Climate Change Bill [Lords]

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Tony Baldry: I think that every member of the Committee will have received a copy of the joint statement by the World Wide Fund for Nature, Scottish and Southern Energy, Christian Aid and the Royal Society for the Protection of Birds—an unusual combination bringing together development non-governmental organisations, wildlife NGOs and business. Two paragraphs from that statement are worth putting on the record:
“These organisations support the amendment as a necessary requirement to ensure that the UK becomes a low carbon economy and does not rely too heavily on carbon credits. A major benefit of the amendment is that it would bolster the UK’s leadership on climate change by ensuring significant reduction efforts are made at home. Financial flows to developing countries should come on top of these actions and not instead. Finally, the amendment would not conflict with the UK’s participation in the EU Emissions Trading Scheme.
The Government’s proposed replacement amendment (New Clause 2) that ‘the Secretary of State must have regard to the need for UK domestic action on climate change’ would provide next to no clarity or certainty on this issue. Indeed, in WWF’s opinion the amendment is almost meaningless in addressing the key issue of whether the UK sets itself on the path to becoming a low carbon economy and avoids locking itself into new high carbon and long-lived infrastructure.”
The Minister can ignore the Committee and he can ignore the House of Lords, but I caution him that it is not necessarily sensible to ignore the combined postcard-writing power of the WWF and the RSPB.
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Mr. Woolas: I ignore those organisations at my peril, and spend many late nights signing letters to hon. Members who have forwarded those postcards. I am grateful to people who write in.
May I deal with amendment No. 83 first? The debate has been important and perhaps the important points made by the right hon. Member for Penrith and The Border have been forgotten. He asked for an assurance that we take account of the carbon sinks in the United Kingdom. As the Member for Oldham, East and Saddleworth, I understand the point, because much of the measurement of moorland peat is done in my constituency, and I have been following that for some 10 years.
I can assure the right hon. Gentleman that the carbon sinks are included in the targets. The Bill relates to net UK emissions—emissions less removals by UK carbon sinks. That provides an important incentive to promote carbon sinks in the United Kingdom. Indeed, the Forestry Commission is one of the most successful organisations in the world at increasing forestation in percentage terms, but not in total acreage, and has responded to that very point. It relates to the subsequent debate about the balance between overseas and domestic emissions. The net emissions are there.
I can provide further reassurance. There are already well-established mechanisms in place to ensure that removals from sinks are properly assessed. Information must be compiled in accordance with the same systems and international methods as for the annual emissions inventory which the UK is already required to submit to the United Nations framework convention on climate change. The UK emissions inventory follows such guidance from the intergovernmental panel on climate change which is reviewed every year by the United Nations—that is, by international experts—to ensure that such practice is followed. We intend to follow exactly the same guidance in compiling the emissions statement, including information on removal by sinks under clause 15. In fact, clause 29(2) requires that the amount of UK emissions and UK removal of greenhouse gases must be determined consistently with international carbon reporting practice, which is defined subsequently in clause 86.
For those reasons, the right hon. Gentleman’s amendment is unnecessary, but I entirely agree that it backs up the point about basing our net emissions measurements on science and not on a political fix. It also, conveniently, helps me with my argument against subsequent speakers, and I shall explain why.
This is the heart of the debate and hon. Members on both sides made their arguments strongly and passionately. Let me try to explain the Government’s argument. We have discussed Government amendments to clause 14 on the balance between UK emissions, action within the EU, and international action. That was a key issue, as has been said, when the Bill was debated in the other place, and the Government have given it significant consideration since then. In the debates on the Bill there has sometimes seemed to be a mistaken idea that this Government, or a future Government, will do anything they can to buy their way out of reducing UK emissions, by purchasing international credits instead. However, we all recognise that the world as a whole will only tackle climate change if developed countries such as ours reduce their emissions significantly. That is why we have tabled new clause 2. If accepted, it will place into legislation for the first time the need for UK domestic action on climate change. The new clause is intended to set out plainly the belief of Government and, we hope, Parliament that we need to reduce our domestic emissions if we are going to meet our targets and encourage others to reduce their emissions as well.
However, we also must not lose sight of the reality that climate change is a global challenge. We need global emissions to halve by 2050, based on the 2 deg C increase that we talked about at clause 1. The international carbon market will be the key to achieving the scale of investment flows necessary to achieve that, which are estimated to be in the hundreds of billions of dollars, over and above the additional public money—additional to official development assistance—that is required. We need action at European Union and international level, as well as at domestic level, if the world is to tackle climate change. We do not believe that the policy outlined in clause 25 is the right one. Apart from the point that clause 25 is inflexible—I do not want to debate that as it is helpful to specify a figure—the 70:30 limit is arbitrary.
Miss McIntosh: The Minister will be familiar with the conclusions of the Environment, Food and Rural Affairs Committee. It positively recommended that the provision to allow for international credits should be strictly limited to a quantifiable amount, to be advised by the Committee on Climate Change for each budgetary period. What is absent from the new clause is the recognition that although we want to contribute, as my hon. Friend the Member for Ruislip-Northwood said, in the original budget for 2010 there was no mention of any part being allocated to international credits.
Mr. Woolas: Indeed, we looked at the Select Committee report and other recommendations when considering the new clause and I hope that the hon. Lady expects an honest disagreement. Let me explain why there are problems with the idea of setting a fixed limit in the way in which clause 25 suggests. The UK’s policy in this regard is firmly rooted within a joint-European Union effort. That is one of the most successful, if not the most successful, area of European Union solidarity in terms of world leadership. As it stands, clause 25 fails to recognise the crucial role of action at the European Union level.
