Climate Change Bill [Lords]

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Mr. Woolas: The honest answer to that question is by December 2009. There is pressure for an agreement—remember that all countries are facing the issue, but what is important is that it is part of the UNFCCC. However, I take the hon. Gentleman’s point—the bottle-half-full approach may be seen to guarantee that we are not dependent on international agreements, but I will come to my arguments against that in a moment.
Miss McIntosh: Before the Minister leaves that point, I have a concern with that approach. If the emissions attach to the airlines, then the airlines would be penalised by passing through a European Union airport. International flights could simply bypass the European Union, which could penalise our competitiveness. That has been put to us by the CBI.
Mr. Woolas: The hon. Lady is right. That is the issue with an international agreement. That is the ultimate interdependency. Just as I have argued that a global agreement is the best option, the next best option is a European Union agreement and after that national definitions, which I believe would cause all sorts of problems.
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I point out that today my right hon. Friend the Secretary of State for Communities and Local Government has outlined the agreements by local authorities on their performance indicators. Many of those local authorities—across the political spectrum, I am delighted to say—have adopted the CO2 emissions target within their area. How are we to allocate them? Are we to say to Hillingdon, because it is the host to Heathrow airport, that all the emissions resulting from the economic of the airport should be assigned to Hillingdon borough council?
I shall choose a better example relating to my hon. Friend the Member for Southampton, Test. Will all the shipping in and out of Southampton be ascribed to Southampton city council? I can see arguments in favour of that, but it would be unfair to the people of Southampton. It is not a trite point; it is an important one. We all want an international agreement, but it is a question of how one defines where the emissions should be allocated. The Government are not trying to duck that. The essence of our policy is that all emissions should be based on science, and I cannot argue for carbon markets or for a cap-and-trade system unless I argue for science. It is a matter of how we allocate.
There is no guarantee that it is possible to calculate what is a UK emission, or the emissions of any other individual countries. Surely what matters is what action is taken to tackle the contribution that the aviation and shipping sectors make to climate change. It does not matter to me whether that action is taken at national, European or international level. Of course, we have a leadership role, which the Government’s proposals recognise, but working towards that agreement should be our priority. We must recognise that what we agree internationally could be completely incompatible with national emissions targets, so we should not prejudge that issue now.
I conclude my remarks by saying that, as was recognised in the other place, these issues are very complex, but more importantly, they are very significant. We have already said that with respect to international aviation emissions, we expect to take a decision on whether to include those emissions in our targets well before 2013. We have already asked the Committee on Climate Change to look at that as part of its first task.
There are significant practical questions. That is why, for instance, the Committee’s work plan, which is available publicly on the Department for the Environment, Food and Rural Affairs website, states:
“One possible answer is that it may be much easier if attempted at EU rather than national level.”
For instance, what is the UK share of emissions? How would that work alongside aviation’s current inclusion in the EU ETS? Would one have two systems running alongside each other, and if so, how would that work?
Shipping is an even more complex question. Neither I nor the Government are trying to duck the issues. Ships can go for many months without refuelling, and they can also take on fuel from tankers in international waters. Based on fuel sold within the UK, shipping emissions have declined over the past 10 years. By any other measure, however, shipping in and out of the UK has increased over that period, so how does one account for that?
Finally, especially if we are acting alone, what of the risk of perverse impacts, which hon. Members often point out when they scrutinise Bills? What of the problems such as planes and ships filling up elsewhere and arriving with a heavier fuel load, or of air traffic simply diverting from Heathrow to Amsterdam or Paris, or of ships docking at Rotterdam and their cargo being driven here by truck? All those scenarios could increase emissions rather than reduce them.
I look forward to the debate on these points, but I ask the Committee to accept the good intent and practical implementation policies behind the Government amendments.
Mr. John Gummer (Suffolk, Coastal) (Con): I want to share with the Minister something that, as a representative of Felixstowe, which is now Britain’s largest port, I am worried about. I am concerned not only about the emissions per tonne of diesel, but the quality of the diesel that is used. We, in the European Union, have been slow in saying that ships that use filthy diesel are not allowed to dock. I am not talking about whether they take that on board, but just that they should not be allowed to dock. We need to reduce the direct air pollution effect of ships, which is very strong—as anyone with a coastal constituency in this country knows. I am not criticising the Minister, but it is interesting that he should have given all the different examples, but did not refer to that. Such action would have a dual effect. It is something that we could do, and it is a matter that the Government could lead on in the European Union. Proportionately, Britain is more affected by the filth from dirty ships than any other country in Europe. Can we not take that on board?
