Examination of Witnesses (Questions 480-499)
SIR DIGBY
JONES AND
MR MICHAEL
ROBERTS
19 JANUARY 2005
Q480 Mr Challen: Should their own position
be allowed to undermine our position?
Sir Digby Jones: We have a commitment
to a target so to that extent the principle holds despite their
not coming on board.
Mr Roberts: Can I add something
to Sir Digby's comments? In an ideal world firm commitments to
do something which should be monitored is the optimum way forward
in many respects, particularly given the science about carbon
concentrations in the atmosphere and the consequences of that.
Where the intelligent debate is starting to focus is on how we
establish those commitments, how we establish targets. There is
a sense that the process by which Kyoto led to commitment in targets
was that was not amenable to the American way of thinking. It
does not mean that targets per se will not work; it is
just the way in which they are established. It may be that in
the short term there is an imperfect way that needs to be pursued.
Imperfect as they are, maybe relative rather than absolute targets
are something to be thinking about, the way in which we get the
Americans to think about producing a serious approach. There might
be a way forward through international sectoral targets. There
are one or two sectors I can think of, aluminium, for example,
which is a global industry where there is some thought being given
to that which might embrace individual sectors and corporate players
within the American economy. The other thing to think about is
to build on those things which are happening below the national
US level, the things that Digby mentioned that are already happening
at federal level. We have a system of north-east emissions trading
in the United States which embraces both Democrat and Republican
states and I think the more we can try and build on those so that
the concept of a commitment, however it is delivered against,
becomes more acceptable to not only business but also to society
within the US. There are different ways of skinning the cat and
we need to think imaginatively about that.
Q481 Mr Challen: In that context we have
got all these different initiatives about climate change. We have
got things happening in Europe, obviously, and other voluntary,
flexible arrangements and perhaps we can all approve of those.
Should there not be some overall framework in which these things
are cast because some people are very cynical about emissions
trading schemes that give taxpayers' money hand over fist to industry
so that they can just pick a few low-hanging fruits, which they
are going to pick anyway. That is the windfall profit; that is
going on later in this session. Would you agree perhaps with Contraction
and Convergence which sets a reducing cap each year and distributes
carbon emissions on a per capita basis? Would you agree that that
provides the overall framework in which we should operate?
Sir Digby Jones: There are two
points. One is that I cannot let you say that on the record without
refuting it, and that is that I do not believe that taxpayers'
money is going straight into what you call industry and I call
business—
Q482 Chairman: We are going to explore
this in a few minutes.
Sir Digby Jones: — so I
disagree with your statement. The second point, do I think we
need that more global but transparent system of easily earned
and distant targets? Yes, I do. You asked me in one of your earlier
questions did I think that the current American stance undermines
the European position. I am a little bit more worried about whether
the participation of certain European states undermines the European
position. One of my worries, which I said a year ago in that press
release—and again I stand by it today—is that if you
were a business in Sweden or Germany or Britain today I think
you would be forgiven for worrying about your competitiveness
and therefore your ability to employ people, earn money, pay tax
and build schools and hospitals, when you see the behaviour of
some other countries in Europe who have either just paid lip service
to what the Commission is trying to achieve and, frankly, by their
conduct have shown that they do not intend to do it, or put in
a national action plan which, at the end of the day, was clearly
something which was going to achieve no change whatsoever. A British
business or a German business would say, "Why should we be
busting a gut here when in the European Union itself other member
governments and member businesses are not?". I think that
is as important in the undermining issue, because I think I agree
with you in that, as the American position. I sat in Beijing in
October, I sat in Delhi last week. At 11 o'clock in the morning
the sky is nearly yellow, your eyes are watering, your chest gets
congested. That is only going to get worse. How are we going to
clean up that act? If the European Union, Japan and America do
not set the example—again, real politics—they will
not. The only way is a globally recognised, clearly understood
what that what measured gets done. I am agreeing with your overall
wish, yes.
