House of Commons - Environment, Food and Rural Affairs

Select Committee on Environment, Food and Rural Affairs Ninth Report

3 The role of the Government as Chair of the G8 and President of the European Council

124. During 2005 the UK holds both the Presidency of the G8 and, during the second part of the year, the Presidency of the EU. Climate change is one of two key areas the Prime Minister has pledged to address during the UK Presidency of the G8. The Prime Minister's climate change strategy for the G8 Presidency is focussed on three main points:

An agreement as to the basic science on climate change and the threat it poses. Such an agreement would be new and provide the foundation for further action.

Agreement on a process to speed up the science, technology, and other measures necessary to meet the threat.

Engagement with other countries with growing energy needs such as China and India, both on how they can meet those needs sustainably and adapt to the adverse impacts we are already locked into.[165]

125. Steps have already been taken to address the first of these aims, in the form of the climate change symposium held in Exeter in February, the main outcomes of which have been laid out earlier in the report. In this section we look at the EU and Kyoto. The main international agreements pertaining to climate change are summarised in the table below.

Table 5: Key International Climate Change Agreements

United Nations Framework Convention on Climate Change (UNFCCC)

This was agreed at the Rio Earth Summit in 1992 and was ratified by over 170 countries. Article 2 of the Convention says the objective is "to achieve … stabilisation of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system". In 1994 the UNFCCC came into force. One of the basic principles of the Treaty is that "remaining scientific uncertainties should not be used as a reason for inaction".[166] The Tenth session of the Conference of Parties to the UN Framework Convention on Climate Change (COP10) marked the tenth anniversary of this event, and accordingly the focus of the December 2004 meeting in Buenos Aires included discussion of climate change impacts and adaptation measures, mitigation policies and the impacts thereof, as well as the entry into force of the Kyoto protocol.[167]
Kyoto Protocol

The Kyoto Protocol was adopted in 1997 and sets out legally binding targets for the reduction of a 'basket' of six greenhouse gases by 2008-12 below 1990 base levels by developed countries.[168] The Protocol officially came into force on 16 February 2005, subsequent to Russia's ratification of the Protocol in October 2004, requiring the developed world to reduce greenhouse gas emissions by 5.2% below 1990 levels by 2008-2012. As part of this the UK and the EU are legally obliged to reduce their emissions of greenhouse gases to 12.5% and 8% respectively below 1990 baseline levels during the same period. Four countries amongst the 'developed' nations have not yet signed the Kyoto Protocol: the US, Australia, Liechtenstein and Monaco.[169]

EU Emissions Trading Scheme and the UK's National Allocation Plan (NAP)

126. The EU Emissions Trading Scheme (EU ETS) is the main EU-wide mechanism for ensuring the EU meets its targets under Kyoto. It officially started on 1 January 2005. The first phase runs from 2005-2007 and the second phase will run from 2008-2012 to coincide with the first Kyoto Commitment Period.

127. The scheme operates on a "cap and trade" basis. EU Member State governments are required to set an emission cap for all installations covered by the scheme, such as fossil-fuel power generators. Each installation is then allocated emission allowances, representing the amount of CO₂ which that installation is allowed to emit. If the installation emits less CO₂ than its allowance, it may sell the remaining allowances to other installations who expect to exceed their emissions allowance, thereby encouraging installations to adopt practices which reduce their CO₂ emissions.

128. The number of tradable allowances allocated to each installation for any given period is set down in the National Allocation Plan (NAP) submitted by each Member State. The UK was the first Member State to publish a draft NAP in January 2004. However the UK failed to meet the 31 March deadline for submission of the final Plan to the Commission, as did many other Member States. The UK's Plan was finally submitted on 30 April, and accepted in July 2004, covering installations responsible for approximately 46% of all UK CO₂ emissions.[170]

129. In October 2004 the Secretary of State announced that the Government wanted to increase the UK's NAP by 19.8 MtCO₂—some 3%—bringing the total to 756.1 MtCO₂. The European Commission announced on 13 January 2005 that it would not consider the request for an increased allocation due to its late submission (the UK had been given two months from 7 July 2004 to submit any proposed revisions).[171] During our visit to Brussels in February 2005 it was made clear that any changes made to the total number of allocations in any NAP would upset the balance of the scheme as a whole and thus render the trading of emissions impossible. At the time of writing, it remains unclear where either the UK Government or the European Commission intends to go from here, although on 11 March 2005 the Government announced the imminent allocation of allowances at installation level, based on the original lower figure of 736 MtCO₂, as approved by the Commission. The Government also announced it will be launching legal proceedings against the European Commission.[172] The Secretary of State defended the revision, stating that the initial methodology was:

'business as usual' minus 1.5. The new methodology on the new assessment of what 'business as usual' actually meant takes us five per cent below, not 1.5 per cent below. So there is actually an argument that our new proposals, based on a more realistic set of evidence, are more rigorous than our original proposals.[173]

