Examination of Witnesses (Questions 389
- 399)
WEDNESDAY 23 FEBRUARY 2005
RT HON
STEPHEN BYERS,
MP, AND SIMON
RETALLACK
Q389 Chairman: We welcome our final
set of witnesses this evening, the Rt Hon Stephen Byers, who co-chairs
the International Climate Change Taskforce, supported by Mr Simon
Retallack, a Research Fellow at the Institute for Public Policy
Research. Stephen, we are very grateful to you for coming to join
us this evening. The Committee's interest in your activities in
climate change were heightened when we sensed that you may have
some input into trying to find ways to re-engage the United States
in matters connected with climate change. Certainly the impression
that has been given by a lot of our witnesses is that there is
a reluctance from the United States' standpoint to fully embrace
Kyoto and all that lies behind it. In fact I went on to the White
House website and amongst the myriad of information about climate
change was a remark by President Bush in 2002 in which he said
it would have cost the economy billions and would have lost 4.9
million jobs if America had signed up to the Kyoto Protocol. Equally,
in the same speech he then outlined a series of things which he
felt in terms of climate change and technology development, sound
science and other activities, which he felt were actually enabling
the United States to address the question of climate change. Given
that you work very closely with your co-chair of the organisation
that you are responsible for, Senator Olympia Snowe, you may well
have a better understanding of the American perspective on climate
change, and if that is the case you might care to share it with
the Committee?
Mr Byers: I will do my best, Chairman,
and I could say that I welcome the opportunity on behalf of the
Taskforce to appear before you and your Committee this afternoon.
The difficulty we have with the American position is that we see
it primarily through the prism of Kyoto and a lot of the comment
is based on justified criticism of the United States not being
prepared to ratify the Kyoto Protocol. I think it is worth reminding
ourselves though that this is not something that began with President
Bush. President Clinton refused to put Kyoto to the Senate because
he knew very clearly that the Senate would defeat Kyoto if it
went there for ratification. When the Senate did vote on Kyoto
it was not actually on ratification; they voted basically to give
guidance to the US administration and they voted—I think
it was 95 or 96 to nil—effectively against the Kyoto Protocol.
The thing that struck me, not just in conversations with my co-chair,
who is a Republican Senator, but with many other groups in the
United States—and I have been over there several times in
this particular role—is that it is a cross-party agreement
as far as Kyoto is concerned; it is a non-starter for a variety
of different reasons. We then have a choice: either we can criticise
America for not signing up or we can try to find ways of engaging
them, and I think the Taskforce was trying to find ways of engaging
the United States. I think the important thing for all of us to
be aware of is that President Bush is now under increasing political
pressure at home domestically to do something on climate change,
for a number of reasons. If I can just go through two or three
reasons? The first is that both the financial institutions in
general but the insurance sector in particular are increasingly
worried about the financial costs to them of severe weather conditions.
I do not know whether these figures are in the public domain yet,
but certainly internally the insurance sector in the United States
has estimated that the four hurricanes which they had in the Gulf
of Mexico last August and September are going to cost the insurance
sector over $20bn in claims. That is a huge impact on that particular
sector. They are not without influence politically within the
United States and I think they are beginning to bring that influence
to bear on President Bush. Secondly, a number of States are taking
their own initiatives. Eleven States in the north east of America,
six of them Republican, five of them Democrats, are going to enter
their own voluntary trading scheme for emissions. It is important
because a lot of power generation in America is located in those
northeastern States. So that potentially is significant. Then
we have California, which is introducing—a not very nicely
worded scheme—"the tailpipe emissions reduction",
which is to stop the level of emissions from cars. So potentially
very significant, in which California is introducing a requirement
on car manufacturers to reduce emissions—a far reaching
proposal, so far reaching that the American car manufacturers
are threatening the State with legal action, and they may well
be joined in that action by the Federal Government. But examples,
if you like, of States beginning to do their own thing. The third
thing which is significant, is that we have the Ford Motor Company,
Dupont and four of the electricity utilities agreeing on a voluntary
basis to cut their greenhouse gas emissions to 4% below the 1998-2001
average, and to do that by 2006. So there is a lot going on in
the United States; perhaps not as much at the level of the Bush
administration as we would like to see, but I think increasing
political pressure is being brought to bear, and in the last couple
of days the McCain/Lieberman proposal has been re-tabled again
in the Senate. So the Senate will have another opportunity to
vote on those particular proposals.
