Examination of Witnesses (Questions 420
- 439)
TUESDAY 20 MARCH 2007
MS JACKIE
JANES AND
MR MARTIN
HESSION
Q420 Mr Caton: But if the voluntary
market is still going to be there after your code comes in should
you not be doing something to regularise that?
Ms Janes: I think the very debate
and consultation that we are having on this code is stimulating
that type of discussion in a very positive and constructive way.
Q421 Mr Caton: So that could come
out of this consultation?
Mr Hession: We have not chosen
a final standard but it is an encouragement to reach this level.
We have not made it compulsory because we think that there are
people with existing financial interests in other systems, but
it is intended to drive people towards the top of the market and
towards the highest levels of transparency and of accountability
to their concerns. That is what it is intended to do, so although
the actual outcome of the standard is not dictated the standard
should encourage a higher level of transparency.
Ms Janes: I think that is a challenge
with the Government talking about a code, albeit a voluntary code,
that the players in the market always want the standard to be
set just slightly below where they are, and if government is trying
to determine what best practice is that is automatically going
to be quite demanding and at the higher end of things, and that
is a cause of lively discussion and debate, very legitimately
so.
Q422 Chairman: Just on this question
about best practice, we have been told that one company claiming
endorsement from Defra is selling EUAs on the market. As phase
one of the ETS was over-allocated and did very little to cut emissions
are you happy that the scheme was associated with what is really
the sale of hot air to the public?
Ms Janes: I think that is a very
important point and that was another point that we took into account
in the consultation. We decided not to put in place any code until
the end of 2007 so that we would not have the problem of taking
on EUAs from phase 1 of the EU ETS.
Q423 Mr Chaytor: In terms of the
CDM itself, it is generally agreed to be overly bureaucratic and
rigid. Does the Government have any specific criticisms or have
you made any representations to try and make it more flexible?
Mr Hession: That is my responsibility.
Essentially it is quite a rigid process and a lot of that rigidity
comes from the time period within which things are considered.
There is third party independent verification, there is room for
public comments, there are procedures about the Government being
able to intervene if they do not like the projects, so a lot of
criticism comes from that. There is also quite detailed guidance
on how to do calculations before a method of calculation is approved
and all of those things have taken quite a deal of time and there
is a lot of complaint about the lack of transparency in the system.
About two years ago during the UK Presidency we made it our priority
with the Canadians to improve the system. A lot of that was to
do with finance. There were only about four people working in
the UNFCC on all of this, and there was a general attitude that
what was needed was more part-time members of a board rather than
support staff, and I think we were quite successful in changing
that perception. We have done things like encouraging the smaller
scale projects to be subject to more simplified methodologies
but that has not been entirely a success, and we have looked at
particular methodologies where there has been a problem about
small-scale cooking stoves and proposing solutions for those.
Q424 Chairman: Could you speak up
please? The shorthand writers are struggling.
Mr Hession: I am doing too long
a list of things but we have negotiated simplified rules for small-scale
projects. We have made a proposal for particular project types
which have not yet been accepted, it is true. We have also proposed
a reduction in administrative fees for smaller scale projects.
We are currently looking at commissioning some research on the
process and how additionality works, so we keep quite closely
in track with it and want to see it improve.
Q425 Mr Chaytor: Have any of these
proposals been adopted?
Ms Janes: I think the point to
note, and I heard your previous witness making the same point,
is that CDM is the pioneer and it is a really difficult area.
The issues I am sure this Committee has grappled with, to do with
additionality, are really challenging. So there have been teething
problems and I would not want to claim that CDM is perfect; it
is not at all, it is an iterative process. There is a lot more
that can and needs to be done to improve it but I think over the
last few years significant strides have been made. One of the
issues—absolutely Martin is right—is the number of
staff within the UNFCCC; there were four professional staff working
on the CDM 18 months to two years ago; now there are 35. We have
done a lot of work on consolidating methodologies; it used to
take about three years to get a methodology through and now it
takes a year, and talking to the UNFCCC Secretariat yesterday
they hope that for the more straightforward methodologies they
will be able to push those through within six months in future.
Because of the consolidation of methodologies you are getting
a lot of the same methodologies being used by more than one project.
