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House of Commons
Session 2006 - 07
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General Committee Debates
European Standing Committee C Debates

Limiting Global Climate Change

The Committee consisted of the following Members:

Chairman: Janet Anderson
Barker, Gregory (Bexhill and Battle) (Con)
Barlow, Ms Celia (Hove) (Lab)
Cunningham, Tony (Workington) (Lab)
Goodwill, Mr. Robert (Scarborough and Whitby) (Con)
Horwood, Martin (Cheltenham) (LD)
Huhne, Chris (Eastleigh) (LD)
Hurd, Mr. Nick (Ruislip-Northwood) (Con)
Iddon, Dr. Brian (Bolton, South-East) (Lab)
Jackson, Mr. Stewart (Peterborough) (Con)
Miller, Andrew (Ellesmere Port and Neston) (Lab)
Mullin, Mr. Chris (Sunderland, South) (Lab)
Pearson, Ian (Minister for Climate Change and the Environment)
Prentice, Mr. Gordon (Pendle) (Lab)
Emily Commander, Committee Clerk
† attended the Committee

European Standing Committee

Monday 30 April 2007

[Janet Anderson in the Chair]

Limiting Global Climate Change

4.30 pm
The Chairman: May I say to hon. Members that in the event of a Division in the main Chamber, we will adjourn the Committee for 15 minutes? For subsequent Divisions, we will adjourn for 10 minutes each. Members may remove their jackets, if they wish.
4.31 pm
The Minister for Climate Change and the Environment (Ian Pearson): Thank you, Mrs. Anderson. It is a pleasure to serve under your chairmanship.
I am sure that the Committee agrees that urgent action is needed to avoid, or minimise, the dangerous impacts of climate change. The European Union has proposed that the global mean temperature should not be allowed to rise by more than 2 C above pre-industrial levels. The European Commission communication that we are debating demonstrates that that target is technically feasible and economically affordable.
This month, the intergovernmental panel on climate change issued the starkest warning yet about the potential impacts that we face. Worldwide changes are already evident through changes in aspects of hydrology—snow, ice and glaciers—and through changes in migration patterns, earlier spring events and shifts towards the poles of ranges of plants and animals. This century, many millions more people are likely to face coastal flooding, drought and shortages of food and water, while up to 30 per cent. of all plant and animal species could be at an increased risk of extinction if temperatures rise by 2 C to 3 C. Even by 2020, there are likely to be drastic impacts on the worst affected areas. Some African countries could experience reductions of up to 50 per cent. in the output of rain-fed agriculture, and between 75 million and 250 million people are likely to experience an increase in water stress.
Some impacts are inevitable, but the worst are avoidable through concerted and immediate international action. By agreeing an ambitious and far-reaching package of climate change and energy measures at last month’s spring European Council, EU leaders demonstrated real global leadership. The unilateral commitment to cut EU greenhouse gas emissions by at least 20 per cent. compared with 1990 levels by 2020 was the first of its kind. However, the European Council went a stage further and agreed to achieve a 30 per cent. reduction by 2020 as part of a wider international agreement.
The spring package of measures will mean changes in the domestic policies of all member states, but the battle against climate change can ultimately be won only through global action, and a comprehensive global agreement including America, China and India is required. The European Council therefore also reaffirmed the importance of agreeing a long-term UN framework to address climate change. It set out a coherent vision for a post-2012 framework to broaden the Kyoto architecture that is constructed around agreed core elements.
A long-term stabilisation goal is needed to provide greater clarity to business, Governments and society at large on the overall direction of travel to move towards a new, low-carbon technology future. Such a goal would help to drive innovation by increasing the credibility of the policy framework within which private investors operate, and would provide the required impetus for the scaling up of investment that is needed to address climate change. The global carbon market needs to be strengthened and extended, and a common global carbon price should be established. The power of the market must be harnessed to ensure that private sector investments are directed towards low-carbon technologies. The carbon market is a key weapon in our armoury to tackle climate change, but it will not deliver any reductions in greenhouse gas emissions unless it is driven by meaningful targets.
The EU has demonstrated leadership in adopting targets, and the rest of the developed world must now step up to the mark. Further effective contributions by other countries, particularly the major emerging economies, will be needed. For them, sectoral-crediting approaches might be more appropriate than Kyoto-style targets. There needs to be increased collaboration in technology investment and transfer in order to stimulate research into and the deployment of low-carbon technologies to reduce emissions. Information, costs and efforts can be distributed efficiently through international co-operation in a world in which capital movements and investments have no national boundaries.
According to the Stern report, emissions from deforestation account for 18 per cent. of global carbon emissions. There are also growing emissions from aviation and maritime transportation. A future agreement must include incentives and strategies to tackle those issues without jeopardising economic growth.
A level of climate change is inevitable, and it is an issue for all sectors and countries. It is a particular challenge for the most vulnerable developing countries, which contribute the least to the problem, but will be most affected. Incentives and strategies to facilitate adaptation and enhance resilience to climate change must form a substantial and integral part of any global climate change agreement. As well as that, the principle of common, but differentiated treatment must run through all climate change negotiations.
The EU has shown leadership in tackling climate change, and it will continue to do so. This year, politics must catch up with the science, and we must get an international, political decision to launch negotiations on a comprehensive, global, post-2012 framework.
The Chairman: We now have until half-past 5 for questions to the Minister. I remind Members that those should be brief and asked one at a time, although I am willing to permit one supplementary to each question. There is likely to be ample opportunity for all Members to ask several questions.
Gregory Barker (Bexhill and Battle) (Con): Thank you, Mrs. Anderson. May I, too, say what a pleasure it is to be here this afternoon?
At the outset, the Minister rightly said that we need to set a long-term goal for stabilisation. What does he believe that that should be, and specifically what are the Government doing about it?
Ian Pearson: We believe that a long-term stabilisation goal can be expressed as parts per million of carbon dioxide in the atmosphere, or by limiting an increase in global temperatures. The EU has a firm policy of limiting global temperatures to no more than 2C above pre-industrial levels. The Government accept that and think that the level of CO2 in the atmosphere should be stabilised at between 450 and 550 parts per million. That is what Stern says about the science, and it is the basis of our discussions with the EU and other international partners, because we see a stabilisation target as key to a negotiating framework. We need a long-term goal, if we are to drive policies in all countries and avoid dangerous climate change.
Mr. Robert Goodwill (Scarborough and Whitby) (Con): I was interested to see that the report mentions not only CO2, but other greenhouse gases, such as fluorinated gases, nitric oxides and methane. Having been the rapporteur at the first reading of the F-gas report in the European Parliament, I was particularly pleased to see the reference to fluorinated gases. As I am sure that the Minister is aware, the European Parliament toughened its position on them quite considerably and is moving towards charging vehicular air-conditioning systems for CO2 emissions, rather than for just those of the more benign f-gases. As he knows, those gases have the same potential as CO2 for global warming. When the directive is revised and tightened up, will he look at air conditioning systems in buildings and fire protection systems? Currently, the directive refers to limiting leakages from buildings and a list of derogations.
The Chairman: Order. Will the hon. Gentleman keep his questions as brief as he can, please?
Ian Pearson: Clearly, the hon. Gentleman has a great deal of expertise in that area due to his background in the European Parliament. We need to look at all sectors and gases in order to avoid dangerous climate change. The Commission is well aware of and is considering the points that he has made. We need to move to a situation in which all our buildings are low or zero carbon not only in the UK, but across Europe. The directive requiring an energy performance certificate for all buildings was a major step forward, but more needs to be done. We will reflect on his points and bear them in mind during discussions in the Commission.
