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8 May 2007 : Column 41

We also need to abolish air passenger duty in favour of a tax based on the emissions of the flights. That would set up an incentive for the airlines to fill all the available places and to move more rapidly towards more fuel-efficient aircraft. It is certainly not the whole answer to sustainable aviation, but it would be a real start. Much of the rest, including imposing a kerosene tax and ensuring that aviation is included in the European Union emissions trading scheme, needs to be done at EU level if there are not to be adverse effects on the competitiveness of our businesses.

Mr. MacNeil: I am still unclear as to whether, under the hon. Gentleman’s proposals for the vehicle excise duty, there would be a real-terms increase for working crofters and farmers paying for their very valid working vehicles.

Chris Huhne: The hon. Gentleman knows that it would be unusual for the people whom he is describing to buy new high-value 4x4s. Our proposal would affect only new purchases, and it would be designed to shift the pattern of car buying towards low-emission vehicles. One thing that would certainly happen is that car manufacturers would move towards producing more fuel-efficient engines right the way down. In attempting to effect behaviour change of this kind, it is not quite so easy to hold the world constant as the hon. Gentleman might suggest. The whole point of our proposals is to encourage behaviour change.

Mark Lazarowicz (Edinburgh, North and Leith) (Lab/Co-op): As we are discussing the effects of vehicle excise duty on people in rural areas, may I take the hon. Gentleman back to a question that I have raised about whether a city such as Inverness would fall within his definition of a remote area in which people would be entitled to a reduction in fuel duty? One of his colleagues has suggested that it would not, but another has said that it would. Does not that illustrate the difficulty of finding an excuse for a particular area being exempt from such measures if there are perceived electoral advantages involved?

Chris Huhne: The hon. Gentleman knows that if we always find difficulties—if the glass is always half empty—we will never make progress. Sometimes it is necessary to establish boundaries—income tax or inheritance thresholds, for example—and sometimes people find themselves on the wrong side of those boundaries. Such measures are not necessary popular, but unfortunately we have to make real changes in our behaviour and it is therefore important to strike out in that direction.

Crucially, every penny raised through green taxes to help us to change our behaviour collectively should be handed back in income tax cuts, thereby shifting the tax burden on to activities that we want to discourage from activities such as work, risk and effort that we wish to encourage.

Daniel Kawczynski (Shrewsbury and Atcham) (Con): On the hon. Gentleman’s previous point about exemptions for certain people in rural areas, there are parts of my constituency in Shropshire where people can live only if they have a 4x4, because they are so remote and mountainous. Would it not create huge
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amounts of bureaucracy and red tape to run a pilot to decide who would and would not be exempt from these extra charges?

Chris Huhne: The hon. Gentleman raises an interesting topographical point about the mountains in his constituency, and I look forward to travelling across them to find out for myself whether his description is accurate. He must remember that there are already new 4x4s available that are below the top emissions category. Taking that into account when considering our proposals for rural areas, I think that I can allay his fears on that score, and I hope that the Conservatives will be able to support us.

Finally, the motion deals with the crucial issue of the built environment: our buildings, which are responsible for half our carbon emissions. It calls on the Government to set an example by ensuring that their own massive purchasing power goes into the building of low-carbon schools, hospitals and other public buildings. Sadly, as we have already heard from Opposition Members, the Government’s record is appalling. As the Sustainable Development Commission has made clear, DEFRA’s ability to wag a finger at other Departments has been entirely undermined by its record on pushing up carbon emissions from its own office buildings three times as quickly as the rise in the national average. The Government’s role in setting an example for the commercial sector is crucial, and I hope we hear from Ministers what firm proposals they intend to make to extend best practice in the public sector.

Equally important is a much more concerted effort to improve the energy efficiency of our own homes. Let me give just one shocking statistic that brought home to me how unambitious we have been in saving energy rather than wasting it. If the average energy bill in Britain were the same as that in Sweden, every household here would save £385 a year—we are literally burning £50 notes—yet average temperatures in Sweden in January are 7º C colder than they are in Britain.