I have got some figures here: for large-scale renewable projects,
367 projects are now using the same methodology; for small-scale
renewable projects 512 projects are using the same methodology;
for large-scale biomass 119 projects are using the same methodology
and for small-scale methane recovery 169 projects are using the
same methodology. There are DNA forums in developing countries
that happen two or three times a year; all documents are published
on the web, the executive board meetings are webcast and there
has been a range of improvements for small-scale projects: free
registration if the project is below 15,000 tonnes, simplified
procedures and methodologies; the Secretariat providing assistance
to those projects in developing their methodologies; bundling
of projects and, also, the Secretariat now working on, with the
executive board, programmatic CDM. These are really positive developments,
but we must not stop there, and the UK will continue to press
for greater efficiency and effectiveness in the operation of the
board.
Q426 Mr Chaytor: Given the level
of investments involved and the complexity of the systems that
have now been developed it is not conceivable that the CDM would
not survive after 2012. Essentially, even though technically there
is uncertainty from 2012, in reality it will be the CDM beyond
2012, surely?
Ms Janes: There is a vast amount
of international commitment and investment in the CDM and a widespread
recognition among Annex One countries of the need to engage developing
countries, and the CDM does just that.
Q427 Mr Chaytor: That strengthens
the department's assertion that the voluntary market should be
incorporated into the CDM. There is a risk about what happens
beyond 2012.
Ms Janes: Clearly, there are uncertainties
about the period post-2012, and they relate not just to the CDM
they relate to the whole international structure and to the EU
Emissions Trading Scheme, but there is a great deal of support
for the existing framework.
Q428 Mr Chaytor: You are confident
that your argument that the voluntary market should be integrated
with the compliance market is solid in spite of the uncertainties
beyond 2012?
Ms Janes: Yes, I think so, because
the key thing—and this was reiterated in the Stern Report
in November—to tackle climate change is having a robust
and credible carbon price, and the CDM is part of that effort.
Mr Hession: It is our stated position
that the CDM is part and parcel of the compliance market post-2012,
and there is an enormous loss riding on that as well. I think
the CDM will definitely continue. One of the key questions we
have for the post-2012 framework is in recognising other countries'
commitments. Some countries may want to take on commitments. How
do we evolve the CDM to reflect that? The basic picture is that
it will continue and I do not think there is any question or can
be any question about the commitment to that because we have made
it part and parcel of the EU ETS vision that the EU has, and we
obviously we need to negotiate that but it is tied to the compliance
market as well. So that should give some reassurance.
Q429 Chairman: One quite widely expressed
concern about offsetting generally is whether it disincentivises
people to actually cut their own carbon emissions, and it is understandable
why people would say that. You say the code would require offset
providers who want to be accredited to make information available
to people about how to reduce their emissions. What is that actually
going to involve?
Ms Janes: That is a good question
and something we are still considering and discussing with consultees.
I think Defra has a lot of views on the types of actions that
individuals could take to do with properly insulating your attic,
your cavity walls, using energy-efficient light bulbs, energy-efficient
appliances, or walking small distances or taking public transport.
It would be that type of activity that would be accessible to
people to make informed choices.
Q430 Chairman: Someone who is interested
enough to think about running an offset and to start making inquiries
from a provider, clearly, has got a concern about their carbon
footprint and, therefore, they are very ripe for guidance as to
how to pick some of the low fruit which still remains—not
necessarily through Defra but some other departments—unpicked,
at the moment. So there is quite an opportunity here, is there
not?
Ms Janes: Absolutely, and interestingly
although we talk about avoid, reduce and offset, some people may
come into that sort of triumvirate through offsetting; they may
have an awareness of offsetting by going in and using the calculations,
understand more about their footprint and that, in turn, may encourage
them to take further action. A good analogy here is to micro-generation.
Some people are interested in micro-generation because it is quite
sexy, visible and exciting, but actually by installing micro-generation
the anecdotal evidence suggests that their energy use becomes
more visible, and then they become more interested in being more
efficient and reducing their energy use. So we see a similar analogy
to the offsetting.
Q431 Chairman: Is there any danger
that by helping people to understand more about offsets it is,
in a sense, slightly leapfrogging their state of knowledge, because
some people are still relatively uninformed about their own carbon
footprint and the whole climate issue. These are quite complex
issues for lay people who have not taken an interest in the past.
Is there a danger that if we start talking too much about offsets
we will just confuse them about what they could and should be
doing?