Martin Horwood (Cheltenham) (LD): It is a great pleasure to serve under your chairmanship, Mrs. Anderson. The Minister has referred to the ambitious targets in the documents, and the Government should take some credit for organising the Exeter conference on avoiding dangerous climate change, to which the documents refer. The conference sets out rather more pessimistic scenarios and gives rather more attention to feedback mechanisms than the intergovernmental panel on climate change report, which ruled out many issues on which there was not absolute consensus. Which is the more reliable guide as we go into the coming negotiations—the Exeter conference or the IPCC report? The EU documents imply that the conference is more reliable.
Ian Pearson: As the hon. Gentleman knows, the IPCC, in its fourth assessment report, which was published earlier this month, and its previous report, which came out a couple of months ago, provides the clearest evidence on the science. Its assessment represents six years’ work by something like 2,500 scientists and draws on peer-reviewed articles—it really is authoritative. As the hon. Gentleman has said, however, it is built on consensus, and some say that the risks are on the upside and that the science suggests even worse scenarios than the IPCC’s consensus report. Some of the papers submitted to the Exeter conference certainly presented an even starker picture than the IPCC report. The key objective is avoiding an above-2 C rise in global temperatures, and it is vital that we agree a long-term target internationally. That is what the EU is focused on, and that is what the UK is focused on in its negotiations.
Mr. Gordon Prentice (Pendle) (Lab): In terms of temperature increases, what is the tipping point after which changes in the global system, such as the thawing of the permafrost, will become irreversible?
Ian Pearson: It is not easy to give a straightforward answer to that question, because there is a huge amount of science on the issue and some scientific debate about the exact effects. Temperature increases of 2 to 3 C, which are highly likely if we do not take urgent action, will have significant impacts. The recent IPCC report on those impacts, some of which I mentioned in my opening remarks, shows that 30 per cent. of plant and animal species could be at risk as a result of such temperature rises. There would also be sea level rises and more adverse weather events. It is not possible to point to one temperature rise or to a certain number of parts per million of CO2 equivalent in the atmosphere and say that it will definitely be the tipping point, because the science continues to evolve. My worry is that the more scientific reports we see, the starker the picture will become. We are still playing catch-up with the science in terms of taking political action, and we need to get on with introducing policy initiatives globally.
Mr. Nick Hurd (Ruislip-Northwood) (Con): The Minister appears to have placed on record the Government’s commitment to play a part in trying to limit global climate change to 2 C. Why do he, in this comments today, and the Government persist in saying that a range of 450 to 550 ppm is a plausible stabilisation target, when the document states that recent research has confirmed that stabilisation around 450 ppm of CO2 has just a 50 per cent. chance of attaining that 2 C objective? The Stern report makes it clear that the probability of 550 ppm being compatible with a 2 C target is remote.
Mr. Hurd: Thank you, Mrs. Anderson, for the chance to ask a supplementary question.
I fully understand the Minister’s point about the difficulty of the challenge, and there is considerable uncertainty about the science. My point is that 450 to 550 parts per million is an enormously broad range, and given what I have said about the low probability that the top end of the range is consistent with 2 C, would not our dialogue with the public be honest if we stepped back from the figure of 550 parts per million, which is clearly incompatible with the goal?
Ian Pearson: When it comes to tackling climate change, we want an open and honest dialogue with people in Britain and throughout Europe. The draft Climate Change Bill, which is out to consultation, is intended to do just that, and there is no serious disagreement between us on the issue. The figure of 450 parts per million will be incredibly difficult to achieve; 550 parts per million will be more manageable, but it will still require massive international commitment and agreement. We would like to see stabilisation at the lowest level possible, but we must face the facts that the level is already 430 parts per million and that we are rapidly heading towards450 parts per million. That is why it is imperative that we make progress this year on agreeing a comprehensive negotiating framework, which is why negotiations must be concluded by 2009. There must not be a gap between the end of the Kyoto commitment period in 2012 and a regime that takes even tougher action to reduce greenhouse gas emissions.
Andrew Miller (Ellesmere Port and Neston) (Lab): May I follow my hon. Friend the Member for Pendle and invite the Minister to look at the map on page 49 of the bundle? It sets out significant climate anomalies and events in 2005. The huge number of anomalous events should be looked at as a snapshot in time, but the most important factor is that the events are increasing in number and severity. Does not that information give the lie to people who argue that climate change is not a real phenomenon?
Martin Horwood: The hon. Member for Ruislip-Northwood made a very strong point about the overall parts per million. The Minister is right to say that we all agree that the challenge is very difficult, but to aim only for a range in which the upper limit gives us a50 per cent. chance of failure on so critical an issue seems to me to lack ambition.
May I ask the Minister about another range of targets? I am referring to the relationship between the targets in these documents—for instance, the suggested 30 per cent. reduction, by international agreement, in CO2 by 2020—and those in the Government’s draft Climate Change Bill, which offer only a range between 26 and 32 per cent. Surely if the Government’s target is met only at the lower end of that range at 26 per cent., we will miss that suggested international negotiating framework.
Ian Pearson: First, we need to pay due credit to EU leaders and what was decided at the spring European Council. It is a real landmark decision to say that we will have a unilateral commitment to a 20 per cent. reduction in CO2 emissions and that we will go to30 per cent. if there is international agreement.
In our policy statements so far in the United Kingdom and in the Climate Change Bill, we have said that we want to legislate to set a target of 26 to 32 per cent. by 2020. That target might need to change, just as, when we examine the evidence, our 60 per cent. target by 2050 might need to change. That is why there is provision in the Bill for flexibility to consider the setting of targets in the light of international agreement.
Of course, we want to see an international agreement on a successor to Kyoto, and we want it to include aviation emissions and other emissions. We would be delighted if, as a result of international agreement, we had to revise our targets, because that would mean that we were genuinely making global progress and getting global agreement on the need to stabilise CO2 levels, which is a very difficult challenge.
Martin Horwood: I am grateful to the Minister for his confirmation that the targets in the Government’s Climate Change Bill may need to change. That is a very welcome concession and reinforces the belief that it might apply to the 2050 targets as well, as this document also refers to a reduction in the range of between 60 and 80 per cent. by then, whereas the Climate Change Bill refers to only 60 per cent. However, he is referring to a target that is in the documents with international agreement—
The Chairman: Order. May I ask the hon. Gentleman to restrict himself to asking questions, rather than making speeches?
Martin Horwood: I am grateful for your guidance, Mrs. Anderson. The documents refer to a target by international agreement of 30 per cent., but an independent target of only 20 per cent. Will the Minister explain the logic of an independent target that would be lower than the internationally agreed one, which would presumably be needed only in a scenario in which there was less international agreement and therefore more need for action?
Ian Pearson: If there is to be any sort of international agreement that will stabilise CO2 levels at an acceptable level to avoid dangerous climate change, we will need to achieve more than a 20 per cent. reduction across the European Union. I think that that is quite clearly recognised by countries in the EU. As I understand it, the reason why a 20 per cent. figure was chosen unilaterally was to send the right long-term signals to businesses, which will be making significant investments in energy infrastructure over the next 10 to 15 years. Clearly indicating the direction of travel—saying that we will definitely do 20 per cent. unilaterally, but we are certainly prepared to do 30 per cent. as part of an international negotiation—sends a powerful message. It shows the rest of the world that the EU is prepared to take on its responsibilities for tackling global emissions. I believe that we have given a kick-start to the negotiation process by making that commitment.
