Climate Change Bill [Lords]

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Martin Horwood: I have similar concerns about the amendments. Government amendment No. 13 is a rather strange dilution of the reporting requirement on adaptation, in that it will no longer be annual. The Minister argued that mitigation and the associated long-term strategies justify an annual report by the Secretary of State, but that somehow adaptation should be excluded from annual reporting. Adaptation is a matter of current Government policy on flood budgets, health strategies and transport infrastructure, which, as we all know, changes from month to month, let alone from year to year, so I find her argument rather strange. Perhaps she would reiterate exactly why she thinks that adaptation, in particular, is not a matter for immediate annual reporting concern.
The Minister said that Government amendment No. 21 would remove simple duplication, but that is not quite the case. Clause 56(3), which would be removed, refers specifically not only to reporting on adaptation, but
“the progress made towards implementing the objectives, proposals and policies set out in earlier programmes.”
There is no such wording under new clause 4 or any of the other Government amendments so, in a sense, the proposal seems to be yet another wriggly amendment designed to remove the immediate responsibility of the Government to report on something specific. In this case, it would be whether they were actually meeting the targets and objectives that they had set out in previous adaptation programmes. That is important reporting, and it should stay in the Bill.
1.15 pm
Joan Ruddock: I turn first to what was said by the hon. Member for Bexhill and Battle. I need to reiterate that we are in no sense diluting matters. We are removing requirements that existed for the Government before we decided to give the power to the committee. The committee will be asked to make an independent assessment of progress on the Government’s adaptation programme. It will be giving advice on the progress that is made. There is no way in which such action will dilute things. Indeed, we would have expected the hon. Gentleman to understand that an independent committee undertaking such work is likely to strengthen provisions rather than dilute them.
The progress reports will cover all adaptation programmes, past and present. That is shown by the reference under new clause 4 to “programmes”. We believe that adaptation requires more time in respect of the progress that is made. The subject is enormous. It covers every aspect of our society, country, people and economy in their adaptation to climate change. We have non-statutory programmes at present, and we believe that annual reporting is unlikely to give a proper analysis of what is happening and of the Government’s progress.
I am talking about an analysis of the progress made against the programme that the Government have set. The hon. Member for Cheltenham suggested that we should retain clause 56(3), but the issues that it covers are more concerned with policies than progress. I stress that there is no point in duplication. We need the Government to have an adaptation programme and for proper scrutiny to be made of its progress. Amendment agreed to.
Clause 35, as amended, ordered to stand part of the Bill.
Clause 36 ordered to stand part of the Bill.

Clause 37

Duty to provide advice or other assistance on request
Amendment made: No. 14, in clause 37, page 19, line 26, leave out from ‘or’ to end of line 27 and insert—
‘(c) adaptation to climate change, or
(d) any other matter relating to climate change.’.—[Joan Ruddock.]
Clause 37, as amended, ordered to stand part of the Bill.
Clauses 38 and 39 ordered to stand part of the Bill.

Clause 40

Powers to give guidance
Amendments made: No. 15, in clause 40, page 20, line 31, at end insert—
‘(e) section [Advice of Committee on Climate Change on impact report] (advice on report on impact of climate change), or
(f) section [Reporting on progress in connection with adaptation] (reporting on progress in connection with adaptation).’.
No. 16, in clause 40, page 20, line 32, leave out ‘such guidance’ and insert
‘guidance under any of paragraphs (a) to (e)’.—[Joan Ruddock.]
Clause 40, as amended, ordered to stand part of the Bill.

Clause 41

Powers to give direction
Amendments made: No. 17, in clause 41, page 21, line 15, at end insert—
‘(e) section [Advice of Committee on Climate Change on impact report] (advice on report on impact of climate change), or
(f) section [Reporting on progress in connection with adaptation] (reporting on progress in connection with adaptation).’.
No. 18, in clause 41, page 21, line 16, leave out ‘such directions’ and insert
‘directions under any of paragraphs (a) to (e)’.—[Joan Ruddock.]
Clause 41, as amended, ordered to stand part of the Bill.
Clause 42 ordered to stand part of the Bill.

