer countries to join in. You are right,
it is a complicated mechanism, and it would be grossly unfair
to ask a country like Bali or somewhere like that to join in such
a regime. They presently do not have the resources and they do
not have many emissions either. So we are only really thinking
about the very biggest, rapidly industrialising developing countries
that have large emissions and whose emissions are growing rapidly
and bringing in those who know precisely what they are doing.
China knows they have a huge air pollution problem already. They
are very concerned about cutting acid rain emissions and have
already been doing stuff on that. India, again, knows precisely
what it is doing. The last time I went to Delhi I was very impressed
because Delhi used to be hugely polluted and they decided they
were going to cut all the pollution in Delhi. So they converted
everything including the auto rickshaws, the tuk-tuks, to liquid
petroleum gas, and they can do that quite well by themselves,
they know what they are doing. It is those sorts of countries
you are looking at, not poor developing countries.
Q51 Mr Francois: Turning from countries
to organisations, some organisations have argued that they should
not be taxed twice effectively for the same emissions. If you
take the example of the aviation industry, they argue that if
they were to be included in an EU Emissions Trading Scheme that
the surrogate Air Passenger Duty should be scrapped. What do you
say to that?
Mr Lanchbery: If it was placed
on them primarily for climate change purposes then, yes. It is
not at all clear with some of these things what the duty was imposed
for, but certainly, yes, if it was imposed for that purpose it
should be removed.
Dr Jefferiss: It is ironic to
get the aviation industry accusing the Government of charging
it once let alone twice!
Q52 Mr Francois: The Government has announced
that sites participating in the EU ETS might be able to opt out
from their climate change agreements. Do you think that an approach
such as that would be justified?
Mr Lanchbery: Yes, they are allowed
to do that under the Directive as long as they achieve the equivalent
effort somewhere else, so if under their Climate Change Agreement
they over-achieve what they would have done under the trading
scheme then they can be exempted under the Directive. That seems
fair enough. It seems a rather round about way of doing it but
if that is what they are doing, it is fair enough if they are
achieving the same result.
Mr Francois: That is helpful, thank you.
Q53 Mr Thomas: I think we already know
how difficult the USA finds any idea of a national target for
themselves that they must be bound into at an international level.
Looking ahead past Kyoto to the future, are there any initiatives
coming out of the US at the moment that could be pointing the
way to the future. On emissions trading you mentioned California
earlier on and the seaboard there coming together. Could you say
a little bit more about those sort of initiatives and also what
the NGOs are asking for in America? Where are they pressing for
now?
Mr Lanchbery: The big national
one in America, the federal one is the McCain-Lieberman Bill,
which I mentioned earlier, which they will resubmit. It is interesting
in the United States because climate change is not actually a
party political issue at all. People tend to think because Mr
Bush is a Republican that all Republicans are anti-climate change,
and that is clearly not the case. Schwarzenegger is very keen
on doing something in California, Petaki is very keen on doing
something in New York and Senator McCain from Arizona who is not
a particularly left-wing "Pinko", is also a Republican
and thinking of doing something nationally. It is not a Republican
party issue in that sense. The McCain-Lieberman Bill is the big
initiative and they only lost by 43-55, so that is eight votes
in the Senate.
Q54 Mr Thomas: That is an achieving bill
not a national allocation bill.
Mr Lanchbery: No, that covers
all installations in the United States, more than 10,000 mega
tonnes of carbon dioxide. It also includes transport fuels with
equivalent emissions. So it is quite all-encompassing but it would
be a trading scheme, you are right, and you would have credits
and you would trade. The cap is a bit weak. The cap proposed nationwide
was to stay at 2000 levels by 2010, so it is lower than the one
in the EU Emissions Trading Scheme or elsewhere but nevertheless
it is quite ambitious. It is quite a complicated scheme.
Dr Jefferiss: The other thing
I would mention is that in the 1990s I was the Energy Programme
Director of the Union of Concerned Scientists in the United States
and I was always surprised at the lack of knowledge in Europe
of the degree to which at state level there was a hive of activity
on sustainable energy policies, so there are a number of states
with what we call the renewable obligation and what over there
is called the renewable portfolio standard. There are states that
have what they call a system benefits charge which is like the
Non-Fossil Fuel Levy to support various types of system benefits.
There are various state tax and subsidies schemes for renewables
and sustainable energy. As I say, they are quite extensive and
some of them seem to have been quite effective, including in Mr
Bush's home state of Texas where wind power is doing reasonably
well. If you are interested, the Union of Concerned Scientists
has a full tabulated analysis of activity at a state level as
well as inter-state activities such as the North East Trading
Scheme and activities in California and the West Coast. So we
can provide details of where to access that if you would be interested.
