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The committee’s review of the target, which the Bill makes statutory, will take place in the coming months, alongside consideration of the first three carbon budgets, and will be completed by December this year. It will also include whether and how the other internationally recognised greenhouse gases should be incorporated in our targets, rather than simply CO2. We will use the powers in the Bill to do that, if it is what the committee recommends.

The Bill begins with a purpose clause, which was added in the other place, linking the Bill’s objectives to the EU’s ambition, which we support, of limiting global temperature rise to 2° C through a global effort. Much as we support the overall goal, I cannot see how that requirement fits into a piece of UK legislation. Any measure based on global temperatures means that we are dependent on what happens elsewhere in the world—in other words, on things outside of our direct control. The UK cannot, through domestic legislation, tell other countries what to do; nor can we legislate to control global temperature—but we can control our own overall emissions, which is why the Bill places a duty on the Secretary of State to reduce the net UK carbon account. We will therefore seek to remove clause 1.

One of the Bill’s most radical and distinctive features is the framework that it creates for delivering and monitoring the reductions in emissions required to achieve the 2020 and 2050 targets. It establishes a system of five-year carbon budgets, set up to 15 years in advance, to make clear the direction that we are taking and provide greater certainty for business. We propose to strengthen our commitment in the Bill to building a low-carbon economy in the UK. However, we are unable to accept the limit that the other place inserted on the balance between domestic effort and internationally traded credits, because the limit set is arbitrary and undermines clause 34, which asks the Climate Change Committee to advise on the use of credits.

We need to ensure that the Bill supports our efforts to secure the ultimate prize of a comprehensive global deal to tackle climate change. Investment in low-carbon technologies through the international carbon market is an important part of that.

David Howarth (Cambridge) (LD): I hear what the Minister says about rejecting the approach of the House of Lords. However, is he willing to accept some limitation on the use of international trading to avoid the need—or requirement—to change what we do in this country? Surely we must be an example to the whole world.

Mr. Woolas: I am grateful to the hon. Gentleman for the opportunity to give him an affirmative response. It is a question of balance. We must balance the limit that we set to ensure that UK industry secures innovation, which will benefit us and the wider world, with the amount of international trade in carbon that should take place to allow the technology and finance transfer, through the private sector initiatives, that the developing world needs. I know that the hon. Gentleman supports that point.

Gregory Barker (Bexhill and Battle) (Con): Will the Minister clarify whether he intends to remove the clauses that the other place inserted and await the independent
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committee’s judgment? Does he give a commitment to accept the judgment, whatever it is?

Mr. Woolas: Yes, yes and no. We intend to change matters—I give notice that, should the House give the Bill a Second Reading, we would like the committee to consider that. For reasons of good government and parliamentary accountability, it would be wrong to say that we will accept whatever the committee says. We intend to appoint people of the highest calibre to the independent Committee on Climate Change and take sound advice from them, because they know what they are talking about. It would be foolish to rule out accepting their recommendations. We therefore have an open mind.

Mr. Tim Yeo (South Suffolk) (Con) rose—

Mr. David Heathcoat-Amory (Wells) (Con) rose—

Mr. Woolas: I give way to the Chairman of the Environmental Audit Committee.

Mr. Yeo: I am interested in what the Minister said earlier about the targets. He knows that I strongly support the view that too much focus on the 2050 target runs the risk of not doing enough urgently. Will he seek the views of the Climate Change Committee specifically on the interim target and recognise that, although we could hit the 2050 target, we have no chance of staying within the 2° C maximum if we do little in the earlier period?

Mr. Woolas: The hon. Gentleman makes my point. He is right—we could hit the target by carrying on in the same way until 2049 and cutting emissions by 80 per cent. in the last year. If we did that, dangerous climate change would occur, with temperatures rising by 8° C, 10° C or possibly more. Emissions of gases are cumulative and the interim target is as important, if not more so, than the 2050 target.

Mr. Heathcoat-Amory: Will the Minister give way?

Mr. Woolas: There are many points to be made on that matter, and I must make progress.

Action by the EU is also important to help deliver our targets, and we need to recognise the legitimate right of UK companies to participate fully in the emissions trading scheme, which is the foundation of the EU’s efforts to tackle climate change.