Q483 Mr Challen: In terms of the UK economy,
your deputy has said recently that industry has taken its fair
share of this burden of dealing with the environment and that
the domestic sector ought to now do more. Do you agree with that
statement?
Sir Digby Jones: Yes.
Q484 Mr Challen: Have you considered
what the domestic sector ought to do to fulfil that objective?
Sir Digby Jones: I have been in
this job for five years and what has been noticeably absent is
hard, strict governmental pressure on the average voter to step
up to the plate on this whole issue. Business is a very easy target.
One reason is because, yes, we are very visible in the way we
pollute and, secondly, we do pollute, so we are a worthwhile target
and we certainly ought to accept that, so we are not trying to
avoid our obligations but we are allowed, I think, to be frustrated.
A statistic I was told a couple of years ago is if you take four
semi-detached houses in the average housing estate in Britain
and look at their back yards and if you put a motor mower down
those four lawns on one Sunday afternoon you will pollute the
environment more than a Ford Focus in 12,000 miles. Ford get hammered
every day as a manufacturer in Britain for being a polluter and
the thing they make they are told pollutes the environment. Do
we see any government action to go and do something about four
people who might vote Liberal, Tory or Labour? No, we do not.
Q485 Chairman: Is the answer not to hammer
the manufacturers of motor mowers?
Sir Digby Jones: If you are going
to let the market do it, then of course what you do is ensure
that the motor mowers become less attractive and the other ways
of mowing your lawn become more attractive. I understand that.
However, at some point somebody has got to look the voter in the
face and say, "This is going to cost you in a change in your
behaviour and your cheque book," and until they do we will
not stop saying that business has shouldered its share of the
burden and it is time the government of any colour acknowledged
that. I would love to see three manifestos dealing with this saying
to the people whose vote they are looking for "it is going
to cost you too".
Q486 Joan Walley: What about the cost
to the environment?
Sir Digby Jones: What about the
cost to the environment?
Q487 Joan Walley: In that line-up you
have just drawn up you have not included the cost to the environment
of not taking action.
Sir Digby Jones: I agree, I am
sorry, I thought that was a given, yes, completely right.
Q488 Mrs Clark: I am very enthused by
what Sir Digby has just said about the individual and the domestic
situation and pollution. He may or may not be aware that our Committee
has been doing some considerable research into environmental crime
and into the responsibilities of local authorities and individuals,
et cetera. Indeed, we did have a debate on this in Westminster
Hall only last week as I recall. Would he like to comment now
on what he actually thinks central government should do in terms
of local authorities? You have talked about the concentration
(and I would agree with you) on making business a scapegoat instead
of local authorities and what their responsibilities should be.
Indeed, would you agree with me that a) perhaps central government
should impose some financial penalties on local authorities who
do not actually come up to stump on these matters, and b) John
Major's Environment City Status Award was absolutely excellent
but that in fact there has been no attempt to police this and
ensure that those cities, including my own of Peterborough who
were given that award, go through their paces and come up with
it or have it withdrawn?
Sir Digby Jones: The answer to
the first point is I would sincerely like to see—and I do
not see a lot of this at the moment—over the next few years
increasingly government seeing public sector and private sector
employers as very much the same and not different in the way they
behave environmentally, the way they employ, the way they skill,
the way they participate in society because the public sector
has become a huge employer in Britain and a big operator of many
businesses and for some reason they tend to get treated differently.
The public see them differently, politicians see them differently,
they see themselves differently, and at the end of the day the
private sector are often put into a position where they compete
with them. They often see what they do not being duplicated there
and it is high time that the public sector did not see themselves
as special and they saw themselves as very much part of the overall
ambition, which I thought was to make this country great. On your
second point about one of John Major's initiatives, the honest
answer to you is I do not know enough about the facts to comment,
I do not know enough about it and I do not comment on things I
do not know. I will look at it for you and I will write to you
individually and tell you what I think, I could not do it now
simply because I do not know the facts.
Mrs Clark: Very helpful.
