Select Committee on Environmental Audit Minutes of Evidence


Examination of Witnesses (Questions 120 - 132)

TUESDAY 24 APRIL 2007

MR JONATHON BREARLEY, MR ROBIN MORTIMER AND MR TOM TAYLOR

  Q120  David Howarth: The idea it depends on a mitigation path of course implies that we know what mitigation path we are on, and that assumes the success of existing policy. The problem was, right at the start of our session, we were struggling to understand policy not succeeding. Is that going to be taken into account, or will the report simply assume that the policy will work?

  Mr Taylor: I would not like to pre-empt what the chief economists around Government will conclude on this matter, but I imagine that they will take into account the range of mitigation paths; and a different Social Cost of Carbon therefore theoretically applies depending on what mitigation path one is on. Clearly the decision on what kind of path we believe we are on is a very complex one and it is based not only on the UK's performance, given that we account for only 2% of global emissions, but crucially, as Robin was saying earlier, the international dimension and where we think we are moving on international agreements for mitigation.

  Q121  Mr Hurd: Are any other countries doing any serious work on the Social Cost of Carbon?

  Mr Taylor: I am not aware of that, but that does not mean to say that there are not any.

  Q122  Mr Hurd: You are doing the work, the Office of Climate Change, but you are not aware of any work being done in any of the other countries?

  Mr Taylor: I should clarify, the work being done on reviewing the Social Cost of Carbon in light of Stern and reviewing it every five years that is being done by a range of Government chief economists, but predominantly Defra.

  Q123  Dr Turner: Figures, forecasts and targets et cetera get bandied about all over the place. We had a very reasonable and logical request from the Engineering Employers' Federation last week that the Government should put the data, assumptions and the methodologies that they use to generate emissions forecasts into the public domain—at the moment they are not, and they are figures that could just well have been plucked out of thin air. They are calling on Government to use a broader range of scenarios when it forecasts future emissions and to anticipate the impacts of different trends of, say, fuel prices and the impact that could have on emissions. What is your reaction to that?

  Mr Taylor: It is an interesting perspective. I am not sure it is technically correct in all aspects, because by far and away the largest element of the Government's projections for greenhouse gases comes from the DTI's energy model, and very many of the central assumptions within the DTI energy model are not only transparent but also publicly consulted on. There are consultations that run on the oil price, the oil price to plug into the model, and the prices for other fossil fuels; and the growth assumptions that feed into the model are, of course, derived from the Treasury's assumptions on growth, which the NAO in their reports agreed were cautious and reasonable. I could go on. There are a range of assumptions that are plugged into the different models around Government including, for instance, on the transport models and various consultations go on about which assumptions should be plugged in. I actually do think there is already a pretty transparent process that is going on there. However, I think one of the advantages of the Committee on Climate Change, should it come to pass, is that that will make the process even more transparent because its analysis will be much more open.

  Q124  Dr Turner: What do you say to their point, which I think is a very fair one, that you really ought to be looking at alternative possibilities depending on which assumption of fuel prices or fiscal measures you put into the mix? You may find some surprises.

  Mr Taylor: It is certainly true that if you play around with different scenarios you are going to get different results. The nature of modelling in this area is that it is far from a precise science and one has to apply judgments, and all you can hope is that you apply those judgments professionally and with the best knowledge of evidence out there. I think the DTI do an awful lot of sensitivity analysis on their model and play around with different oil price assumptions and so on. Scenario planning is very much part of the kind of modelling that goes on for particularly longer-term targets. The 2050 targets are less suitable for the kind of time series models that we use for nearer-term projections, and we have to use more scenario-based modelling, where you test the assumptions of various scenarios using, for instance, the insights developed from the Office of Scientific Innovation and the Foresight Programme and so on.

  Q125  Dr Turner: This work will help you understand the mechanisms that are going on and help you devise policy instruments that will actually achieve the results that you want. Would it not be helpful to publish all this stuff more widely?

  Mr Taylor: As I said before, there is an awful lot of sensitivity analysis that is done and there is a lot of consultation that goes on on the assumptions and that is, therefore, published. When the DTI publishes its series called the Updated Energy Projection Series, the UEP Series, it actually has some annexes in there which compare different scenarios based upon different inputs of oil prices and so on. It is a complex and, as far as I can see, largely transparent process.

  Q126  Mr Hurd: Turning to international aviation and shipping, we had a nice letter from Friends of the Earth to say that in leaving out emissions from those sectors the targets in the Climate Change Bill are "rather like a calorie-controlled diet that opts to exclude calories from chocolate". How accurate and meaningful are targets and forecasts that leave out these sources of emissions?