Q55 Chairman: That would be helpful.
Mr Lanchbery: Just a little additional
bit. One of the problems with the present administration is the
word Kyoto and that comes from a previous Senate Bill which was
passed just before Kyoto, which the Senate passed by a complete
majority of 95-0, the Byrd-Hagel Resolution, and that said there
should be meaningful participation by developing countries and
the Clinton administration did not negotiate such a treaty so
the Senate was almost bound to not like it when it came through.
Again, it is not a straightforward Bush does not like it, Clinton
did like it, sort of thing with the treaty. The Senate always
did not like the treaty which did not bring in at least some rapidly
developing countries, so the two issues are linked.
Q56 Mr Thomas: They are indeed and I
wanted to ask about that because the two major countries are India
and China, who have also had difficulties with national targets
and, as you correctly pointed out, it was Clinton who first failed
to get this through the Senate not George Bush. Do you have any
information about what is happening in India and China in an analogous
way to what is happening in the USA, something that is moving
there that at least if they had not been bound into something
like Kyoto when we come to review and when we come to look at
the future they will be able to be part of that process?
Mr Lanchbery: Various senior Chinese
officials—not their head of government but senior officials—have
said that climate change is a big problem for them and that they
ought to do something about it. They have not been terribly specific
but they are increasingly looking to solutions at home, especially
ones that solve their acid rain problem, which is huge. They would
be particularly keen to look for alternatives to coal or at least
carbon sequestration because they have massive pollution problems,
particularly in Beijing. India is probably thinking of doing less
although India has a number of programmes. They have a big wind
power programme, for example, so it is not as if they are doing
nothing domestically. They, too, have big pollution problems.
One hit the papers fairly recently around Agra which they had
to clean up. So it is not as though they are doing absolutely
nothing; they are just not participating internationally as much
as they might. Having said that, the UK keeps visiting China,
and Defra officials are always going there. Mrs Beckett is just
back from China.
Q57 Mr Thomas: Finally then, the Government's
attitude. We have heard an awful lot from the Prime Minister down
on the opportunities of the G8 and climate change because climate
change and Africa are the two main foci for the Presidency of
the G8. Has the Government worked with you and the NGO community?
In advance, for example, of Johannesburg there was a great deal
of stakeholder involvement and building a consensus around these
issues. Has that happened at all in this context? Are you engaged
in the Government's thinking? You seem to be quite well informed
about it.
Dr Jefferiss: Not on the scale
of the run up to Johannesburg but in a quieter and less public
way they have engaged, I think, with key voluntary sector stakeholders,
for example inviting us to meetings with key officials to discuss
both the G8 Presidency and the EU Presidency. Defra ran a workshop
that was run by the Institute for European Environmental Policy
and the Green Alliance to look at specifically what the voluntary
sector community thought of the EU Presidency as an opportunity
for climate and other environmental issues. There have been a
number of meetings with officials on G8 opportunities, so I would
say a number of key stakeholders have been invited to comment.
Mr Lanchbery: Upwards to Number
10 and Mr Blair has talked to our chief executives.
Q58 Mr Thomas: So you would be quietly
confident about the way that is going in terms of your engagement?
Dr Jefferiss: In terms of our
opportunity to comment; whether our comments have been taken on
board or—
Q59 Mr Thomas: —We will find out
next year.
Mr Lanchbery: We have been given
the opportunity.
Q60 Mr Thomas: We will see whether our
comments have been taken on board as well.
Dr Jefferiss: I hope so.
Mr Lanchbery: One brief comment
on climate change and Africa. We have been working with the development
groups on that and the development groups are increasingly worried
about the effect of climate change on the poorest countries. We
have got a brochure which we might leave behind which was produced
with people like Christian Aid, et cetera, on the effect of climate
change on the Millennium Development Goals. They are quite closely
linked.
Dr Jefferiss: That is an important
message that we would want to send, particularly to the Treasury
and DFID, both of whom have concentrated primarily on poverty
elimination globally, which is obviously crucially important as
a priority, but just to take careful note that unless climate
change is addressed as an equally pressing international priority
it will be difficult to the point of impossible to eliminate poverty
globally and poverty will be exacerbated by climate change.
Q61 Chairman: I think that exhausts our
questions. You have given very helpful answers. Thank you once
again for coming.
Mr Lanchbery: Thank you very much.
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