Letter from the Chairman of the Committee
to Angela Eagle MP, HM Treasury
The Environmental Audit Committee were grateful
for the opportunity to question you in our evidence session on
12 December, and appreciated your thoughtful comments.
Unfortunately we were not able to get through
all the topics we had hoped to cover in the time we had available
to us. At the end of the session you kindly agreed to send us
a written answer to any remaining questions we had. Accordingly,
to help inform our report on this year's Pre-Budget Report, we
would be very grateful for some written answers to the following
questions:
1. Monetising the impacts of climate change.
2. According to Friends of the Earth, the
Shadow Price of Carbon (SPC) is three times lower than the Social
Cost of Carbon advocated by the Stern Review. Why is this?
3. The Defra website explains that the Shadow
Price of Carbon is "target consistent". This means it
is based around an assumption that the world will meet a certain
greenhouse gas target in the future; and on this basis the projected
costs of carbon are reduced from what they would be under a "business
as usual" scenario of emissions growth. How do you address
the criticism that by setting a lower value for the Shadow Price
of Carbon, the Government is encouraging the development of carbon-intensive
projects, and thereby making it more difficult to achieve the
very stabilisation targets the SPC is based on?
4. According to WWF, the cost-benefit analysis
in the Heathrow expansion consultation follows Treasury guidance
in using a discount rate of 3.5% for the first 30 years, then
3% thereafter; and that this outweighs the effects of the Shadow
Price of Carbon, which rises by only 2% to account for the rising
stock in greenhouse gases in the atmosphere. Why is the Treasury
enforcing such a high discount rate on the future costs of carbon,
especially when that used by Stern was so low?
5. How will the Treasury ensure that impacts
from climate change that are hard or impossible to convert into
monetary figures are properly reflected in cost-benefit analyses
throughout Government?
6. To what extent did the Government consult
externally on the Shadow Price of Carbon?
7. Aviation taxes.
8. This year's Pre-Budget Report announced
that Air Passenger Duty will be reformed into a levy per plane,
rather than per passenger. Can you give us some more details as
to how this reformed APD will be applied in practice, and what
difference it will make to APD's impact on carbon emissions?
9. The PBR announces a reform to end the
anomaly whereby passengers on "business class only"
flights could escape business class APD. How big an impact will
this have on carbon emissions and how much money will it bring
in?
10. WWF have proposed that there could be
a third band added to APD to cover "very long haul destinations",
such as Australia. What are the Treasury's views on this idea?
In view of our publication schedule, and the
need to prepare any supplementary memorandum we receive for publication
alongside the evidence we have already gathered, we would very
much appreciate it if you were able to send us your answers by
Wednesday 16 January.
13 December 2007
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