Examination of Witness (Questions 20-39)
RT HON
DAVID MILIBAND
MP
4 JUNE 2007
Q20 Chairman: As you know, the draft
Bill excludes international aviation and shipping from the target,
although it creates a provision to bring it back in. We have discussed
this several times and I still do not understand why that is the
case, why we cannot just include aviation's emissions when they
are made in international waters in the ordinary way in which
you would do that, so perhaps you could explain why they are excluded.
Can I also ask you something very specific about the way that
the Bill was drafted? The power to put international aviation
back into the target seems to depend on there being a change in
international carbon reporting practice relating to aviation and
shipping. Does that mean that the rest of the world has a veto
on what power you as Secretary of State would have to take unilateral
action if you thought that was the right thing to do?
David Miliband: No, no one else
has vetoes. If I may say so, it is a slightly glass-half-full
way of looking at the Bill to say we have excluded aviation and
shipping when a whole clause, I think it is clause 15 or 16, is
dedicated to making it easy to include aviation and shipping,
and which clearly should be done because aviation and shipping
are important contributors to global emissions. In respect of
aviation, there are two things that are under discussion at the
moment that we want to get sorted out before including them. One
is the actual measurement and how you include the fact that you
are emitting at 35,000 feet, how much more damage does that do,
so a calculation of the amount of damage. Secondly, there is the
allocation issue. If you are flying from A to B do you allocate
to where you are going to or where you have come from, or do you
do half and half? We want to get those things sorted out. This
is not punting it into the long grass. We now have agreement that
there should be aviation included in the EU ETS by 2011. Those
two issues will have to be resolved as part of that process. Once
they are resolved we can get aviation in, so I think it is a reasonably
responsible approach and the fact that the EU should have said
that caps should be set for aviation's entry into the trading
scheme on the basis of 2004 levels of emissions is a good thing
because that means that they are not just allowing for lots of
business as usual over the five or six years before they include
it. They have used 2004 as a base year, when it must have been
3 or 4%, I cannot remember the exact figure, of total EU emissions,
maybe a little bit higher. It is not like we are losing ground
by getting the number-crunching right before including it.
Q21 David Howarth: But you will have
seen, and we have seen, the Tyndall Centre's method of allocation,
for example, which follows they are using the half-and-half rule.
Why can we not just start with the half-and-half rule and then
move to something else later if something else comes along rather
than start from a situation where we are saying we do not move
unless we have agreement? Is it not going back to the previous
discussion about using the 2% as a possible excuse not to have
it?
David Miliband: I do not think
so. If I were sitting here saying, "I am hoping the EU will
get agreement to get aviation into the Emissions Trading Scheme.
I do not know when it will be and therefore I do not know when
we will sort out these calculations", I think you would be
in a stronger position to say, "Look: just go with the common
sense proposal by the Tyndall Centre". Since we have got
EU agreement to get this in, since we are going to have 27 nations
figuring out the basis of allocation methodology, I think it is
not unreasonable for me to say let us do it on a basis that everyone
else uses and then it will be in and we will be working on a common
basis. We are in a pre-legislative phase, so I would not want
to give the impression that I do not welcome challenge and suggestions
on it, but my instinct is that I do not feel it is an uncomfortable
position to defend. I am not sure I would tell you it was an uncomfortable
position to defend if it were uncomfortable, but because we have
got the EU ETS agreement I feel pretty comfortable defending that.
Q22 David Howarth: What about the
policy consequences of thinking about aviation in a more strict
way? You will have seen the figures, and we quote them in our
report, that if we take the best scenario for the growth of aviation
and stick to the 60% figure aviation will take up a very large
proportion of emissions by 2050 and if you go beyond that and
look at a high growth scenario for aviation, which would be plausible
given present trends, and you have a higher target, an 80% target,
then aviation will be taking up the whole of the country's allocation,
and plainly that is an absurd situation to obtain or predict.