Clause 43

Trading schemes
Question proposed, That the clause stand part of the Bill.
Miss Anne McIntosh (Vale of York) (Con): It is a pleasure to serve under your chairmanship, Mr. Atkinson.
I want to press the Minister on trading schemes. Much of the detail that we will consider will be set out in regulations. Clause 43 defines the trading schemes, but does not specify which trading schemes will be introduced using the enabling powers in later clauses. The Minister will be aware that the Environment, Food and Rural Affairs Committee picked up on that and we were disappointed that more detail was not given at this stage.
My second point is that the clause could have gone a little further by stating how the national trading scheme for England will relate to the devolved trading schemes, and especially how the UK trading scheme will relate to the EU emissions trading scheme. Who is to rule on the compatibility of the two trading schemes? Will it be the Secretary of State? A little more meat on the bones would be very helpful.
Mr. Mike Weir (Angus) (SNP): It is a pleasure to serve under your chairmanship this afternoon, Mr. Atkinson.
I make a similar point to that of the hon. Member for Vale of York. The clause seems to give all national authorities the power to begin their own trading schemes, but it is not clear how they will interact with each other and, more crucially, the EU ETS. As the Minister will know, one of the early problems with the EU ETS was a fall in the price of carbon to a very low level. It is not clear how the carbon price would be dealt with in the various sub-national and UK-wide schemes, as opposed to the EU scheme. I am concerned that we might arrive at a situation in which the various schemes cover the same industry, but the price of carbon in each one may be different. That could cause problems for both the UK scheme and the EU scheme as a whole, and I would like some reassurances about how that will be dealt with. Obviously, the price of carbon will be crucial in making the EU—or any other—scheme work.
The Minister for the Environment (Mr. Phil Woolas): Thank you, Mr. Atkinson, and welcome to the sitting. It is a pleasure to be here.
Hon. Members have asked important questions. Carbon trading schemes, on which there is consensus, lie at the heart of the Bill, and their success should be judged on not just the EU scheme, but on similar arrangements, such as the previous scheme for sulphur dioxide and the very successful Montreal convention, which we recently celebrated 20 years of.
In answer to questions raised, it is important that carbon trading schemes are compatible and that there is an exchange mechanism so that we can roll out such schemes across the globe. Our long-term aim is to see the expansion of the ETS to cover more sectors and gases, but some sectors might not be appropriate for inclusion. The enabling powers in the Bill will provide the Government or devolved Administrations of the day with additional options to take domestic action in sectors that are unsuitable at the time for inclusion in the ETS. They will also allow them to take domestic action ahead of the EU when that is cost-effective and necessary to reduce UK emissions. We believe that that approach might also help sectors to prepare for inclusion. Any decision on the best policy instrument will take account of the UK Government’s objectives in the round. For example, we might wish to supplement the EU-level action and introduce our own policies to uncover inefficiencies and to support clean technologies. The powers here will provide them and the devolved Administrations with the opportunity to do that.
I am trying to create an architecture for carbon trading schemes that allows inter-exchange. It might be that prices will differ, in which case we would have exchange rates, would we not?
Mr. Weir: The Minister said that the schemes are meant for industries that are not appropriate for inclusion in the EU ETS, but it seems to me that the definitions would allow a national scheme to include industries that are in the ETS. In such a situation, would the ETS take precedence, or could industries find themselves operating in both schemes?
Mr. Woolas: I see the hon. Gentleman’s point. It would be a question not of preference, but of a scheme’s operability. For the sake of argument, let us say that one established a scheme for bus companies to trade carbon credits and that a European bus trading scheme—for example, a sectoral scheme—was also in place. Those two schemes would have a relationship through, for example, independent auditing and buying and selling. At any one time, the price of carbon in the different scheme might be different.
If I interpreted the hon. Gentleman’s question correctly, he is worried that a Scottish bus carbon trading scheme, for example, might undermine the European ETS, if not set up correctly. That would not be possible because, as we were reminded by the hon. Member for Northavon, the architecture of the European ETS is based on units, not on countries. It would not be subservient any more or less than the pound in Scotland is subservient to the euro.
Mr. Weir: Try telling that to English shopkeepers!
Mr. Woolas: In answer to the hon. Member for Vale of York, clause 43 on its own provides for the enabling power for the Government or devolved Administrations to establish trading schemes. Powers to establish those schemes are provided later within the rules. At present, neither the Secretary of State nor Welsh Ministers have the power to establish such trading schemes through legislation. The Scottish Parliament can make trading schemes within its competence in Scotland. Interestingly, the Northern Ireland Assembly can make trading schemes within its competence in Northern Ireland.
1.30 pm
Our aim is for each national authority to have the same set of powers without changing or upsetting the devolution settlements that are already in place. As the hon. Member for Angus said, the idea is to enable joint trading schemes to be made in secondary legislation, and that cannot be done at present.
Question put and agreed to.
Clause 43 ordered to stand part of the Bill.

Clause 44

Activities to which trading schemes may apply
Question proposed, That the clause stand part of the Bill.
Steve Webb (Northavon) (LD): As we are dealing with a new part of the Bill and a clause on trading schemes, I want to ask the Minister a question about the philosophy and principle underlying the creation of trading schemes. To what extent do the Government think that sectoral schemes are a good idea over and above what one might loosely call aggregate schemes? By analogy with the argument that has been used elsewhere in our deliberations, one could say that carbon is carbon is carbon. In that case all we need to do is set overall caps. If we create sectoral schemes within those caps, or alongside them, we may create a new bureaucracy and a new infrastructure, but not add a great deal.
On the other hand, just as we have argued that a tonne of carbon saved in the UK has a different meaning and value to that saved elsewhere because of the leadership role, one might argue that a sectoral trading scheme has value quite apart from the aggregate effect, because we want to create innovation in transport or in industry. As clause 44 is about the activities to which trading schemes may apply, what are the principles that will guide the Government in deciding when it is appropriate to establish a sectoral scheme and when it is appropriate to let the carbon price, the ETS or some aggregate scheme that is not sector specific be the dominant approach?
Mr. Woolas: The hon. Gentleman poses an important question. The issue is widely debated in the international forum, so it is useful to have the opportunity to respond.
The word “sectoral” is used by different people in different ways. Sometimes it refers directly to a particular industrial sector. Ceramics comes to mind, for reasons that are evident on the Labour Benches, but we could also use the example of steel or aluminium. Some people use the word “sectors” to mean energy production or transport. Clearly, it is important that we answer the question posed by the hon. Member for Northavon.
Our policy is firmly based on the pre-requisite of national emissions cap and trade—national targets and binding agreements. On that basis, we believe that there may well be advantages for further reduction of emissions through sector schemes—international sector schemes on steel come to mind.
Joan Walley (Stoke-on-Trent, North) (Lab): Will my hon. Friend confirm that in those sectoral arrangements, it is the Government’s intention to allow as much flexibility as possible within the individual sectors so that we can achieve our global emissions? Do they recognise that we need such flexibility?
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