Mr. Woolas: I am grateful to the right hon. Gentleman. With your indulgence, Mr. Cook, I wish to make another point. We are also a world leader in engine design and manufacture. The most efficient ship engines in the world are our military ship engines. For reasons not primarily to do with emissions, but with refuelling Type 55 frigates, I highlight Rolls-Royce. I mention that because part of the supply chain is in Oldham, East and Saddleworth. I shall stop there, hoping that the Oldham Evening Chronicle correspondent has noted that important remark.
The right hon. Gentleman is correct. I am trying to ensure that we have a verifiable emissions capping regime and recognise its global nature, that we give UK plc competitive advantage, when we can, and that we do not unduly punish the UK. I think that I am right that 30 per cent. by volume in his example of trade between the UK and the European Union comes through Felixstowe dock, which is significant. I used the Heathrow and Southampton examples but, given that my hon. Friend the Member for Southampton, Test is about to intervene, I suspect that Southampton is bigger than Felixstowe in volume trade.
Dr. Alan Whitehead (Southampton, Test) (Lab): I regret to say that Southampton is not bigger in volume trade than Felixstowe, but obviously the quality of trade is better.
The right hon. Member for Suffolk, Coastal has cited the example of dirty diesel. There are also other factors relating to what shipping carries, how efficiently it carries it, and over what distance. Given that 95 per cent. of what we consume comes into this country via ports, notably Southampton and Felixstowe, we are concerned about what is coming in and going out on ships, too. What is the value per mile travelled, for example?
Mr. Woolas: My hon. Friend’s intervention illustrates the complexity of the matter. The Government are not trying to dump the issue. We have argued—above all countries in the European Union—that, of course, aviation and shipping emissions should be included in a scheme. Given the importance that we place on the cap-and-trade system and carbon trading, it would be nonsense for us not to do so. That does not disguise the fact that there are the complexities to which my hon. Friend has referred.
Let me mention some further items to consider. Should we look at emissions from the transportation of goods to the UK at all stages of the journey? Ships that dock in Southampton may well be carrying goods, including passengers, from one country to another—they may be dropping off at Southampton, taking on new cargo and moving on elsewhere.
I suspect that the whole Committee is trying to include aviation and shipping in a pragmatic way, so let me point a way forward. There are already international rules on how to calculate the emissions from, for example, journeys through the channel tunnel. If the electricity is generated on the French side, the emissions belong to France; if the electricity is generated on the UK side, they are our emissions. I am trying not to score a point, but to show the difficulties. The alternative approach, which we will discuss later, risks double counting. We also have the problem of the administrative burden. How do we ascribe goods where part of the journey was by sea? Would we need to examine every single journey of every single ship and aircraft? Huge uncertainties and data problems need to be considered.
The Government’s approach meets the objective of those who are rightly campaigning for the inclusion of aviation and shipping emissions in the Bill and the international agreement. Let us move forward on the best basis.
Miss Anne McIntosh (Vale of York) (Con): I am more confused now that the Minister has moved the amendment than I was before. In his amendment, is he saying that the Government could introduce regulations that apply to aviation and shipping and remove the other aspects of international transport? He referred briefly to trucks, which surely provides an opportunity for us to charge, for example, the Dutch and German hauliers who come in with full tanks of more polluting diesel that is cheaper than in the rest of Europe. Currently, they can undercut domestic hauliers, who cannot compete with their prices, on cabotage. I am slightly concerned that by including aviation and shipping, but putting it out to the long grass—longer than five years—he is also excluding railway and road transport. Is that the purpose of his amendment?
The Chairman: Order. I need to clarify something. I am anxious to preserve the tolerant, friendly, brotherly, and almost comradely exchanges that are taking place, which I do not want to impinge on adversely, but I must draw a distinction between interventions and speeches. Some interventions have been very long, and speeches have then taken up and made the same points that were made during the interventions. Will hon. Members try to analyse their interventions and speeches.
