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We are setting out our commitment to strengthen the EU emissions trading scheme as the nucleus of a global carbon market. I will be discussing with business and
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environmental groups on Wednesday how we can develop a unified UK position for phase 3 of the EU emissions trading scheme from 2012. I am sure that we need to secure the long-term certainty of the scheme, to extend it to cover new sectors, especially aviation, and to link it to other emerging emissions trading schemes, notably those in California and other parts of north America.

Secondly, Stern argues for a stronger focus on technological co-operation, including the doubling of energy research and development support and a fivefold increase in low-carbon technologies. In March, the Chancellor announced the creation of an energy technologies institute, a new public-private partnership worth £1 billion of research and development funding into low-carbon energy technologies over the next10 years. Today, we can announce that two new companies will be joining the partnership, Scottish and Southern and Rolls-Royce, taking total contributions so far to £550 million, half of which has come from the Government and half of which has come from the private sector.

Stern also identifies a specific need to develop low-carbon transport fuels, which is why the UK has initiated a joint taskforce with Brazil, South Africa and Mozambique to promote the development of a regional sustainable biofuels strategy in southern Africa. The renewable energy and energy efficiency partnership, which the UK launched in 2003, is now working in more than 40 countries to develop policies and financing frameworks for investment in sustainable energy.

At the Gleneagles G8 summit last year, the UK was instrumental in establishing the energy investment framework to bring forward increased investment in energy efficiency and alternative energy sources. That was led by the World Bank and other regional development banks. The UK Government, with president Wolfowitz of the World Bank and the four leading regional development banks, are therefore pleased to announce today a partnership with the World Economic Forum and the World Business Council on Sustainable Development to stimulate private sector investment through that framework. President Wolfowitz and the Chancellor will co-host a conference early in February 2007 to kick off the partnership.

Thirdly, hon. Members on both sides of the House know that action to reduce deforestation, which makes up 18 per cent. of global greenhouse gas emissions each year and which is more than the whole of the transport sector, is important. Forests are of great global importance for climate change and biodiversity, but they are also the sovereign territory of the countries where they are, and only those nations can decide what happens to them. With the Governments of Brazil, Papua New Guinea, Costa Rica and the Coalition of Rainforest Nations, with Germany holding the presidency of the G8 and the EU next year, and with the World Bank and other interested parties, we will be exploring over the coming months how to mobilise global resources for sustainable forestry.

Fourthly, on adaptation, the review suggests that richer countries must provide financial support to developing countries to adapt to the changes in climate that are already in train. The UK Government are
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strongly committed to making climate risk reduction key to development activities. Contributions to the special climate change fund, the least developed countries fund and the Canadian international development research centre are additional to development finance and policy as part of this drive.

In all those four areas, the UK is determined to continue to show international leadership. That drive is strengthened by our domestic leadership. To be the most convincing persuaders abroad, we must be effective contributors at home. Between 1997 and 2005, when the economy grew by 25 per cent., the Government led the way to ensure that greenhouse gas emissions were cut by 7 per cent. We are exceeding our Kyoto targets and are the only country on track to double them. The ambitious commitments in the energy review to take a further 19 to 25 million tonnes of carbon out of the economy will add further impetus to reduce emissions.

We have now also decided to put in place a legislative timetable to become a leading low-carbon economy. Our climate change legislation will provide a clear, credible, long-term framework for the UK to achieve its long-term goals of reducing carbon dioxide emissions. The Bill will be based on four pillars. For each, we will give details at the time of the Bill’s publication. In addition, we are determined to promote the widest possible debate in the House and across the country about the contents of the Bill.

First, the Bill will put into statute the Government’s long-term goal to reduce carbon dioxide emissions by 60 per cent. by 2050 from 1990 levels. We will also consider appropriate interim targets. We are determined to enhance Britain’s competitive position and believe that business in particular will benefit from the long- term framework that is so important for effective investment decisions.

Secondly, the new legislation will establish an independent body—a carbon committee—that will work with Government to reduce emissions over time and across the economy. We will ensure that the committee’s advice is transparent, equitable and mindful of sectoral and competitiveness impacts, including the need to secure energy supplies at competitive prices.

Thirdly, we believe that targets need to be accompanied by substantive measures if they are to have credibility. Therefore, the legislation will create enabling powers to put in place new emissions reduction measures to achieve our goals.

The final pillar of the legislation will be to assess what additional reporting and monitoring arrangements are necessary to support our aims of a transparent framework for emissions reduction, including reports to the House.

The House and the country owe a huge debt to Sir Nicholas Stern and his staff for their outstanding work. His report should be a cause for alarm but also for action. The whole Government are determined to deliver that action, at home and abroad.

Mr. Peter Ainsworth (East Surrey) (Con): I thank the Secretary of State for his statement and for advance notice of it.