Why is there no apparent movement on the most obvious policy measures,
for example, bringing policy on airport expansion into line, which
has got to be the policy for the longer term?
David Miliband: I would say two
things about that. One, in and of itself it does not seem to be
unreasonable for us as a country to make a social, economic and
technological choice that aviation should be a rising share of
our total allowable emissions as long as we live within our emissions
envelope. What it requires though, if aviation is going to become
a rising share of the emissions that we are allowed, is that we
take more radical action in other sectors—electricity, heat
and transport. As long as we live within our emissions budget,
if you like, our carbon budget that is set, it seems to me perfectly
legitimate for a country, given the level of technological progress
that exists in aviation compared to other areas, to say that aviation
will be a rising share of our total allowable level of emissions.
There is no aviation company able to make the presentation to
me that the car company did today about taking all the carbon
out of air transport in the way that you can think of doing in
respect of cars. You can, the experts say, get between 17 and
20 or 23% improvement in the emissions from aviation through technological
things but also the way airlines are handled and circling round
Heathrow and all of that sort of thing, so it seems to me there
are technological, social and economic reasons why people might
want to choose to fly more. If they do we are going to have much
less pollution from other sectors, which is far from impossible.
The second point is that in December Douglas Alexander set out
for the first time that any airport expansion will require an
emissions statement from the proposer of an expansion and to sit
in front of the minister the emissions test that will be established.
That means that for the first time anyone thinking of proposing
a new runway or airport and a government minister or a planning
inspector thinking about that would have to think about the emissions
impact, so you have got the EU ETS applying a cap with a price
on emissions. You have then got an emissions test for any airport
expansion, so I do not think it is quite right to say there is
no recognition. What we have tried to do is do it consistent with
the principles of Stern, which is that any section of the economy
should bear the price of the pollution that it generates within
the cap that is established.
Q23 David Howarth: The problem with
the emissions test was that every time we on this Committee have
spoken to transport ministers either about airport expansion or
about road building they have come back with a notion that what
matters is the proportion of overall emissions from transport
or to what extent would that change with this project, and that
is always going to be a small figure. The problem with that is
that you need a firmer line in public policy to tell you where
you want—
David Miliband: Yes, but if we
are saying that there is a cap on aviation emissions as part of
the European Emissions Trading Scheme, then surely that is providing
the sort of hard cap that you are talking about. It is a very
difficult thing to put into English, but the fact that we have
got the commitment that aviation, which is currently seven% of
emissions, should be going into the EU ETS, the fact that there
will thereby be a cap on emissions, the fact that if, for the
sake of argument, aviation grows as fast as or faster than you
suggest or technological progress in aviation is slower than you
or I expect, the price of carbon will rise within the ETS, thereby
increasing the incentive for aviation operators and anyone else
to take tougher action against emissions. It may be surprising
for me to say this but yes, global warming is the biggest market
failure, as Nick Stern said, but the answer is not to abolish
markets. It is to put a price on the pollution that is corroding
and corrupting those markets. If aviation goes the wrong way in
terms of emissions then the price mechanism kicks in in a serious
way. I have not checked on the exchange today but the fact that
for phase two of the ETS carbon is trading at €20 per tonne,
€19.65 last week, suggests it is beginning to be priced in
in a serious way.
Q24 Chairman: What you have described
certainly is very adequate in theory. I think those of us who
have observed phase one and even phase two of the EU ETS so far
also are aware of the considerable power of the aviation industry
lobby, so we are not holding our breath for very tight limits
to be set in the early years of aviation inside the ETS.
David Miliband: I understand why
you say that about phase one. Tell me why you say that about phase
two.
Q25 Chairman: Because phase two does
not take account of aviation at all as yet so we do not know what
the figures are going to be when aviation comes in, but unless
the European Commission and the Member States show a great deal
more robustness in the negotiations against what is a far more
powerful lobby, and you have got the whole might of the United
States aviation industry lined up against you in year two, I would
not be hopeful that in the first four or five years of aviation
inside the ETS they would be subject to a very tight cap.
