Dr.
Whitehead: Has the hon. Gentleman taken into account the
fact that even when goods arrive in the UK by sea, there may be a
number of circumstances in which that freight is then subject to short
sea shipping—one has to say that very carefully—around
the UK? That means that a number of other ports are used for the
ultimate destination of something that has already arrived in
the UK. Therefore, additional measures relating to shipping
within the UK have to be taken into
account.
Gregory
Barker: I have taken that into account in the amendments,
but the hon. Gentleman has made a sensible point. Obviously, if
national emissions trading schemes are in existence through the transit
states, there would be a disincentive to use freight transport.
Effectively, what we are saying is why take that risk and not give
clarity when we can close that loophole here and now. If we introduced
our system before some or all of our neighbouring European transit
states, Britain would be perversely incentivising the movement of goods
away from direct shipping and towards a more polluting alternative.
Clearly, if we were leading by example, we would not want that perverse
impact.
Similarly, if
one imports goods from China, the best way, both in terms of cost and
the environment, is for the container to be shipped directly to the UK.
Yet, if we specifically mention aviation and shipping in the Bill
without reference to other means of importing goods, it could make
economic sense to ship only as far as Rotterdam and then move the goods
by lorry into the UK to minimise the amount of carbon officially being
counted. The Conservative party believes that it is correct to stick to
the current wording of “international trade and
transport”, because it takes in more than aviation and shipping.
We are not against aviation and shipping—completely the
reverse—but the term should be stretched more broadly. We would
prefer our amendment No. 82 to be included, rather than returning to
the previous definition of aviation and
shipping. The
opt-out in clause 30 should be removed. Although it requires a report
from the Government about why they were incapable of preparing the
requisite regulations within five years, which would provide an
incentive for them to avoid embarrassment, the fact that the
alternative to having to find a solution exists at all gives the whole
process a degree of uncertainty that should not be
present. My
party has said all along that the Bill must give business and the
market long-term certainty and clarity. Maintaining the uncertainty
about whether trade and transport emissions would be included in five
years’ time does not give that clear market signal that the
private sector needs and deserves. That is why we have tabled amendment
(b) to the Minister’s amendment No. 7. Moreover, I am
happy to speak in support of the proposed change in the reporting
deadline, as included in new clause 1. It makes good sense to have the
new regulations laid out before setting the second five-year budget
period, because, depending on the pace towards Royal Assent, if we are
to stick to the existing five-year reporting period, the necessary
clarity of trade and transport may not be set until 10 months into the
second budgeting period. In the interests of common sense and market
clarity, resetting the deadline to 1 January 2013 is a wise
decision that would be welcomed by the private
sector.
Martin
Horwood: I suppose that I should start by welcoming the
progress that has been made. The Government seem to have been taxiing
up the runway, but some of the Minister’s remarks suggest that
the plane may be stalling before take-off. As well as welcoming the
need for the inclusion of aviation and shipping, which we welcome, too,
the Minister seemed to be creating a long list of possible excuses and
reasons why this is a complex area with various technical stages. Of
course, it is complex; nobody is arguing that it is not. Almost all
calculations of emissions are complex and there are complexities to be
overcome. However, that is what the Government, the National Audit
Office and many others are struggling with in terms of finding accurate
reporting mechanisms. These are obstacles to be overcome, not excuses
not to be
prepared. As
the hon. Member for Bexhill and Battle has said, the reasons are clear.
Aviation and shipping are important according to the
Government’s own figures from 2006. The fuel sold to the
aviation and shipping industries produced 42.8 million tonnes of
carbon, representing 7.6 per cent. of the UK’s total emissions.
Although the hon. Member for Bexhill and Battle has rightly pointed out
that, in the long term, if those emissions are rising and all others
are stabilising, reducing or being reduced through energy efficiency,
the proportion of the whole will be even greater—possibly in
excess of 20 per cent.—and even removing 7.6 per cent. of the
UK’s current emissions would start to undermine the long-term
carbon budgeting process.
That point
has been strongly reinforced by a number of Select Committees. For
example, the Environmental Audit Committee, on which I am honoured to
sit, concluded
that, “While
the draft Bill contains provisions that allow these emissions to be
included in the future, we recommend that they be included
immediately...There already is an internationally agreed
methodology for attributing and recording these emissions as memo items
to national Kyoto accounts; the Government should simply use this to
track these emissions within the UK's carbon
budgets.” I
should be grateful if the Minister, in his closing remarks, were to
respond to the EAC’s draft report, which made that point. A
similar point was made by the Select Committee on Environment, Food and
Rural Affairs, which
stated: “these
emissions are already reported to the UN as a ‘memo
item’...The inclusion of the UK’s share of emissions
from international aviation and shipping will have significant
implications for the validity of the 2050
target.” Generally,
the rationale for amendments Nos. 6 and 7 was that they were about
technical tidying up and rewording where necessary, which we are used
to in Government amendments. Most of that looks reasonably innocuous,
but I am beginning to be persuaded by the argument advanced by the hon.
