Select Committee on Environmental Audit Third Report


59. The Pre-Budget Report and Comprehensive Spending Review were published a year after the Stern Review. Alongside them, the Treasury published a report on how it was implementing Stern, but Friends of the Earth described it as "mainly a rehash of their existing policies",[85] and certainly we found little sign in the PBR and CSR that the Treasury was responding on the scale and with the urgency Stern recommended. This was very disappointing given the particular emphasis which Stern had placed on the need to make early cuts in carbon emissions, and the argument that these are disproportionately beneficial both to the environment and to the economy. It was also somewhat curious given the conclusions of the Commission on Environmental Markets and Economic Performance,[86] and the report by the CBI's climate change taskforce, both published in November 2007. Both reports highlighted the economic opportunities of accelerated investment in low carbon industries, and suggested that business attitudes towards climate change policy have shifted considerably—perhaps further than the Treasury has realised. To Friends of the Earth, the Treasury was behind the times: "It feels to us almost as if the Government is refusing to push at an open door".[87] Certainly, in giving evidence to us on PBR 2006, Green Alliance had commented on the Treasury's attitude hitherto: the Treasury would "often block proposals on the environment from other parts of Whitehall", one reason for which being its "perception that the business community would not support a more ambitious approach".[88]

60. In its defence, the Exchequer Secretary argued forcefully not only that the Treasury was aware of the change in the attitudes of business, but that:

The interesting thing is how the Treasury is now seized of this. I do not believe that that is necessarily the case yet in many other countries. The Treasury is very much engaged in doing the analytical work to try to bring about the change we need to make in the most cost-effective and economically efficient way. That will help to demonstrate that there is a practical and efficient road map to de-carbonising our economy and we hope to be able to keep with us the population which naturally aspires to improved living standards and greater opportunities. When visiting other countries I do not discern that their finance ministries are as yet quite as engaged in this process. […][89]

61. We are not in a position to judge the record of other finance ministries. But we have been publishing annual reports on the Treasury's environmental policies for a decade now, and for a number of years until the Stern Review came out in late 2006, what we saw essentially were small announcements and dwindling momentum. Publication of the Stern Review was a momentous event; but we have yet to see whether it has had a profound effect on Treasury thinking. In any case, whether or not the Treasury is now intellectually seized by climate change, it needs to provide real action. This is not least because in the 12 months between the publication of the Stern Review and that of the PBR, the science on climate change continued to harden, with global emissions rising faster than projected. For instance, while the Stern Review drew on more recent work, it was partly based on the Third Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), published in 2001; in 2007 the IPCC published its Fourth Assessment Report, which considerably strengthened the certainty with which it assessed the causes and projected the development of climate change.[90] Also, in October 2007 a study by the Global Carbon Project warned that rising emissions suggested "a carbon cycle that is generating stronger-than-expected climate forcing sooner than expected". This was the result of the authors' analysis of a recent acceleration in the rise in global CO2 emissions: these have been rising at an average of 2.9% per year since 2000 as opposed to 0.7% per year in the 1990s.[91] In this context, the Treasury's lack of urgency stands out as even more remiss.

62. The next Pre-Budget Report will be published within a new policy landscape, following the scheduled passing of Bills on climate change, energy, and planning, as well as the EU carbon reduction and renewable energy targets for 2020. Pre-Budget Report 2008 must establish a coherent set of measures to help deliver the UK's 2020 domestic and European targets on emissions and renewable energy, and show explicitly what their planned contribution to this delivery will be.

85   Q35 Back

86   "Commission on Environmental Markets and Economic Performance", Defra, Back

87   Q31 Back

88   Environmental Audit Committee, Pre-Budget 2006 and the Stern Review, Q82 Back

89   Q151 Back

90   Intergovernmental Panel on Climate Change (IPCC), Climate Change 2007: Summary for Policy Makers, November 2007, Back

91   Canadell et al, "Contributions to accelerating atmospheric CO2 growth from economic activity, carbon intensity, and efficiency of natural sinks", Proceedings of the National Academy of Sciences (PNAS), 25 October 2007, p 4 Back

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