I want to clarify that what I have said was not a concession. The flexibility to consider future targets in the light of changing circumstances is built into the Bill. We hope that such changing circumstances will involve a comprehensive global agreement on tackling climate change.
Gregory Barker: The Minister is right to talk about the need for both multilateral international action and urgent unilateral action at home. In his opening remarks, he chose to focus on the problem of the increasing levels of emissions from the aviation sector. What steps are the Government taking domestically to change the path of increasing levels of emissions from aviation?
Ian Pearson: Across the European Union, the UK has pushed for aviation to be included in the emissions trading regime and, during our presidency of the EU, we obtained a commitment from the Commission to consider and agree to that. The Commission made some proposals regarding that matter, and we are pushing the EU to implement them as speedily as possible. At the moment, it is proposed to include all intra-EU flights by 2011 and all departing and landing flights by 2012. If possible, we want to bring forward that time frame, because aviation is one of the biggest sources of the rapid increase in CO2 emissions. We have also taken domestic measures, such as doubling air passenger duty, which was announced in the Budget. That will have an impact on the issue and will save, if I remember correctly, around 0.7 million tonnes of carbon. Those measures were opposed by the Opposition.
Mr. Goodwill: The document, for example on page 4, mentions reducing the impact of emissions from transport by developing sustainable biofuels. The fact that the word sustainable is used demonstrates that not all biofuels would necessarily be sustainable. Is the Department or the European Commission carrying out any assessment of the net environmental impact of biofuels produced in the EU or those imported into the EU from further afield?
Ian Pearson: Much research is taking place in that area, and there is a significant amount of concern that deforestation is occurring because of the need to plant palm oil, which is why there is a round table on sustainable palm oil. In the UK, we are working on assurance standards to ensure that the biofuels that come into the UK are from sustainable sources. We would like some form of sustainability standard right across the European Union. Indeed, there should be a global standard on sustainability, because it is simply not acceptable to develop biofuels at the expense of increasing deforestation, which does nothing for the environment or for our climate change targets.
Mr. Prentice: My friend the Minister told us a few moments ago that deforestation accounted for 18 per cent. of global carbon emissions. The document pack states:
“The role of emissions from deforestation will be key to meet the 2C objective”,
which is what we have discussed. Does my friend have any examples of reforestation, perhaps in south America or in the Congo? What are we doing about introducing financial incentives to persuade people that it is not in our collective interests for forests to be chopped down?
Ian Pearson: China is the best example of reforestation. It is planting huge amounts of forest every year—I think that it is planting more trees than the rest of the world combined at the moment, which is making a difference. However, deforestation is still a big issue. In that context, the Stern report mentions18 per cent. and the Commission document mentions 20 per cent. of global CO2 emissions. It is important that we avoid deforestation in the future, which is why much international negotiation has focused on that issue. We already have some mechanisms to provide incentives for reforestation and afforestation. For example, the clean development mechanism, which is one of the mechanisms from the Kyoto protocol, allows for such projects. However, it does not allow for deforestation projects, because of concerns about displacement. Providing incentives to avoid future deforestation is high on the Government’s political agenda and the international agenda. We should be able to solve the problem, and if we can stop deforestation within a close and measurable period, we can avoid 18 to 20 per cent. of global CO2, which is important.
Andrew Miller: Up to 2030, China and India alone are predicted to build about 1,100 GW of new power stations, and over the same period, according to my understanding of the document, Europe intends to reduce its reliance on the nuclear cycle. Is that not a contradiction of our objectives, and would it not be more logical for Europe, which has the leading science in the nuclear cycle, to expand its use of nuclear power? I am conscious of the constituency of my hon. Friend the Member for Workington, the Whip.
Ian Pearson: Clearly, nuclear energy is low-carbon energy, and at the moment about 20 per cent. of the UK’s electricity comes from nuclear sources. If we do nothing about that, it will decline to 6 or 7 per cent. by 2020. At the same time, we are moving from obtaining 80 to 90 per cent. of our oil and gas from the North sea to importing 80 to 90 per cent. of it in 2020. In the energy review, we are considering how to get the right energy balance for the UK’s future, bearing in mind what we know about climate change and our energy security needs.
When we publish the energy White Paper, we will also publish a consultation document on nuclear. The Government’s initial view is that there is a case for a nuclear new build programme, and we want to test that view through the consultation exercise that we will launch with the energy White Paper.
Gregory Barker: First, on deforestation the Minister rightly said that, by and large, it is not covered by the clean development mechanism, which is a hindrance to greater international investment in programmes. What are the Government doing to promote their inclusion in a post-Kyoto framework, and what are their objectives post 2012?
Secondly, in the short term—the Government have much more control over this—are any reforestation programmes included in the recommended offset programmes that the Government have favoured in their own code? If they are not included, why not?
Ian Pearson: First, deforestation is a key element of what the UK wants to see in a future negotiating framework. Our objective is clear: we want to stop it, and we must find mechanisms to ensure that we cando so.
One of the announcements in the Budget was that there will be an international window to the environmental transformation fund. The Chancellor announced an £800 million fund, of which the first £50 million will go to 14 countries in the Congo basin to tackle deforestation. That is a clear statement of the Government’s commitment on tackling deforestation.
As I have said to my hon. Friend the Member for Pendle, this is a problem that we should be able to solve, which would bring enormous gains in avoiding dangerous climate change.
Martin Horwood: The Minister has rightly pointed out the importance of gaining international agreement for the process. Does he support the initiative of the German Chancellor, Angela Merkel, to draw the United States into the post-2012, post-Kyoto framework at her meeting with George Bush today? Would he ultimately like states such as California and the north-eastern states to be included in the emissions trading system as a result of such co-operation?
Ian Pearson: The UK has for a considerable time been having discussions with the United States to persuade it that it needs to sit down around the table and negotiate a meaningful comprehensive global agreement on what happens post-Kyoto. One of the things that we achieved during our presidency of the G8 was to set up the Gleneagles dialogue, which includes the US. It provides a good political space in which to discuss climate change issues.
We have an extensive range of contacts, not just with the current US Administration, but at state and congressional levels as well. I believe that public opinion is changing in the US, partly as a result ofAl Gore’s film, partly as a result of hurricane Katrina and partly for other reasons. People and businesses increasingly recognise that the US needs to get involved with the successor to Kyoto, and that it should not be frightened of participating in trading mechanisms. That is why California is discussing an emissions trading scheme, and why the north-eastern states, the so-called Reggie states—that is, those states that are participating in the regional greenhouse gas initiative—are at an advanced stage in planning an ETS. The ability to link schemes globally as part of having a global carbon price is one of the key elements that we need to discuss in international negotiations, if we are to get a successor agreement to Kyoto that will really work.
Martin Horwood: I welcome the Minister’s optimism—obviously, it is right to be optimistic when going into international negotiations. However, I am not sure that he answered my question about whether he would like California and the north-eastern states to join the ETS. Obviously, that scenario would become more important if by any remote chance we were to fail to include the US in the post-Kyoto scenario. In that situation, would he like to go it alone with California and the north-eastern states? What sanctions wouldhe have against the US if it were not a participantin a post-Kyoto agreement, which is an issue thatSir Nicholas Stern raised in his report?
Ian Pearson: Our clear preference is for the EU ETS to be able to link to other schemes. The review of the ETS directive, which is taking place at present, has that as one of its areas of focus. Clearly, the ideal situation would be to link with a US-wide scheme that involves levels of effort that are comparable to those of the EU ETS, but, if that were not possible, we would certainly want to consider the ability to link with other trading schemes at a state level.
