Examination of Witnesses (Questions 100
TUESDAY 24 APRIL 2007
Q100 Mr Chayter: The motorist lobby
is too strong?
Mr Brearley: I think we already
have the renewable transport fuel obligation, for example, and
we have other policies for transport. I do think there are quite
strong technical issues within that sector.
Q101 Colin Challen: The outturn to
the period of 2010 is, what, about 18%, do you think, in terms
of cuts, against the 20% target; or do you think you will actually
reach the 20% target?
Mr Brearley: I think the outturn
so far is 16.2% is my understanding.
Q102 Colin Challen: Does that high
probability in failing to meet that target influence the fact
that, in terms of the legislation that is being proposed, we can
meet a target by only getting up to 26%? It is not terribly ambitious,
is it? If we had met our 2020 target, perhaps we still will, we
could then perhaps do another 6% in 10 years. Is it your view
that that is sufficiently ambitious?
Mr Brearley: I think you need
to balance up a number of things in climate change policy-making
in general but particularly how you deliver against climate change
versus economic growth and also poverty. What we need is a clear
path to our 2050 goals. I think the interim roles will be set
out in the Energy Review and it would seem entirely sensible to
get us there. In terms of the 2010 target, we are going to ask
the Committee on Climate Change to recommend a pathway to 2020
which will include helping us understand whether or not the 2010
target is achievable.
Mr Mortimer: I think it is ambitious
actually the 26-32% range. I think you need a range and therefore
the trajectory could be at the higher end of that or the lower
end of that but the legal requirement is 26%. The Energy White
Paper, and measures which included transport as well as the electricity
sector, takes us at the upper end of optimism to the current 25.2%,
and actually bridging that gap is not insignificant. I think that
it is ambitious. I think it is also important to say that it is
part of the trajectory to 2050 so, in a sense, as long as the
mitigation curve passes through that range on the way to the 60%
target by 2050 then that delivers the outcome which the Bill is
about. For both those reasons I would defend the 2020 target for
being really ambitious.
Q103 Colin Challen: Who do you talk
to when actually deciding what is ambitious or not? We have heard
that Ken Livingstone, for example, said the 2030 target was under
the 60%. Is that wildly over-optimistic? Have you discussed with
his office how they think they can achieve that kind of target?
Mr Mortimer: I guess the starting
point in terms of deciding the level of ambition would be to look
internationally. We have been very conscious in the work on the
Climate Change Bill to be particularly mindful of the European
context. As you know, the European Council has set a 20% target
and 30% on a conditional basis, which is the greenhouse gas target.
I think the range in the Climate Change Bill which is for CO2
only is consistent with the upper limit of that, assuming burden-sharing
on an historical basis. Even if the EU goes for its ambitious
target of 30%, the UK Climate Bill range is already within that.
On that, that would be one measure of recognition that the UK
is at the front of the pack, if you like, within Europe. I think
it is slightly difficult to compare sub-national actions in the
way you describe. Obviously the Department has contacts with the
Mayor's office but I do not think it is a direct comparison, because
we have to look across the economy. There are different abatement
opportunities in different parts of the economy. I am not sure
the analogy quite works in the same way at the sub-national level.
I think the ambition should be related more to the international
context rather than the sub-national.
Q104 Colin Challen: Looking at the
2050 target of 60%, the Bill contains provisions to update the
target "if there have been significant developments in scientific
knowledge about climate change". We know that the 60% figure
arrives out of an RCD(?) report from 2000. When can we expect
any scientific developments to take place, as if there have not
been any in the last seven years? There have been two significant
reports from the IPCC, we have the Stern Review, we have had the
Exeter Conference Report(?), all of these point to a higher target
being necessary. Could you say a bit more about whether we should
be going for a higher target and, if we should, how will that
come about? Is it going to have to be a process of years trying
to change something in the Bill, because that does seem to suggest
it can only be changed really rather exceptionally.
Mr Mortimer: The first thing to
say is I do not think the process of years point is right because
the Bill contains specific provision to allow the target to be
amended through secondary legislation in the light of significant
development internationally or in climate science. That is the
first point, that it does contain that scope for amendment. I
think the second point is really to go back to what the purpose
of the Bill is. Obviously part of it is about providing international
leadership, and the Bill does represent the first of its kind.
It is also extremely ambitious in relative terms compared with
many of our international partners. The question is whether the
UK should be putting an even more ambitious offer on the table
at the start or, in a sense, waiting to develop that in the context
of multilateral talks. I think the Government's position has been
that we have got this ambitious target of 60%. There has been
a consensus around that across large sections of society, including
the business groups. Things have moved on a bit so that consensus
is not, as you say, as firm as it was in 2000-01. Nevertheless,
we are going into the international discussions with a very, very
ambitious offer. I think the Government have always made it clear
that if and when it is required to take on a more ambitious target
as part of a multilateral context then it would be prepared to
Q105 Colin Challen: Our target is
no different from the European Union's, how is that showing international
leadership? We are just following the crowd. We are not actually
distinguishing ourselves in any way. One could say that Norway
in its recent announcement, although there will be a lot of off-setting
involved in that, seeking to be carbon-neutral by 2050 is being
rather more adventurous?
