Martin
Horwood: I will speak briefly. I sense that the amendment
was not drafted in the Department for Environment, Food and Rural
Affairs, but that it might have originated somewhere rather closer to
No. 11 Downing street. It has the sniff of Treasury bean counting about
it. When considering the pros and cons of offsetting, the Treasury has
been remarkably immune to environmental arguments. However, at the
prospect of Ministers squirreling away funds for their disposal outside
of Treasury control, it has suddenly become interested.
This is an
interesting amendment that may be technically and legally necessary and
I shall not oppose it. I would be interested to hear the
Minister’s response on its origins and the rationale for it in
relation to the
Treasury.
5
pm
Gregory
Barker: I understand from the Minister that the clause is
an enabling clause that allows the Government and the Departments to
buy carbon credits to offset their emissions. If my reading of the
amendment is correct, it enables Departments to sell carbon credits, as
well as purchase them. That might be a rather cursory summary, but if
that is the principle behind the amendment, we support
it. A
few questions still need to be answered. First, the amendment will add
to the ability to dispose of carbon credits the power to acquire them.
This might simply be a matter of legal language, but will the Minister
explain if anything is meant by disposing of the units, other than
selling them? If the Government had the power to dispose of them in
some other way, such as by nullifying or invalidating them, that could
seriously affect the carbon market. If Departments had the power to
acquire and invalidate units of reductions, it could cause a level of
uncertainty in the carbon markets and contribute to unwanted volatility
in the price of carbon. Will the Minister be clear that by
“dispose” he exclusively means
sell? Similarly,
Government amendment No. 28 seems superficially innocuous. If it simply
clarifies that when the Treasury buys units, it owns them, it seems
wholly reasonable. However, that poses an interesting question about
what the Treasury’s involvement in the carbon market will be. Is
it the Government’s intention to trade in carbon units? Will
amendment No. 28 give the Treasury the power and scope to intervene in
the carbon markets in a similar fashion to the way it speculates on
gold? As hon. Members know, the Treasury’s speculation on gold
has cost the country billions and billions of pounds. Indeed, the
decision to sell gold reserves has cost the Treasury more money than
any single financial decision by any Chancellor on
record. If
amendment No. 28 will open the door to similar speculation in the
carbon markets, we will have to address it in more detail. Perhaps the
amendment is not even required for that. Will the Minister clarify
whether the Treasury has the power or the intention to trade—or
speculate, as some of his old Labour colleagues might say—in the
carbon market? If the amendment is for clarification only and the
Minister can assure the Committee categorically that it is not even the
thinnest end of a very thin wedge that could lead to speculating in the
manner of the gold reserves, I apologise for being alarmist. I am sure
hon. Members share my concern, given that the stakes are so
high.
Mr.
Woolas: The biggest single retrograde decision by a
Chancellor was the decision, as advised by the then right hon. Member
for Witney, to join the European exchange rate mechanism at an
unsustainable level against the express support of the vote of the
national executive committee of the Labour party. The point about gold
is that one has to look at what was done with the money in the
meantime. It may well have been used to better
purposes. Miss
Anne McIntosh (Vale of York) (Con): What did you do with
the
money?
Mr.
Woolas: We invested in the economy of the United Kingdom
to great
effect. Knockabout
aside, the hon. Member for Cheltenham is scrutinising the Bill
effectively. The Treasury, like any other Department, already has the
power to buy and sell carbon units just like any other person. However,
I am advised that the answer to his question is that the Treasury means
the Lord Commissioners of the Treasury. They are not a corporate body.
Amendment No. 28 will make it clear to a buyer of units that they can
buy units from the Treasury even though it is not a corporate body. The
hon. Gentleman is right that this is a technical
provision. The
first question from the hon. Member for Bexhill and Battle was
sensible, but I thought his second ridiculous. In answer to his first
question, the term “dispose” is about selling, but in
certain circumstances it could also mean cancelling—just to
complicate matters. For example, if the country had reduced its
emissions beyond what it was required to do, and had surplus carbon
units, under clause 16, the Government could bank those units into the
next period—remember the debate about banking or borrowing over
periods—or sell them to another country. That is the basic
principle. It could involve cancelling, but in practice it means
selling. Amendment
agreed to.
Amendment
made: No. 28, in
clause 78, page 37, line 8, at
end
insert— ‘(
) If the Treasury acquire such units or interests in units, until they
are disposed of they shall be treated as held by the persons for the
time being constituting the
Treasury.’.—[Mr.
Woolas.] Clause
78, as amended, ordered to stand part of the
Bill. Clause
79 ordered to stand part of the Bill.
Clause
80Guidance
on
reporting Question
proposed, That the clause stand part of the
Bill.
