Climate Change Bill [Lords]

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Martin Horwood: I am grateful to the Minister for his comments. He made some serious criticisms of the amendment, including the one that we should not attempt to introduce too many policy measures relating to greenhouse gases for which there is limited or uncertain scope for reduction. Sadly, if that is true, we are all in trouble. If reductions to 15 per cent. of our greenhouse gas emissions are not going to be attempted or are going to be outside the scope of policy, we are in deep trouble, especially as that percentage is set to rise dramatically if carbon reductions are achieved. If I tell the Minister that significant efforts are being made in other countries to reduce such emissions, he might take the matter more seriously. I mentioned Japan in my opening remarks. According to the team from Obihiro university of agriculture and veterinary medicine, a few simple food additives costing about 50p each day per cow might be able to remove virtually all methane from a herd’s daily output of greenhouse-gas enriched belches. Given that there are something like 1.5 billion cows on the planet, that would provide significant scope for reduction in methane emissions. In the same way that renewable energy can be stimulated by feed-in tariffs and other policy measures, energy efficiency can be stimulated by policy measures, and carbon trading stimulates business and industry to reduce its carbon footprint. There is political business potential to reduce methane and other greenhouse gas emissions, but we need the policy tools. We need the policy framework in place to achieve that, and that is why we support this amendment. However, I acknowledge that if we do not have the support that I had hoped for from Conservative Members, it is unlikely that the amendment will be agreed to. On those grounds, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 23 ordered to stand part of the Bill.
Clause 24 ordered to stand part of the Bill.

Clause 25

UK domestic effort
David Maclean (Penrith and The Border) (Con): I beg to move amendment No. 83, in clause 25, page 13, line 22, at end add—
‘(3) In this section “sinks” mean land-based carbon sinks which have been assessed by the Committee on Climate Change as being, or likely to be permanent.’.
The Chairman: With this it will be convenient to discuss the following: Clause stand part.
Government new clause 2—Duty to have regard to need for UK domestic action on climate change.
David Maclean: Where I am coming from is my belief that carbon sinks have a vital role to play in the United Kingdom, and certainly internationally. This is not the point at which we should talk about the vital role that carbon sinks can play in the rain forest, but I hope that the Government will encourage companies to invest heavily in them. However, in the United Kingdom, too, there is a great role for carbon sinks in our forests, peat lands and bogs. I do not want them discredited because of some inappropriate carbon-sink trading that might be going on, or some inappropriate or dodgy dealing that does not stack up.
As I read about carbon sinks, discovering the wonderful role that our forests and peat lands could perform, I came across more and more stuff on the internet from environmental groups that had been rubbishing carbon sinks on the basis that the schemes could be a bit dodgy or the solution was not permanent. The groups suggested that if the world warms up, our forests in this country could get warmer and that rather than our peat bogs and carbon sinks retaining carbon, they could be releasing it, so let us not touch them. Some of the criticism had a rather puritanical and misguided streak, saying, “Yes, carbon sinks may be good, but they do not cause enough pain, and what we really ought to be doing in the United Kingdom is making sure that we are closing down industry and making people and businesses suffer, so let us not pay attention to the trees and the forests and the land that we have and let us not exploit it to the full.” That is barking. If we are to be successful in meeting our climate change targets and are to do genuine good, yes, we must have targets for industry to reduce the amount of carbon emissions and for the rest of us to drive less or to have a cleaner or lower carbon lifestyle. However, for goodness’ sake, let us exploit some of the things that we have in this country and expand them.
Carbon dioxide emissions from soils totalled 13.69 million tonnes in 2005. By comparison, carbon dioxide emissions from domestic aviation were 2.47 million tonnes. There used to be an old gardener on the television years ago—was he a Yorkshire gardener?—who said, “The answer lies in the soil.” The answer in some part does lie in the soil. If we maintain it and keep it properly, we will be locking carbon in for evermore. All the peat lands in England and Wales would absorb around 41,000 tonnes of carbon a year if they were kept in a pristine condition. However, they could emit up to 381,000 tonnes of carbon a year if they were damaged by practices such as excessive burning, drainage and overgrazing. The restoration and enhancement of peat lands could save 400,000 tonnes a year, which is the equivalent to the greenhouse gas emissions from 1.1 billion car miles or 84,000 family-sized cars. In addition to that, not only do we lock in the carbon, but we would safeguard the habitats of 5,000 different species of plants and animals.