Over a period of time, we will see pressure grow in the US for a federal scheme, rather than just the schemes adopted by groups of states or individual states. Some of the American companies that I deal with have said that a federal trading scheme would make a lot more sense, and we will start to see more pressure in the future from the US business community for such a scheme.
Mr. Hurd: I welcome the emphasis that the Minister and the document place on reversing deforestation. May I press him to be a little more specific about the focus of the Government’s negotiations? Are we talking about introducing into carbon markets that are, frankly, quite shallow a new credit for avoided deforestation, or are we talking about the creation of a new financial incentive?
Ian Pearson: We could be talking about both, but we need to be talking. In Bali in December, we need to secure a framework with certain key elements, such as a stabilisation target, global carbon markets, mechanisms for technology transfer, more mechanisms to help countries—particularly the poorest—adapt to climate change and an approach to deforestation based on what is required.
We need to discuss and negotiate with other countries the policy instruments that have to be developed. Again, one way to discuss such issues is through the United Nations framework convention on climate change. As the hon. Gentleman will know, there are various work streams at the moment. Clearly, we need to do more than we are at the moment, because we are not stopping the problem.
We are seeing significant successes on reforestation through CDM funding, which is welcome, but the issue is still huge. We are flexible, whether we are talking about separate funding mechanisms from the World Bank or the regional development banks rather than the carbon markets, or about a mixture of such funds and private funds through the carbon markets. We need to find something that works and that has international agreement.
Mr. Goodwill: Despite Channel 4 documentaries, the majority of people see the views of scientists who say that global warming is not due to man’s activities as becoming discredited and marginalised. However, there is another group of scientists, typified by Bjorn Lomborg of Denmark, that says that we should have a plan B to mitigate the effects in case the plan in the document does not work. Is the Minister’s Department or the European Commission working on a plan B in case we fail to achieve the reductions in greenhouse gases that we would all like to see?
Ian Pearson: Let me put it this way: as a Government, we have always believed that we need to take action to mitigate our own domestic carbon emissions and to obtain international agreement on the need for a stabilisation target and for other countries to mitigate their carbon dioxide emissions. At the same time, however, we have recognised that a certain amount of climate change is already inevitable. That is why across Government we have been doing work on an adaptation policy framework, and I hope to publish that framework by the end of this year.
Climate change risk needs to be factored into the business models of a range of our industries. Both mitigation and adaptation are required for the future. Whatever emissions pathways and scenarios are talked about in some IPCC projections, they all look pretty much the same for the next 20 years, because of the time lag in the carbon cycle. Even if we were totally successful in reducing CO2 emissions from today, we would still have to adapt during the next 20 to 30 years.
Mr. Goodwill: So why are we still building on flood plains?
Ian Pearson: We rarely build on flood plains in the United Kingdom. The Environment Agency produces the relevant figures in its annual reports, and it pretty much opposes all development on flood plains. In some instances, when all the evidence has been considered, it might be sensible to build on a flood plain—often when that would give the opportunity to strengthen flood protection for homes already on it. We should not be completely dogmatic on the issue, but the Government certainly accept the general proposition that building on a flood plain is a bad idea.
Andrew Miller: One reason why we recently captured investment by General Motors was that this country, through Treasury fiscal policy and work within the Minister’s Department, has a strategy to bring together investments in science and help us move forward to the next generation of personal transport. Clearly, that is important to my constituency. Can we be assured that the same joined-up approach will occur in the European dimension? Unless we take a lead in developing hydrogen, in particular, as a fuel, we shall lose a huge number of jobs to people further to the east of Europe.
Ian Pearson: My hon. Friend has put his finger on an important issue. Carbon abatement opportunities are not necessarily as extensive for transport emissions as they are for other sectors of the UK economy. He will be aware of the Commission’s initial view about reduction, which is reflected in the Commission document that we are debating with respect to the adoption of a mandatory target for car emissions and the proposal to attain the figure of 120 g per km for new vehicles. That is an important step forward, but as to its achievement, we need more feasibility research. Among the Chancellor’s announcements in the Budget was a study of the long-term technical possibilities for new car technologies, which is very exciting.
I understand that the Chinese have already committed themselves to the figure of 15,000 such cars in Shanghai by 2015, which is pretty ambitious—I am not sure whether I would want a hydrogen power station outside the House of Commons. However, that shows that research on low carbon and zero carbon technologies for the future is taking place not only here and in the European Union, but in China and elsewhere. Technology investment is a key element that we need to agree as part of the negotiating framework.
Andrew Miller: I have driven a hydrogen car from the Palace of Westminster; there was no risk. On the second part of the question, is there the same degree of joined-upness in other European countries in the European Union?
Ian Pearson: It is not particularly up to me to discuss the position of other EU member states. However, as to what the Commission is trying to achieve, and the research and development funding that receives support through the Commission as part of its programme, there is a lot of joined-upness. I have said before that there is no such thing as national science and research, just as there is no national multiplication table—well, it was Chekhov who said it, actually, and he said it better than that—but the key thing is collaboration between different countries and companies. An awful lot of work is going on and new technology solutions will have an important role to play in reducing CO2 emissions. That applies to the automotive industry just as it does to other industries.
Gregory Barker: Reforestation is turning out to be a bit of a theme this afternoon, and the Minister has been eloquent on it. I want to press him to answer a question that I put to him earlier, which he may inadvertently have missed out. The Government have four approved carbon offset schemes. Does reforestation form part of any of them? If not, why not?
Ian Pearson: No; reforestation is not part of the Government’s carbon offsetting fund at the moment. We do not generally tend to favour reforestation projects, because we believe that they may provide only a temporary solution to CO2 emissions, without guarantees that the forests to be planted will remain for the next 100 or 200 years, or longer. We have so far favoured other projects with definite, clear long-term CO2 reduction benefits.
Gregory Barker: Is not that a contradiction, given the welcome emphasis placed on reforestation by the Chancellor, and the announcement of the scheme in the Congo? Is there not a lack of synchronicity between the Government’s focus on the Congo and reforestation, which are very welcome, and their incredibly backward-looking, narrow approach to selecting carbon programmes for their approved list? Will the Minister undertake to reconsider this matter? I understand that there is a consultation period for the list. Will the Minister undertake that at least one of the programmes on the revised list—perhaps he will also update us on progress on that—will include some measure of reforestation?
Ian Pearson: I confirm that we have been consulting on the Government’s carbon standards in relation to our carbon offsetting fund. I am happy to reconsider this matter, but we have tended to believe that energy efficiency projects that provide guaranteed long-term CO2 reductions are preferable. Let me be clear, however, that we need to do all that and more. We need to avoid deforestation, and we need reforestation projects. We need energy efficiency projects as well as projects through the CDM and other routes which enable developing countries to introduce low-carbon technologies and zero-carbon energy for the future. All those things need to be part and parcel of Government policy and an international agreement on what happens after Kyoto.
Mr. Hurd: The Minister has mentioned the environmental transformation fund, of which £50 million is earmarked for reforestation schemes. What can we expect the other £750 million to be spent on?
Dr. Brian Iddon (Bolton, South-East) (Lab): I shall be brief, Mrs Anderson. I apologise for arriving late, but I have been trying to serve on two Committees.