David Miliband: I take seriously
what you say about that. Let me just play this back to you though.
No one is saying the European Commission have not been tough on
national allocations for phase two, tougher than you might have—I
mean, I know you are not one of the Europhobes of the Tory Party,
but you might—
Q26 Chairman: I might be still.
David Miliband: I will try to
make sure you never get Shadow ministerial office. Without being
a Europhobe you might have said, if we had been sitting here a
year ago, "The Commission has been far too lax in phase one.
There has been massive over-allocation. We have to have tougher
action in phase two". We have, including the French. If I
told you that the French cap would have been rejected out of hand
by the Commission and that they have battered their way through
a tougher solution, you would have said, "Well, yes, let
us see. The proof of the pudding will be in the eating".
Well, they have done it so let us recognise that. Every allocation
is going to be within its Kyoto requirements and below the current
level of emissions, so scarcely in the market. Secondly, we were
pushing for early entry of aviation into the ETS. In the end it
was 2011/2012, which was later than we had originally argued for.
However, the fact that they have set 2004 as the base year is
almost better than having it coming in in 2008 but with 2008 as
the base year. That is why I slightly raise my eyebrows when you
say phase two has been shown to be inadequate. I think that is
premature, if I may say so.
Q27 Mr Hurd: Let me talk about offsetting.
David Miliband: That was what
I was meant to be coming to talk about. I am supposed to be the
world expert on the offsetting market, which I am not.
Q28 Mr Hurd: There has been a lot
of noise around the integrity of offsetting. Anyone who read The
Guardian on Saturday would have seen a long article on it.
David Miliband: I am afraid I
have spent all my time reading the glowing tribute to the Prime
Minister by Martin Amis.
Q29 Mr Hurd: Which was not in The
Guardian. As you will be aware, there is a lot of concern
about the integrity of offsetting, both in terms of the compliance
market and the voluntary market. I had a meeting last week with
a large British bank which wanted to offer an offsetting scheme
to their customer base but were put off by the fact that they
just felt the sands were shifting the whole time and they did
not know what they could trust. My first question to you is, what
conclusions have you reached about the degree to which the Government
should now encourage people to offset, and, secondly, the degree
to which the Government should meet our own national obligations
to offsetting?
David Miliband: I do not want
to end your career as well as the Chairman's by saying I agree
with you.
Q30 Chairman: Mine ended some time
ago.
David Miliband: Maybe I should
try and end your career by saying that. One, I think it is right
for national government to be robust. There are 60 offsetting
schemes in operation in the UK and you know this as well as anyone
else. Four of them met the Defra standard that was published in
our consultation document in February. There you have the argument
that the consumer needs to be put properly in the picture about
what constitutes an offsetting standard, but, in respect of the
Government, I am flying to the States today. The offsetting will
be done through a completely recognised gold standard as offset.
Before you ask, offsetting is not as good as not emitting in the
first place but nonetheless half a loaf is better than none at
all and that is what offsetting represents. It represents a mitigation
of the damage that is done and it is worth doing. As part of a
global carbon market it is valuable because it helps invest in
the low carbon energy infrastructure that people need.
Q31 Mr Hurd: But in terms of the
question about meeting national obligations we have just concluded
a report on emissions trading and it became quite clear from that
report that a large proportion of the next stage of emissions
reductions this Government will effectively purchase in overseas
markets. Do you agree that we should accept that perhaps in terms
of a maximum of national offsetting?
David Miliband: That is interesting.
I got this wrong on Newsnight a couple of months ago. Half
the economy is covered by the European Emissions Trading Scheme
and the rules governing the amount of emissions reduction that
you can purchase abroad—this is what you are talking about:
supplementarity—are designed to ensure that your purchases
abroad are to supplement your domestic effort, not to be instead
of it, and it is all defined in terms of the percentage of effort.