130. This is supported by the Department of Trade and Industry, which argues that despite the recent upwards revision in NAP emission projections, the UK is 'no further off course' to meet its domestic 20% CO₂ reduction target for 2010.[174]

131. According to FoE there are considerations for the UK's credibility:

if we, as a stable, well-developed county cannot show that we can get our emissions onto a downward trajectory how on earth can we persuade anyone else to do the same?[175]

132. The EU ETS is of global significance, according to the International Climate Change Taskforce. Stephen Byers told us:

Globally everybody is looking at the European Union Scheme, which it really is a political imperative to make sure that that Scheme works. … whether it is the United States or Australia or the major developing countries like China and India, they are all looking with great interest to the EU scheme, and if it founders in this first few months we will pay a heavy price.[176]

133. We note that the current situation of uncertainty surrounding the UK's National Allocation Plan (NAP) can only have a negative impact on the UK's credibility and leadership position with respect to climate change. We urge the Government to consider reviewing its current position on the NAP. We are concerned that, once again on a key development of EU environmental policy, the UK finds itself at odds with the Commission on the detail of how the new rules on emissions trading will work. Given that 22 Member States have now got approved NAPs in place, we call upon the Government to rapidly resolve its difference of opinion with the Commission on this matter without resorting to time-wasting and lengthy proceedings via the European Court.

134. We are concerned that, while the EU Emissions Trading Scheme (ETS) focuses attention on relative positions, it has the potential to 'lock-in' current energy use, with heavier emitters merely purchasing carbon allocations from the new accession States which themselves, in absolute terms, may have energy inefficient systems compared to those used by allocation purchasers. We recommend that the ETS be monitored carefully to ensure that it increases the use of more CO₂ efficient technologies and that total emissions are capped at increasingly restrictive levels to achieve an EU-wide reduction in emissions.

The EU's Kyoto targets

135. The Kyoto Protocol officially came into force on 16 February 2005, subsequent to Russia's ratification of the Protocol in October 2004. The UK contributes around 2% of global anthropogenic (of human origin) CO₂ emissions (equivalent to between 6.2 and 6.9 billion tonnes of carbon per year).[177]

136. Not only is the UK not likely to reach its own domestic emissions targets, neither is the EU on track to meet its targets. Under the terms of the Kyoto Protocol, the UK is legally bound to reduce its emissions of greenhouse gases to 12.5% below 1990 levels by 2008-2012.[178] The EU is obliged to reduce emissions of greenhouse gases by 8% below 1990 baseline levels during the same period. In 2002, a reduction of only 2.9% had been achieved. Friends of the Earth suggest that "initial discussions indicate that [Kyoto targets for the EU, post-2012] will need to be in the region of at least a 30% reduction by 2020".[179] Friends of the Earth felt that the EU as a whole was particularly failing to address emissions from transport.[180]

137. It is important in itself for the EU to meet its Kyoto targets, but it also adds weight to attempts to persuade the rest of the world to change. It is imperative that the EU sets an example to developed and developing nations, by achieving its target and thus showing, through its own practice, that implementation of energy efficiency measures is not detrimental to economic growth, or indeed individual businesses.

Agriculture and climate change

138. Agricultural practice also has an impact upon climate change. For example, fertilizer use can increase emissions of greenhouse gases. The Biosciences Federation told us that "most agriculture will be a net emitter at present".[181] A recent study of commercial forestry found that current practices may cause forests to be less significant as carbon sinks than previously thought, if not actual net emitters of CO₂.[182]

139. According to the UK Climate Change Programme, the UK's total CO₂ emissions in 1990 were 168 million tonnes of carbon equivalent. According to Defra

Fossil fuel and lime use on farms accounts for less than 1% of UK emission of CO₂ in 1990, though the sector also contributes to CO₂ emissions through soil cultivation and indirectly through demand for manufactured fertilizer.

140. Methane is a potent greenhouse gas with a global warming potential 21 times that of CO₂. According to figures from Defra cited by the Soil Association, agriculture accounted for 28% of the UK's methane emission in 1990.[183]

Agricultural policy

141. The UK Climate Change Programme states that:

The most effective way for the agriculture sector to contribute to reductions in greenhouse gas emissions is through the production of energy crops.

142. The Biosciences Federation argues that policies in the UK Climate Change programme relating to emissions and carbon sequestration in agriculture and other land uses should be updated in light of new research and evidence:

184

143. The Tyndall Centre suggests that "current agricultural and trade policy in the EU conspires to encourage emissions from agriculture."[185] This argument is supported by the Soil Association, whose evidence states that there have been "past and ongoing declines in soil carbon levels due to changes in agricultural practices."[186]

144. Witnesses argued strongly for an increase in the agricultural production of biomass (for energy production)[187] and biofuels (for transport).[188] WWF states that "the UK is in a good position to lead the debate for redirecting agricultural subsidies and introducing stronger incentives to support biomass production" … "there is considerable scope under CAP reform to press for more support for a stable, environmentally sustainable biomass supply".[189] Yet there is minimal production in the UK at present.

