New
Clause
8Reporting
on greenhouse gas emissions by Export Credits Guarantee
Department ‘(1) The Export
and Investment Guarantees Act 1991 is amended as
follows. (2) In section 7 after
subsection (1)
insert— “(1A) The
annual report shall include an assessment of the direct and indirect
contribution of greenhouse gases to the climate from those projects
falling into Category A, High Potential Impact or Category B, Medium
Potential Impact of the Export Credits Guarantee Department Case Impact
Analysis Process for which arrangements were entered pursuant to
sections 1, 2 or 3 in that
year.”’.—[Mr.
Hurd.] Brought
up, and read the First
time.
Mr.
Hurd: I beg to move, That the clause be read a Second
time. I
shall be brief, both because I know that the Committee is keen to get
on and because events have unfolded in respect of the
Government’s response to the new clause since it was tabled. The
new clause, which was tabled in my name, has distinguished cross-party
support, including from an ex-Labour climate change Minister. Our short
debate will take us back to the issue of
disclosure. We
spoke at length about the need, or otherwise, for large British
companies to disclose their emissions. The new clause would extend that
principle to the public sector, which should be a beacon of best
practice. The new clause focuses on one particular Government agency:
the Export Credits Guarantee
Department. Most
of us recognise that the ECGD plays an extremely important economic
role in facilitating UK exports. Over the past five years, it has
supported more than £12.5 billion of UK exports. No one would
underestimate the importance of its role to the economy in underwriting
risks that others are not prepared to underwrite. However, a growing
number of people in this House and outside, most notably the WWF, are
concerned that the process that the agency works to has inadequate
transparency and
accountability. The
ECGD has been allowed to operate in a way that is semi-detached from
the Government, and it is not entirely in tune with the priorities that
the Government attach to the environment and the battle against climate
change. For some months, we have been campaigning to reform this
important agency and to drag it out of the shadows so that it more
effectively considers its impact on the
environment. The
agency is not particularly big, when measured in terms of the number of
people who work for it, but it has tremendous clout, particularly when
it is connected to other export credit agencies around the world. The
annual value of capital goods that are exported with finance from the
club of OECD-based ECAs is estimated to be between £30 billion
and £40 billion. The 2003 report on the agency by the
Environmental Audit Committee, which first expressed concerns about the
degree to which the agency supports and is seen to support the
Government’s agenda on the environment, noted that some 10 per
cent. of exports from large industrialised economies are facilitated by
ECAs. A
non-governmental organisation called—believe it or
not—ECA Watch has estimated that, worldwide, ECAs support twice
the number of oil, gas and mining projects as all the multilateral
development banks combined, and half of all new greenhouse gas emitting
industrial projects in developing countries have some form of ECA
support. The point that I am trying to make is that we should not think
of the issue in terms of one relatively small Government agency. The
agency has real power to drive change, especially if it is seen to take
a lead on the way in which ECAs around the world
work. The
underlying issue is that to date the ECGD business book, if we can call
it that, has been focused on carbon-intensive industries. To give that
some context, defence and carbon-intensive industries, including
aerospace and fossil fuel developments, typically make up more than 75
per cent. of ECGD’s customers.
7.45
pm The
problem is that the evidence accumulated by WWF and others suggests
that there are inadequate processes within the ECGD regarding the rules
for assessing projects for their impact on the environment. When rules
exist, their application appears to be discretionary, and more than
half the business is focused on defence and aerospace, for which no
such rules exist. Surely it is time, given the context of a Government
who take great pride in their leadership on climate change and the
importance that they attach to the climate change agenda, that the
agency is brought up to date and seen to be consistent with the
Government’s priorities elsewhere.
We are
pressing for reform of the agency. In parallel with this
Committee’s deliberations, the Environmental Audit Committee has
launched a second inquiry into the agency to explore some of the
concerns that have been expressed. We have campaigned for amending the
Export and Investment Guarantees Act 1991 so that governance of this
agency is reviewed and reformed, and to give it the requirement to have
a more explicit regard for climate change in how it does business and
in the processes by which it makes decisions.
The ECGD
should have its own targets, as other agencies do, and it should be
leading the shift towards low-carbon finance, rather than continuing to
be so heavily weighted towards financing carbon-intensive industries.
Frankly, I am sure that the Minister will share my surprise that a
£50 million fund that is ring-fenced within the ECGD to
facilitate investment in the export of low-carbon technologies has not
been deployed at all. As far as I understand it, only about 2 per cent.
of the business book of the ECGD is focused on what we might call new
technologies. That seems to be a wasted opportunity in the context of a
British Government
who are seeking to position the British economy as a leader in the
low-carbon future. We need everyone to pull in the same
direction. Finally,
and this point is most relevant to the new clause, the agency should be
transparent and should disclose the emissions that result from the
decisions that it makes. There seems to be little practical argument
against that because the agency has confirmed to me that it collects
the data from what it calls the high-impact projects that it
facilitates, and there appears to be no practical difficulty in
collecting the data from the medium-impact projects.
