Examination of Witnesses (Questions 160
- 179)
WEDNESDAY 16 MAY 2007
MR RUPERT
EDWARDS, PROFESSOR
MICHAEL GRUBB
AND MR
JAMES WILDE
Q160 Chairman: Even if you did not
have it numerically defined in the Bill, do you think that the
Government has got to make a clear statement of what its policy
is towards the use of credits?
Mr Edwards: We would encourage
that, yes.
Q161 David Lepper: We have talked
already about the role of the Committee on Climate Change and
you, Mr Edwards, were suggesting a comparison with the Monetary
Policy Committee; I just wonder if that is a very accurate comparison.
The Chancellor sets the inflation target, the Monetary Policy
Committee then decides what the interest rate will be in order
to meet that inflation target, it makes that decision. That is
not quite the same role for the Committee on Climate Change, is
it, it is advisory; it is to make proposals to the Government.
Mr Edwards: I would not want to
take the comparison too far but I think, going back perhaps to
what Professor Grubb said about seeing targets set and not being
met, and everybody going quiet about it, the Climate Committee
will create a process of scrutiny and transparency that will put
pressure on Government to meet the targets even if the exact mechanism
and the levers are different.
Q162 David Lepper: I wonder if you
have looked—and I address this to all three of you—at
what is suggested in Schedule 1 of the Bill as to the kinds of
people who will sit on the Committee on Climate Change and whether
you feel that is adequate. Are all of those areas which need to
be covered, are there any glaring gaps and what do you think of
the fact that a knowledge of climate science comes sixth on the
list of the areas of expertise to be included among the members
of the Committee?
Professor Grubb: So long as they
are still on there; I am not sure I remember where on the original
list they were, but so long as they are on there.
Q163 David Lepper: You do not feel
they should have been a little bit higher up than this; that does
not matter so long as they are there.
Professor Grubb: Yes.
Q164 David Lepper: Mr Edwards, you
also talked about the Committee depoliticising in your evidence.
Can you explain how you see it doing that?
Mr Edwards: Without wanting to
overdo the comparison—which you have already suggested is
not wise—with the way monetary policy is conducted I do
feel here, looking at the history of inflation targeting from
Paul Volcker to the European Central Bank to the wise men of Kenneth
Clarke, there is a strong sense in which this Bill is going to
be very valuable in taking controversial decisions out, becoming
less of a party political issue and more of an issue that is scrutinised
publicly and dealt with in a less political way.
Professor Grubb: It was partly
to the previous question, so I was just checking through the list.
There is one thing that could also be considered in terms of the
Committee composition. This is slightly ironic coming from an
economist, in that whilst there are large parts of this problem
that can be addressed through economics and technology and investment
et cetera, there are other parts that involve public behaviour,
involve public willingness to accept certain things like much
higher prices, constraints on road use or travel. Therefore, that
socio-political dimension it might be wise to include, because
the idea that a bunch of relatively technical and business people
could declare that the Government needs to do various things,
which then turn out to be actually politically extraordinarily
controversial, or there is simply a failure to take account of
what people are or are not willing to do in terms of behavioural
change, is a useful thing to consider.
Q165 David Lepper: The Committee
needs someone to handle spin.
Professor Grubb: No, not at all,
the Committee's job is nothing to do with public relations as
I understand it, it is to do with advising governments on how,
potentially, to get people to change to lower carbon lifestyles
rather than pretending that everything comes down to price or
investment, so I think that is an issue to consider. There are
other areas perhaps that we do not have time to go into, but we
touched in our memo on the question of the difficulty of business
translating national targets to investment indicators.