Mr Mortimer: I think you have
to take the Bill as a package. It is not just about targets. One
of the unique things about the Bill is that it is not just about
setting the long-term goal; it is also about creating an underpinning
framework to ensure we manage our way towards it in a sensible
way. I think the really interesting thing about the UK's Bill
is the idea of embedding carbon budgeting in a domestic framework.
Having three five-year carbon budgets in place sends a much more
important signal for business to make intelligent investment decisions
based upon a medium-term horizon. It is more important than a
2050 goal. I am not dismissing the 2050 goal, but I think that
the budgeting framework is the more important part when it comes
to businesses and Government making the investments in policy
Q106 Colin Challen: Are you saying
that we can perhaps ignore the 2050 goal to a certain extent provided
that we have these interim measures? I cannot quite follow the
logic you are making. Surely everything flows from the headline
core target in this Bill. If it does not, is there really any
point in having it there?
Mr Mortimer: I am certainly not
saying we should ignore the long-term target, but merely in a
sense both Government and certainly businesses will be making
investment decisions particularly over the 15-20 year timeframe;
and, therefore, the 2020 target, which pins the trajectory in
the middle if you like, is particularly important; as are the
five-year budgets which provide certainty over the 15-year period.
I am not in any sense trying to say the 2050 target is irrelevant.
I am simply saying, going back to your question about the ambition
in the Bill, that is a very unique aspect to it which is not present
in other European legislation.
Q107 Colin Challen: Is the Office
of Climate Change preparing contingency plans to look at different
scenarios with different long-term targets? Do you have a range
of options? Are you simply working and focussing entirely on the
one that is laid out in the Bill?
Mr Brearley: I think we should
be clear that we have now handed back the implementation of the
Bill to Defra who are working on this. Essentially as part of
that work, as we did, there will be ongoing discussion around
the level the target should be and what the implications of those
Q108 Chairman: Going back to what
Mr Challon said at the start, what in your view would constitute
a significant development in scientific knowledge about climate
change over and above the reports we have had since the 60% target
was set in 2000? I think many observers would say we have had
some pretty substantial developments since 2000 in scientific
knowledge. If those do not justify raising the target then what
on earth does it need to take the Government to rethink it?
Mr Mortimer: I go back to the
point the Bill is intended to provide the UK with a very firm
framework in which to go to the international context. The Government
basically made clear that if there is new evidence or there is
development internationally which justifies it then it is prepared
to look again at those targets. Yes, there have been developments
since 2000-01; no doubt there will be further development in science
looking forward. I am not sure I can pre-empt those. I think the
point simply to make is that the option is there to up the target
in the light of change, and that is what the Bill provides the
flexibility to do.
Q109 Dr Turner: I think it could
be further said that the scientific evidence is before us, and
virtually the scientific consensus is there already. The Government
Chief Scientist has himself been saying for the last two years,
to my certain knowledge, that we should be aiming for 80% in the
UK, like similar industrial countries, if the world is going to
achieve 60%; and if we are going to achieve a higher target then
we need to recognise that as early as possible and we need to
adjust the trajectory on the way to it so the interim waypoint
targets need to be more ambitious. Are you doing any work on that
because this is inevitable? The 60% target is obsolete before
we actually legislate for it.
Mr Mortimer: I think the important thing
is that the work that is going on on this in the Department is
really in the context of the multilateral discussions. The UK
as part of the EU is developing its position internationally and
that is the context in which it is looking forward, to look at
what obligations the UK should take on internationally. I would
not disagree with much of what you said in your question, other
than to say I think there is certainly no uniform consensus around
a different figure. The Stern Report talked about developed countries
taking on 60-80% consistent with 550 parts per million stabilisation,
and obviously the UK target is in that range. There is a debate
to be had on it; in a sense that is what we are now doing on the
context of the draft Bill publication. I do not think there is
yet a single consensus on what exact figure the UK should offer.
Q110 Dr Turner: Two of the main policy
strands that were invoked in the Climate Change Programme Review
last year, and which the National Audit Office commented on, the
Renewables Obligation and the Voluntary Agreement to reduce new
car emissions, the National Audit Office reckoned that they performed
rather poorly in terms of cost-effectiveness. We also know that
both of them are performing rather poorly in absolute terms, because
we show no sign of achieving the renewables obligation of 10%
by 2010 and we are well behind on reducing new car emissions.
