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I welcome the Conservative promise of raising green taxes as a share of taxes as far as it goes, but it does not go far enough for my taste because if taxes fell overall,
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green taxes could rise as a share of taxes without any increase whatsoever in pressure on people’s behaviour. That is why countries that use green taxes, which are all those that are pioneering efforts to deal with climate change, think of green taxes as a share of national income.

Green taxes can play a key part in changing our behaviour and ensuring that we can meet this extraordinary challenge. I am not a Private Frazer doomsayer on climate change. We had success before with the Montreal protocol of 1987 that banned chlorofluorocarbons. The hole in the ozone layer has since stopped deteriorating and environmental catastrophe from that source has been averted. I agree that weaning us off fossil fuels is a bigger challenge, but I am convinced that we can do it again. We need to ensure that we are making progress and that we can see that the best is not the enemy of the good.

Overall, the problem that we face is not the failure to recognise the instrument, but the failure of political will. Labour Members were afraid when faced with the fuel duty protests. They ran and they have gone on running. The time has come to change course, to take our courage in our hands and to begin to deal with the problem in the way in which we know that it can be dealt with: through the application of green taxes, especially on the aspects of transport that have formed such an important part of the UK’s increased carbon emissions.

8.18 pm

The Minister for Climate Change and the Environment (Ian Pearson): I beg to move, To leave out from “House” to the end of the Question, and to add instead thereof:

There is no bigger challenge in politics today than the way in which we respond to the rapidly growing body of scientific evidence that our climate is warming and that the human race is responsible for this increase in temperature. Climate change is not just an environmental issue; it is an economic issue, a social
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issue, a security issue and, above all, a moral issue. The way in which we respond as a nation—the Government, business and citizens together—will determine our legacy for future generations. It is a test of character and, overwhelmingly, of political will.

As the world’s first industrial nation, we have a moral responsibility to provide international leadership. Nothing, apart from alleviating starvation and avoidable disease, is more important and urgent in the world today than securing international agreement on a long-term framework and the actions that are necessary to avoid dangerous climate change.

Mr. Graham Stuart (Beverley and Holderness) (Con): The central fact about today’s debate is that the Treasury said in 1997—in what would have been a consensus among all the parties in the Chamber if it had stuck to its promise, but which excludes Labour because it has not acted on it—that the Government would move to take taxes off goods and put them on bads, and that they would increase environmental taxation in order to combat climate change. That was the promise in 1997. As the hon. Member for Eastleigh (Chris Huhne) said, you have moved in exactly the wrong direction, and your warm words at the Dispatch Box will do nothing for people out there who can see that emissions are up and that your taxation has gone in the wrong direction. Will you please answer that?

Madam Deputy Speaker (Sylvia Heal): Order. May I remind hon. Members of the correct parliamentary language to use, in case it happens again?

Ian Pearson: If the hon. Gentleman will be patient, I will answer those questions about the appropriate mix of policy instruments to tackle climate change.

Stabilising the amount of carbon dioxide and other greenhouse gases in the atmosphere will take enormous effort. There is widespread recognition that we will have to move substantially beyond the agreements reached at Kyoto. Our ambitions must be far greater and all key emitting nations must play a full part. Around the world the UK is recognised as a leading voice on climate change. Last year we made climate change and Africa top priorities during our presidency of the G8. We moved the debate forward, and we are still doing so with the Gleneagles dialogue process and in the UN and other forums. But we can credibly provide leadership internationally only if we continue to show by our actions at home that we are fully committed to tackling climate change.

I welcome the opportunity today, therefore, to discuss the Government’s domestic agenda and our judgments on the right balance of policy instruments to meet our climate change objectives. I strongly welcome, too, the fact that climate change is now at the top of the agenda of all three main political parties in the UK. This reflects the mood of the British people, who care so passionately about making poverty history and protecting the world from what we are doing to it through our actions.

I put on record the important fact that we are on course to meet our Kyoto protocol target. Greenhouse gas emissions are projected to fall to around 23 per cent. below 1990 levels by 2010, nearly double our Kyoto commitment. The Government introduced a
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wide range of measures that helped us to achieve that, and fiscal measures have played a key role. For instance, the climate change levy package, which combines fiscal and non-fiscal measures, has delivered emissions savings of over 28 million tonnes of carbon since they were introduced in 2001.