I want to flag up with my hon. Friend the Minister an issue relating to carbon dioxide emissions and climate change that is of great concern to me. The Science and Technology Committee is currently looking at marine science. Is the Minister aware—I hope that he is—that 50 per cent. of the carbon dioxide that has been emitted, in various ways, in the 200 years since the industrial revolution has been absorbed by the sea, resulting in its increased acidification? If we carry on acidifying it to the same level, or to a higher degree, in this century, we can say goodbye to coral and most of the species in the sea that rely on calcium carbonate and the carbon cycle in general, such as shellfish. When the Minister considers climate change with his officials and with the EU, will he bring that point to their attention? Also, can we discuss the effects of the acidification of the sea when we discuss climate change?
Ian Pearson: My hon. Friend is absolutely right to highlight the impact of ocean acidification: we are already seeing the bleaching of coral reefs. Much of the scientific research on this issue predicts serious impacts on coral reefs, such as the great barrier reef, from pretty modest temperature rises. We do not talk about this issue enough, as we tend to focus on the atmosphere rather than what is happening in our seas, but both are important to the world’s ecosystem. This issue has not been forgotten by the Government.
Mr. Prentice: Generally, the debate is about carbon dioxide and carbon footprints, but, of course, methane is a problem as well. Government documents point to cattle as a source of methane. What practical measures can we take to reduce methane emissions?
Ian Pearson: Methane is included in the basket of six greenhouse gases measured by the industry and reported on under the Kyoto protocol. I am pleased to tell my hon. Friend that methane levels in the United Kingdom are decreasing—they have been on a downward path for a number of years—but we can do more. In particular, I highlight anaerobic digestion, a developing technology on which the UK can do more. It could provide major benefits for the farming community and help us to meet our climate change targets.
Gregory Barker: There is a great deal in the document about the EU ETS, a major tool in which we all place great hope. However, thanks to the linking directive, European companies are entitled to use Kyoto compliance credits in order to meet their targets under the trading scheme. Will the Minister tell us what percentage of corporate carbon reductions he anticipates will be absolute reductions, and what percentage will be achieved simply through importing those credits? On the aviation industry specifically, he hopes that the aviation industry will be brought under the trading scheme in 2011-12. To what extent does he think that that will result in absolute reductions in emissions? Will companies just hike up fares and pay for reductions elsewhere?
Ian Pearson: The first thing to mention is the importance of carbon markets in reducing carbon emissions at the lowest cost. Under the trading scheme, the carbon market provides an incentive to companies to reduce their direct CO2 emissions. If a company’s emissions are less than its allowance, it can sell the additional ones in the marketplace. If its emissions are likely to exceed its allowance, however, it will have an incentive either to reduce its direct emissions or, if that would be too expensive, to buy the equivalent reduction from elsewhere through the joint implementation mechanism or the CDM. That is a strength, because a tonne of carbon dioxide emitted is a tonne of carbon dioxide emitted. It does not matter whether it is emitted by a manufacturing business in Birmingham or by one in Bangalore. If it is more effective for a Birmingham business that is part of the trading scheme to secure a reduction in carbon emissions in Bangalore rather than in the west midlands, it is sensible that it should do so. So carbon markets are important.
There are supplementary rules—
The Chairman: Order. I suspend the Committee for 15 minutes to enable hon. Members to vote in the main Chamber.
5.29 pm
Sitting suspended for a Division in the House.
5.44 pm
On resuming—
Ian Pearson: The decision on the phase 2 national allocation plans for the EU emissions trading scheme was that 8 per cent. of the allowances surrendered by EU ETS installations could be CDM credits, which confirms the UK view that efforts need to be made in the UK. It is in the long-term interests of many companies and sectors to do the job themselves and to move towards being low carbon, rather than simply to buy in credits.
On the hon. Gentleman’s question about aviation and the clean development mechanism, the Commission’s proposal suggests—
The Chairman: Order. That brings us to the end of the time allotted for questions.
Motion made, and Question proposed,
That this Committee takes note of European Union Documents No. 5422/07 and Addenda 1 and 2, Commission Communication: Limiting Global Climate Change to 2 degrees Celsius—the way ahead for 2020 and beyond; endorses the Government’s support for the ambitious reduction targets that the EU has put forward and supports the Government’s objective of ensuring that European policy on climate change continues to demonstrate the leadership that is necessary to galvanise the international community to work towards a global and comprehensive post 2012 agreement.— [Ian Pearson.]
5.45 pm
Gregory Barker: Now we will never know what the Minister was about to say. I hope that he might enlighten us in his closing remarks, because it sounded like an interesting answer.
I thank the Minister for answering a series of questions arising from the useful document before us. It is the first time that I have debated a document in Committee that has not been a piece of legislation; nevertheless, it has served a useful purpose. The communication comprises a package of proposals for 2020 and beyond to ensure that global climate change is limited to 2 C above pre-industrial levels. The communication has been published in parallel with the European Commission’s strategic energy review, and we await the Government’s energy White Paper. I should be grateful if the Minister could confirm whether he has a date for its publication, which should be only a matter of weeks away now.
Ian Pearson: My understanding is that the Financial Times says that the White Paper will be published on17 May, and the Financial Times rarely gets it wrong. Perhaps I should not say any more than that.
Gregory Barker: I am old-fashioned because I was labouring under the impression that the Financial Times got its information from the Government, rather than the Government from the Financial Times. Perhaps that shows how out of touch I am.
The document follows up the 2005 communication “Winning the Battle Against Global Climate Change”, which provided recommendations for EU climate policies and set out key elements for the EU’s future climate strategy. The official Opposition are wholeheartedly behind the Minister when he says that we must hit those targets. Indeed, we are undertaking our own work to determine whether we need to go further and to be more ambitious than the figures of 2 C and 450 to550 ppm to which the Minister subscribes. There is a growing feeling that they are too unambitious, and that if we are to avert the very worst effects of man-made climate change within this century, we will have to go further—there is no other choice for us.
We heard some well-informed questions from hon. Members on both sides of the House and well-informed answers from the Minister, but as everyone on the Committee knows, the issue is complex. Although not all my concerns that arise from the EU’s climate change strategy will be addressed today, I shall put to the Committee a few that arise from the document. We wholeheartedly agree with the 2 C aspiration, but we think that it may have to go further and happen faster. The costs of meeting it far outweigh the economic costs—to say nothing of the social and human costs—of not meeting it.
It is worth putting on record that the commissioning of the Stern report is one of the achievements of this Government. It is a useful and important piece of work, and I know that having been sent abroad,Sir Nicholas has been an important ambassador for it. When I have been abroad, people have told me that they have eagerly bid for him to visit. One need not agree with everything in the report to recognise the contribution that it has made to the debate on climate change.
The Government have done a lot of work on priming the debate, but let me explain where our criticism kicks in. If we look beyond the debate and the Government’s agenda setting, there is a very disappointing lack of action, which is calculable and readily auditable in the sad failure to make a material reduction in our own carbon emissions since the Government came to power 10 years ago. If we look to the medium term, there is no real prospect of a significant increase in the progress that we are making towards future reductions. Everything seems to be pushed back further and further. It is one thing to have ambitious long-term targets, but we need short-term action.
That is why I was disappointed when the Minister spoke about aviation. He was hoping that progress on aviation would start to kick in with the EU ETS in 2012, but we require urgent action; the Minister is right about that. That time scale simply is not sufficient. If we accept the Al Gore premise that we have a relatively short time—perhaps a decade—in which to take action or we will cross the tipping point, we simply do not have time to wait for long-term multilateral mechanisms to kick in before we get our house in order.