Member for Bexhill and Battle on terminology. Moving from
“passenger
travel and imports or exports of goods”
to specific references
to “aviation or international shipping” highlights the
precise problem that the Minister has mentioned. Such an approach might
exclude road freight and therefore lead to perverse results whereby
goods that might have come in by air are transferred by an even less
carbon-efficient form of transport—road freight. Perhaps our
noble Friends knew what they were doing
when they came up with the phraseology in the current text. If the Bill
goes back to them, they might want to look at it
again. 5
pm In
Government amendment No. 7, we see the mysterious subsection (3)(b),
which I shall describe as the parachute clause because it would enable
the Government to get out of the five-year obligation altogether by
laying before Parliament
“a report
explaining why regulations making such provision have not been
made.” That
means not bringing the matter to a vote in Parliament, or amending
legislation, but simply laying a report explaining why they have failed
to do that. That is not acceptable.
There are
clear reasons why aviation and shipping have to be in at the earliest
opportunity. Various arguments to the contrary have been put forward,
such as that international agreements are ongoing and that we are
developing ways of measuring these things at an international level,
but that has not stopped the Government from pioneering other
well-regarded legislation or policies on climate change. The emissions
trading scheme was a UK initiative before it was part of a wider
international scheme, and only this week the Government made an
announcement on the definition of “carbon capture ready”
in terms of new power stations. That is being worked on at the EU
level, but we hear that the Government have come up with a definition
in advance. It is quite possible for UK Governments to be pioneering in
that respect and to lead rather than follow.
Clearly, new
clause 1—I shall be interested to hear what the hon. Member for
Bury, North says about that measure in the context of the
Government’s amendments—would effectively achieve the
same thing as the amendments to Government amendment No. 7, so I am
inclined to be sympathetic on that.
The Minister
has set out some strange arguments against the non-Government
amendments. He has said that our forging ahead would somehow give other
countries the impression that we were trying not to forge an
international agreement, but to force something on those countries. Of
course we are trying to forge an international agreement—no one
doubts that in the slightest—but we are also trying to step up
the pace and lead by example. I cannot see how the construction of a
truly comprehensive budget for the UK would in any way undermine the
development of international negotiations or agreements. If, as the
Minister said in response to my intervention, a truly comprehensive
sectoral agreement on aviation and shipping was in place by 2009, which
is what he has said he hopes for, I would be completely astonished, but
very pleased. However, even if that were the case, it would simply be
another factor to take into account when setting our carbon
budget.
Timing is
quite important, because if we do not bring aviation and shipping in at
the earliest stage, let alone if we allow that move to be delayed for
longer than five years, the industries that have to be included in the
carbon budget will be not be on a level playing field. They will have
to make adjustments to their business
plans and practices and take account of a new decarbonising economy,
while airlines and others will not have to make those adjustments.
Those in industries that are subject to quite rigorous international
competition, such as the aluminium industry, might justifiably feel
aggrieved that one of the most dangerous emitters of all was getting
away relatively scot-free. Mr.
Mike Weir (Angus) (SNP): Is the hon. Gentleman aware that
industries such as the aluminium industry are already seeking
exemptions from the European scheme at the next stage of the EU ETS
discussions? Indeed, there has been talk of the German automobile
industry looking for such exemptions. If aviation and shipping are not
included, will not that send the wrong message and have an effect when
we come to discuss the details of that
scheme?
Martin
Horwood: The hon. Gentleman makes an extremely valuable
point—that is exactly right. If we send out a signal that it is
possible to opt out or to include oneself in the small percentage of
industries that will not have to make fundamental changes, we will
undermine the UK’s progress towards a decarbonising, low or even
zero-carbon economy. In the meantime, of course, it would make a
difference to the other sectors covered by budget. Whether aviation and
shipping are included makes a difference to the emissions budgeted for
in housing, energy generation and so on. If those emissions are
included, and there is an international agreement on the methodology by
2009, all well and good, but that will alter the carbon and energy
reductions that have to be delivered in housing under the UK budget. It
is vital, therefore, that we have a truly comprehensive carbon budget,
which is what our amendments are designed to
achieve. Let
us imagine the nightmare scenario in which, in five years’ time,
the Government have failed to work out how that is to be done, despite
all the expertise at their disposal and the fact that they are
calculating those emissions already as a memo item for the Kyoto
protocol, as pointed out by Select Committees. What will the situation
be? Under the Government amendments, the Secretary of State could
simply slide a quiet report before Parliament—just before a
recess probably—and get away with a few negative media stories,
and that would be it! In such a nightmare scenario, we would want the
Government to be held fully to account and to amend legislation in the
full glare of parliamentary scrutiny and publicity, because they would
have let down their overall carbon reduction
plan. Mr.