Let me quote what Lord Turner of Ecchinswell said on this issue when he appeared before the Select Committee on Environment, Food and Rural Affairs, which the hon. Member for Vale of York mentioned:
“Of course, it is important within the European Emissions Trading Scheme to realise that we cannot actually in advance define the maximum amount of buy-in which will occur from the rest of Europe to the UK. That is not a policy variable which the UK Government or any other government”
within the EU—actually, he did not say “within the EU”, but that was the context—
“can pre-fix within the scheme. The amount of buy-in will be whatever the market determines and will only become clear as we move towards the end of a budget period.”
Yet clause 25 invites us to do the exact opposite, defining now, in 2008, what the maximum amount of credits will be, as bought in from within Europe and from the rest of the world, all the way to 2050 and beyond.
Let me further back up my argument by mentioning what Lord Taylor of Holbeach, the Opposition spokesman, said in the other place, when discussing the amendment:
“A fixed percentage in the Bill may not be the best way of going about that.
that is, addressing decarbonisation—
“We understand the difficulties in placing such a precise figure in the Bill, which range from the constraints of the international negotiation tables to the fact that the carbon market will look a lot different in 42 years.”—[Official Report, House of Lords11 March 2008; Vol. 699, c. 1407.]
There is a difficulty, first, in the context of the ETS.
Steve Webb: The Minister is answering the point thoughtfully and seriously, but he is saying essentially that the UK Government are indifferent about domestic emission cuts and that those bought in from, say, Germany—a country like ours—or Poland, or a much poorer country. However, our argument is that it is not a matter of indifference. Surely, there are strong arguments why the UK would want, as a positive policy goal, to favour domestic cuts, as even new clause 2 says. His argument that we should just be neutral within the ETS is inconsistent with his own new clause 2.
Mr. Woolas: I have so far advanced the argument about the ETS. I have another argument that I wish to develop, which encompasses the hon. Gentleman’s point.
Of course, we recognise how important it is that the Bill demonstrates the need for domestic action to reduce UK emissions and—to address the point that the hon. Member for Ruislip-Northwood made—to ensure the maximum possible transparency about our plans for meeting targets and moving the UK to a low-carbon economy. That is why we have tabled Government amendment No. 8, which we have already discussed, and new clause 2, which we are debating now.
New clause 2 would place the Secretary of State under a legal duty to consider the need to reduce UK emissions of greenhouse gases when considering how to meet the targets and budgets. That important step forward represents a constructive response to the concerns expressed in Parliament. It will, if agreed to, set out unequivocally Parliament’s desire that the UK should move to a low-carbon economy. New clause 2 will mean that, when developing policies to meet carbon budgets, the Secretary of State must keep in mind the need to reduce UK emissions and the positive benefits in doing so, including improved energy efficiency, which will of course reduce energy bills; demonstrating our commitment to take action on climate change to international partners; helping to meet our international obligations; helping to meet other policy objectives, such as improving air quality; and addressing the advantages to UK competitiveness of developing the technologies and industries that can achieve low carbon. We agree that there needs to be a balance. It is up to developed countries to show the way.
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The global low-carbon energy market is already worth $38 billion and employs 1.7 million people. Within the UK, the environmental goods and services market is likely to grow from £25 billion in 2005 to nearly double that by 2015. We believe that, taken together, the Government amendments will ensure that decisions on the appropriate balance between action at domestic, EU and international level are first, based on independent and expert advice from the Committee on Climate Change, secondly, transparent, thirdly, sufficiently flexible to take account of changes to the international context between now and 2050, and fourthly, guided by the need for UK domestic action on climate change.
The accusation is made or the implication is drawn that the United Kingdom Government want the policy to pay off our conscience—so we can pay someone else to reduce emissions. That is the proposition that is made; I will not use the word allegation. That allegation misses two fundamental points. [Interruption.] Sorry, I meant to say proposition. The hour is late, Mr. Cook and I, like you, am bored with my voice. The proposition misses two fundamental points. First, the United Kingdom’s CO2 emissions within our borders are 2 per cent., but the emissions from United Kingdom’s world economic activity are around 15 per cent. Our carbon footprint goes way beyond our shores. The mechanisms that we believe that we must have to address global emissions must take that point on board. The 15 per cent. carbon footprint is our goal, not just the 2 per cent. Of course the credibility of the clean development mechanism and the other mechanisms is crucial, but one should not confuse problems with the CDM with arguments against the need for offsetting.
Secondly, on the whole, developing countries in the G77 welcome and support this approach, because it provides them with a flow of finance in addition to overseas development aid that can help to ensure that their prosperity can grow through low-carbon technology. When one debates in the international forums on 30:70 or another figure, one hears a plea from the developing to the developed countries to allow maximum flexibility, so that the carbon markets can provide a flow of finance to develop economic prosperity in those countries. I ask colleagues to consider those two points when they make their decision.
Mr. Hurd: No one disputes the value of the international capital flows that the Minister has described, but the debate is about finding a balance. I have listened to him carefully and I think that the record will show that in the previous debate he talked about the Government’s desire to have the flexibility to go up to 100 per cent. of international credits. Where is the reassurance about the transparency that I was seeking? Where in this process do the Government imagine we will have a transparent threshold for the deployment of international credits, or are they trying to avoid that completely?
Mr. Woolas: I am grateful to the hon. Gentleman. He asks questions and follows the debates closely. The reassurance that he seeks is in the amendments that we have already tabled. Clause 35(2) requires the Committee on Climate Change to comment on action, and new clause 2, which the hon. Gentleman said was inadequate and not tough enough for him, places a new legal duty upon us, as I have described. I hope that the combination of those two factors, which the Government have considered since the debate in the other place, will be enough. We are in danger of throwing the baby out with the bathwater by not grasping the profound importance of placing our statutory, legally binding commitment within the international context of the EU and wider international agreements.
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