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The Opposition strongly welcome the findings of the Stern report. I cannot pretend to have read all700 pages, and I only hope that it has been printedon recycled paper. As the key findings were comprehensively leaked over the weekend, however, it has been possible to get the gist. Sir Nicholas Stern and his team deserve to be congratulated on their forensic and thorough analysis of both the dangers and the opportunities presented by climate change. The report is an important and profoundly serious piece of work.

In its overall message, Stern’s analysis reveals little that was not already known, but it puts beyond doubt the arguments that the Opposition have been advancing for some time, and that the Environmental Audit Committee has been advancing for even longer: first, that the activities of mankind and climate change are inextricably related; secondly, that we do not have much time, although we do have just enough time to take action to head off irreversible and catastrophic changes to the earth’s climate; thirdly, that we must decouple economic growth from carbon emissions and move quickly towards a low-carbon global economy; and, fourthly, that the costs of not tackling climate change will be infinitely greater than the costs of taking action now.

The Chancellor has rightly emphasised the need to put in place an effective, international, market-based system for reducing global emissions. I note that he proposes a new commission to take that forward, for which we have already called. It is good to see him accepting our advice. We have also called for a tougher and wider application of the EU emissions trading scheme as one means of creating a price signal for carbon. Again, it is pleasing to note that the Chancellor has caught up.

The Secretary of State has finally stopped playing hard to get over our calls for a climate change Bill, and announced that we will have one. I hope that he will confirm that that will form part of the next Queen’s Speech, which he omitted to mention in his statement. We look forward to debating the details of the Bill.

It is good that the Government have accepted the need for a new independent body, which will work with the Government to reduce emissions, but does the Secretary of State expect the carbon committee to set targets based on scientific evidence, as we do, or will the targets be set by Government on the basis of a wing and prayer? I remind the Secretary of State that his party has a very poor record on meeting its own environmental targets.

I note that the 60 per cent. reduction target is to be put into statute. What about the “interim targets” that the Secretary of State is “considering”? Unless they are statutory as well, they will be in danger of being about as meaningless as all the other targets that have been missed. I see no reference at all to the annual rolling carbon reduction targets for which we, and climate change campaigners, have been asking. Have the Government rejected that proposal?

The Secretary of State says that the final pillar of the legislation will be

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An assessment does not sound much like a pillar. Will the Secretary of State commit himself to an annual carbon budget report in Parliament? That would give him and his successors an opportunity to report on progress, and to set out any new measures that are thought necessary to ensure that carbon dioxide emissions are reduced before putting them to the vote.

What has the Secretary of State in mind when he talks of “enabling measures”? Will he assure the House that when he introduces any new measures he will do so in an upfront, transparent and open manner, and that the measures will be subject to parliamentary scrutiny and approval?

There is a real danger that the Government are intending to produce a watered-down climate change Bill, which will do little to impose the externally applied rigour that is needed to change the mindset of Ministers and civil servants. We do not want a watered-down climate change Bill, or a Bill based on four wobbly pillars. We want a Bill that will create a green revolution throughout government.

The Secretary of State can hardly have failed to notice that his own thoughts on measures to tackle climate change were leaked at the weekend. They included a range of new taxes. It was an interesting wish list, and if the Chancellor accepts any of the Secretary of State’s proposals we will of course examine them with care. We have been calling for a rebalancing of taxation to reward activities that do not contribute to climate change, and to bear down on those that do. The fact is that, since 1997, the proportion of tax revenues generated by environmental taxes has fallen from 7.7 per cent. to6.2 per cent. That trend needs to be reversed, but will the Secretary of State assure us that the Chancellor will not see it as a chance simply to hike up the tax burden yet again? We need replacement taxes, not extra taxes. Does the Secretary of State accept that the Chancellor’s record on introducing stealth taxes has seriously undermined public confidence, led to widespread and understandable cynicism, and made the job of persuading people of the need for green taxation very much harder?

We welcome the Stern report, but we are doubtful about the Government’s willingness or ability to follow through with effective action. Under Labour, carbon emissions have risen in five of the last eight years, and they are higher now than they were in 1997. According to Stern, the costs of dealing with climate change are increasing with every passing year. Has the Secretary of State calculated how much less expensive it would have been if the Government had acted sooner?

Is not the main reason for the Government’s failure to date that the Chancellor simply has not taken the issue seriously enough? Incidentally, where is the Chancellor? Given that Stern himself said this morning that the issue was far too important to be left to energy and environment Ministers, it is extraordinary that the Chancellor has done exactly that this afternoon.

The speeches surrounding the publication of the Stern report suggest that, at last, the Government have started to become more ambitious about climate change. If that is true, and if it is followed up with effective action, I shall be delighted. However, we have heard too many grandiose speeches from the Government before to be wholly convinced.