David Chaytor (Bury, North) (Lab): The Minister and others
have set out the context of the serious issues underlying the inclusion
of aviation and shipping extremely well. I shall speak briefly,
therefore, to new clause 1, and comment also on Government amendment
No. 7. Although the arguments have been well rehearsed over the
past 12 months, I think that we have moved on considerably from
the initial debate on the draft Bill last year, and it is heartening to
see such an overwhelming consensus on the inclusion of aviation and
shipping.
It is worth
stressing the urgency of that inclusion, given the likely increase in
aviation and shipping emissions in years to come. The hon. Member for
Bexhill and Battle spelled out the figures for aviation and shipping.
My understanding is that, as of 2006, they officially represent 7.6 per
cent. of our total emissions. Aviation, in particular, is one of the
very few areas of the economy where emissions are growing, and growing
rapidly. Of course, the official figures understate the reality for two
reasons. The calculation for shipping, which is based on fuel purchased
in the UK, is an underestimate because ships will tend largely to
refuel overseas where fuel is cheaper. Secondly, on aviation, we do not
take into account the impact of radiative forcing, which could multiply
emissions by anything up to a factor of
four. There
is no disputing, however, that the measures before us are very complex,
and I still struggle to get my head around many of the measurements,
the different formulae that could be adopted and the different impacts
that that could have on the UK. I also struggle to understand precisely
the way in which the ETS and our climate change legislation will work.
However, in a sense, that does not matter, because just as there is
consensus on the need to include aviation and shipping, there is
consensus on the complexity and a willingness to cut through
it.
The value of
new clause 1 lies not only in the fact that it is quite explicit about
including aviation and shipping, but in the fact that it sets a start
date—1 January 2013—in advance of the second carbon
budget period, whereas Government amendment No. 7 and the
Government’s current commitment do not allow for that. The
earliest date on which they would consider the inclusion of aviation
and shipping would be after the start of the next carbon budget period.
There is, of course, a way around that, as there was a way around the
previous contentious issue concerning the choice between 60 per cent.
and 80 per cent., which is to adjust the date. However, we will come on
to that a little
later. The
other advantage of new clause 1 is that it would do away with the
provision for the Government to provide a report if they are unable to
meet the five-year deadline. The Minister described that as an opt-out;
whether it is an opt-out or a cop-out I would not wish to say. There is
a growing consensus that that is not the ideal way forward. There is an
analogy to be made with the earlier debate about the 60 per cent. or 80
per cent. choice. The Government’s argument is that we cannot
push the issue too fast because of the complex interrelationship with
international negotiations, and that pushing it too fast would cause
problems. We did not make that argument when publishing the Bill in the
first place, although the Bill is moving forward the international
debate significantly, and nor did we make that argument in recognising
that there needed to be a target for 2010 and 2050. If we accept the
argument that it is absolutely legitimate for the United Kingdom to be
the first country in the world to publish such a Bill, and that that
actually advances the cause of international agreement by setting tough
targets for 2020 and 2050, it is logical that the argument for
including aviation and shipping by a set date, preferably in advance of
a second carbon budget period, is perfectly valid and
convincing.
In drawing to
a close—I do not want to delay the Committee—we know that
the figures are there because the Government collect the figures for
aviation and shipping. First, will my hon. Friend the Minister tell us
why those figures cannot be published alongside the first carbon
budget: not only the figures for bunker fuels purchased in the aviation
and shipping sectors, but
figures showing how they relate to the calculation of emissions? What is
the argument against doing that? I think that it would generally help
the debate along. Secondly, will he comment on the fact that the date
that he is proposing—five years from Royal Assent—will
almost inevitably be after the start of the second carbon budget
period? Could he not consider an alternative before Report? Thirdly, we
understand that it may not be possible to introduce the change by 1
January 2013—there may be overwhelming arguments against and
there may be a total failure to move the international agreement
process forward. Does he accept, however, that rather than have the
opt-out of the Government simply producing a report to say why they had
not met the deadline, if we fixed the date in the Bill now, there would
still be the possibility of amending it to reflect the stalling of
international negotiations in the parliamentary Session of
2012-13?
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