Supplementary memorandum submitted by
Ian Pearson MP, Minister of State for Climate Change and the Environment,
Department for Environment, Food and Rural Affairs
When I gave evidence to the Committee on 12
December as part of your inquiry into the EU Emissions Trading
Scheme, I undertook to send you further information on a number
of points.
One of the issues that the committee was particularly
interested in was the exact level of emissions abatement that
has taken place since the Scheme began. During the session I mentioned
a study by the Massachusetts Institute of Technology which suggests
that the EU ETS may have resulted in emissions savings of between
50 and 200 MtCO2. Officials have since given a copy
of this to the committee clerk [not printed].
The Committee were also interested in the level
of emissions savings observed in the UK due to the Scheme. As
I said in my written evidence it is difficult to draw firm conclusions
with just one year's data. However comparing 2003[23]
and 2005 emissions in the UK from incumbent installations in the
EU ETS shows a reduction of around 10MtCO2 (4%). A
number of new installations commenced operation and entered the
Scheme in 2004 and 2005, emitting a total of around 5MtCO2
in 2005. Therefore, the net total reduction in emissions from
UK installations (incumbent and new) in the EU ETS was approximately
5MtCO2 between 2003 and 2005.
My officials have carried out a series of analyses
of the first year results of the EU ETS examining the results
by the sector and as a whole. The first of these was published
shortly after the Committee's hearing and may be of interest.
The analysis can be found on the Defra website:
http://www.defra.gov.uk/environment/climatechange/trading/eu/results/index.htm
You were also interested in actions by individual
companies. For confidentiality reasons we cannot identify companies,
however, the Carbon Trust is working with 92 organisations with
installations covered by the EU ETS to reduce their emissions.
This work includes reducing energy use in plants and in depth
energy efficiency measures.
KYOTO PROJECT
CREDITS IN
EU ETS
We discussed at some length during the evidence
session in the interaction between the EU ETS and Kyoto project
credits and I undertook to set out the detail for the Committee's
benefit.
The UK has welcomed the Commission's announcement
in its decision on the first batch of Member State National Allocation
Plans to limit the amount of Kyoto project credits that can be
used in meeting the EU ETS requirements. This announcement ensures
that the EU ETS will deliver reductions in CO2 emissions
within the EU rather than just through the purchase of Kyoto credits.
The Commission considers that as a general rule installations
in the EU ETS should be allowed to supplement their EU allowance
allocation by up to 10%. In assessing Member States' proposed
limits that are greater than 10% the Commission takes into account
the effort a member state has to undertake to respect of its Kyoto
target. This reflects that some Member States may have a variety
of mechanisms to meet their Kyoto targets (ie not just the EU
ETS). This is taken into account using a formula set out in the
Commission communication. The Commission formulae aims to ensure
that each Member State does include at least come CO2
reduction within the EU and is not wholly reliant on purchasing
Kyoto project credits.
For the UK's phase II National Allocation Plan
the Government decided to allow operators in the EU ETS to use
Kyoto project credits, derived from reductions of emissions of
any of the basket of six greenhouse gases, to provide them with
further cost-effective and flexible compliance options.
By setting a limit on the use of project credits
of 8% we are signalling the need to create a market for investment
Clean Development Mechanism & Joint Implementation projects
balanced against domestic action. This 8% limit represents around
two-thirds of UK effort level—the level of effort is the
distance between the emissions projections for the period and
the UK emissions cap. Therefore at least one third of the reductions
delivered by UK installations, compared to projected emissions,
must be made within the Scheme—either through making reductions
themselves or buying allowances from other installations. And
no more than two-thirds can be delivered from outside the EU using
the Kyoto flexible mechanisms. The 8% is arrived at using the
following calculations:
The UK's yearly effort level (distance between
projections and cap) is 8 MtC, or 29.3 MtCO2.
2/3 of 29.3 = 19 MtCO2 = 8% of yearly
cap of 246 mtCO2
19MtCO2 = 8% of the annual cap of 246
MtCO2
TRANSPORT VOLUNTARY
AGREEMENTS
The current voluntary agreements on new car
fuel efficiency were agreed between the European Commission and
the automotive industry and aim to reduce the CO2 emissions
of an average car sold to 140 g/km by 2008-09. This represents
an improvement of 25% in the average fuel efficiency of new cars
sold across the EU. The European Commission are currently considering
what should replace the current voluntary agreements beyond 2008.
METEOROLOGICAL OFFICE
FUNDING
Joan Walley raised funding for the Meteorological
Office which is a Trading Fund Agency owned by the Ministry of
Defence. It is one of the world's leading National Met Services
with key responsibility—through its Public Weather Service—for
providing National Severe Weather Warnings and a range of other
forecast services to the public.
The Public Weather Service is funded by MoD,
on behalf of a number of government departments. Funding currently
amounts to some £65 million per annum. MoD has already identified
efficiencies in this budget totalling £6.5 million in real
terms over four years. As part of the MoD's regular two-yearly
planning rounds, further reductions of £9.5 million over
four years are being considered—but no decisions has been
taken yet. Ministers will be making decisions o the forward Defence
programme, including the Met Office, in the first quarter of this
year.
None of these cuts will affect overall funding
for climate change research. In fact, we are increasing our overall
funding in this area from £17.4 million in 2006-07 to £18.4
million in 2007-08.
Separately, Defra and the MoD are currently
funding an independent review of the Hadley Centre, but there
are no plans to cut its funding. The review is a normal give yearly
examination of the science and activities of the Hadley Centre,
and how it meets the needs of its MoD and Defra clients in delivering
climate change research. It is not concerned with wider Met Office
Public Weather Service activities or budgets.
I hope these answer the outstanding questions
and inform your report. I look forward to receiving your recommendations
which will be timely for contribution to the Review of the EU
ETS.
January 2007
23 Lack of verified emissions data for 2004 means we
must compare with 2003 data. Back
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