Mr.
Woolas: The hon. Gentleman’s point is right. How we
report our emissions is agreed under Kyoto. That goes back to the point
that, from a global perspective, if we measure bunker fuel sales, we
get a global total. That does not amount to an agreement between
countries that their share of the emissions calculation should be based
on bunker fuels. That, in my view, is naïve. If one goes to
Rotterdam, where approximately 30 per cent. of shipping fuels are sold,
of course the Dutch Government are prepared to report that, as a report
under the UNFCCC agreement. Were there a request to take on the cap
consequential on that in the European Union trading system, the
Dutch—who, I would argue, along with the UK, are possibly the
most environmentally progressive country in the world—would not
agree to
that. The
hon. Gentleman is right to say that the reporting method is agreed, but
I make the simple point that that is not the same as the allocation
between countries being agreed. He is going to push his policy anyway,
and I respect him for that, but I want him to accept that point. It is
analogous to asking Southampton, Felixstowe or Hillingdon to take on
board, within local authority caps, the total emissions generated from
trade through Southampton, Felixstowe—I will throw in Liverpool
and Merseyside, for the benefit of the Liverpool Echo—or
Hillingdon. I hope that hon. Members see my
point.
Mr.
Chaytor: Just for the sake of clarification, does my hon.
Friend accept that nothing in new clause 1 would require the Government
to accept irreversibly a particular method for calculating emissions
now, and that the purpose of new clause 1 is simply to advance the
process of international negotiations? He fully accepts that this is a
complex matter and that the current method that the UK uses may not be
the one that is finally
agreed.
Mr.
Woolas: New clause 1 is sensibly drafted. By including
both international aviation and shipping emissions in the targets and
budgets under the Bill from 1 January 2013, if I have read it
correctly, the Secretary of State would have
to “have
regard to international carbon reporting
practice.” Later
on, clause 86 defines the reporting method that I have mentioned. As I
say, the Secretary of State would have to have regard to that carbon
reporting practice or any other such EU or international agreements as
may be specified. So I take my hon. Friend’s point, which that
is why it is a more difficult argument for me to
put. Let
me finish my argument, if I may. My hon. Friend’s second
question was why have a date five years after Royal Assent that falls
in the second budget period? I am very keen to emphasise that the
Government amendment requires us to include emissions or to report to
Parliament within five years, not at the end of five years—we
could take a decision earlier. Why have we chosen that phraseology? The
answer is that the Lords suggested that date and that framework and we
are seeking to work within their amendment. In other words, I am trying
to be consensual and once again I am learning that that is not always
the easiest policy to pursue.
The hon.
Member for Bexhill and Battle asked whether we should use a multiplier
for aviation emissions. As I have said, the key point is that there are
considerable
scientific uncertainties about this issue. The Environmental Audit
Committee looked at this issue as part of its scrutiny of the draft
Bill and it concluded—I hope that my hon. Friend the Member for
Stoke-on-Trent, North will back me on this—that we should not go
down that road. In case it is needed, my hon. Friend has a copy of the
EAC report in front of her. Therefore, we intend to follow the
international practice of not having the multiplier. The EAC
concluded that, due to the significant uncertainties in this area,
which are widely accepted by commentators, we should use the
internationally agreed methodologies in this area. They do not include
any radiative forcing index or multiplier in that regard.
I was
specifically asked by the hon. Member for Vale of York about road and
rail on the point that was made about the channel tunnel. Of course,
there are already clear international rules on how to allocate road and
rail emissions to countries, but there is no such international
agreement in relation to international air or sea travel.
Let me quote
Lord Taylor of Holbeach, the Conservative spokesperson in the other
place, who said during the debate on this issue, in this case in
relation to
shipping: “If
the regulations on shipping are not sophisticated enough...it
might prove economical to have goods driven across much larger
stretches of land and then simply loaded on to ferries to make the
Channel crossing, when a large ship could have delivered the goods to
England with a fraction of the carbon
footprint.”—[Official Report, House of Lords, 4
March 2008; Vol. 699, c.
1015.] That
was the point that the hon. Member for Bexhill and Battle made, and
that is exactly the type of risk that I am talking about. In the case
of aviation, we would also need to be clear on how a UK system would
fit with aviation’s inclusion in the ETS, which we expect to
start in 2012.
Gregory
Barker: That is the very reason why we should have the
broader definition of aviation and transport that we have
suggested.
Mr.
Woolas: That was not the conclusion that Lord Taylor of
Holbeach came to in the other place. I see the argument, but I believe
that there would be a perverse incentive for that.
Let me finish
my point on aviation; I think that the hon. Member for Bexhill and
Battle will accept the logic of my argument. Once the ETS rules are
agreed—and I expect they will be—we will ask our
Committee on Climate Change for detailed advice on whether there is a
methodology that works and that is compatible with both the EU ETS
rules and the wider international context. We will also ask what the
impact of adopting that methodology would be. We expect to be in a
position to take a decision on whether to include international
aviation emissions in our targets ahead of the start of the second
budget period in 2013.
My argument
is that there is strong agreement—the United Kingdom has pushed
this point—to include aviation and shipping. We base our whole
policy in the international arena on the idea of cap and trade and that
means one has to base emissions on science—on actual emissions,
not on some political fix. Our policy and the political pain that I
acknowledge that we are going through on this point—I am the
recipient of many thousands of communications on this matter—is
not based on our desire to avoid the inclusion of aviation
and shipping simply because we wish to exempt those sectors. We take our
position because we wish to ensure that aviation and shipping are
included in a practical, pragmatic way that can include those sectors,
that leaves open better possibilities for international agreement and
that is fair to the other sectors within our economy. In an appeal to
my hon. Friend the Member for Stoke-on-Trent, North, I could mention
ceramics, but I could equally appeal to Southampton, Felixstowe or
elsewhere. We need to act pragmatically, and I urge the Committee to
support that
policy. Question
put, That the amendment be
made:— The
Committee divided: Ayes 11, Noes
8.