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Gregory Barker: I hear what you say, Mr. Cook, and will do my best to comply.
It is vital that aviation and shipping in the broadest sense are included in this Bill. Despite the surfeit of amendments, and amendments to amendments, it is important to note—I am grateful for what the Minister has said—that a great deal more unites the parties in Committee than divides us, although there are differences of opinion nevertheless. We all agree on the necessity of including carbon pollution caused by aviation and shipping in our national carbon budgets. We all agree that that is, unfortunately, a process far easier said than done, which is why we have reluctantly agreed on the necessity of a four to five-year delay before including aviation and shipping properly in the carbon budget.
We have also come to the conclusion that it is right to agree with the Government that they should be able to define exactly what constitutes emissions from aviation and shipping and to say under what circumstances those emissions should be counted as arising from the UK—the Minister explained that point very well in his speech. However, due to the seriousness of the issue, which goes to the heart of the Bill, I want to reiterate for the record the scope of the problem.
Aviation is the fastest growing source of greenhouse gas emissions in the United Kingdom and many advanced economies throughout the world. In the unlikely event that the UK’s 2050 target remains at just 60 per cent., current forecasts project that emissions from aviation will be equivalent to 26 per cent. of the total UK carbon allowance. That is why people are right to be alarmed at the role of aviation, not because of what it is emitting now, but because of its potential to dominate the carbon economy landscape by 2050. If we end up going for an 80 per cent. reduction target under current growth rates, aviation could account for more than 50 per cent. of the UK’s total annual carbon budget by 2050. To say that that would put extreme pressure on other sectors of our economy to meet our budget targets would be a massive understatement, even before we begin to consider the additional impact of the multiplier effect of releasing heat-trapping gases at high altitudes.
In its 1999 report, “Aviation and the Global Atmosphere”, the intergovernmental panel on climate change put the multiplier effect at two to four times the actual emission because of the effect of being emitted at high altitude. If that is taken into account, aviation emissions account for well over the total of the UK’s allowance by 2050, assuming a reduction target of 80 per cent. That paints a dramatic and horrifying picture, but it shows the key role that solving the problem would have in achieving a reduction in our national carbon emissions. I believe that we can ultimately solve the problem.
As the Minister has said, emissions from shipping are trickier for two main reasons. First, shipping emissions are far more difficult to calculate, primarily because aeroplanes, by and large, carry fuel for only one trip at a time to keep their weight to a minimum, but ships are not constrained in that way and often refuel every few weeks. Furthermore, ships can refuel in many parts of the world, few of which have a proper carbon accounting mechanism. The second reason why shipping is more problematic to calculate is that while it is still a significant polluter, it is by far the most carbon-efficient method of international freight transport. The comparative figures that I have seen show that sea freight emits between 30 to 90 g of CO2 per tonne of freight per kilometre. Road freight, on the other hand, emits between 130 to 190 g per tonne per kilometre.
While shipping must internalise its carbon pollution costs, we must ensure that we do not, through well meaning but poorly designed legislation with unintended consequences, offer a perverse incentive to more carbon-intensive modes of transport, such as road freight, over the more efficient movement of goods by sea. For example, if shipping becomes heavily regulated inappropriately, there might be an incentive to have ships dock at Rotterdam or, worse, Istanbul, and then drive across the continent and into this country via the channel tunnel. That was the reasoning behind the Conservative amendments in the other place that changed aviation and shipping to the broader term, “international trade and transport”. We want further to enhance the existing clause through the addition of amendment No. 82, which would require the assessment of emissions to take into account all stages of the goods’ journey to the UK from their point of origin.
By maintaining trade and transport as it is, and by adding amendment No. 82, we wish to prevent the system of measurement being skewed in favour of more carbon-intensive methods of transport, which could happen if shipping and aviation were included without reference to other modes of transportation. Let me give some practical examples. If oranges exported from Spain to the UK were sent over on lorries, only the short leg of the journey by ferry would be included in the UK’s carbon allowance. If they were sent by sea, the whole journey would be counted, making the carbon cost much more expensive. We would therefore create a significant incentive for the use of road freight over sea freight, despite its being many times more carbon intensive. If national emissions trading schemes exist in the transit states, then the disincentive to use road freight should be strong enough.
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