Ms Janes: I think that is a very
fair point, and one of the barriers to consumer action is confusion
and multiplicity of messages from multiple sources. That is, in
part, the motivation behind the code; trying to create more transparency
and have a dialogue about some of these issues to cut through
some of that confusion as it relates to offsetting, but there
is a wider challenge to do with people having a relative framework
so they can assess the relative value and impact of different
actions they can take to tackle climate change. It is important
that people understand that offsetting is not going to solve climate
change; you actually need to reduce emissions as well.
Q432 Mr Caton: Following on from
that, you talk about anecdotal evidence but is there any objective
evidence that offsetting actually encourages behavioural change?
Is it not more likely that it is going to salve people's consciences
and allow them not to tackle their own carbon footprint?
Ms Janes: That is a very fair
point. Some people do feel or have concerns that offsetting could
be just a guilt-assuaging activity. I do not think we have a great
deal of empirical evidence and research on offsetting; it is an
area where Defra wants to do more. We have a six-monthly consumer
survey of opinions, and interestingly the last time that was done
was October 2006 and that said that 37% of people had heard of
offsetting, which was up six% from when the survey was done in
March 2006. We are hoping to undertake annual surveys and increase
the number of questions about offsetting to understand people's
attitudes, why they offset and what they think it achieves, but
I think there is a lot we need to learn.
Q433 Mr Caton: Several organisations
have told us that they think there is a very real need for research
specifically into whether there is a link between offsetting and
behaviour change. Would that be part of what you are going to
do on an ongoing basis?
Ms Janes: We are open to all ideas
and that sounds important.
Q434 Mr Caton: The Environment Agency
has chosen not to offset its emissions but to invest the money
it would have spent in that way in reducing its own carbon footprint.
Is that a better approach?
Ms Janes: We would encourage organisations
like the Environment Agency and beyond to reduce their own emissions.
There is an issue that the UK has a national cap, so any of their
reductions will contribute towards the UK's national cap. That
is a legitimate activity.
Q435 Mr Caton: Carbon Clear have
told us that only one to two% of individuals currently offset
and that basically they are the green and the affluent. Are we
going to be able to move beyond the environmentalist and the rich
in take-up of offsetting and, if so, how do we do so?
Ms Janes: We have done some work
in Defra on different socio-economic groups and their attitudes
towards the environment and there is a link between the more affluent
groups and their awareness of the environment and climate change.
What we need to do is raise awareness in all sectors of society
about actions people can take to play their part in reducing emissions,
and that may be through offsetting but it may not be. It may be
through avoiding or reducing emissions but, because if you are
more affluent you tend to have more emissions, clearly that is
an important group to reach.
Q436 Mr Caton: So should part of
a government publicity programme include making people more aware
of the offset option?
Ms Janes: We would not exclude
anything. At the moment when we are looking at our communications
programmes they are very much about the call for action and Defra
is going to be launching what the DfT have already launched but
Defra will be using as well, which is the "Act on CO2"
brand to try and get people more engaged in the debate. One of
the challenges that we have at the moment though is more basic
than that, which is that only about 20% of people link climate
change to carbon dioxide emissions, so getting people to understand
the link between turning off their lights when they leave a room
or turning off their TV on standby and climate change is still
quite a big leap for a large percentage of the population.
Q437 Mr Chaytor: The department is
supportive of forestry projects but within the CDM for a very
few forestry projects, so is this not a paradox, given that you
are trying to persuade the voluntary market to move into the compliance
market and yet the voluntary market is very good at supporting
forestry projects?
Mr Hession: I think one of the
reasons there are forestry projects, though not many, it is true,
is that the EU ETS does not include forestry as a compliance option,
so the demand has not been terribly high. That said, I do not
think the standard would exclude using those compliance credits
and so therefore it actually provides a source of demand for those
budgets, but the broader policy of Government will be to seek
to include those projects, both within the EU ETS and also in
the future framework expanding into forestry. You can say there
is some inconsistency and unfortunately our position within the
EU ETS negotiations has not been successful.
Q438 Mr Chaytor: There is a contradiction
at the moment because it is the voluntary market that is in a
better position to promote forestry projects which you support?
Mr Hession: Indeed. In a sense
we have not been able to make the compulsory markets have that
option as of yet, but it is our position to do so.
Q439 Mr Chaytor: But are you confident
that there will be some change in the compliance market and over
what period of time? Before 2012?
Mr Hession: In the review of the
European Emissions Trading Scheme they are looking at scope questions
over the next six months and the Commission proposal should come
out at the end of the summer, so it is within that context but
I do not think it will come into force before 2012.
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