I said, I think, that two-thirds of the reduction could be purchased
overseas. That was wrong. Two-thirds of the effort that you have
to make against business as usual can be purchased overseas, so
in phase two of the Emissions Trading Scheme our cap requires
a reduction of 12%. Two-thirds of that effort can be purchased
overseas; in other words, 8%, so 8% of our total emissions can
be purchased overseas, in other words two-thirds of the effort,
not two-thirds of the total. I hope that is clearer than it was
before. You are nodding. It should be supplementary, it should
be defined in terms of a fraction of the level of effort and the
rules should be taken from international best practice, and that
is what the Climate Change Bill does. It says we will follow international
rules on the basis of the advice of the Climate Change Committee,
so I think that is the sensible thing to do, but remember it is
a global problem so reducing by a tonne the emissions in Bangalore
is as valuable as reducing by a tonne the emissions in Birmingham.
Q32 Mr Hurd: If they are additional,
yes. Can I press you a little bit on the question of the Clean
Development Mechanism, because it is a hugely important mechanism
and there is a whiff of a scam around it at the moment, and The
Guardian headline was, "All Profit No Carbon", and
this is very damaging to its integrity. What is the British Government
doing to support greater integrity in terms of that mechanism?
David Miliband: This was a big
topic at the Nairobi UN Conference last year, mainly, it has to
be said, about why there was not more CDM in Africa as opposed
to China and India rather than the integrity of it, but the integrity
of it is very important. First of all, we always make sure that
our own offsetting is done through completely copper-bottomed
projects and we can take you to the projects so that you can see
them. Secondly, we work very hard with the UN itself—it
is a UN-mandated scheme, the CDM—to make sure that they
are not the victims of scams. What is interesting at the moment
is that the criticism of CDM is that it has got too much bureaucracy
associated with it. Although it probably has got too much bureaucracy,
the bureaucracy is not tackling the scam, so we have to find a
way of taking the bureaucracy out without binning the scrutiny
and that is what we are arguing with them to do and that is what
they are trying to do themselves. The other thing I would say
to you, which I think is relevant to this, is that as more developing
countries become enthusiastic about the potential of CDM you are
going to get more, better projects coming forward and I think
that is important as well.
Q33 Mr Hurd: If I can take you back
to the voluntary market and your code of practice, we are just
concluding the inquiry into that and we heard complaints from
basically two quarters of people. The first was the people who
are structuring the smaller type projects. The conversation was
that they were talking in Nairobi about the fact that the CDM
appears completely to ignore Africa and the argument was that
the Government's rather heavy-handed approach towards raising
the bar in terms of standards was in their view in danger of killing
off the smaller projects, killing off the more innovative end
of the projects market, so basically shutting the door on African
projects. I would like your comment on that. The second critical
voice was from the aviation industry, which was clearly in a big
sulk and their message was, "We are keen to structure innovative
offsetting schemes but the combination of this heavy-handed approach
and the way in which the air passenger duty was introduced has
put us off".
David Miliband: What has air passenger
duty got to do with it?
Q34 Mr Hurd: The fact that you doubled
the taxation.
David Miliband: But what has that
got to do with the integrity of the offsetting market?
Q35 Mr Hurd: They were in a sulk
because they basically said, "We were going to do all this
innovative stuff to improve our performance and help our passengers
offset but we are not going to do it now because of the way the
Government is implementing it".
David Miliband: The heavy-handedness
was about the fact that it was too bureaucratic?
Q36 Mr Hurd: And was just basically
saying, "This is the standard you have got to maintain",
which was a very high standard and people who were doing smaller
scale projects might not be able to comply with it.
David Miliband: The answer to
that is two-fold: one, we are trying to take the bureaucracy out
of it, and, two, we are trying to take the bureaucracy out of
it without taking the scrutiny out of it by bundling projects.