The framework of carbon budgets is underpinned by clear accountability, through annual reporting to Parliament on progress, supported by the requirement to set out an indicative range for the net UK carbon account for each year of the budget period, and by the independent scrutiny of the new Committee on Climate Change. The Government will be required to report to Parliament, setting out their plans and proposals to meet each carbon budget, as soon as practicable after it is set. The first three budgets and our plans for meeting them will be set out alongside the Budget in 2009. A requirement for the report to be laid by the Prime Minister was inserted in the other place, but since every other duty in the Bill is laid upon the holder of the Secretary of State’s office, as is usual in a system of collective Government responsibility, we will seek to amend the relevant clause to uphold that responsibility.
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There has been a great deal of debate about emissions from international aviation and shipping, which have already been raised this afternoon. They are, by definition, international industries, and the UK has therefore strongly argued for international action to ensure that they play their part in tackling climate change. I hope that aviation emissions will be included in the EU emissions trading scheme from 2012. That would ensure that any growth in aviation emissions in future would have to be balanced by reductions elsewhere. However, the issues in the allocation of national responsibilities for such emissions are complex; and so once the EU ETS rules have been set, we will ask the committee to advise on whether there is a methodology to include international aviation emissions in our targets and on what the impacts of doing so would be. We would expect to be in a position to decide whether to go ahead before the second carbon budget under the Bill, which runs from 2013 to 2017, although we would not want to cut across our parallel efforts to reach wider international agreement.

Several hon. Members rose

Mr. Woolas: If hon. Members will bear with me, I think that they will welcome what I am about to say.

We recognise the strength of feeling on the issue, and have decided to accept the main thrust of the amendment made in the other place that sets a deadline of five years either to include international aviation and shipping emissions in our targets or to report to both Houses on why that has not been done.

Ms Karen Buck (Regent's Park and Kensington, North) (Lab): I very much welcome what my hon. Friend has just said. Aviation concerns the public, because it is the fastest-growing source of global emissions. Does he agree that it is right that aviation should bear the full economic costs that it imposes? Is it not time to look, globally, to a successor to the Chicago convention, and is it not anomalous that aviation fuel has been exempted internationally from taxation?

Mr. Woolas: There is a certain amount of detail in this debate, in which I am sure the House will want to participate this afternoon. What I have just announced meets the points of hon. Members in all parts of the House. The Government’s intention is that aviation and shipping should be included. We are among the strongest adherents of carbon markets and the cap and trade policy in the world, but carbon markets have to be based on verifiable science. We cannot cherry-pick in carbon markets. The problem is recognising the difficulties in different methods of calculation, but we of course already collect such information.

Joan Walley (Stoke-on-Trent, North) (Lab): I am grateful to my hon. Friend for giving way and for his kind words about the role of the Environmental Audit Committee. The work that he has just announced to the House is likely to generate the same sympathy in respect of shipping, because if we have to wait longer for shipping to be included than we do for aviation, that will be unfair on UK manufacturers. We need all emissions to be counted in one go. The sooner that shipping is included, the better.

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Mr. Woolas: I can confirm that our policy is exactly to include shipping, partly for the reasons that my hon. Friend suggests.

Several hon. Members rose

Mr. Woolas: I should like to make some progress, because I have already been speaking for too long and need to get through this important speech.

I have already referred to the Committee on Climate Change—a new independent, non-departmental public body that will be established under the Act.

Mr. Nick Hurd (Ruislip-Northwood) (Con) rose—

Ms Sally Keeble (Northampton, North) (Lab) rose—

Mr. Woolas: I need to move forward and finish my speech.

The committee’s task will be to advise on the emissions reduction path to the 2050 target, and specifically on the appropriate level of the carbon budgets and our progress towards achieving them. The committee has already been established in shadow form, with a first-class team under the chairmanship of Lord Turner. It will be sponsored by and will report jointly to the Government and the three devolved Administrations. That gives me the chance to mention the excellent co-operation between the UK Administrations on this Bill, much of which covers devolved areas, for which I am grateful. Both the Scottish Parliament and the Northern Ireland Assembly have agreed the requisite legislative consent motions.

Mr. Hurd: The Committee on Climate Change is a key innovation in the Bill, which goes to the heart of improving accountability. It is, however, being asked to do a lot in a very short period of time. In the Joint Committee, we expressed concern about the amount of resources allocated to the new Committee on Climate Change. Will the Minister confirm its budget in its first year?

Mr. Woolas: I will have to come back to the hon. Gentleman—later in the debate, I hope—on the specifics. I give way now to my hon. Friend the Member for Northampton, North (Ms Keeble).

Ms Keeble: I am grateful. Is the Minister aware that although many qualities are required for the Climate Change Committee, there is no specific requirement for anyone to have any technical knowledge about the impact of climate change on the ecology of wildlife? Will he look into whether that quality could be included somewhere in the wide range of different skills required?

Mr. Woolas: Consultation with the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Lewisham, Deptford (Joan Ruddock), confirms that the answer is in the affirmative.