Part of the answer is to raise thermal efficiency standards for new buildings, and the Government are moving towards such action. There is no reason why we should not proceed more rapidly to a GreenHouse standard for new homes that would cut energy use and carbon emissions by 95 per cent. This is not rocket science. It has already been achieved in Germany with the PassivHaus standard, and the intriguing experience there is that the initially high extra cost of more than a fifth has now all but vanished. Following the building of several thousand such homes, the extra cost of construction is running at just 2 per cent., and it repays itself in a few months’ savings on the householder’s energy bill. The GreenHouse standard would make it easier for young families to get on the housing ladder, provided that building societies take account—as the regulator should ensure that they do—of the savings in their energy bills.

Lynne Jones (Birmingham, Selly Oak) (Lab): Germany operates the same high standards for refurbishments as for new build. Would the hon. Gentleman advocate that here?

Chris Huhne: The hon. Lady anticipates the next section of my speech. Adding microgeneration means
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that energy savings can be even greater than those that can be achieved through a move to much higher thermal insulation standards in new build. Genuinely carbon-neutral homes are now attainable, but however ambitious we are with new building standards, the truth is—as the hon. Lady rightly reminds us—that three quarters of the homes in which we will be living in 2050 have already been built. We need a far more ambitious set of plans to tackle our existing housing stock than the Government’s Warm Front scheme and the energy efficiency commitment. At the current rate of progress, it will take 125 years to upgrade the housing stock, and even then it will be only to modest cherry-picking standards involving, for instance, cavity wall and loft insulation.

We need to offer packages that can improve the sealing of windows, doors and chimneys, clad walls either inside or outside in solid-walled properties, and install under-floor insulation and efficient boilers—even, soon, combined-heat-and-power boilers. We need those packages to be testable, so that householders know they will get the energy savings that they have been promised. If those conditions are met—the Royal Institute of British Architects and the National Home Improvement Council are interested in helping to ensure that they are—hundreds of thousands of householders will jump at the chance to cut their energy bills. The obvious way to finance such packages is through an energy mortgage attached to the property that is repaid on the same bill as that of the utility company. It is likely that about one fifth of the cost of such improvements would need to be met by the energy company to ensure that the energy mortgage could be repaid from the savings in energy made by the householder.

That is why we also suggest reshaping the energy efficiency commitment. The energy efficiency commitment is currently simply a levy on consumers to pay for energy efficiency improvements. It would make sense instead to encourage energy companies to find the most effective ways of curbing energy use by changing their incentives. They currently make more profit by selling more energy. If they were subject to a “cap and trade” scheme, such as the European Union emissions trading scheme—and, to give the Government credit, similar to a measure envisaged in an enabling clause of the draft Climate Change Bill—they could collectively have a declining sales target, and they would maximise their profits by selling even less and selling on their allocations under the scheme. If they sold more than their reducing allocations, they would have to buy that in the market. Therefore, an incentive would be established.

Mr. Hurd: I fully share the emphasis that the hon. Gentleman places on energy efficiency, but I want to be clear about the precise meaning in terms of the GreenHouse package of the proposed policy that he is discussing. From reading his stimulating pamphlet, it is my understanding that the message to my constituents is that the Liberal Democrats would require them to take out a loan of between £5,000 and £10,000 from the local utility company, which will then have a charge over their property while they pay it off. Is that really the hon. Gentleman’s intention, or have I got that wrong?

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Chris Huhne: As we make clear in our proposals, for any period of time that we might envisage it would be extremely unlikely that any measure of compulsion would be necessary. One of the extraordinary results from the German scheme is that there has been such a great rush of households wanting to participate that the building industry has found it hard to catch up. We must be wary in that respect and ensure that the necessary skills are in place in the British building industry for us to be able to deal with such circumstances.