145. As part of ongoing CAP reform, a new system of farm subsidies has been introduced within the EU. In the UK, this is being implemented in the Single Farm Payment (SFP) scheme. There was support for the single farm payments scheme as a potential means—and valuable opportunity—for encouraging production of biomass crops to be used as an energy source.[190] Estimates by the Renewable Power Association suggest that it is entirely possible that some 30% of our energy demand could be provided for by renewable energy, some 10% of which could come from energy crops.[191]

146. We recommend that the Government investigate using CAP reform and the redirection of agricultural subsidies to encourage biofuel/biomass production, and to encourage agricultural best practice with regard to climate change during its Presidency of the EU.

International relations and the G8

147. In 2000 the USA accounted for 20.6% of global greenhouse gases and is by far the biggest emitter in the world.[192] The G8 alone accounts for over 47% of global CO₂ emissions.[193]

148. Figures suggest that in 2000 the US emitted 6.7 tonnes of carbon equivalents of greenhouse gases per capita, as opposed to 3.1 tonnes per capita in the UK. Per capita greenhouse gas emissions from Australia are actually greater than those from the US, at 6.9 tonnes C equivalent (see Figure 2).[194] This illustrates the importance of considering relative population size when comparing emissions data with regard to climate change impacts.

149. The UK's Kyoto target is to reduce emissions by 12.5% below 1990 levels by 2008-12. Had the US ratified the Kyoto Protocol, its target would have been to reduce emissions by 7% from 1990 levels over the same period. However, it has refused to ratify the Kyoto Protocol. According to President Bush, the Protocol would cost the US economy up to $400 billion and cause 4.9 million jobs to be lost.[195] Since 1990, USA greenhouse gas emissions have increased by some 13%. Australia, which has a Kyoto target of only an 8% increase in emissions, has stated it will also definitely not ratify the Protocol.[196] However, Mr Byers suggested that Australia has set its own emissions reduction target—the same as their Kyoto target, had it ratified it—which it looks likely to achieve.[197]

International Climate Change Taskforce

150. The International Climate Change Taskforce was established in March 2004 by the Institute for Public Policy Research, together with the Center for American Progress and the Australia Institute. The US and Australia are both represented on the Taskforce, co-chaired by Rt Hon Stephen Byers MP and Senator Olympia Snowe (Republican US Senator for Maine). Their report, Meeting the Climate Challenge was launched in January 2005. It stated that "the UK's goal of reducing greenhouse gas emissions by 60% by 2050 is the leading example of governmental commitment".[198]

151. According to the Taskforce: "We have a choice: either we can criticise America for not signing up or we can try to find ways of engaging them". Several States in the north-east of America, where a lot of US power generation is located, are in the process of entering their own voluntary emissions trading scheme. The US insurance sector has estimated that the four hurricanes in the Gulf of Mexico last autumn will cost over US$20 billion in claims. According to Stephen Byers the insurance sector hold political influence within the US "and I think they are beginning to bring that influence to bear on President Bush". Mr Byers argues:

I think 12 months ago the climate change door was locked as far as America was concerned; I think it is unlocked but it is still closed … the challenge for those of us who recognise climate change is the most pressing international issue facing our globe at the present time, is to find a way not just of criticising America for not signing up to Kyoto - which I think we can justifiably do - but to … engage the United States bearing in mind that there are now these domestic pressures building on President Bush that may not have been there 12 months ago.[199]

152. The Taskforce report argues that all G8 countries should adopt national targets to generate at least 25% of electricity from renewable energy sources by 2035. Higher targets will be needed for some countries.[200] It suggests that, in the US, renewables targets and a cap-and-trade scheme could be introduced under the Climate Stewardship Act, proposed by Republican Senator John McCain and Democrat Senator Joseph Lieberman. In October 2003 the Senate voted not to pass this Act. However, this proposal has recently been re-tabled in the US Senate; and Mr Byers suggested that it would continue to be re-tabled.