We can build significantly on the international advocacy work that the Prime Minister and his Government have done if we now take corrective action ourselves. That means actually delivering. To that extent, one of Sir Nicholas’s key recommendations in his report—that there be a climate change Bill—was fundamental and we welcome the Climate Change Bill, but that in itself is still really an enabling mechanism. Very little in the Bill will in itself drive down carbon emissions; it will just make it easier to implement other policy initiatives. It will provide the monitoring, auditing and accountability that we want. However, it will not be effective unless the Government change their mind, step up to the plate and have annual targets. Only then will we start to see a greater correlation between the ambitious rhetoric, which we have no problem supporting, and the delivery of carbon emission cuts.
Since my right hon. Friend the Member for Witney (Mr. Cameron) became the leader of the Conservative party, we have consistently said that tackling global warming is one of the greatest challenges that we face and that the UK needs to play a leading global role in that. Members of the Committee will know that the UK is directly responsible for only 2 per cent. of world emissions. However, it has been calculated that our business interests held through investments in the City bring that figure much closer to 15 per cent., as the UK often punches above its weight both economically and politically.
Scarcely a month goes by without new scientific evidence reinforcing the notion that the actions of mankind, which is addicted to fossil fuels, are causing irreparable damage. Across the globe, temperatures have been rising at an unprecedented rate for the past century, and we are now witnessing more and more unusual weather events, as the Minister said.
In that respect, the information in the report was useful. There is now so much information on climate change that it is unusual to find that something new or useful has been said about the subject. To that extent, I am sad that the copy that I had was relatively poorly produced, because, as highlighted earlier, the report contains some good graphics, which deserve a wider audience. We have now heard about the Al Gore film so often that it is becoming a bit tired and an old chestnut—certainly to those of us around the Westminster village—and new, updated information deserves a wider hearing.
The Minister spoke about the EU ETS, and he is right that we need to harness the power of the market to provide long-term, effective solutions to climate change, but there is growing concern about the over-dependence on the scheme. An article in the Financial Times suggests that although the ETS is a market mechanism, it is flawed in many ways:
“Project failures and over-optimism...together with a tendency to exaggerate in applications, mean that 40-50 per cent. of the carbon credits anticipated under the Kyoto protocol will never be delivered”.
I do not want to damn the ETS or say that it does not play a significant role in the strategy, because it does, but we must not be blind to its shortcomings or to the inefficiency of programmes sponsored under it. I hope, therefore, that the Minister will look at the report and at the current analysis of the effectiveness of ETS-sponsored programmes to ensure that companies in the developed economies do not simply pay a premium to carry on emitting carbon at the expense of a genuine transition to a low-carbon economy.
Unfortunately, the allocation of credits under the EU ETS to date has been nothing short of scandalous and has undermined the very market that we are trying to create. The price of carbon has tumbled as a result of gerrymandering and the fiddling of allocations, although not in this country, and I pay credit to the Government for coming in at the right end of the allocation spectrum. However, across the EU as a piece, the situation is laughable, and any real attempt to pump-prime the market has been completely pole-axed by a failure to recognise the imperative of a rigorous standard applied even-handedly across the union. That has not taken place. Unless the EU acts to bring that about, it will bring its own scheme into disrepute, and that would be a terrible shame, as to date it is the only trading scheme of any real substance anywhere on the planet.
If the EU, of all institutions, cannot get the ETS to work effectively within its frontiers, there is no hope for a more ambitious scheme that would bring in California and, I hope, the rest of the US in due course, as well as developing economies. In the EU ETS, we have the nugget of a global solution, but, on current trends, unless the Commission and the member states get a grip on matters, its potential will not be realised. I would welcome the Minister’s thoughts on how we can avoid the very real problems that have been experienced in trying to implement a stringent EU ETS allocation, and perhaps he could share his thoughts on whether he believes that there is a need for some form of independent scrutiny, at the very least, in setting ETS allocations.
One of the reasons that we have been calling for a long time for the extension of the ETS is that, in the long run, it will bring in countries such as the US and even India and China, and that would be a good thing if we can get it right. Doing that would require a global framework and focusing the minds of politicians and investment communities. However, there is no direct reference to such a proposal in the document. Doesthe Minister plan to make representations to the Commission about that aspect of the scheme?
Instead, the communication calls for a new approach to the Kyoto pre-development mechanism and recommends that it should be streamlined and expanded. On page 6, it also highlights the need for strengthening the EU ETS after 2013 by extending it to other sectors such as aviation and to other gases, and to abatement methods such as carbon capture, which is not covered currently. We agree with the communication’s placing such importance on the role of markets in tackling climate change. Although the experience of the EU ETS to date has not been wholly satisfactory, largely for the reasons that I have given, the principle of trading emissions remains sound. It is a shame that the document does not address the long-term implications in more detail.
To be successful, oversight of a global scheme will require a new, impartial and authoritative international body to be established. The problems with the EU ETS just in Europe, to say nothing about going global, have highlighted the difficulties. Such a body would need to command the trust of developing, rapidly developing and developed countries in equal measure. Perhaps its terms of reference would be analogous to those of the World Trade Organisation. There would have to be maximum co-operation between the two bodies.
I wish the communication had included that proposal. Such ideas must be discussed and evaluated before we can come to any firm conclusions. Something that is not legislation but simply a document like this one offers an opportunity to put such a proposal on the agenda. Perhaps the Minister would like to consider that, and perhaps the Commission could carry out a feasibility study on the establishment of such a body.
The Conservatives also recognise that the Commission needs to provide necessary incentives to encourage emissions reduction among the EU trading partners. However, I remain concerned that that could pose the risk of creating protectionist EU trade policies, wrapped up as environmentalism. As the Minister will know, the idea of imposing higher import tariffs on goods from countries with rapidly growing levels of pollution, such as China and India, was advocated by the French Government. Furthermore, the environmental credentials of some current EU trade policies also need to be considered, following publication of the communication.
An example is the imposition of tariffs on biofuels from Brazil. They might be produced more cheaply there than in the EU, but there should be real transparency about the genuine eco-value that biofuels have, as well as their economic value. There is now great concern, as was explained earlier, that a global trade in biofuels does not create the economic benefit that one might automatically assume if they are grown at the cost of degradation in otherwise natural rainforest, or if the carbon footprint from transplanting them all the way to the EU does not make sense within a carbon alleviation programme.
With biofuels in particular we need a holistic view and a more considered and forceful European policy to ensure that they play a full part in carbon abatement and do not become a type of fool’s gold. I was shocked by a meeting that I had with the chief executive of one of the large generating companies who had taken no account of the total carbon footprint of biofuels used by his company. He generally assumed that biofuels imported from south America or Indonesia were de facto a good thing. We cannot afford that approach. A great deal more research and public information needs to be available about the international trade in biofuels. The EU is ideally suited to be the institution that brings clarity to the debate.
6.9 pm
Martin Horwood (Cheltenham) (LD): I welcome the positive atmosphere of the debate and questions, and I take the hon. Gentleman’s point that the document is a valuable communication which could do with a wider audience—although he is a little ambitious if he thinks that 98 pages of European policy will ever be a terribly popular document. Perhaps the hon. Members who mentioned methane could offer some advice on that, because I have found, certainly with primary school children, that explaining the process by which methane is produced, and how it contributes to global warming, is a sure-fire winner, which gets a good laugh and gets them on to a serious issue.
It is important that we have achieved broad consensus on quite a few issues. We all seem to agree that it is important to bring aviation emissions into the framework, even if we differ over some of the detail, and that it is important that an international agreement is achieved that includes China and India, which have been much mentioned. However, as Kyoto signatories, they are both party to the international agreement at the moment; they are simply Kyoto signatories without targets. The most important achievement is for the Government to bring in Australia and, even more importantly, the United States of America, which have far higher carbon emissions per capita than China or India. They contribute more overall and need to brought within the framework of an international agreement.