Mr. Hurd: Can the hon. Gentleman confirm that his proposed measure will be entirely voluntary, because his pamphlet gives the impression that there will be a hard rump of people who will not take up the offer that is made and who will be forced down that route?

Chris Huhne: As the hon. Gentleman can see by looking at the pamphlet, there is no proposal for the scheme to be on anything other than a voluntary basis. Clearly, in the longer run we will have to assess its progress, but we hope that it can be completed on a voluntary basis, with the necessary incentives. However, there is no doubt that we need the sort of systematic proposals that we have made if we are to tackle energy efficiency.

Michael Gove (Surrey Heath) (Con): The definition of compulsion is, of course, an elastic one. One of the proposals that was floated at the same time as the publication of the hon. Gentleman’s pamphlet was that there should be a tax penalty—specifically a stamp duty tax penalty—for those who do not make the improvements that the hon. Gentleman mentions. Is that part of his party’s policy?

Chris Huhne: It is not part of our party’s policy. At some point in the future additional incentives might be required to complete the process of improving energy efficiency. If that were the case, I am sure that the hon. Gentleman could think of a number of tax incentives—one of which might indeed be a discount on stamp duty. That would not involve raising taxes, but it would provide people with additional inducements and therefore additional incentives to go ahead with such improvements.

Climate change is the great challenge of our times. We need to tackle it with urgency because any carbon emitted into the atmosphere has a long life—a century or more. Yet far from delivering cuts in carbon emissions, the Government have presided over increases in them since 1997. As the United Nations intergovernmental panel on climate change report shows, we need to be much more ambitious, much more focused and much more radical. Time is now running out. I hope that the House will support the motion.

4.49 pm

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

Climate change is the greatest long-term challenge facing the human race. It is a top priority for the Government, at home and internationally. The broad cross-party consensus on the urgency of the issue is a strength of our politics. Sometimes, when people outside the House observe the partisan nature of our proceedings, they misunderstand the fact that we can have knockabout debate that is, rightly, questioning of the Government, while still reaching a broad consensus as to the policy prescriptions and action required. That is important, because climate change does not discriminate, whether in the UK, US or the rapidly emerging countries such as China, India or Brazil. Climate change is a threat to us all and, therefore, a challenge to us all.

Without global action on climate change, emissions of greenhouse gases will continue to increase. All countries will be affected. The poorest nations will be hit hardest, but the UK and other developed countries will not be immune from the consequences. We are already starting to feel those consequences, as the fourth assessment report published last Friday graphically demonstrated.

We are committed to the EU’s 2° C target temperature rise to avoid the worst impacts of climate change. As the hon. Member for Eastleigh (Chris Huhne) said, that implies a reduction in greenhouse gas emissions of up to 50 per cent. by 2050. As the EU has said, that means that, because developing countries must grow, we and other developed countries must cut emissions by between 60 and 80 per cent. We are ready for that. We already have our 2050 target of at least a 60 per cent. cut for CO2 only. In relation to other greenhouse gases, more emissions reductions will be achievable, and we will do even more if needed. We will, of course, keep our goals under review in the light of scientific evidence and international developments, and the draft Climate Change Bill contains a specific clause allowing us to do that.

Chris Huhne: Why have the Government framed their targets in terms of CO2 alone when, as we all know, the basket of greenhouse gases contains other much more potent ones? Surely there should be an overall target, not just one for CO2.

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Ian Pearson: When we were discussing our targets, we thought it right to focus on the main greenhouse gas emitted, and as the hon. Gentleman knows, the large majority of greenhouse gas emissions are CO2. That is not to say, however, that we do not need to do more in relation to other greenhouse gases. Certainly, there is scope to consider that as part of the Climate Change Bill, and I look forward to future debates with him on the subject.

Mr. Robert Goodwill (Scarborough and Whitby) (Con): Is it not true that the Government signed up to the regulation on fluorinated gases, which will make a dramatic impact on the amount of other gases emitted? CO2 is increasingly rapidly, whereas most of the other greenhouse gases are being reduced and moderated by legislation and new technology.