What we are
asking for goes with the grain of what seems to be happening in the
international market, with OPEC and ECOSIM, which I know are slightly
different from the ECGD, apparently disclosing the details of emissions
that result from their decisions. There really seems to be no practical
argument against disclosure.
I am
delighted to hear, although I have yet to see the hard proof, that we
are pushing on an open door in this context, because I understand that
the Government accept the principle of the new clause, but they prefer
not to action its intention through amendments to the Bill. Instead,
they would prefer to make the change in a different way. I am thus
being asked to take things on trust, pending what I understand to be an
imminent announcement from a Minister, perhaps next week. I will listen
to the Minister’s response very
carefully.
Gregory
Barker: In the interests of brevity, I do not intend to
repeat the arguments that my hon. Friend has powerfully made. I will
simply reiterate that the ECGD wields a power and influence that is
well above its level of financing for private sector projects. Ignoring
the effects of carbon-polluting activities that are directly supported
by the UK Government fundamentally undermines the rationale of
establishing a climate Bill to reduce the contribution of the UK to
global man-made climate change. I thus wholeheartedly endorse my hon.
Friend’s
comments.
Mr.
Gummer: Will my hon. Friend ensure that he listens
carefully to the response, because in my experience of battling with
the ECGD in the past against the Ilisu dam, it took a great deal of
effort to make it think outside the box at all? We thus need some tough
words from the
Minister.
Gregory
Barker: Indeed we do, and that is what we are looking for.
Ultimately, we need a far more ambitious strategy right at the heart of
the Government, not just at the ECGD. As my hon. Friend the Member for
Ruislip-Northwood hopes, now is the time for the Government to get
serious about matching ambition with action. I hope that the Committee
supports the principles behind the new
clause.
Steve
Webb: I also lend my support to the measure, which was
expertly moved. I see the name of the Chair of the International
Development Committee, my right hon. Friend the Member for Gordon
(Malcolm Bruce), attached to the amendment. I have a sneaking suspicion
that my hon. Friend the Member for Twickenham (Dr. Cable), in his
characteristically iconoclastic fashion, would rather abolish—or
something—the ECGD. However,
for as long as it continues, I can see no reason, particularly because
of the global leadership factors that the hon. Member for
Ruislip-Northwood mentioned, why we should not have comprehensive
reporting of the sort that he suggests. The Liberal Democrats thus
support the new
clause.
Mr.
Woolas: Congratulations are due to the hon. Member for
Ruislip-Northwood on tabling the amendment. It is always nice when
there is a champagne moment in a Committee, and we have reached such a
point, because the Government have listened to the arguments made by
the hon. Member for Ruislip-Northwood and, incidentally, those of the
right hon. Member for Gordon and the right hon. Member for Scunthorpe
(Mr. Morley), and faced with the array of arguments, we have
decided to announce that we agree with the
proposal. I
confirm here and now that the ECGD will report emissions from
high-potential-impact cases from this financial year and will inform
applicants in respect of its support for medium-potential-impact cases
that they will be required to provide information on their emissions.
That information will be published from the financial year 2009-10. My
hon. Friend the Minister for Energy will confirm the details of that
arrangement shortly. The Environmental Audit Committee is looking at
this
matter. As
the hon. Member for Ruislip-Northwood mentioned, in line with the
approach on better regulation—not having regulation when it is
not necessary—it makes sense to achieve the effects of the new
clause without legislative change. This is a fast-moving field, so it
would be a shame if the ECGD was not able to maintain its position as
the leader of the pack in the world because it needed, at some point,
to change an Act every time new developments occurred. This
announcement makes the ECGD the first export credit agency in the world
to report systematically on emissions from projects that it supports.
That is a good example of how we can lead the
way. Let
me just cover the high potential impact cases. Starting with the
financial year 2008-09, ECGD will publish on its website, in respect of
each financial year, estimates of the greenhouse gas emissions as
follows: first, it will publish estimates on those projects for which
ECGD has provided support in that financial year that fall into
category A—high-potential impact—as determined in
accordance with the ECGD’s case impact analysis process
statement; secondly, it will publish estimates for those projects with
greenhouse gas emissions that exceed the threshold used by the
International Finance Corporation, as described in its performance
standard; and, thirdly, it will publish estimates when the value of the
goods and services supported by ECGD exceeds a sum, which is equivalent
at the moment to about £8.2 million, to the threshold set out in
the OECD council recommendation on common approaches on environment and
officially supported export
credits. On
medium-potential-impact cases, there is more good news for the hon.
Gentleman. From 1 January 2009, ECGD will collect data on greenhouse
gas emissions as follows: first, it will collect data from projects
that it has provided support for that fall into category B, as
determined in accordance with the case impact analysis statement. It
will collect data from projects with emissions that exceed the
threshold used by the International
Finance Corporation, as described in performance standard 3
and when the value of goods and services, supported by ECGD, exceeds
the special drawing rights threshold set out in the OECD common
approaches policy statement. Those are the thresholds that are used on
a multinational
basis. The
argument is very strong. It is important that this country’s
export credit guarantees are supporting our international efforts, as
has been said. That is why the Government are pleased to make this
announcement. In the interests of pursuing this policy immediately, I
respectfully ask the hon. Gentleman to withdraw the new
clause.