153. WWF believes that the UK should use its Presidency of the G8 to encourage member countries to "adopt mandatory absolute caps for the post-2012 time period",[201] and that "the UK must ensure that re-entry of the US into the international climate change regime is based on US commitments to tough emissions reductions domestically".[202]

154. The Prime Minister told the Liaison Committee that he believed the US was ready to enter into a dialogue and achieve an agreement on climate change; however he conceded that it would be "very difficult".[203]

155. We commend the Government for hosting the Exeter scientific symposium 'Avoiding Dangerous Climate Change' in February this year as one of the first major events of the UK's Presidency of the G8, reinforcing the Prime Minister's commitment to bringing the issue of climate change to the fore in the international arena. We hope the Government will take full advantage of the momentum generated by this event by taking forward climate change policies during its Presidency. We also applaud the work of the International Climate Change Taskforce, and recommend that the Government supports the Taskforce's activities in working towards international engagement on climate change issues. All political leaders must show in their actions a consistent commitment to tackling climate change.

Developing countries

156. According to figures by the UN, the global population is projected to increase by 50% from 6.1 billion to around 9 billion people by 2050, with the majority of this growth occurring in the developing world. Consequently, by 2050, developing countries are forecast to become the main consumers of global energy.[204] Our World Foundation is keen to see developing countries adopt renewable technologies to meet these demands, although acknowledge that foreign investment will be required.[205]

157. The World Energy Outlook 2002 report predicts that global CO₂ emissions will be 70% greater in 2030 than they were in 2002. Much of this can be attributed to the predicted rise in energy consumption, and consequently CO₂ emissions, from developing nations. Per capita emissions in China are predicted to increase from 2.4 tonnes in 2002 to 4.5 tonnes in 2030, and from 0.9 tonnes to 1.6 tonnes in India.[206] Given the respective population sizes, this represents a considerable increase in global CO₂ emissions.

158. Africa, the other of the Prime Minister's two main issues for the UK's Presidency of the G8, is predicted to feel the impact of climate change more than most. As well as hampering Africa's economic growth, climate change will add to and exacerbate the burden of poverty, droughts and floods, conflicts and disease already experienced by the continent. The Millennium Development Goals, as set out by the Millennium Declaration in September 2000 by the UN General Assembly, aim to address the eradication of poverty and to encourage sustainable development. Recent studies suggest that the impact of climate change will prove a severe hindrance to the realisation of these goals.[207]

159. The International Climate Change Taskforce recommends that the G8 establish a 'G8+ Climate Group', to include "other large developed and developing country economies", namely China, India, Brazil and South Africa plus possibly a few others, in order to "pursue technology agreements and related initiatives that will lead to large emissions reductions".[208] This would operate alongside, rather than instead of, the Kyoto Protocol, but would engage the US and developing countries not currently legally bound to the Kyoto agreement. Mr Byers told us:

In 2000 China was already the second largest carbon dioxide emitter - it was 15 per cent, 14 per cent for the whole of the European Union, and that was in 2000 - and China has expanded economically significantly since then, so it is a major emitter of carbon dioxide, and it is vital that we find a way of bringing them on board. What has been fascinating to me through the work of this Taskforce is that China and the Chinese Government have been very responsive, and they are concerned about this whole agenda and the effects of climate change … fairly minor changes in temperature have a devastating effect on the Chinese rice crop.[209]

160. According to the Taskforce "the EU and other developed countries made a 'political declaration' at the seventh conference of the parties to the United Nations Framework Convention on Climate Change (UNFCCC) in 2001, to provide US$450 million a year, mostly for adaptation. To date only about US$20 million has been provided".[210] Adaptation strategies acknowledge that a degree of climate change as a result of past human activity is already inevitable, and invoke methodologies to reduce the impact climate change is predicted to have.

161. We understand that the use of existing coal stocks in developing countries is inevitable. However we recommend that the UK Government encourages international technological development of more efficient fossil-fuelled power generation to minimise emissions per tonne of coal during its Presidency of the G8. We recommend that the UK take full advantage of the current global prominence of the issue of climate change to take forward the proposed G8+ Climate Group and pursue international agreement on concrete carbon reduction measures to run alongside—and not instead of—the Kyoto Protocol.

165 Prime Minister's speech on climate change, 14 September 2004, at www.number10.gov.uk/output/page6333.asp Back

166 The Carbon Trust; www.thecarbontrust.co.uk Back

167 UNFCCC website; http://unfccc.int/meetings/cop_10/items/2944.php Back

168 The term 'greenhouse gases' as defined by the Kyoto Protocol includes carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF₆) Back

169 European Parliament, National Parliaments Joint Meeting of Environment Committees; 29 November 2004 Back

170 'Smoke and mirrors as UK revises allocation plan', ENDS Report 358, November 2004 Back

171 'Europe refuses British emissions plea', The Independent, 14 January 2005 Back

172 Defra news release 119/05, 'UK announces next steps on EU emissions trading scheme', 11 March 2005 Back

173 House of Commons Environment, Food and Rural Affairs Committee, Session 2004-05, (HC 330-i), Q15 Back

174 'Smoke and mirrors as UK revises allocation plan', ENDS Report 358, November 2004 Back

175 Q254 Back

176 Qq 399-400 Back