What is your role in bringing these policies into some sort of
Mr Brearley: To date the OCC has
not been asked to look at either of those issues. If we were to
do so then we would run similar projects to the ones run at the
Q111 Dr Turner: One of the other
comments of the National Audit Office is the fact that fiscal
policy is entirely the preserve of the Treasury, and is not subject
to the same sort of assessment progress that other policies are
throughout Government. Does the Office of Climate Change have
any remit to consider fiscal policies in this area?
Mr Brearley: I think fiscal policies
remain the ground that Treasury covers; so the OCC does not carry
out any work on fiscal policies.
Q112 Dr Turner: I am finding it difficult
to find things you do have any grounds for working on. Your letter
to us mentions the "Analytical Audit" work that you
are doing "looking into the economic rationale for Government
intervention to reduce greenhouse gas emissions". That is
a fairly basic sort of aimcould you tell us how you are
going about this?
Mr Taylor: Phase 1 of the Analytical
Audit looked at synthesizing what we know about the science and
the measurement and projections process, and we actually published
a report on the internet at the time, at the launch of the draft
Climate Change Bill, which focussed predominantly on the science
in order to produce a very accessible précis of the scientific
orthodoxy at the time, which was consistent with the IPCC third
and fourth reports. Phase 2 of the Analytical Audit, as Jonathon
Brearley has said, is moving into the economic realm looking at
the economic rationale for intervention; and there predominantly
what we are doing is taking the logic laid down in the Stern Review,
deconstructing that a bit more in the UK context and mapping out
how the UK policy sits against the framework laid down by Stern.
Q113 Dr Turner: Forgive me but that
sounds a trifle vague.
Mr Taylor: I am sorry, I did not
mean to sound vague. Stern outlayed a number of principles
Q114 Dr Turner: We know what Stern
said. We are familiar with Stern.
Mr Taylor: If you are familiar
with Stern then all we are simply doing is seeing how the UK policy
mix maps against what Stern said.
Q115 Dr Turner: Have you come up
with any specifics?
Mr Taylor: We have not finalised
our report yet. We are still in the preliminary finding stage
and we are checking our findings around various experts. As soon
as we finish our reporting stage, in line with the principles
of disclosure that Jonathon outlined earlier, we would be happy
to share the analysis underpinning our conclusions with the Clerk.
Q116 Dr Turner: When will that be
Mr Taylor: The project is due
to finish in mid May.
Q117 Dr Turner: Because hopefully
it may help illuminate the drafting of the final Climate Change
Mr Taylor: Indeed, but of course
we have been working very closely throughout our audit with Robin's
team who worked up the draft Climate Change Bill, and we continue
to work closely with all the departments involved, including the
DTI drawing up the Energy White Paper.
Q118 David Howarth: Could I ask about
one of the specifics of the Stern Review, it is about the Social
Cost of Carbon. Stern implies a much higher Social Cost of Carbon
than the Government is using at the moment, up to three times
more. We have had the Financial Secretary to the Treasury here
before us and we have put it to him that it seems to be an implication
of Stern that the Stern higher value should be used in the policy
evaluation as opposed to the present lower value. He said to us
that, no, that was not the case because Stern had to do with global
cost rather than cost in the UK. As the person putting the question
I did not quite understand what that meant. If you have any comments
on that I would be grateful. He also said that some work was going
on about how to update the use of the Social Cost of Carbon in
Government policymaking as a consequence of Stern. I was wondering
whether you could give us any progress on that particular work?
Mr Taylor: First of all, I am
not sure it is actually the case that the Stern Review recommendations
on the Social Cost of Carbon are that different from the Government's
current guidance. The Government's current guidance is that the
Social Cost of Carbon for policy appraisal processes should be
considered in a range of £35/tC up to £140/tC, with
a central range of £70/tC. Stern's recommendations, if I
recall them correctly, were in a range between £60/tC and
roughly £200/tC, and that reflected the different mitigation
path that one would assume to be on. A business's usual mitigation
path would obviously be towards the higher end of that range.
I think it is pretty clear that the Government's current estimates
fall well within the Stern range.
Q119 David Howarth: They do not fall
within itthey overlap it, which is a rather different thing.
Mr Taylor: Fair enough. It is
clear they are not terribly different. In fact, the Stern recommendation
on what the Social Cost of Carbon is around the 550 parts per
million mitigation path is roughly £68/tC, which is nearly
bang on the £70/tC the Government is currently using. However,
I think it is pretty clear it is an area that is very complex;
it is an area that it is difficult to come to any firm view on;
and the Government committed to reviewing its guidance on the
Social Cost of Carbon when it introduced it in 2002, I believe.
I think that plans are to publish something later this year in
the summer on updating the Social Cost of Carbon in the light