Mr.
Hurd: A champagne moment indeed. I thank the Minister for
that extremely detailed reply. I know that he and his Department dance
with the angels on this issue. I also know that the ECGD reports
directly to the Department of Business, Enterprise and Regulatory
Reform, about which many of us are more sceptical when it comes to its
commitment to this agenda. Because I have done business with the
Minster before, I accept at face value what he says and what he has
read out. We will consider the detail of the proposal with great
interest. We note that the ECGD continues to demand flexibility on how
it does that, and that it avoids that being done on a statutory basis
or on any amendment being made to the Act that governs it. That causes
us some concern. However, on the basis of what I have heard, I beg to
ask leave to withdraw the
motion. Motion
and clause, by leave,
withdrawn.
New
Clause
10Carbon
impact assessments ‘(1) After
the publication of proposals and policies for meeting carbon budgets
under section 13, the Secretary of State must for any new measure,
proposal or policy made in any area of administration carry out an
assessment of how that measure, proposal or policy will affect UK
emissions and what effect it will have on the achievement of the 2050
target (a “carbon impact
assessment”). (2) If a
carbon impact assessment shows that a measure, proposal or policy would
increase UK emissions, then it must also set out the measures necessary
to ensure that the 2050 target is nonetheless
achieved. (3) A carbon impact
assessment must be published at the same time as the measure, proposal
or policy to which it relates.’.—[Gregory
Barker.] Brought
up, and read the First
time.
Gregory
Barker: I beg to move, That the clause be read a Second
time. The
new clause is intended to formalise a policy that already exists
informally in government. The requirement to assist the carbon impact
of any policy is to be adopted across the Administration. The Prime
Minister said in a speech last November that every new policy would be
examined for its impact on carbon emissions—not just those that
reduce emissions, but those that increase them. When emissions rise in
one sector, we will have to achieve corresponding falls in another.
That does not just mean every new Act of Parliament. It means that all
policies, proposals and spending commitments right across Government
must be assessed in that way. That
was an ambitious statement from the Prime Minster, and we welcomed it
then and we welcome it now. However, we would like to see that policy
enshrined in law and linked to the duty on the Secretary of State to
report on the proposals and policies for meeting the carbon budget as
required under clause 13 of the Bill. If it is not, how can the public
be confident that the de facto requirement is being followed? How can
they be confident that successive Governments, between 2010 and 2050,
will take seriously the word of a weak Prime Minister in
2007? One
only need to have listened to our previous debate on the enormous yet
unaccounted carbon pollution from the Export Credit Guarantee
Department to see that while an unwritten requirement might exist in
the Government to assess the carbon impact of any new policy, that does
not stop different Departments from carrying on regardless.
DBERR’s support for a new and unabated coal-burning power plant
at Kingsnorth also suggests that the writ of the Prime
Minister’s words of last December does not currently extend to
every reach of his Government, so we must do better. That is why our
new clause would require the Secretary of State to order a formal
assessment of how any new measure, proposal or policy across any
Government Department would affect our carbon budgets and the 2050
targets.
Moreover, if
the assessment showed that the new policy would increase UK emissions,
the report would have to set out the measures necessary to ensure that
the 2050 target was nevertheless achieved. The impact assessment must
be published at the same time as the proposed policy to which it
relates. That will prevent a situation in which the Government can say
that while the impact assessments concludes, the emission levels will
increase as a result of the policy. The process has already progressed
too far to stop
it. Lord
Rooker said in the other place:
“legislation is
often made toward the end of policy development, so a test applied only
at that stage would not, in itself, achieve
much.”—[Official Report, House of Lords, 25
February 2008; Vol. 699, c.
487.] We
believe that our new clause would prevent that situation from arising
by requiring the assessment to be published at the same time as the
policy proposal to which it relates. It is about enhancing the
joined-up nature of government, and the adequacy of our political
response to the challenge that we face. Do we want to continue with
business as usual, allowing the opening of new airport runways and the
building of new coal-powered plants, all without questioning the
contributing effect that such decisions will have on our carbon
reduction targets; or do we want truly to change the way in which we do
government so that we can respond effectively to the climate change
agenda, rather than progressing with a patchwork of non-joined-up and
all too often contradictory policies?
8
pm I
conclude by quoting Abraham Lincoln. He
said: “The
dogmas of the quiet past are inadequate to the stormy present...we
must think anew and act anew. We must disenthrall
ourselves”. That
is what the new clause challenges us to do: to think anew, and to
conduct government in a way that is commensurate with the challenge
that we face from
dangerous, man-made climate change. It demands a new, joined-up,
big-picture approach from Government. If we are to succeed, that is
what we need. | 
