Simon
Hughes: I do not know the order in which the Minister will
proceed and she may come to this later. However, I shall ask my
question now and she can tell me that she will answer later if that is
more
appropriate. Putting
it simply, given that the scheme allows the purchase of extra capacity
for emission by trading, do the Government anticipate that, to meet
their requirements internationally through the trading scheme and also
to justify Heathrow airport’s expansion, they will use that
excess capacity by trading, that is, that they will need to use the
capacity to buy more credits through the European trading scheme
because they have committed themselves in the next decade to the
expansion of
Heathrow?
Joan
Ruddock: No. Importantly, the Government are not
purchasing the credits. From 2012, European aviation—that which
starts and ends in Europe—will be within the European trading
scheme. Domestic aviation is in the scheme that we already have for the
UK, and is counted domestically. The international element within the
EU is introduced in 2012 and that means that those emissions have to be
dealt with within the European cap. I accept that there are good
reasons why people believe that we should not have expansion at
Heathrow, but the Government are clear that it should happen. We have
said such things as, “If we were to deny ourselves expansion at
Heathrow, which we think is economically necessary, another European
airport could expand.” What matters is the overall European cap
and the fact that everything is traded within a European system. That
system will hold down emissions from aviation, and other sectors would
make greater reductions within that system if aviation were to continue
to grow. That is the way it works and, although it is often difficult
for people to understand how we are able to expand Heathrow and at the
same time make such an absolute commitment to legally binding targets,
that is why it is
possible.
Simon
Hughes: I was slightly loose in my language when I said
the UK. It will obviously be an operator—an airline or something
else. I apologise for that. The Minister, however, appeared to accept
that if there is Heathrow expansion, the way the system will work is
that an airline flying internationally will apply for the extra
credits—the extra trading—to keep within the limit, which
is a European one. We will be buying more for a company based in the UK
as an airline, than if we did not have the additional Heathrow
operation.
Joan
Ruddock: Not necessarily, because the implication is that
there is no way other than to buy more credits. But of course there are
many other ways. There will be many variations in how emissions in any
sector increase or decrease, new technology being one of them. And of
course, a cap is a cap. It is not possible to go outside the cap. What
matters internationally and in getting a global agreement is that the
EU should play its part and take on its fair burden—in fact it
is significantly offering to take on more, perhaps, than its fair
burden—and that in doing so it should accept that there must be
a limit.
Everything that happens in the EU emissions trading scheme must
accommodate whatever growth there is—or lack of growth—or
reductions or increases in energy efficiency.
That is a
matter of semantics, rather than necessarily the use of more
allowances. If I have not already said, let me make it clear, that
there is already a limit on the credits that can be purchased by any
operators in the EU ETS. That limit is becoming more
constrained.
I was talking
about the operation of the carbon reduction commitment and the fact
that it includes a safety mechanism that would make it possible to
purchase allowances. We think that it is unlikely that that will
happen, because there will be a price deterrent, but it is important to
acknowledge that that safety valve exists. Furthermore, the exclusion
of those potential credits through that safety valve does not mean that
any safety valve units must be counted as credits. The Government will
aim to meet the budgets without using them, so that even if they
arose—and we think they may not—we would not necessarily
have to use them, and we would endeavour not to. They would be, as they
are said to be, a safety valve and fall-back.
The
third and final element of the Climate Change Act order is the
definitions of international aviation and international shipping. Hon.
Members will recall that emissions from international aviation and
shipping are not covered by the targets and budgets in the 2008 Act.
That is because there is no globally agreed methodology for allocating
those emissions from international travel to individual countries.
However, the 2008 Act provides that the Government must either include
those emissions in carbon budgets by the end of 2012 or report to
Parliament to explain why they have not done so. It also gives the
Government the power to define international aviation and international
shipping for carbon budget purposes, and that is why we have included
those in the draft
orders. The
definitions reflect international reporting practice and follow the
approach that we use in reporting to the United Nations framework
convention on climate change. They put beyond doubt possible
ambiguities, such as how to treat flights that have interim stops. It
is important to note that their purpose is only to set out which
emissions are not covered by the Act. The definitions have no bearing
on how international aviation and shipping emissions might be allocated
to the UK or any other country.