I fully accept that we need to do more, and I shall explain some of the steps that we are taking to strengthen our domestic programme on climate change and put us on a path to reduce CO2 emissions by at least 60 per cent. by 2050. Before I do so, I shall address the core argument in the Liberal Democrat motion. It is right for the Opposition to question why we have taken some steps and not others. Taxation, public spending, regulation and encouragement of voluntary public action all have the potential to contribute to our objectives in this field. The question is what is the appropriate mix of policy instruments.

I can agree with the general proposition that we should tax environmental bads and encourage environmental goods. The “polluter pays” principle is a long-established Government policy. We have programmes to support the growth of clean technology. However, I fundamentally disagree with the Liberal Democrats’ contention that environmental tax as a proportion of gross domestic product is somehow an accurate indicator of success or failure in tackling climate change. It is not. A decline in environmental tax revenue can be the consequence of policy being effective and delivering behavioural change. Climate change agreements have delivered 10 million tonnes of carbon savings by giving an incentive to companies to pay less tax through a reduced climate change levy.

The fuel differential for biofuels also involves the surrender of tax revenue. It is simplistic and wrong to judge policy by reference to the proportion of green taxes as a percentage of GDP. The link between growth and carbon emissions, strong for most of our industrial history, has been substantially broken. It is equally fallacious to measure the effectiveness of the Government’s commitment to tackling climate change by how much the Government spend in this area. Adding up a few DEFRA budget lines and comparing that with the amount spent on Trident or the Iraq war may produce a news story, but it gives a false picture of what is being done by Government to tackle climate change across a range of different policy instruments. I shall focus on four areas where we are taking action, and then offer some concluding remarks.

Mr. Ellwood: Before the Minister moves on to those points, which I am sure are important, will he clarify where the Government stand on the 1997 proportion of green taxes, compared with current levels?

Ian Pearson: If the hon. Gentleman was listening, he would have heard me explain that green taxes as a proportion of GDP are not an accurate or fair reflection of the Government’s attitude to tackling climate change. He needs to recognise that a range of other policy instruments, such as regulation and public spending, are also important. Let me explain by dealing with the first of the four points that I want to make—the European Union emissions trading scheme.

This summer we submitted our proposals for the second phase of the EU emissions trading scheme in the UK. The scheme is a market mechanism to reduce
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carbon emissions, not a taxation measure. It will be expanded to cover additional activities at 160 installations in the UK, responsible for 9.5 million tonnes of carbon dioxide that are not covered in the current phase of the scheme. Alongside this we are pressing for reforms to the EU emissions trading scheme to extend its coverage and secure its long-term future, which I am sure we all agree is extremely important.

Chris Huhne: The Minister is right that in theory it is perfectly possible to construct a climate change policy that does not rely on green taxes, but, in practice, international comparisons show that there is not a single European country that has achieved a good record on climate change without a greater reliance than ours on green taxes as a share of GDP. Will the Minister name one, if he can?

Ian Pearson: The UK has a good record on climate change. As a Government, though, we want it to be even better. That is why we are introducing measures to strengthen our domestic climate change programme.

One of the areas that the UK is working to have included in the EU emissions trading scheme is emissions from aviation. This would enable the industry to meet the full costs of its environmental impacts through a mixture of emissions reductions within the sector and purchase of reductions that can be produced more cheaply by other sectors. I know the Liberal Democrats also want that, and I believe the Conservative party does too, so we are united in wanting to tackle the issue.

Susan Kramer (Richmond Park) (LD): On the Minister’s point that tax is not a particularly relevant instrument in dealing with climate change, is he conscious that in its own publication DFID upbraids developing countries because it says that their

This is a case of the goose and the gander choosing very different words to preach.

Ian Pearson: Not at all. I did not say that taxation was not a relevant policy instrument. I said that it was not the only policy instrument. In government one has to reach a judgment about the right mix of policy instruments to achieve one’s objectives. That is what we are doing, and it is why—the second point that I want to make—in July we published the results of our energy policy review, a central theme of which was further action to deliver annual reductions of up to 25 million tonnes of carbon and put us on track to meet our 2050 target.

Measures announced in the energy review include giving people accurate information about their energy use through smart metering, phasing out inefficient consumer goods, moving towards our long-term ambition of carbon-neutral housing development, and a revolutionary change in the basis of energy supply regulation, so that companies have an incentive to conserve energy rather than supply more of it. We also plan to consult on a possible energy performance commitment, which will target emissions from large commercial and public sector organisations that are currently not covered by the EU emissions trading scheme and climate change agreements. This could effectively save 1.2 million tonnes of carbon a year by 2020.