Q489 Mr Challen: You have said that you
support the principle of contraction and convergence and in the
domestic sector the need for individuals to do a lot more. Has
the CBI come across the proposal for domestic tradable quotas
and have you had a chance to evaluate that at all?
Mr Roberts: Just a point of clarification,
we did not say we agreed with the principle of contraction and
convergence. We agreed with the principle of commitments to real
action and that those should be international. The debate about
contraction and convergence is one that we are still having with
our membership. That is just for clarity's sake although I understand
the rationale behind it. With regard to the issue of quotas for
the domestic sector, again that is one of the things that we are
looking at at the moment in terms of our response to the current
review of the Climate Change Programme to see whether that is
something that might have legs. Clearly it is a reasonably radical
proposition and whilst trading may well be suitable for certain
parts of the corporate community who have the resources to engage
in trading, there is a question mark as to whether individual
members of the public would find it such an easy proposition when
one wades through brokers and the like. It is not something on
which we have a clear view at the moment but it is one of those
issues we are looking at in terms of how you might unlock the
contribution from that sector of the economy.
Q490 Mr Challen: The financial analysts
and carbon traders have told us in previous evidence sessions
that they would prefer absolute caps and targets and those are
essential if emissions trading is to work effectively. Would you
agree with that?
Sir Digby Jones: I for one would
agree with more certainty. I think caps and targets give that
certainty and give that transparency. Everybody understands where
this whole thing is trying to get to and when you can judge progress.
Things that tend to be certain and easily understood have a better
chance of winning. So for that purpose, yes, I would.
Q491 Mr Challen: How does that sit with
flexibility?
Sir Digby Jones: I was going to
say "but I will let my expert comment on that"!
Mr Roberts: The flexibility is
in how you achieve those. The prescription is not about the method;
the prescription is about the end outcome.
Q492 Mr Challen: A 60% reduction by 2050,
which has been quite controversial in the last few days in European
discussions taking place, does suggest having to have some rather
strict ways of dealing with it. It does not affect the community
but that is nevertheless a strict target. How much flexibility
does having a strict target allow you to interpret these things
in a way that perhaps the Americans would like to do but we Europeans
seem less inclined to do?
Mr Roberts: The flexibility is
in how you get towards that target and it is an ambition towards—
Q493 Mr Challen: Can you give me an example
of flexibility? If we have a strict and demanding target how do
we have flexibility? I cannot quite square the circle.
Mr Roberts: The target is the
outcome, it is the goal. The goal could be achieved through a
variety of means. If government is trying to establish how you
get to that goal government has at its disposal a number of policy
levers, if you like, whether that be classical tax or straightforward
regulation or encouragement of voluntary initiatives or some mix
of all of those, and that is where the flexibility comes into
play. What is particularly important about this debate at the
moment is that five years ago the UK committed to a programme
of activity that would take it towards its current set of targets.
That included a mix of those types of instruments. What was lacking
in that programme was a clear sense of the benefits and costs
associated with the mix and indeed with individual measures so
there was no sense either on the part of the UK as a whole or
on business specifically as a major player in that programme as
to whether or not we had identified the least cost way of achieving
our 12.5% reduction on Kyoto or indeed our transition towards
the 20% target. This time round we need to learn that lesson because
some measures will be more cost effective than others. That is
what I mean by flexibility towards an agreed outcome. Having said
all of that, you need to be clear that your outcome is properly
specified. The 60% target that everyone talks about, ideally speaking,
should be a 60% reduction in global emissions to reduce the concentration
of carbon to scientifically what is deemed to be a reasonable
level to address the issue of climate change. If that then translates
into "the UK will do that but no-one else will do it because
that is the way politically things turn out in the future",
we go back to our original concern which is we will have done
a lot in this country, potentially at some significant cost to
individual parts of the economy, but it will only have a marginal
impact on the global problem.
Q494 Chairman: Just for the record I
think Sir David King is now talking in terms of an 80% reduction
by 2050 to take account of the accelerating melting going on on
the Greenland ice cap.
Mr Roberts: I appreciate that
the science is changing and we need to be alive to that.