We also welcome the role of the clean development mechanism within the framework, although I agree with the Minister that it is important to retain a framework that incentivises UK businesses to reduce their own carbon emissions, and not simply to provide a return on investment by purchasing limitless credits under the CDM, which would almost incentivise polluting behaviour in some scenarios. We have also achieved consensus on biofuels, which need to be treated with some caution. I urge the Government to introduce a certification scheme to allow energy companies and others accurately to gauge the overall carbon and environmental impact of biofuels.
It is appropriate that we are discussing this matter in what will almost certainly be the warmest April since records began, which suggests that the impact of global warming is with us. We are lucky to be discussing it on a day on which we have been discussing European communication. The hon. Member for Bexhill and Battle seemed to be slightly torn between his Eurosceptic and his Euro-enthusiast tendencies. I urge him and those in his party to resist their Eurosceptic tendencies, because without the EU, we would not be here discussing the subject in such detail.
Gregory Barker: I am not sure that the hon. Gentleman heard me correctly. I said that although we have concerns that the EU overstretches itself in many areas and competences, on the issue of the environment it can do better and is well placed to do so, although unfortunately its record of exerting influence in that area is not all that it could be. We support the EU in its core competences, however, of which the environment is one.
Martin Horwood: I am grateful for that contribution, although the hon. Gentleman spent a lot of his speech pointing out the flaws in the European trading scheme. We accept, as I would have thought the Government and most of the EU do, that it has flaws, but that is because it is an innovative scheme. As he pointed out, it is the first international scheme of its kind in the world, and it is therefore enormously important. It is difficult to imagine how such a scheme would have been created without the EU. It is a shame that he described the scheme as laughable in some of its implementation. I agree that there are problems with the implementation, but he must measure his language and appreciate the importance of the ETS and of the EU in achieving what we are discussing.
Mr. Goodwill: What word, if not laughable, would the hon. Gentleman use to describe the allocation of licences under the scheme?
Martin Horwood: I would say that it is in need of improvement, which is to be expected with an innovative scheme. We are in the early stages of adopting a mechanism on which no other part of the world has got even this far, so it is impressive as well as being in need of improvement.
The importance of the communication is that it sets out a programme that goes beyond 2012 and is therefore part of the EU setting out its stall for the post-Kyoto negotiations. As I suggested in my questions—there appears to be a degree of consensus among Opposition Members on this point—the target of 20 per cent. by 2020 is inadequate in any scenario, even one in which the EU is acting alone. The Government should aim for a minimum of 30 per cent. in the negotiations on the mechanism, to take the EU forward into international negotiations. That target compares well with the Government’s 26 per cent. floor target in the Climate Change Bill. I agree that the Minister slightly reinterpreted his remarks during his answers, but he seemed to suggest that that target and the 2050 target were now negotiable and that the Government might be willing to give ground.
The target of 60 per cent. is also inadequate, and the political consensus will have to move us further forward and make us more ambitious. The danger is that we base too much on documents such as the IPCC report. That report is important for demonstrating to the whole world how much consensus there is on climate change, but it was heavily influenced in places by countries such as Saudi Arabia, which clearly had a vested interest in taking out some of the more controversial points—if not all of them—that are accepted by many scientists worldwide.
The Exeter conference on avoiding dangerous climate change offers a much better guide. I refer the Minister to the report of the international scientific steering committee of the Exeter conference, which concludes that
“with a concentration level of 550 parts per million volume CO2 mean temperature increase is unlikely to stay below 2C...A long term stabilisation at 450 ppmv CO2 equivalent would imply a 50 per cent. chance of staying below 2C”.
In a sense, the scenario that we are looking at, even at the lowest level of the 450 to 550 range, still gives only a 50 per cent. chance of achieving the targets that we need to reach on global temperature rise, as the hon. Member for Ruislip-Northwood pointed out.
Even that is not the most pessimistic recent research. The Institute for Public Policy Research has published a research model calculating that scenarios in which carbon dioxide stabilises at 450 ppm have a 46 to 86 per cent. chance of exceeding 2 C. At 500 ppm, that rises to 70 to 95 per cent. and at 550 ppm which, according to the Minister, is still within an acceptable range, the chance of exceeding a 2 C temperature rise worldwide is in the range of 78 to 99 per cent. In other words, according to the IPPR’s figures, it is overwhelmingly likely.
Even more troublingly, these scenarios include a significant chance of exceeding a 3 C rise. I thinkthat we all agree that that would be catastrophic. At 450 ppm, the chance of exceeding 3 C is 11 to 24 per cent.; at 500 ppm that goes up to 18 to 47 per cent., and at 550 ppm the probability is in the range 28 to 71 per cent. That underlines the fact that 550 ppm is an inadequate and dangerous target for us to accept. Even 450 ppm could be dangerously high.
There are other ways in which the document could be more ambitious. I shall not go into all of them in detail, but I would point out, for instance, that on energy efficiency the European Parliament resolution on climate change says at paragraph 20 that it
“Considers that there is a huge potential for emission reductions in the field of energy efficiency; calls on the Commission and Member States to adopt ambitious measures and targets in this field and to explore the possibility of going above the 20 per cent. reduction target proposed by the Commission”.
Successful and ambitious companies in this country are looking to achieve reductions far greater than 20 per cent. A company in my constituency called Commercial—it is a simple office supplies company; there is nothing particularly environmental in its business—is aiming for a 75 per cent. reduction in carbon emissions, partly through the use of biofuels but largely through energy efficiency measures. The document could be more ambitious in that respect.
It is important that we accept our responsibilities in playing a role in getting international agreement. In defence of China—the Minister made some references to tree planting, of which I was unaware and I am grateful for that information—I would mention the initiative in Dongtan near Shanghai, which has been given approval by Beijing to build a sustainable city of 500,000 people by 2030. The ecological footprint is intended to be one third of that of people in Shanghai. All buildings will be self-sufficient in energy, powered by renewables, and built using local materials. All houses will be within seven minutes’ walk of public transport. Farmers will grow organic food. Much of the island is a nature reserve, and the wetlands are to be protected and extended. The only cars allowed will be fuel-cell and battery powered. It is not clear how energy intensive the construction will be, but new tunnels and bridges will be built to connect it to Shanghai. The British engineers, Arap, are partners in the project, which is an example of a British company gaining business by being ambitious about climate change. That is also an example of how Chinese policy is starting to move in the right direction.
The problem with an international agreement is what we should do about countries that will not participate. Competitiveness, which has been raised in various debates here and elsewhere, is a serious issue for industries such as our aluminium and steel industries. If we impose a high cost of carbon compliance on our aluminium and steel industries, it is easy for them to relocate to countries with no restrictions on carbon use. Therefore, we are almost incentivising companies to move to more polluting environments.
We must address the issues raised by Sir Nicholas Stern on what to do about non-compliant countries. He raised the possibility of having a border tax, but went on to reject it. Between us, as political parties, we must try to reach some form of consensus, and the Government must discuss with the European Union what our policy would be towards those countries that ultimately do not come on board with a post-Kyoto process. If we are to argue a case convincingly, we have a particular responsibility to meet the targets that we set ourselves.