The Bill also introduces powers to establish new emissions trading schemes within the UK through secondary legislation. Trading schemes are among the most economically efficient means, we believe, of delivering emissions reductions. The first use of those powers will be to implement the carbon-reduction commitment, a mandatory cap and trade scheme covering approximately
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4,000 to 5,000 large, non-energy-intensive organisations. That will save some 4 million tonnes of CO2 a year by 2020, making a significant contribution towards achieving our targets.

As the House will be aware, a significant level of climate change is already inevitable, so we must ensure that we adapt to climate change as well as militate against it. The Bill will put in place a requirement to assess the risks and vulnerability of the UK and to report that assessment to Parliament. The Government will have to lay before the House a programme of action on adaptation to address those risks and vulnerabilities. As part of this effort, all providers of public and other essential services will need to take similar steps. The Bill therefore creates powers for the Government to require service providers to assess the risks and set out the actions that they need to take in response. We will provide statutory guidance to help with that work.

Martin Salter (Reading, West) (Lab): I welcome the fact that the Minister has referred in his speech to adaptation—an important point. The Bill gives the Government new powers to require public bodies to produce action plans on adaptation at the discretion of the Secretary of State, so does my hon. Friend not agree that even at this stage it is important for Ministers to make it clear to local authorities that, given that it is right to expect considerably more volatile weather conditions and considerably more flooding, some of the proposed developments on flood plains are simply irresponsible? Those projections of increased rainfall and increased flooding are a direct result of the climate change that we are already seeing.

Mr. Woolas: As ever on this issue and others, my hon. Friend makes a strong point. He is right; we agree with him.

I say to the hon. Member for Ruislip-Northwood (Mr. Hurd), who asked about the new committee’s budget, that it is £3.2 million for this financial year.

A new provision establishing a statutory sub-committee of the Committee on Climate Change was added in the other place. I recognise the importance of expert advice on adaptation, so I accept the new provision. We will bring forward further proposals to ensure that the work of the sub-committee is consistent with that of the committee as a whole.

I shall now deal with other provisions of the Bill. The Bill contains powers for up to five local authorities to pilot waste-reduction incentive schemes, designed to encourage households to minimise and recycle their waste. That is in response to requests from the Local Government Association. As previously announced by my right hon. Friend the Chancellor of the Exchequer, we will bring forward proposals for a power to require retailers to charge for single-use carrier bags. That will ensure that if the radical and swift reductions in their use that we seek are not achieved through voluntary agreement with the retailers, they will be achieved under this Bill.

The Bill also includes provisions to enhance the operation of the renewables transport fuel obligation. It will require the administrator to promote the supply of renewable
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transport fuel which delivers carbon savings and contributes to sustainable development or general environmental protection in the longer term.

Finally, I wish to address the addition made in the other place concerning corporate disclosure of carbon emissions, which has been of much interest to campaigning groups and to many in this House—the issue has been raised already this afternoon. The Government are not persuaded at present that such specific mandatory reporting requirements are an effective means of encouraging emissions reductions. But we do recognise that action is desirable in this area, not least to encourage the development of a standard that will support comparable emissions reporting. We will therefore propose a requirement for the Secretary of State to develop and issue guidance on how companies should report their greenhouse gas emissions. We will look further at taking forward the issue of emissions reporting in 2010, in parallel with the anticipated review of the narrative reporting requirements of the Companies Act 2006.

Many right hon. and honourable Members wish to speak on the Bill, so I shall draw my remarks to a close, but before doing so I wish to make this point: this Bill is about leadership. No other Parliament in the world has attempted to do what we seek to do today. I wish to take the Bill forward in the same spirit in which it arrived here—open debate, testing ideas and seeking improvements. I am sure that all that and more will take place in Committee, should the Bill be given a Second Reading.

In the end, however, the Bill is just a framework. What we do with it will determine whether we are worthy of the responsibility that has been placed on us by previous generations, ourselves, our own actions and the power of nature. The question is not whether we can pass the Bill. I have no doubt that we will. The real question is: can we reduce our emissions? Can we bring about the low-carbon industrial revolution? The answer will depend in part on what all the nations of the world do between now and our meeting in Copenhagen in 18 months’ time to reach a new climate agreement. Each country must make its contribution and each person must play their part. That is the nature of climate change—it affects us all. The best step that the UK can take is to show leadership at home.

On the evidence of the past 18 years, during which UK CO2 and greenhouse gas emissions have declined, what once seemed impossible has now become possible. That is progress, but we need much, much more of it. This Bill will help us to take those next steps on the most important journey that, we believe, faces humankind. I commend the Bill to the House.

4.58 pm

Mr. Peter Ainsworth (East Surrey) (Con): May I begin by expressing my condolences to the Secretary of State, who is unwell? No doubt he is as unhappy as anyone that he cannot be here to introduce what is probably the most important environmental legislation for a generation. We wish him a swift recovery.

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