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Mr. Weir: I am interested in the Minister’s remarks about the EU trading scheme. The Trade and Industry Committee has been taking evidence on the energy review. All energy generators have expressed their fear about the long-term price of carbon. Following the recent difficulties with the scheme, the price of carbon fell dramatically. Are the Government’s proposals aimed at stabilising a long-term price for carbon? The German Government have offered some of their generators.

Ian Pearson: The key point is to ensure the continuation of the EU emissions trading scheme beyond 2012 to provide certainty for businesses that are making long-term investment decisions. I am sure that that is what the hon. Gentleman was referring to, and I would be interested to hear what the Trade and Industry Committee has to say about it.

We aim to increase the level of the renewable transport fuel obligation to above 5 per cent. after 2011 and to develop strong successor arrangements to the current voluntary agreements on new car fuel efficiency. With transport accounting for around 25 per cent. of UK carbon emissions, I agree that we need to take action in that area. The carbon savings from those measures alone will be some 2 to 3 million tonnes. We are also increasing our commitment to renewable energy by strengthening the renewables obligation, with higher levels of support so that the newer technologies receive the support that they need. That is in addition to existing measures to incentivise renewables, including £500 million of funding for a range of support programmes for emerging technologies.

Thirdly, we are doing more to reduce the carbon footprint of Government. We have made a pledge that the Government office estate will go carbon neutral by 2012. That will save approximately 160,000 tonnes of carbon—the equivalent of taking some 150,000 cars off the road. We are offsetting all official air travel, which will mitigate an estimated 300,000 tonnes of carbon dioxide by 2009. New sustainable operation targets have been introduced for each Government Department. We will shortly respond positively to the sustainable procurement task force report.

Fourthly, the Budget presented by my right hon. Friend the Chancellor set out a range of important measures: changes to car taxation; an incentive package for biofuels; and measures to encourage greater energy efficiency in households, including an extra 250,000 homes to be insulated over the next two years. That builds on the £320 million of investment this year through the Warm Front programme, which will help more than 100,000 households, and the energy efficiency commitment, which has delivered net benefits to households of more than £3 billion over the past three years.

Chris Huhne: Does the Minister recognise that the Chancellor’s Budget package on vehicle excise duty will raise £10 million less in cash terms in the current financial year than in the previous one? How does that make any substantial difference to the pattern of car purchases or to carbon emissions from personal transport?

Ian Pearson: At least the Chancellor’s Budget figures add up, which is more than can be said for the Liberal Democrats’ plans. I am sure that my right hon. Friend
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the Chief Secretary will have something to say about that in his closing speech. Additional support will fund 25,000 micro-generation installations in public buildings such as schools and hospitals over the next two years. My right hon. Friend the Secretary of State recently announced a switch of £10 million from energy efficiency into a new partnership for renewables, which will mobilise up to £500 million of investment to catalyse the expansion of the public sector renewables, potentially producing an additional 500 MW of renewable electricity.

Mr. Ellwood: In his Budget, the Chancellor introduced a new zero-rate road tax for environmentally friendly cars. How many cars are eligible for that and have signed up for it? I hope that the Minister can answer that question, as he did not answer my previous one.

Ian Pearson: I do not have the figures to hand, but if we cannot get them before the end of the debate I, or the relevant Treasury Minister, will be happy to write to the hon. Gentleman.

I appreciate that many hon. Members are interested in legislation on climate change, with some 398 having signed early-day motion 178. The Government have said in the UK climate change programme, and more recently in the energy review, that we are carefully considering the merits of introducing a carbon budget as a means of helping to deliver our goals. The only issue for the Government is whether legislation would help in the battle against climate change, support the efforts to join individual activity with business and Government leadership, and link domestic and international action. Legislating for targets is not the same as legislating the means to achieve them, and it is the latter on which we will all be judged. Consensus on goals is important, but without effective policy there is no effective response. The challenge for us as legislators is to ensure that we have the right mix of policy actions to achieve our ambitious goals.

Climate change requires change right across society—from central and local government, from individuals and from business—if we are to move towards one-planet living. I am proud that we were the world’s first Government to set a long-term target for carbon reduction consistent with the science of climate change, the world’s first Government to legislate for a climate change levy, the world’s first Government to introduce an emissions trading scheme, and the world’s first Government to meet and tighten its caps under the European emissions trading scheme. All those changes were met with scepticism, and some with opposition, but they were the right course of action. Now we need to go further. We will do so. We must put the world first, and I look forward to support from right across the House as we do just that.

8.36 pm

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