  Mr Brearley: There is an issue for both shipping and aviation in the sense that these are international and, as yet, there is no agreement on how we allocate emissions between countries. One of the risks of including these within the Climate Change Bill, for example, is that we have perverse effects on policy-making itself. For example, in shipping, do we end up with ships being registered elsewhere rather than being registered in the UK? I would argue, until we have an international agreement that would allow us to understand better how we allocate emissions, it is quite a challenge for us to include those within our domestic targets.

  Q127  Mr Hurd: That is a bit of a cop-out, is it not? "We haven't got an agreement—therefore we don't publish". What is the argument against us publishing a parallel set of emissions forecasts that include those, because that would send quite a strong signal that this position is untenable in the medium or long-term. It would provide quite a good lead from this country, would it not?

  Mr Mortimer: There is a leadership argument, but there is also an argument about whether we have policy levers to immediately take on UK legal responsibility for emissions where we do not control all the levers to reduce emissions. Shipping is the best example where if we took on 50% of emissions for all shipping which passes throughout UK waters, for example, we have precious few ways to act on those outside international agreement; and, therefore, we took the view that it would be much more sensible to allow the Climate Change Bill to evolve and add emissions later, than to artificially take on responsibility for them in advance of any international agreement. It is a mixture of not having an agreed basis for allocating them but also not having the international agreement, as yet, on the policy measures to reduce them.

  Q128  Mr Hurd: Presumably Government does use some form of forecasting of these emissions internally, do you not; otherwise you are in danger of having everything thrown completely off course?

  Mr Mortimer: That is rather different from taking on the legal responsibility for emissions over which we require international agreement.

  Q129  Mr Hurd: I am not sure I am talking about taking on legal responsibility for emissions; I am just talking about actually having a rather more honest dialogue with the country in terms of the forecast of emissions; because the reality is there is a little elephant in the corner of the room that is getting bigger and bigger and bigger and in danger of completely dwarfing what you are trying to do. That is not transparent to the public because you are all hiding behind this saying, "We don't have an agreement on that, therefore, we're not going to publish it".

  Mr Mortimer: I think there is a separate question about whether the Government should be publishing data not necessarily in the context of the Climate Change Bill but about emissions from international aviation and shipping. Some of that data is published, but I think that is a very different question. From the Climate Change Bill where there is a very good quality policy argument to be had for saying, "Let's primarily pursue this in an international forum rather than taking on responsibility legally".

  Q130  David Howarth: Is there not something the wrong way round? You are saying, "We don't have the policy instruments to deal with this, so pretend it doesn't exist". It seems a rather backwards way of thinking. Is not the point about policy effectiveness separate from the point about whether these emissions are there in the first place and we should be trying to do something about them, and trying to think of some more effective way rather than waiting until an international agreement occurs? Your point about the transfer registration, that might work in some cases but not all, so there would be some effect but you would not have the 100% effect you might have if you controlled the whole thing?

  Mr Brearley: To emphasise, we are not saying you should not address these sectors and you should not essentially be putting in place policies that do address emissions from these sectors—for example, PPR is one of the measures that is intended to do that. I think that is different from essentially giving yourself a statutory obligation to address emissions in the sector where you do not really have full control because you are dependent on international action to do so. The Climate Change Bill essentially is about tackling climate change, about tackling UK emissions, but it is also about doing so in such a way that is credible, allows Government to be able to do this but also balances off economic growth and poverty and other objectives which the Government has. If we give ourselves an objective which we think is extremely difficult to meet under current circumstances then we do not have a credible framework to take forward, say, to 2050. As we pointed out before, there is a clause within the Bill that does allow us to amend this if we do get international agreement, and if we do get a fair way of allocating emissions between countries.

  Q131  Dr Turner: Have we not already gone some way down the road of getting international agreements? Aviation is going to be included in the European Commission's trading scheme—now that is a big enough area to be enforceable and to have a major effect. You must surely be factoring that into your calculations, and it will be a very small step to extend that to shipping?

  Mr Mortimer: I am sorry to go back to the clause which allows us to amend it but the clause allows the Bill to be amended to add emissions from international aviation at the point at which there are international developments. That is one international development which might be in that category. It has not happened yet. The Government will be free in 2011/2012 when that comes in to effect that decision.

  Q132  Dr Turner: To go back to the point that Mr Hurd made, there is nothing stopping you now from publishing parallel figures that take this into account which will illustrate the necessity for doing it?

  Mr Taylor: May I come in on that. There may have been some confusion. We do actually publish those items under the Kyoto Protocol, because there is an agreement on how the international aviation and shipping items should be accounted for nationally. They are actually recorded as a "memo item", so they are recorded in the tables, but they are recorded so you do have this parallel set of figures there already. In the Climate Change Programme Review, I was just looking through here, there is information in there on projections also of the growth in greenhouse gas emissions from aviation and shipping. The Government publishes that information. It just may not always be apparent to everybody that just looks at the core set of international report figures.

  Chairman: Thank you very much for a very helpful session. I am sure we will see you again before long.





 
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