I am sure, Mr. Cook, that it will be at the forefront of your mind that Natural England held a conference headlined “Better Bogs Create Carbon Sinks”. The “better bogs” conference, which was officially entitled “Moors for the Future”, in the Peak district, said:
“We must protect and enhance our upland peat bogs—they are the UK’s most important and vulnerable carbon store.”
That was the message from Natural England. Sir Martin Doughty, the chair of Natural England, said:
“Evidence shows that the degradation of soils through over-grazing, fires, drainage and erosion is releasing five times more carbon dioxide into the atmosphere every year than from all domestic flights in the UK.”
Peat soils contain a huge amount of carbon. If it is locked in, it is okay, but if there is degradation and the peat land is not looked after properly, it becomes a major source of emissions.
I see the Minister nodding—I have rabbited on about so many different things that he was bound to have nodded at something. If the Government accept the analysis that our carbon sinks are legitimate and good, and that we ought to enhance them, I do not want anyone rubbishing them in the next few years and deterring businesses from investing in them. I am happy to have businesses in my constituency that might be emitting carbon doing a carbon-trading deal and investing in peat bogs, new forest—or woodlands—and in trees that, hopefully, will not catch fire accidentally or be cut down. We must distinguish between that sort of forestry and planting trees for 20 or 30 years that might soak up carbon while they are growing, but which are then cut down regularly. That is not what I have in mind.
The only way in which we can make the approach completely legitimate and stop some of the misguided environmental groups from attacking our carbon sinks and the planting of trees is to make sure that the Committee on Climate Change has the role of approving carbon sinks. It is no good me or anyone else coming along and saying, “I am just going to have a carbon sink there. I am investing in this and buying a bit of hillside, which has good grouse shooting and a lot of peat. I am therefore doing my bit as a carbon sink, so can I please have that accredited against me?”
If we are to have legitimate and kosher carbon sinks, the Committee on Climate Change should accredit them or have an assessment system for saying, “Yes, this is a good carbon sink and, as far as we can say, it has the possibility of remaining permanent, so Natural England and others can put conditions on it to make sure that the peat is not eroded and not dug up, drained and released.” We want a legitimate verification system that keeps our carbon sinks as a valuable resource for reducing carbon and locking it in, and that does not allow people to discredit the whole concept.
I conclude with those words because I am worried that some people want to discredit the concept of carbon sinks for their own ends. Yes, the UK should be doing a lot. Yes, our industry should be producing less carbon, but let us not rubbish carbon sinks as a natural and perfectly acceptable form of locking in carbon that should be expanded and increased, and that should not only help British industry, but contribute to the world’s reduction of carbon in the atmosphere.
Miss McIntosh: I congratulate my right hon. Friend on speaking to the amendment so eloquently and with such knowledge. I wish to restrict my remarks to clause stand part and Government new clause 2. I place on record how firmly we are wedded to the wording and the principle of clause 25. In my humble view, it goes to the heart of what the Government and all of us want to achieve in support of a climate change strategy. Our aim is obviously not only to come forward with a Bill that is groundbreaking in its own way, but to create a low-carbon economy. By being one of the first movers in that regard, it is important to aim primarily at reducing pollution in this country, and not to export the problem through the use of more than 30 per cent. of credits, but to reduce emissions and, for want of a better term, to reduce pollution in this country.
We have received strong support for keeping clause 25 in the Bill in a joint statement from the WWF-UK, Scottish and Southern Energy, Christian Aid and the Royal Society for the Protection of Birds. In their briefing, they go right to the heart of the matter when they say:
“Removing clause 25 from the Bill would undermine a key objective of the Bill—that of establishing a framework which provides UK companies with the long-term certainty that they need to incentivise sustainable and low carbon investments. It would also leave unanswered the question—to what extent will the UK rely on buying credits or emission allowances from other countries to meet its targets? Without a requirement for clear and strong domestic action, the UK could in theory meet its targets under the Bill without any action to decarbonise the UK economy—an outcome that would do little to promote UK leadership in the international climate negotiations.”
If one accepts that the point of the Bill is, as has been said, to provide the market and companies operating within it with the long-term clarity and certainty that they need to compete and be the best in the world, the clause should be retained.