Q390 Chairman: When you launched
the Taskforce you and Senator Snowe put your name to a statement
that started, "Our planet is at risk. With climate change
there is an ecological time bomb ticking away and people are becoming
increasingly concerned by the changes," and you put forward
the thought that the Taskforce with its diverse membership had
been able to find common ground, and indeed your report does suggest
that, given the international basis of it, that there are common
areas of thought, at least amongst the Taskforce members that
support action in this area. If that can be done by a group of
people who take a real interest in the subject what prospects
do you think there are of there being within the G8 more concerted
action on this subject as a result of the fact that the United
Kingdom has put it top of the agenda?
Mr Byers: To be honest I think
time will tell. I think the important thing is that the Prime
Minister has made it one of the two key issues for his Chairmanship
of the G8 so it is very much firmly now on the international agenda,
politically on the international agenda. We saw the Exeter science
conference; we are going to have a meeting in March of the Energy
and Environment Ministers from 20 leading countries, and that
will be followed up by a meeting of Ministers from the developing
world; then we have the G8 at the beginning of July. So I think
those are significant developments.
Q391 Chairman: Does that give any
thought that there might be any thought for a what comes after
Kyoto Agreement, that in fact players like the United States and
Australia who currently do not embrace Kyoto could become involved
in?
Mr Byers: They could and I think
we have to find a way to almost allow them to get engaged in the
process. I was interested by the comments by President Bush in
Brussels on Monday where he mentioned climate change; he did not
have any specific proposals about how to tackle global warming,
but he acknowledged that for Europe climate change was a major
issue and he said that we need to find ways in partnership of
working together to tackle the consequences of climate change.
I do not think that President Bush would have said that a year
ago, so I think that is a shift. But the expression I used is
that 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, if you get what I mean? There is still a closed
door there and 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 say for their own reasons they are
not doing it, they are not signing up to it, so what is the practical
agenda 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, five years ago.
Q392 Alan Simpson: I am sure you
know better than most of us the gap that exists between what countries
say they are going to do and what they actually do.
Mr Byers: Why should I know that
more than most people!
Q393 Alan Simpson: I think you may
have been closer to where decisions and delivery were located!
In terms of the Taskforce comments you gave Britain quite a good
press and yet in practical terms the latest figures coming out
of the DTI suggest that we are not going to meet our targets of
20% emissions reductions by 2010; it is highly unlikely that we
are going to meet the commitments to have 15% of our energy supplies
coming from renewables by 2015. You talk to sectors of the energy
industry and they say, "The market rules require us to compete
on at least price terms not on energy conversation terms."
So how do we put ourselves in a position of European leaders when
we are pretty consistently going to fail to meet our own targets?
Mr Byers: I think it is worth
saying we will meet our Kyoto obligations so that is to the good.