Ian Pearson: The hon. Gentleman is absolutely right that the UK has made significant reductions in methane and other greenhouse gas emissions, notwithstanding our progress on carbon dioxide, on which we fully accept that we need to do more.

In particular, we need to do more in the light of the warnings of the intergovernmental panel on climate change from Bangkok earlier this week, and from Paris and Brussels earlier this year. The UK remains committed to demonstrating leadership internationally through our actions at home. No major industrialised country has done more than Britain to tackle climate change. Our national programme has made significant progress, through the climate change levy, the UK emissions trading scheme, reform of vehicle excise duty to encourage the take-up of low-polluting cars, differentials in fuel duties and the landfill tax. We are exceeding our Kyoto targets, and are the only country on track to double them. We have also shown real progress in reducing greenhouse gas emissions while maintaining economic growth and high employment levels.

Until recently, the conventional wisdom was that carbon dioxide emissions and household income were related, with the wealthiest societies responsible for the highest emissions. In the UK, that link is now being broken. We are showing the world that one can have green growth—that emissions reductions and prosperity can go hand in hand. Between 1997 and 2005, our economy grew by 25 per cent. and greenhouse gas emissions were cut by 7 per cent.—or by 11 per cent., allowing for the effects of the EU emissions trading scheme.

David Howarth (Cambridge) (LD): The Minister mentioned international leadership. Will he undertake that the Government will show more such leadership by including international shipping and aviation within the terms of this country’s greenhouse gas targets?

Ian Pearson: Currently, there is no internationally accepted definition for aviation and shipping emissions, which is one reason why they do not appear in national inventories under the IPPC. The UK is certainly pressing for international agreement on this issue. As the hon. Gentleman will be aware, we have been pressing for including aviation in the EU’s emissions trading scheme as quickly as possible. However, we need a global deal on aviation and shipping, just as we need one on a post-2012 framework.

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David Howarth: I thank the Minister for giving way again. Would it not be better if the Government took a unilateral lead on this issue? Otherwise, no progress will be made. This morning, the Tyndall Centre for Climate Change Research told the Environmental Audit Committee that it has been able to calculate perfectly reasonable estimates of the British share of international aviation and shipping emissions by using a simple 50:50 rule? Could the Government not do the same?

Ian Pearson: We are showing leadership on this issue. For example, the UK will be the first country in the world to legislate for CO2 emission reduction targets. However, because aviation and shipping emissions are internationally traded, more complex issues arise. Taking action unilaterally would not necessarily produce benefits in terms of reducing greenhouse gas emissions. We need to get international agreement on comprehensive definitions that cover all countries and that will ensure that we have a range of policies to tackle future aviation and shipping emissions, just as we are tackling emissions from other sources through the emissions trading scheme and other measures.

Success will and does rely on the support and active participation of all sectors of society. The private sector has a vital role to play in avoiding dangerous climate change, and more and more businesses are recognising that there is a value and importance in reducing CO2 emissions. Through the emissions trading scheme, some of our biggest companies are already actively involved in a highly effective cap and trade scheme. The Government are committed to using the EU ETS as a key tool to reduce greenhouse gas emissions. Last year, we showed strong leadership in setting a robust cap for phase 2 that will deliver savings of 29 million tonnes of carbon per year. We have also consulted on a proposal for an energy performance commitment in the UK—a mandatory emissions trading scheme to reduce emissions from energy use by large, non-energy intensive organisations by at least 4.4 million tonnes of CO2 a year by 2020. The results of that consultation will be released shortly.

We continue to fund Envirowise, which has helped business to save some £1 billion through increasing resource efficiency and avoiding waste. We also fund the Carbon Trust to work with companies that want to avoid climate change. The trust has given practical advice and tailored support to some 10,000 businesses through energy audits, carbon management services and energy efficiency loans.

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