7.30 pm
The clause says that the Secretary of State must ensure that at least 70 per cent. of the efforts undertaken are achieved by
“domestic emissions reductions and domestic removal by sinks.”
It goes on to define “effort” as
“the difference between the present UK carbon budget and the verified emissions for the previous budgetary period.”
Having compared the clause with new clause 2, I humbly submit—I hope that the Minister will respond positively to this plea—that the wording completely misses the point of seeking to obtain the highest reduction. Clause 25 writes into the Bill a provision in relation to 70 per cent. of domestic action and will thereby reduce pollution at home; it will not just export the problem. That will still leave a 30 per cent. allowance for international credits and will fit and be compatible with the EU ETS.
I commend clause 25 to the Committee and make a plea to the Minister to keep it in the Bill. Perhaps he will also withdraw new clause 2.
Steve Webb: I agree with the hon. Lady that the clause is fundamental, and I would like to address the clause stand part issue. In my short contribution, I shall address some misunderstandings or myths that have surrounded the debate, which we heard on Second Reading.
The first such myth, which is often quoted, is that a tonne of carbon is a tonne of carbon, and that it is of no great consequence, as far as the planet is concerned, where it is saved, as it will have the same adverse effect wherever it goes up. It is interesting that the person whom the Government have asked to supervise the process, Lord Turner, does not take that view. In discussions in another place he has said that
“it is not absolutely the case that a tonne of carbon saved in every country of the world is precisely the same. There is a value in hard emission reductions targets in developed countries because they will drive the changes in behaviour, energy efficiency and technology which will then be required across the whole world.”—[Official Report, House of Lords, 11 March 2008; Vol. 699, c. 1412.]
So the argument that it is all the same whether we do it ourselves or buy it in is not accepted by Lord Turner. Given that he has been charged with advising the Government, it seems a shame to pre-empt what he will say by taking out some sort of assumption about the importance of domestic effort.
There are two conflicting arguments, one of which is that we just want to save the stuff. The other says that there is a leadership role both from the point of view of British industry, as Conservative Members have said, and—I hesitate to use the “M” word at this point—from a moral dimension. That moral dimension says that because, to a greater or lesser extent, we caused the problem, we have a responsibility to make the first moves in clearing it up. That means that we should play our part and make the adjustments sooner.
If we accept the long-term goal, whether that is described as a zero-carbon Britain or a low-carbon economy, the sooner we get on with it the better. Clause 25 allows us to put off the evil day—or it might be a good day, depending on how we look at it—by getting savings elsewhere. Our argument for retaining clause 25 is that there is a strong case on moral, practical and even self-interested grounds for doing far more of this ourselves than might otherwise be the case.
The second principal argument used against any restriction of the sort contained in clause 25 is that it messes up emissions trading. The point about emissions trading is that it is an elegant, market-based solution and people will get the cheapest savings possible. People who find it hard to make emissions savings do not have to spend huge amounts of money as they can pay somebody who finds it easy to make those savings and the aggregate costs are minimised.
As an economist, I can see the attraction of that, but the working of the European emissions trading scheme means that there is no conflict between having some sort of cap on the extent to which we can opt out of domestic effort and the ETS. That is because the ETS is operated at an individual business location level. In other words, Governments agree a national allocation and that is subdivided between individual operators in the market. Once that has been done, businesses either meet their carbon emissions cap or they under-emit and sell their credits or over-emit and buy them in. That is true whatever we do in Committee this afternoon. It does not matter whether it involves 100, 0, 30 or 70 credits and so on. Whatever it is, businesses still have their caps and permits and they still buy and sell credits.
Nothing in the Bill will change the duties of businesses to comply with their emissions caps, so the existence of a cap and an emissions trading scheme has no bearing on that—it is totally unaffected by clause 25. On Second Reading, at least one Minister said that we should not do this as it would interfere with emissions trading, but it has no bearing on that whatever.
If we delete clause 25, there could be wholesale import, export and crediting schemes and so on. However, we would get a perverse result. Half our national emissions are covered by the emissions trading scheme. That means that the total of emissions from that source is given. Therefore, if every credit that we buy in is a saving on the national account and anything that we sell is a debit, there is no benefit from Government policies that incentivise industries within the scope of the ETS to cut their emissions, as that has no impact on the national carbon account.