Q166 Mr Cox: Is there enough in the
Bill that creates that institutional independence which you, Mr
Edwards, spoke of and which you, Professor Grubb, mentioned right
at the beginning of your remarks as being the value of this Bill,
namely creating this kind of institutional certainty for industry
and the country? The CBI does not think so, the CBI seems to have
got the idea that the idea of Defra is that it would provide advice
to the Government in response to specific questions, like a jury
being tasked with a judge to decide certain issues of fact. It
does not seem explicit in the Bill that it will occupy even the
role of the wise men, Mr Edwards, of which you spoke, it really
is a very ill-defined institution indeed and if it is meant to
have that type of independence that would give genuine political
cover do you really think it is sufficiently explicitly set out
in the Bill?
Mr Edwards: It would ideally be
more explicitly set out and other things could be more explicitly
set out. The Climate Committee will need to have more explicit
guidance on whether it should take into account socio-political
reality or international negotiations or trajectories, and I did
notice that the Committee was going to have to take account of
a 60% target, decide whether that target was realistic in the
light of international negotiations and also take account of a
number of other factors: economic, social and political and it
will be a tough job to do without a little bit more explicit guidance
that perhaps the trajectory is the number one priority.
Q167 Mr Cox: What about Professor
Grubb?
Professor Grubb: I would agree
with that. I am sure the independence could perhaps be more fully
defined than it is currently laid out.
Q168 Mr Drew: If we look at the history
of independent committees there is no better example of some of
the tensions than CoRWM, which looked at nuclear waste. By the
very nature of this body it was trying to be all-embracing to
get the inherent tension within it so you could get different
viewpoints represented in that body. The problem is the tensions
were so great that there was a time when people were resigning
with gay abandon as part of that body. Are we seriously suggesting
that a committee could bring in all those different views and
yet be a body that would take some tough decisions and tell Government
about those tough decisions?
Professor Grubb: Again, it may
not fully be my area of expertise but, first, I do not think you
can expect to have every possible view represented on a relatively
small committee and I agree, if you try and expand it to have
every conceivable view then you could end up with the kind of
problems you have indicated. My slight observation is that, given
the right mandate, the success and impact of a body like this
unfortunately to some degree does come down to two factors, one
of which is the right choice of chair who can manage a process
towards some consensus without losing all of the substance, and
can pull out the things that really matter and argue and defend
them potentially against a slightly hostile government and, secondly,
I would suggest a secretariat that is adequately resourced so
that the Committee can carry out its own analysis and, if necessary,
challenge government analysis.
Q169 Chairman: What does it need
in the way of resources?
Professor Grubb: It needs a secretariat
that has some technical competence to do analysis.
Mr Drew: Can I just say, we have the
Sustainable Development Commission which actually has probably
done invaluable work because it has not tried to have a high profile
in the sense of making lots of exotic statements, it has just
got on and done a lot of good groundwork, and where the Government
has been at fault it has criticised and where it feels the Government
has done some good work it has been complimentary and it has gained
status because it has not tried to get into the political framework.
Why do we not just give it to the Sustainable Development Commission;
there is nothing more sustainable than trying to keep the planet
going, why are we inventing another body?
Q170 Chairman: Ask Mr Miliband that
because he has drafted the Bill. Can we have a quick answer, yes
or no, do we need another body?
Professor Grubb: I think the mandate
of the SDC does not cover the mandate that is required for this
Bill, for starters, and one might argue it requires different
sets of expertise in some respects.
Chairman: Thank you very much. David.
Q171 David Lepper: The Energy Saving
Trust, in talking about the resources that the Climate Change
Committee might need, talks about a secretariat, as did you. The
Energy Saving Trust talks about the importance of the Office of
Climate Change and the inter-departmental analysts group as being
amongst those who might help to provide that support. From what
you have seen so far of the work of the Office of Climate Change,
for instance, or indeed the IAG, do you feel those are the right
sorts of bodies to be providing that resource that is needed to
the members?
Professor Grubb: I am not sure
whether the Office of Climate Change has yet had much time to
show what it can do in terms of analytical advice—at least,
not that has gone into a more public domain as yet. You can tell
me exactly how long it has been in existence, but it is not long
to produce that kind of outlook.