The
Chairman: With this it will be convenient to discuss
Government new clause 6 and Government new clause
7 . Steve
Webb (Northavon) (LD): Clause 80, on corporate reporting
of greenhouse gas emissions, was inserted in another place by my noble
Friend Baroness Northover, and I warmly support its retention in the
Bill, and the rejection of Government new clauses 6 and 7, which are a
pale shadow of her version. To give a flavour of the paleness of that
shadow—I am not sure how colourfully I can convey the flavour of
paleness—the Government’s proposal is to take out the
reporting requirements in clause 80 and to insert two other
clauses.
New clause 6
refers to publishing guidance to assist reporting, which must be done
by October 2009—getting on for 18 months. The first draconian
measure planned by the Government on such a vital issue, therefore, is
the publication of guidance late next year to assist reporting. It will
not necessarily require anyone to do any reporting, but those who do,
or would like to, will get some guidance some time late next
year. New
clause 7 promises a review of whether the reporting would contribute
much, and must be completed no later than 2011. That means that we will
get some advice in one year, and a review concluding in three years.
One might sense a lack of urgency over the whole issue. The challenge,
therefore, is to explain why it matters to the Committee. It has
emerged during the debate, and in the contributions from Members on
both sides, that we all share a common concern about climate change.
The question is what role the corporate sector has, and how far the
reporting requirements address those concerns. Our contention is that
retention of clause 80, and even stiffening it up, would contribute far
more than the Government’s very weak
alternative.
Mr.
Gummer: Is the hon. Gentleman aware that very large
numbers of companies were extremely distressed by the
Government’s about-turn on the question of reporting? The best
companies in the country felt that they had been deeply let down by the
then Chancellor of the Exchequer. To them, this is another example of
the Government’s unwillingness to recognise that most companies
want a common system whereby they are commonly comparable, and do not
want the system to be led by the least good companies, whose previous
mouthpiece was Lord Digby Jones, who has become a Minister. No doubt
that is the reason for this sad
situation.
Steve
Webb: I am grateful to the right hon. Gentleman. I concur
that there are companies behaving well, and that others must be
dragged, kicking and screaming, to the climate change agenda. It is
entirely unacceptable that companies that accept their social
responsibilities in this area can be undercut or face unfair
competition from those that do not.
One of the
aims that we intend through the retention of the clause is consistency
and transparency. There is no great desire to impose swingeing burdens
on business for the sake of it. If we can ensure that the reporting
that takes place is to the greatest extent reporting that companies
might be doing anyway, particularly in a world of carbon trading and
carbon budgets, measures that enable that to be done consistently and
systematically are entirely welcome.
All members
of the Committee will have received the letter from the Aldersgate
Group, a coalition of businesses, lobby organisations, academics and
hon. Members, who are coming together to argue for the retention and
strengthening of the reporting requirements. It is worth thinking about
why those might be desirable. The first thing to observe is that at
present, the extent of reporting in annual reports or equivalent,
according to Christian Aid, is quite limited. Although many companies
do some reporting, it found only 16 FTSE-100 companies reporting
emissions in their annual report or a parallel report, and the coverage
of the emissions that were reported was often limited.
Quoting from
Christian Aid—I think hon. Members will have seen these
figures—only 58 per cent. of the most direct and easily
identifiable emissions are reported. Some emissions are omitted, and
the indirect emissions caused by the company’s activities
further down the chain are also omitted. It is important that there
should be comprehensive reporting of the direct emissions from a
company, and a view should taken on the indirect impact of the
company’s activities and how far and in what way that should be
measured. The idea of waiting more than a year for guidance and then
three years for a review as to whether anything should happen is
staggering in its lack of ambition.
Some
companies already have similar obligations. For example, companies that
fall within the carbon reduction commitment already have to monitor
such matters closely, so for many companies the costs are marginal.
Perhaps the data are being collected anyway and would have to be
presented in a different or standardised way, but it is not an
additional burden for many companies. No one expects the smallest
businesses to be part of the scheme. Many of the largest businesses are
already covered by such a scheme, but we want greater
consistency.
It is worth
stressing that we are moving into a new kind of world. In the
discussion of earlier clauses, the Minister spoke about the setting of
carbon budgets alongside the fiscal Budget. In a world where we are
buying, banking and borrowing emissions, trading permits to pollute or
selling excess permits where we have saved, such things will be almost
literally part of the cash flow of major companies. Companies that have
a significant impact on the environment through their activities will
need to know what their emissions are, whether those are rising or
falling and whether they can save more. As the scope of the emissions
trading scheme increases, those issues will become the bread and butter
of corporate life in Britain.