Unfortunately, as the hon. Member for Bexhill and Battle suggested, the Government’s record does not look good. If we consider the changes in greenhouse gases and carbon dioxide emissions since the Government came to power in 1997, there has been a reduction in the overall greenhouse gas targets, but an increase in carbon dioxide of 2.4 per cent. The recent trend line shows an increase in both the overall basket of greenhouse gases and carbon dioxide. Since 2002, there has been a 0.6 per cent. increase in the overall basket of Kyoto greenhouse gases and the rise in carbon dioxide is even more significant at plus 3.3 per cent. on the provisional 2006 figures.
I welcome the work that the Government have done and give them due credit for it. I also welcome the communication and motion before us, and wish the Government well in their negotiations. However, it is important the we take practical action domestically to put our house in order because that will give us a stronger negotiating position and enable us to push not for 20 or 26 per cent., but for at least 30 per cent. by 2020 and a much larger level of reduction than 60 per cent. by 2050. We should also ensure that the ambition for a much more comprehensive post-Kyoto international framework that includes all carbon emitting countries, such as the USA and Australia, is not undermined by a poor performance at home.
6.23 pm
Ian Pearson: I agree that we need to do more, which is why the Government have introduced the draft Climate Change Bill and why we will shortly be publishing an energy White Paper. We have also demonstrated a range of other policy initiatives when planning the Marine Bill White Paper and our strategy on waste.
I welcome the comments of the hon. Member for Bexhill and Battle, and what he said about Sir Nicholas Stern’s report and the ambassadorial role thatSir Nicholas is playing. The report has resonated around the world and clearly demonstrates that the cost of inaction will be the endangering of economic growth in the long term, which is why we need to tackle this issue.
I want to say something about the Government’s record, but I will not make detailed responses in relation to the Climate Change Bill and annual targets, because we will debate those on a number of future occasions and because I cannot find the Climate Change Bill in the document pack.
The hon. Gentleman has said that he could not find linking in the Bill. Page 6 of the document—page 14 of our notes—mentions the linking of the EU emissions trading scheme, and I will say more about that in a moment. It is important to recognise that the United Kingdom is the only advanced industrial country on target to almost double the commitments that we took on under Kyoto. Using 2005 as the latest complete set of figures, we are already 15.3 per cent. below our 1990 levels, which is already ahead of our 12.5 per cent. commitment. When emissions trading is included, we are 18.8 per cent. below.
Martin Horwood: Will the Minister give way?
Ian Pearson: I want to reply fully to the hon. Member for Bexhill and Battle first. If one looks at the 2005 figures compared with the baseline of 1997, which the hon. Member for Cheltenham used, it is true that CO2 emissions are just a fraction over 1 per cent. above 1997 levels. When the effects of emissions trading are included, they are 3.8 per cent. below. Yes, we need to do better, but emissions overall, including trading as a major policy mechanism, are down. When the figures on trading and greenhouse gas emissions are included, we are already 11 per cent. below the 1997 baseline, so significant progress is being made.
Martin Horwood: The Minister cannot get away with his claim that the Government are on target to meet their Kyoto emissions targets. That target, according to the Government’s own figures, was first met in 1999, largely as a result of the dash for gas, which structurally changed the carbon emissions content of the UK economy. Since then, the trend has barely been downwards at all; as I have pointed out, it has actually been upwards in recent years.
Ian Pearson: Let me tell the hon. Gentleman where we are on the 2005 figures. Including the EU ETS on greenhouse gas emissions, the Kyoto targets were at minus 18.8 per cent. On our projections, we reckon that over the period we will get to minus 23.6 per cent. That is not a flat line; it is further progress at the same time as there have been substantial levels of growth in the UK economy, which has grown by more than a quarter since 1997. We have proved that we can have green growth and high and stable levels of employment and that we can take carbon and other greenhouse gases out of the economy. We need to do more, hence the Climate Change Bill.
I shall refer to the EU emissions trading scheme and some of the comments made by the hon. Member for Bexhill and Battle. Phase 1 was always accepted as being a “learning by doing” phase. The hon. Gentleman showed some rather jumbled thinking on credits and allocations. Certainly, phase 2 will be more stringent, and the Commission’s approach to the phase 2 national allocation plans has been robust. I am pleased that the UK was one of only two countries that has had its phase 2 NAP accepted unaltered, and we will continue to make progress in the UK under phase 2.
There is a clear environmental role for the EU, which is why my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs talks about the European Union as the environmental union. There is a case for considering centralised cap setting as part of the review of the EU ETS. We also need to consider levels of auctioning and of project credits. Project credits are about how much effort is required in the United Kingdom in the European Union, as opposed to trading under the CDM.
I want to answer a question that I was not able to complete in an earlier sitting. The suggestion from the Commission on aviation is that it will consider the level of project credits across all EU member states and use an average when it applies to aviation. We are still considering whether that is an effective response—it is a Commission proposal at the moment. What is clear is that we want to see aviation in the ETS as quickly as possible.
The hon. Member for Cheltenham has said that the EU’s 20 per cent. is not enough. In the UK, we want an EU-wide target of 30 per cent., because we want a successful outcome to the negotiations. He criticised the hon. Member for Bexhill and Battle for not having a measured tone, but he was wrong to say that the IPCC had been heavily influenced by Saudi Arabia. He might wish to reflect on whether his own tone was measured, because I do not believe that the IPCC was in any way, shape or form influenced by Saudi Arabia in the reports that it has published.
The hon. Member for Cheltenham made some comments about Dongtan. I am interested and excited by what China is doing there—it is one of a number of projects that Arup is undertaking in the country. Clearly, there are things that we in the United Kingdom can learn from China when it comes to low and zero-carbon developments.
The last two points that I shall cover are the about border tax adjustments and action, and to reply to the hon. Member for Bexhill and Battle by saying what will happen next. It is right that border tax adjustments were discussed and rejected by Sir Nicholas Stern. The UK is an open trading nation. For centuries we have made our living by open markets, and we want to continue to do so. There is a legitimate argument to be had, as part of the negotiations, about sanctions for countries that say that they do not want to be part of any future international agreement. Clearly, I am speaking with reference to developed nations, not less developed or developing countries, which should not be required to take on binding commitments. Sanctions are a legitimate matter for debate, but they should not be the preferred route. We need to get to a stage at which we have an open market in low carbon technology between the EU and developing countries such as China, which has a tremendous ability to work with us and to help us to deliver low carbon solutions for the European economy.
My last point is on the question of action and what happens next. As hon. Members will be aware, we are debating a communication from the Commission to the Council. In fact, it has been superseded by the decisions taken by EU heads of state, which will determine action to be taken across all member states. A lot of work needs to take place on burden sharing and the technical issues surrounding how EU member states will meet their 20 per cent. unilateral commitment to CO2 reduction by 2020, and on the 2020 targets for renewable energy. That work will take place over the coming months. The other obvious key action will be the Commission heads of state meeting, which has made a clear commitment as part of a negotiating process. We hope that we will see progress at the G8 meeting in Heiligendamm, Germany, in June and further progress and agreement on a comprehensive global negotiating framework in Bali, Indonesia, in December. The UK will be pushing strongly for that, as will the EU.
Question put and agreed to.
That the Committee takes note of European Union Documents No. 5422/07 and Addenda 1 and 2, Commission Communication: Limiting Global Climate Change to 2 degrees Celsius - the way ahead for 2020 and beyond; endorses the Government’s support for the ambitious reduction targets that the EU has put forward and supports the Government’s objective of ensuring that European policy on climate change continues to demonstrate the leadership that is necessary to galvanise the international community to work towards a global and comprehensive post 2012 agreement.
Committee rose at twenty-six minutes to Seven o’clock.

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