I think you are absolutely right to say that as things stand at
the moment our own domestic target of 20% reductions in CO2
by 2010 will not be met. On the modelling I have seen it is estimating
that it will get to 14% reductions if we continue as we have done,
which is why I think the Government is right to decide to conduct
a review of its climate change programme. What I think is very
important, as the Chairman has said, is that the Prime Minister
has made climate change a major issue for the G8 and indeed for
our Presidency of the European Union in the latter half of this
year. If we are going to be successful, giving leadership on climate
change, we have to lead by example, and the worry I have is that
the present review of the climate change programme will be used
as an excuse to move away from the 20% target reduction of CO2
emissions. I have to say that if the Government adopts that approach
then almost everything we say as a Government on climate change
will be devalued as a result. So I think there is a responsibility
on all of us, whether as a Select Committee or individuals, to
really say as clearly as we can to the Government, that this review
must not be used as an excuse to backtrack but must be used as
an opportunity to identify new ways and new methods by which we
can achieve that 20% reduction. If we were to pull away from it
then all of the fine words about climate change and about how
we will use the G8 to give leadership on this issue will come
to nothing because people will say that you talk internationally
in one language, you do something quite differently at home. That
is certainly the message I have been giving to people, if they
have been prepared to listen, that time alone will tell. I think
it is very important that we act at home as we would want other
people to act in their own countries.
Q394 Alan Simpson: Just before you
arrived the Local Government representatives were taking us through
a range of interventions that they had made, but were saying to
us that really if you want significant change the rules have to
be changed, whether it is in terms of new rules for building regulations
to raise the threshold upon which the market then operates, or
whether it is the rules that some of the energy companies are
saying to us need to take place, such as we need to create a market
that sells less consumption and in which they can compete for
selling less, rather than markets that only focus on selling more
consumption; or in the market that you cited about California,
which seems to introduce new constraints on the nature of vehicles
that will be permitted in California. But in each case, when you
push us a bit someone will say to you, "We are open to really
serious challenge under existing WTO rules"; that each of
these initiatives would be challenged on the basis of it being
a non-price distortion of the market. So in the role that we have
in the G8 and in the European context, are you saying that the
lead has to come in pushing for new market rules?
Mr Byers: It effectively applies
across the board because sometimes people will use WTO as an excuse
for their own inaction, but I think through the G8 and the power
that the G8 has, coupled with the need to bring on those big developing
newly industrialised countries like China and India, who are not
part of G8 but actually are major players in all of this, to find
a way of bringing them on board in the discussions—China
now has just become a member of the World Trade Organisation.
But if there is an agreement then effectively—and I was
involved in the WTO when I was in Government—the way that
the World Trade Organisation operates, providing there is an understanding
between the major developing countries, European Union, Japan,
the United States, then an awful lot can be done. What I think
has to happen is a recognition, not just to do with the environment
but also that wider social and economic objectives can be achieved
through an international system, and the World Trade Organisation
needs to be more flexible in what it is prepared to see as the
terms and conditions under which trade operates. If it is purely
a market-led approach then the desirable objectives that we want
to see from international trade, we will not get them, and that
is whether it is in terms of helping the least developed countries
to pull themselves up out of poverty or whether it is in terms
of doing something on the environment, as you will understand
they are not the priority of the market. So we need to use the
WTO in a way that allows us to achieve those wider social environmental
and economic objectives. It can be done but you have to change
the basis on which the WTO operates, but within the rules of the
WTO it is possible to do that.
Q395 Alan Simpson: I am glad you
took this into China and for me, also India, because the question
I want to finish on is how we as a British Government in our own
right, and how within the international fora in which we exercise
some international leadership, we approach our relationship with
emerging nations that will have their own massive impact on carbon
emissions and climate change. I think it was in 1990 that the
World Bank was given the lead responsibility for a sustainability
agenda in the developing world and yet over 80% of the investments
that they have supported since that time have been in fossil fuel
using industries. The recent criticism of DFID is much that our
own involvement in aid programmes in the developing world has
also been focused on fossil fuel generating industries, and that
is at the same time as a claim to want to give a lead in the opposite
direction about the reduction of carbon emissions. How do we square
that circle?