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The Government have dithered for too long. We now need decisions and action: we need to get on with the job.

David Miliband: I am sure that the hon. Gentleman would expect me to associate myself with his remarks about the Stern review and the excellent way in which it was done. Listening to him, you would have thought that the Conservatives had been the most enthusiastic supporters of the Government’s green measures over the past 10 years. You would have thought that the Tories had been champing at the bit for the climate change levy that was introduced—

Mr. Speaker: Order. The right hon. Gentleman should address the Speaker.

David Miliband: I am sorry, Mr. Speaker.

I wonder whether hon. Members noticed that the hon. Gentleman failed to apologise for the fact that the Conservatives opposed the measures that we took, including the climate change levy and the aggregates levy. He asked where the Chancellor’s decisions had led over the past 10 years. They have led to the United Kingdom being the only country in the world that has more than doubled its Kyoto commitment.

The hon. Gentleman asked about the work on annual targets that we have announced. I am glad that he did so. On Friday, the Leader of the Opposition said that we should have

The hon. Gentleman was quickly sent out to explain what the Leader of the Opposition meant—namely, that those would not be “rigid annual targets” but a “rolling programme of targets”. He also said—this is very helpful—

It does matter what the Opposition’s policies are. They are either a serious party of government or they are a shower; at the moment they are a shower, no matter how many windmills they put on their roofs.

Chris Huhne (Eastleigh) (LD): I, too, thank the Secretary of State for the courtesy of letting us have an advance copy of his statement.

I associate Liberal Democrat Members with the welcome for Sir Nick Stern’s excellent report. Sir Nick is one of the few British economists with a genuinely global reputation by virtue of his role as chief economist at the World Bank for many years. The report will have a serious impact not only in the business and economics community in this country but more widely—particularly, I hope, in the United States. It is significant because it turns on its head the old notion that we could delay action on climate change because the costs and benefits were out of line. It is clear from Sir Nick’s work that we must not delay in taking action.

I welcome the Secretary of State’s letter to the Chancellor—or was it the letter to The Mail on Sunday?—in which he set out a range of green taxes that bore more than a passing resemblance to a package that the Liberal Democrats voted on at Brighton. One could almost say that it was a carbon
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copy of our policies. I, for one, believe that imitation is the sincerest form of flattery, so I thank the Secretary of State for that.

We welcome the Secretary of State’s announcement of a legislative framework and an independent review body—the carbon committee. However, it is important that he tells us whether it will be able to take its evidence openly, whether its minutes will be published, like those of the Monetary Policy Committee of the Bank of England, and whether it will produce annual reports to this House assessing progress towards the targets on which all major parties in the House now agree, however belatedly in some cases. The problem is that the statement makes no mention of annual targets—indeed, in other places the Secretary of State has dismissed them—but merely mentions “appropriate interim targets”. What would we think of the Treasury if it did not set annual targets for its expenditure? On the other hand, the Secretary of State might think that not a bad idea, given the damage that he is inflicting on his own budget at present.

Is not this an entirely untenable position? Is not the Treasury, or any reputable economic forecasting organisation, fully capable of taking into account the effect of the weather on energy demand, carbon emissions and growth in gross domestic product? Is the Treasury really saying that all the work that the MPC, or any self-respecting economic group, can do on smoothed averages, cyclically adjusted figures and even weather-adjusted figures is completely irrelevant to the carbon framework? I urge the Secretary of State to look again at the possibility of setting more realistic targets that would allow this House to assess the trajectory in meeting those targets in 2030 or 2050. How on earth can anyone hold to account a Government who are up for election in 2009 or 2010 when the targets are being set for 2030 or 2050?

The report contains nothing about joined-up government, which is a key element of dealing with climate change, following on from the Stern review. When will the Government set up a Cabinet committee, headed by the Prime Minister or the Chancellor, with the clout to get the team of Ministers working as a team? If climate change is the No. 1 problem, as we have heard so often, why are flood defence budgets being cut? Why has the Treasury simply bottled out of taking on the fuel duty protesters year after year so that carbon emissions from transport have increased sharply? Why is the Department of Trade and Industry cutting the centres for ecology and hydrology, which help us understand the impact of climate changeon biodiversity? Why does the Department for Communities and Local Government sanction more than 100,000 new homes on flood plains, contrary to the advice of the Environment Agency? Again, that point was raised in the Stern review.

Why do not we get straight answers in plain English about those contradictions? On climate change policy, should not the Government play like a well-rehearsed orchestra? Instead, the players pay no attention to the conductor, and the orchestra is out of tune, off key and not playing to time. It is no wonder that climate change policy is a shambles. When will the Secretary of State start pulling the Government’s efforts together in a co-ordinated manner?

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