For example, within the scope of the ETS, the Government have a policy that might get a particular industry to reduce its carbon emissions, which is great, but the cap has already been fixed, so it comes in under the total, the business sells its surplus credits abroad and that comes through on the national carbon account. We already know what the figure will be for that half of the economy.
A worse problem is that the half of the economy with the cap and trade will probably reduce its carbon emissions more slowly than we want to be consistent with the rest of the Bill. Because that section of the economy is fixed because 100 per cent. trading is allowed, the other half of the economy potentially has to do a lot more of the legwork, and that is inefficient. It is the opposite of the flexibility that the Minister talked about—it creates artificial divisions between the half of the economy that is in the ETS and the other half that is not. Government activity to incentivise business within the ETS to do better on carbon is a waste of time from the point of view of targets. If the Government want to hit their targets, they must do far more with the other half of the economy, and that is profoundly distorting.
Cutting the story short, there is no incompatibility between clause 25 and emissions trading, which does not undermine or affect it in any way. Deleting clause 25 would mean that everything that that half the economy did was already predetermined in terms of the national carbon account, so the other half would have to make most of the effort, which seems wrong.
Fundamentally, there is a strong, self-interested case for national leadership, as well as a strong moral one, of the sort embodied in clause 25. If the Minister wants to return with a different number, we would be happy to debate it—he could say that our 30 per cent. is as arbitrary as his 1 per cent. It is a case of more so than not: 70 per cent. represents more domestic effort than not, but we could have a sensible debate about the figures.
Although new clause 2 is a token nod in the right direction, just “having regard to” the merits of domestic effort does not really do the job, so I hope that the Committee will resist new clause 2 and retain clause 25.
Mr. Nick Hurd (Ruislip-Northwood) (Con): We on the Joint Committee on the Draft Climate Change Bill spent much time on this issue, because as previous speakers have said it is incredibly important. Our conclusions will have significant economic consequences for British taxpayers and shareholders in British companies.
I know that the Minister understands all the arguments involved, and new clause 2 is wholly inadequate—it does not mean anything and sends a dangerous signal to British businesses that we want now to commit to the long-term investment decisions that will make the difference. In that context, they would need to receive a strong signal about the commitment to reduce domestic emissions. We must not just buy our way out of the problem in international markets.
We do not only want British companies to reduce carbon emissions—this is not just a carbon issue—but, as my hon. Friend the Member for Vale of York said from the Front Bench, we want British companies and institutes to get ahead in the journey towards a low-carbon economy, because that is in our long-term economic interests.
The Minister has spoken about striking a balance, and he knows, as does everybody who has considered the issue, that important relevant tensions and currents run against each other: on the one hand, the responsibility of any Government and Parliament to ensure that our route to reducing carbon emissions is as cost-effective as possible—the same goes for anyone running a British company in terms of their responsibilities to shareholders —and, on the other, our moral responsibility to take a lead as a developed nation in reducing emissions and our long-term economic interests in being at the vanguard of a low-carbon economy. Those tensions must be reconciled.
With your indulgence, Mr. Cook, I wish to make a simple point about transparency. As has been said, the 70:30 figure is arbitrary. There is no science to it—to some degree, it has been plucked out of the air to generate debate and to make an important point, which is that we need to reach an agreement on where to strike this balance.
Up until now, the Government have not been transparent on that issue. In the Environmental Audit Committee, we tracked the progress of the 2010 carbon target. When that target was published, there was no mention of buying international credits. It was understood that it would be all about UK domestic emission reductions. It was only when the revised climate change programme was published in 2006 that the Government began to count the use of carbon credits purchased from abroad.
The Environmental Audit Committee was quite shocked by a review of the European emissions trading scheme. Our report states that
“without the expected contribution of Phase II of the EU ETS, UK carbon emissions in 2010 are projected to be only just over halfway to the 20% target, a very significant shortfall.”
There has been no transparency up until now about the degree to which we meet our international agreements through the purchase of international credits. That issue needs to be brought out of the darkness and into the light.
I do not know whether 70:30 is the right balance—I do not know whether the Minister even knows what the right balance is—but we need a transparent number, a limit and a threshold around which we can build a consensus. New clause 2 is too vague and will not do.
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