Mr Byers: There are two comments
I would like to make. The first is specifically on your final
point. We should also be addressing our own things like the Export
Credit Guarantees Department, and the report specifically says
that when it comes to the various Credit Export Agencies we have
our own, and many other major countries have their export credit
bodies, and we should be factoring environmental concerns into
those projects that you are prepared to back through Export Credit
Guarantees. I remember from my time when I was Secretary of State
for Trade and Industry having to deal with a particular proposal
to do with a coal fired power station in India, and we were being
approached for a very large sum of export guarantee cover for
this particular project, and I remember at the time raising the
issue and saying, "Do we not have an environmental audit
to see if this is something that we want to support?" and
unfortunately the election was called before there was an answer,
and I got moved, so I do not know what the reply was! But it was
an indication that these factors then certainly were not taken
into account, and why I was very keen that we had a specific recommendation
about Export Credit Guarantees being used for positive environmental
purposes. In 2000 China was already the second largest carbon
dioxide emitter—it was 15%, 14% 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, I have to say on China itself, because if you
look at the implications for rice production in China then fairly
minor changes in temperature have a devastating effect on the
Chinese rice crop, so I think for those reasons perhaps more than
any other they are acutely aware that something needs to be done.
We make a recommendation of what we call a G8 Plus Climate Group,
the G8 certainly plus China, India, Brazil, South Africa, and
maybe one or two others—but those are the key four—that
we say should come together with the G8 to try to identify ways
forward to tackle global warming, and I hope that the Prime Minister
for the Gleneagles Summit at the beginning of July will extend
an invitation to those countries to attend. I think it will send
out a very important signal if he were to do that and I think
that would then provide an opportunity, and I think would help
the Americans because the difficulty President Bush has is that
under Kyoto there would have been huge cuts in American emissions
and, as we know, nothing for China and India, and that could not
be solved politically in the United States. But if you can get
the United States with China and India and the other G8 sitting
around the table, identifying what might be the way forward, then
I think that would be potentially a very healthy and constructive
dialogue.
Q396 Chairman: Can I pick up on a
point that you made? You have been very strong on saying what
ought to be done and indeed in your Taskforce report on page 11
you say, "Reviewing and significantly increasing the World
Bank target to increase its investment in renewable energy arising
from the extractive industries' review." What are the politics,
particularly bearing in mind the key role in both the World Bank
and the IMF that the United States plays in actually getting somebody
to say, "Fine, (a) we agree with that proposition; (b) how
do we then amend the target and move forward?" Is there a
political will to take forward in real work what you recommend
here?
Mr Byers: We have to bring as
much pressure to bear as we can and for the reasons I mentioned
at the beginning, to do with the change in domestic situation
in the United States. I certainly think that bodies like the World
Bank are becoming increasingly aware of the financial cost of
severe climate change, and I think that is a new dynamic coming
into all of this, and if we have oil that is above $50 and it
was $51 a barrel yesterday evening, that is going to have a huge
impact and helps some of the argument to do with climate change.
There are real worries in the United States to do with energy
security post-September 11. So it is a very dynamic situation
that President Bush now has to deal with, which perhaps was not
the case when he started his first administration. So I think
things are changing. I do not want to be overly optimistic; I
think we need to use every opportunity to bring as much political
pressure to bear as we can. But I do think that there is an opportunity
there now that was not there even 12 months ago.
Q397 Mr Lazarowicz: Very briefly,
on the G8 Plus group, you have mentioned the positive signs coming
from China. Do you see the same type of positive response coming
from the other countries which you envisage as being in that G8
Plus group? Will there be a positive response to the invitation,
for example, in practical terms if it is to be issued?
Mr Byers: I know China and India
better than I do in relation to Brazil and South Africa because
we had a representative from China on the Committee and our scientific
adviser was Dr Pachauri, who is head of the UN body and also based
in India and very well respected and close to the Indian Government.
I would not like to say, to be honest. I am not sure I can answer
that. Simon, you know Brazil better than I do.