With an eye
to the London stock exchange and a desire for Britain to be a leading
part of carbon accounting and reporting, as the right hon. Member for
Suffolk, Coastal has said on other occasions, there is an opportunity
for Britain to be a world leader and to establish expertise and advice
on such matters, rather than the Government dragging their heels,
kicking and screaming, to a destination
that we all know we shall reach. That seems to be a key point. None of
us believes that a Committee such as this in the next Parliament or so
would imagine a world where businesses, and certainly big businesses,
were not reporting such information systematically and on a comparable
basis. The attitudes
of business are obviously important. Again, hon. Members will have seen
that CBI members have been surveyed on the subject and some are
enthusiastic, but the majority are willing to give it a try, with
further work. Most businesses are not hostile to reporting. It is an
area where, dare I say it, the climate is changing. In other words,
people are starting to recognise that that will have to happen sooner
or
later.
5.15
pm There
is inevitably an issue of cost on a matter such as this, but there are
also benefits. I should be interested if the Minister gave us some idea
as to what assessment the Department has made of the potential benefits
in terms of carbon reduction from comprehensive, transparent and
consistent reporting. Companies write to all hon. Members boasting of
their credentials as socially responsible businesses, whether they
sponsor computers in schools or whatever, and telling us what good guys
they are. They increasingly do that in respect of carbon reduction,
which is welcome, but we have no idea what the relative performance of
those different companies is, because all we get are their figures on
their definitions, with their coverage over time periods of their
choosing. Therefore, there is limited scope for the competitive
pressure to drive such things down, whereas if all the major companies
had to report those figures consistently, the scope for pressure from
shareholders, employees and consumers would be far greater. We all want
to see a change of culture whereby this is as important a bottom line
to many of the stakeholders in the business as the profit and loss
account is to its
shareholders. There
are costs involved. The Government have mentioned quite a high figure.
We do not want something that is too onerous—it is pointless to
be gratuitously onerous—but we want something that will build on
the data that have already been collected by businesses and enables the
public to know what is
happening. There
is widespread support outside the House for the retention of guidance
on reporting and, indeed, probably for beefing it up. I suspect that
there is precious little support for removing what limited provision
there is in the Bill—which the Government did not even include
in the first place—and replacing it with lily-livered
alternatives that are not worth the paper they are written
on. I
urge the Committee to consider retaining clause 80 and rejecting the
Government new
clauses.
Gregory
Barker: I associate myself with the sensible remarks made
by the hon. Member for Northavon. We Conservatives are disappointed
that the Government appear intent on weakening the Bill. Their
lordships did an excellent job in enhancing the Bill in the other place
and I am sorry that the Government are, again, trying to move back from
the efforts that were made
there. I
have made it clear to the Committee previously that one of the many
reasons why we strongly support the Bill is because it gives long-term
certainty and clarity to
business, which is sorely lacking and badly needed. Clause 80 is an
important part of the Bill because it gives exactly that sought-after
clarity. I am aware that there are already a number of voluntary
reporting standards for greenhouse gas emissions, such as the carbon
disclosure project, but despite the admirable efforts of groups such as
the CDP, reporting of clear, comparable information about UK business
carbon emissions remains low. The latest carbon disclosure survey, from
October 2007, found that only 46 per cent. of the FTSE 350 companies
provided quantitative emissions data and, to quote the carbon
disclosure project
report: “Investors
still lack much of the necessary information to make informed decisions
with respect to carbon emissions and embedded costs, given the limited
quantitative disclosures by many of the companies listed in the FTSE
350.” For
that reason, Conservative peers supported the inclusion of clause 80 in
the Bill, and for the same reason I should like the clause to stay
where it is. My party has long been aware of the necessity for greater
clarity on carbon reporting, but with two caveats. First, one standard
methodology should be agreed to, rather than allowing a situation to
develop where a patchwork of different accounting methodologies are
being used by different companies, resulting in little more than mutual
confusion. Secondly, we do not want small enterprises given additional
reporting requirements that would add even more red tape and costs to
their
businesses. I
draw Committee members’ attention to early-day motion 81, tabled
by my hon. Friend the Member for East Surrey (Mr.
Ainsworth), which
stated: “This
House...congratulates businesses that have begun to measure to
reduce the carbon emissions resulting from their operations, supply
chains, products and services; further notes the difficulties in
defining the parameters for such measurement and in agreeing
methodologies; believes that such measurements would enable both
informed comparison and customer choice; emphasises the need for
national and international consensus on such measurement and
methodologies; and calls upon the Royal Society to take forward the
process for establishing a mechanism for achieving such a
consensus” on
such measurement and methodologies.
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