Division
No.
4] Question
accordingly agreed to.
Clause 15,
as amended, ordered to stand part of the
Bill.
Clause
16Powers
to carry amounts from one budgetary period to
another
Gregory
Barker: I beg to move amendment No. 52, in
clause 16, page 8, line 44, leave
out ‘1%’ and insert
‘0.5%’. This
is a probing amendment. We propose to reduce the amount of carbon units
that can be carried back from one budgetary period to the preceding
budgetary period—the latter period would be reduced so the
previous period could be increased. We propose to reduce the amount
that we are allowed to borrow from the future from 1 per cent. to 0.5
per cent. Although we appreciate that external factors, such as the
weather, might make this so-called banking and borrowing useful to a
degree, we want to ensure that the budgets are robust and not pliable,
especially under political pressure.
5.45
pm We
are also concerned that too generous a carry-back period might allow
any Government of the day to hide their failure to meet the budgets and
allow them to pass the buck on to the next Administration. The issue of
banking and borrowing is worth probing further, particularly in the
light of our earlier discussion about indicative annual ranges. There
is a clear link between the width of any indicative annual range and
the corresponding width in the banking and borrowing between budgetary
periods.
I
have already argued that the indicative annual range must not be too
broad. I understand that the 1 per cent. banking and borrowing
provision under clause 16 only affects the five-year budgetary period.
However, we still need further clarity on their relationship. For
example, how would banked reductions at the end of a five-year budget
affect the next year’s annual range? Would the Government be
allowed to count their banked reductions towards meeting the first
year’s annual range, or would they have to spread them out over
the entire period? Conversely, if a budget period began with 1 per
cent. already borrowed from it, would all the annual ranges for that
period be adjusted to reflect
that? Spreading
out the effect of banked or borrowed reductions across the entirety of
the next budget seems to make sense. It might not be possible to recoup
the entire borrowed 1 per cent. within the first year of the next
budget. Similarly, it would not be appropriate to use banked reductions
to make it seem like the annual range for the first year had been
achieved when in fact the Government were relying on the success of the
previous five-year period—much like the way in which the current
Government rely on the success of the previous Administration to
achieve their Kyoto target. My right hon. Friend the Member for
Suffolk, Coastal played a heroic part in that
success. If
the carry-back provision was narrower, that sort of thing would not
cause the same problems in the calculations of indicative annual
ranges.
Mr.
Gummer: Has my hon. Friend heard any argument other than
the weather for all this? The British have a tendency to blame the
weather for everything. The truth is that if we consider climate
change, the weather should have a less adverse effect than previously.
Will he ask the Government whether the weather has become the universal
explanation for not tightening this up more
effectively?
Gregory
Barker: Once again, my right hon. Friend has put
his finger on it. I have not heard of any meaningful explanation other
than the weather of why these indicative ranges would have to be
changed so materially. Although there may be more violent weather
events, we expect the weather to become milder and less severe in our
part of the world. Perhaps the Minister can enlighten
us. It
is vital to know what a Secretary of State can count towards a given
target or range of targets. I am sure that the Minister can clarify the
relationship between banking and borrowing and indicative annual
ranges, and I would appreciate a detailed explanation. I do not move
this amendment to undermine the evident benefits of having a banking
and borrowing system, because I fully accept that that is a sensible
thing for any Government to have in reserve. I know that the necessity
for such a facility is already reflected in the Kyoto protocol, and for
some existing national level cap-and-trade schemes, such as the US acid
rain scheme, which is mentioned in the Stern report. I also appreciate
the importance of banking and borrowing with regard to the carbon price
and the cost of mitigation, and I understand the importance of having a
carry-back facility in case of adverse weather or other unforeseen
circumstances. Notwithstanding those issues, I wish to probe the
Minister for more detail about the relationship between the breadth of
the indicative annual ranges and the similar breadth of the carry-back
facility.
Steve
Webb: I wish to make a brief comment on amendment No. 52
in anticipation of a separate clause stand part
debate. The
amendment, which is identical to one tabled in the other place, would
replace one arbitrary figure with another arbitrary figure, albeit one
that is smaller. It would be interesting to know from the Minister the
thinking behind 1 per cent. and whether it is anything more than
something along the lines of saying, “It’s not very much,
is it?”, which is how I think the figure was derived.
As for the
magnitude of the figure, it is a percentage of the five-year aggregate
carbon budget. That means that it is bigger than it looks because 1 per
cent. of the five-year total is equivalent to 5 per cent. of one
year’s total—[Interruption.] It took
me years to work that one out. This is important. It sounds innocuous,
but in the context of 80 per cent. cuts over 50 years, with 1 or 2 per
cent. as a typical annual figure, the amount under this provision could
be 5 per cent. of the annual figure, which is
large. As
I shall explain in the stand part debate, I object to the principle of
borrowing. However, if we have to do that, we need the figure to be
justified, and we should certainly err on the side of a much smaller
figure, given that, in effect, it is five times as big as it looks. If
all we can have is a smaller figure, I would rather have that and I
would support the amendment, but I prefer not to have the principle at
all.
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