Mr Retallack: I think that the
most favourable response will come from China, there is no doubt;
India has yet to develop the same sort of scientific capacity
as China has as far as understanding the impacts that climate
change will bring to India, and therefore there is less a sense
of urgency around the issue. Nevertheless, I think the fact that
China does seem increasingly willing to take the issue seriously
and to commit, for example, to 10% renewable energy target by
2010, which is after all what we have in the UK, will send a very
strong signal to other major developing countries and will encourage
them to take part in similar efforts. Certainly the Brazilian
Government and the Chinese Government in the latest round of UN
climate negotiations in Buenos Aires in December jointly presented
their own domestic programme of action on climate change, and
certainly the Brazilian Government takes the issue very seriously,
and I imagine would respond positively to an invitation from the
British Government to attend the G8.
Q398 Mr Lazarowicz: Presumably this
G8 Plus group will be fairly small in terms of the additional
countries to the existing G8. What is the risk of having that
type of group set up, having negative consequences on other countries
outside the G8 and outside the G8 Plus group? There will be other
growing economies that will be part of the process.
Mr Byers: I think the important
part is not to see it as a replacement of Kyoto, so it would run
alongside Kyoto, and if you were to do that then the combination
of those who signed up to the Kyoto Protocol and the G8 Plus group,
you are getting pretty much total coverage of the world's emitters
of greenhouse gases. So that in a sense is the attraction of that
group, bearing in mind that Australia, although they are not signing
up to Kyoto, have set their own target, which would have been
their Kyoto target. You may say why have they not signed up to
Kyoto, but I am sure they have had some interesting conversations
with the American Government about why they have not signed up.
So Australia is going to meet its target anyway. We have been
very clear as a group saying that we are conscious that our proposals,
if we have not got them and have not used the right language,
could be seen to be undermining Kyoto, and our whole remit, our
terms of reference was to support Kyoto and to try to add to it
rather than undermine it. But I think your point is well made,
what we do not want to do is to set up a group which takes over
and somehow relegates Kyoto; Kyoto was an important first step
really, international concerted action to tackle climate change,
and we need to be adding to it rather than trying to move away
from it, and I am confident that a G8 Plus group can be of benefit
rather than have the potential negative consequences that you
have touched on.
Q399 Mr Breed: Can we turn to Emissions
Trading? The report recommends that all developed countries ought
to effectively set up schemes like we have in the EU, of which
the UK is a part. It is very interesting to hear about the 11
States in America and I hope that pattern might continue, but
the whole idea of looking into the future was perhaps at some
stage this could be brought together into some sort of international
Emissions Trading Scheme, bearing in mind we are at a very embryonic
stage at the moment. What sort of time scale realistically do
you think could be put upon that and when would we begin to see
some sort of embryonic international Emissions Trading Scheme?
Mr Byers: Globally everybody is
looking at the European Union Scheme, which it really is a political
imperative to make sure that that Scheme works. I am sure that
many members of this Committee will share my concerns about the
way it has got off to a rather shaky start, particularly this
sort of standoff between the UK Government and the European Commission
to do with the levels of allocations within our own national plan.
So I would hope that we would get to a situation where that could
be resolved, because it is in no-one's interests. So I think we
should be trading emissions rather than trading insults, which
is where we have got to at the moment with this standoff. So we
need to get the European scheme running effectively and once that
happens we will have many international companies that will be
part of the European scheme and I think when they can see it operating
they will be quite comfortable with it, and somebody will be in
America saying, "We should be having something along similar
lines," and then you have the potential—which I think
is very exciting—because if you then have the 11 northeast
States with their own scheme, we could then say within the European
Union that we want to extend it and bring in those 11 States,
and once you start to do that the potential is very significant,
I think, to get a global trading scheme underway. The other attraction
is that within the United States, because Emissions Trading is
seen to be a market solution to the problem it is very attractive
to a lot of people, so I think it has a big potential. And why
it is interesting is that of the 11 States six of them have Republican
Governors, five of them Democrats, and they are very interested
in the whole concept of a market solution to emissions. So I think
it has big potential, but we have to get the European scheme up
and running and working effectively.
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