Q172 David Lepper: Since about September
last year, but quite what it has been doing is one of the questions
that we have asked ourselves on occasions, but it is interesting
that you ask yourselves the same question.
Professor Grubb: That is not quite
what I said.
Chairman: Part of our concern is that
when the NAO produced their report Emissions Projections
in the 2006 climate change programme review they said, and I quote:
"There is considerable inherent uncertainty in modelling
the UK energy market and emissions projections" and here
is this Committee that is going to have to give some pretty sound
comment on all of these things against a background where there
is still modelling uncertainty, and it is a question of what kind
of kit they need to try and bring an element of certainty into
a world of uncertainty. Maybe you have not got a definitive answer
on that because I am going to move on to Lynne Jones.
Q173 Lynne Jones: Before I ask the
questions I was supposed to ask could I just ask Mr Edwards, going
back to the supplementarity thing, you said 50%; what do you mean
by that 50%?
Mr Edwards: That if an Annex 1
country under Kyoto has to reduce its emissions by 8% from 1990
levels, 4% of those reductions at a minimum must be achieved domestically
and no more than 4% achieved by having the assigned amount targeted.
Q174 Lynne Jones: Are you saying
that 30% of our CO2 reduction target—that is
50% of the 60% target—should be based on purchase of carbon
credits?
Mr Edwards: Am I saying that they
should be?
Q175 Lynne Jones: Yes.
Mr Edwards: No, I am saying that
we should be careful that that is not the case.
Professor Grubb: There are, as
Rupert said, different interpretations, which is one of the problems
behind the concept. It has certainly also been used to say that
it means that half of the effort required to achieve a given target
must be done at home, and that has been otherwise defined by some
others as saying you have to work out what the country's emissions
might have been, and then half of the gap between that and its
target could be done. There are differing interpreations.
Q176 Lynne Jones: You are not saying
50% so what would be a reasonable proportion?
Mr Edwards: I am probably not
qualified to have a view on whether the target should be 60% or
80% or 450 parts per million but I sense, if you want a personal
opinion, that 450 parts per million looks wise and that therefore
60% is a minimum, and that if you are going to do that as an industrialised
country you cannot rely on achieving that through purchasing credits
from overseas, but I still think that the flexible mechanisms
of Kyoto are extremely valuable, for the reasons I said earlier.
Lynne Jones: Turning to the secondary
legislation in the Bill which gives enabling powers to set up
new trading schemes, are you generally supportive of such a proposal
and what characteristics would such schemes need to have to ensure
that there was high carbon investment rather than low carbon investment?
Q177 Chairman: Can you give us a
for instance as to what one of these new schemes might look like?
Professor Grubb: James or I could
because we have been somewhat involved in the early stages of
one of them, which is what came to be known as the energy performance
commitment. Some of the contributing analysis that we did on that
was a suggestion for effectively a cap and trade scheme, but which
would be fundamentally different from the European trading scheme
which applies to big industrial high emitting facilities. This
instead would be designed to set caps on the commercial sector
and would operate through the company, not through the individual
facilities so that, for example, a large supermarket chain would
have to map its emissions right across the country and the Board
would then be held accountable for the total emissions and would
then have to buy credits in relation to that. That is an example
and actually that would include some of the carbon emissions from
the electricity that it consumes, which is not how the ETS works.
Q178 Chairman: Just to be certain
I understand that, are you saying that somebody would set a cap
on, for example, Tesco in terms of their emissions?
Professor Grubb: That was the
suggestion, probably following a separate line of inquiry.
Q179 Chairman: Who would set the
cap?
Mr Wilde: Within the scheme that
is being proposed the Government would set an aggregate cap on
participants within the scheme, so currently it is expected that
about 5000 organisations responsible for around 15 million tonnes
of carbon—10% of the UK's emissions—would be within
the scheme, and so the government would set an aggregate cap for
all participants within the scheme rather than a cap for Tesco
specifically.
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