That was what the whole debate in Nairobi was designed to achieve
because at the moment each project needs a vetting process. That
can be tough for smaller projects but if you can bundle them up
then you can get through. I have not got a note on this but I
am happy to write to you about progress since Nairobi in terms
of bundling up projects and making the process go more smoothly
if that would be helpful. We have just had the Bonn subsidiary
bodies' meeting in May and so I could easily find out where we
are on that. Thanks, by the way, for all of your support on the
raising of the air passenger duty. I noticed your strong vote
for us not on that issue.
Q37 Mr Hurd: What about the point
of the aviation industry? Their point was that an opportunity
that was being missed here by the way the policy has been implemented.
Should we not be encouraging them to offer offset schemes?
David Miliband: Of course we should.
It is open to any airline, when you book your flight and when
they offer you cut-price insurance, to also say, "We presume
you will want to offset, tick. Untick this box if you do not want
to offset", but they do not do that. It is alleged that you
can find it on some of airlines' websites on, you know, page 9000
of the terms and conditions contract. Of course, it would be good
for them to make offsetting a bigger thing, and I recommend going
on holiday by Eurostar, which I recently booked, and there they
explain all the virtues of going on holiday by train.
Q38 Mr Hurd: The last aspect of offsetting,
forests, has soared up the political agenda, not least because
of the emphasis that Stern put on it but it is a highly sensitive
area, as you know from your own Brazilian press clippings. What
conclusions have you reached in terms of—and I know Defra
is taking a lead on this—how we can structure an effective
conservation credit for countries to preserve forests in a way
that does not swamp the carbon market?
David Miliband: I met the Brazilian
President and Foreign Minister on Friday and they have a real
sense of urgency about wanting to see more progress through the
G8 plus 5 on this, rightly. The foundation is having sustainable
forestry schemes. This is not just about paying people not to
log; it is about sustainable forestry and there is a lot of Brazilian
experience on that. Secondly, you have to have a baseline against
which to measure progress and the Brazilian proposal in Rome last
August was a step forward on this. I met all the other rainforest
nations at the Nairobi conference and I think most people recognised
that that Brazilian proposal established a new basis for discussion.
Thirdly, I think you have to find a way of bringing it into CDM,
and this is an intensely complicated area, but my prejudice is
that you are better off bringing it into CDM than not and you
are better off mitigating the dangers of what you call the swamping
of the market. The fourth thing, which I think is relevant, is
that if you do have a sustainable basis and if you do it as part
of the UN framework, you can mobilise private as well as public
money for it, and I think that is worth doing. The public money
is very important, that was where I think the Chancellor's announcement
about the Congo Basin was very, very welcome in the Budget. That
will be another thing to add to the litany of good things that
have happened since Stern; £50 million going to tackling
deforestation in the Congo Basin which was announced in the Budget
in March, which has subsequently been matched by the Australian
Government who are also putting a lot of money into this. I think
that is the way I would approach it.
Q39 Colin Challen: Turning to personal
carbon allowances, a year ago on the same day when you came to
this Committee you told the Audit Commission that the idea was
a "thought experiment". I am just wondering how the
idea has developed in the last 12 months.
David Miliband: I think it has
developed on three tracks, this is the idea of a carbon credit
card. Track one is that we have got more research about how it
will work and who it will affect. The Bristol University study
that went into this, which will be published, rather confirms
the work of the Tyndall Centre that is broadly progressing. Second,
and significantly, you have got organisations like the Royal Society
of Arts running pilot schemes, which I think is good and interesting.
Third, you have got a public debate about it which also takes
it forward. Someone said on the radio yesterday that there are
huge organisational and technological issues associated with it,
but so are there with Oyster cards and no one thinks the Oyster
card is the end of civil liberties as we know it. I would say
on the idea of personal carbon allowances that the thought experiment
carries on.
|