Q495 Chairman: It is not getting better.
Mr Roberts: But the fundamental
point remains about shared effort globally and flexibility in
delivering our bit towards that shared effort.
Q496 Joan Walley: Can I apologise for
not being here at the very start of the session this afternoon
and missing some of the earlier questions. I want to try and wrap
up this discussion we are having about post Kyoto. It seems to
me that there are so many possible variations but from what you
have just said to Mr Challen what you really seem to be saying
is that, yes, Kyoto is there and that would give the certainty
and that would give the firm signals to all the sectors to know
what they had to do and to get on and do it, but if we are in
the real world, we might not get (as we have not at the moment)
the US and everybody signed up to it, therefore this flexibility
needs to be somehow or other kept as a reserve to try and push
us through this transitional phase to where we need to be to meet
these ever greater targets. I am not quite sure whether you are
saying in an ideal world Kyoto, yes, but we are not in the ideal
world so we will just get the best that we can and the best that
we can go at this moment at this place in time. Are you therefore
saying that relative targets have got an important part to play?
Sir Digby Jones: Just because
America will not sign Kyoto does not mean we should not pursue,
prosecute, and get to the Kyoto targets. I do not think that the
European Union should duck out of its responsibilities to the
planet. I do not think business should either if they operate
there. I often have big arguments with politicians in America
who, as the Chairman said just now some, see Europe as saying
business in Europe is going to have to adopt these Kyoto targets
as a barrier to entry. That is wrong. It is Europe trying to lead
and set an example. And I repeat what I said earlier, I am proud
of that. Because I advocate a different way of trying to deal
with America trying to "get there". I am just accepting
the realpolitik of life. What I am not doing is saying because
of that we should all stop doing it. What I would say—and
I sincerely hope this is a non-party political issue in Britain—is
that if the United Kingdom has signed up to it and the European
Union has signed up to it then please explain to me why we all
allow some Member States of the European Union, frankly, not to
come to the party to the same extent and not to be rigorous in
their implementation in businesses in other parts of Europe. Worrying
about America is bad enough; worrying about someone in your own
backyard is even worse.
Q497 Joan Walley: We want to look at
the European trading scheme in a short moment but before we get
there can I try and home in on this relative target business because
it seems to us that the way that those have been looked at is
akin to "business as usual" and if it is business as
usual then you have not got any kind of cap and then you are not
getting the environmental benefits that you are aiming to get
in the first place.
Sir Digby Jones: Just so I understand
your comment, are you saying you think the amendment by the Government
was working on the basis of it is now business as usual?
Q498 Joan Walley: No, I am not saying
that. I am saying were you to go down the route of we cannot get
the ideal progress therefore the relative target could be an option;
that is based on business as usual targets. If we have got business
as usual targets we have not got progress.
Sir Digby Jones: I see what you
are saying.
Mr Roberts: Let me try and clarify
what we said earlier about relative targets. I was not suggesting
that the UK should shift from what is currently a commitment to
an absolute towards a relative target. What I was suggesting was
that the history of establishing international commitments through
targets was not successful in getting the US at national level
to commit on the international scene in the same way that some
other developed countries did and that we in the international
community with the UK playing a leading role in that have got
to think a little bit more imaginatively and perhaps accept that
there might be some second best ways in which we get the US to
commit. There are a variety of options around target-setting,
one of which (but not the only one of which) might be some process
of establishing the commitment of the US to a relative target.
I did accept that that was an imperfect way forward but not the
only way forward.
Q499 Joan Walley: That is very helpful
and clarifies it, thank you. Can I just pursue that a bit further
in trying to get the US on board as well. When we had a session
last week we had Barclays Capital giving evidence to us and one
of the options that they defined for us was that if an international
trading system is set up by a core of developed and developing
countries but not everybody was on board with it, then some form
of tariff might be levied on trade with non-participating countries.
How would you respond to that?
Sir Digby Jones: I know the stenographer
cannot write down my reaction,
| 