The last of
the three instruments under consideration is the draft Carbon
Accounting Regulations 2009. I have already mentioned the concept of
the net UK carbon account and the possibility of crediting and debiting
carbon units against it.
Peter
Bottomley (Worthing, West) (Con): This is probably the
least important question that the Minister will face during her
parliamentary career. In the definition of the UK assigned amount, the
number 3,412,080,630 appears. There is something curious about that. It
can be divided by every number under 11 apart from four and eight. That
is a real curiosity. Is that a result of the way it was
created, or is there some other reason for that chance
effect?
Joan
Ruddock: The hon. Gentleman is probably quite accurate in
saying that that was the least important question I would ever face. I
do not know that I brought
a team of mathematicians with me but I am confident that the amount of
carbon has been accounted for on a proper basis and is truly as
accurate as it can be. There is nothing more I can add and clearly
nobody is coming to my aid. We will have to leave it resting
there.
I mentioned
the UK carbon account and the possibility of crediting and debiting
carbon units against it. These regulations are required by the 2008 Act
to establish a system to define what we mean by carbon units, when and
how they can be credited and debited, and how we will keep track of
them. I do not propose to go through the regulations in detail because
we have already published detailed guidance on them. The regulations
make use of the existing UK registry for holding and tracking carbon
units, which is used under the Kyoto protocol and the EU emissions
trading scheme. That avoids unnecessary costs and complications in
setting up a separate registry.
The first
thing the regulations do is define what can be counted as carbon units.
Only carbon units internationally recognised under UN and European
Union rules will be counted. Those have the benefit of significant
international scrutiny and allow the system to be compatible with the
existing systems under the Kyoto protocol and the EU ETS.
Secondly, the
regulations establish a new credit account in the UK registry into
which carbon units to be credited voluntarily must be placed. As I
said, we are aiming not to use any such credits to meet our carbon
budgets. However, we felt it best for continuity to put in place from
the start a mechanism for crediting them, which we are likely to need
when we move to tighter budgets after a global deal.
Thirdly, the
regulations provide a mechanism to account each year for credits and
debits from the operation of the EU ETS. That will have the result that
the contribution of the EU ETS towards the carbon budget will
correspond to the level of the UK’s cap under the system.
Fourthly, the regulations define how units will be debited from the net
carbon account if Government dispose of any of their existing holding
of carbon units, for example by selling them to other
countries.
Fifthly, the
regulations implement an important provision of the 2008 Act. Because
the first carbon budget is significantly more stringent than our Kyoto
target—a 22 per cent. reduction rather than a 12.5 per cent.
reduction—we could meet our Kyoto target and still have a large
number of carbon units left in the national registry. If the UK were to
sell or give those to other countries, allowing them to offset their
emissions, the environmental benefits of the tighter budget would be
lost. To avoid that and to comply with the Act, the regulations set out
how any such surplus carbon units will be cancelled in order to put
them beyond use. Finally, the regulations establish a register of
transactions to record details of the crediting, debiting and
cancellation of carbon units. That was included because a number of
responses to the public consultation called for transparency on carbon
accounting.
I now have an
answer, I hope, to the last question put to me, which says as follows:
the assigned amount—that is, of carbon allowances—is set
with reference to 1990 emissions. It is 87.5 per cent. of these
emissions multiplied by five for each year of the Kyoto commitment
period. Therefore, any interesting mathematical properties, I am
assured, are a coincidence.
4.59
pm Gregory
Barker (Bexhill and Battle) (Con): It is a pleasure to
serve under your chairmanship, Miss Begg. I assure the Minister at the
outset that, further to the question from my hon. Friend the Member for
Worthing, West, none of the points I put to her will require a full
working knowledge of the Fibonacci sequence and will require only a
passing understanding of differential calculus.
I thank the
Minister for introducing the draft orders and regulations. It should
come as no surprise to the Committee that they find full support on the
Conservative Benches, as they stem from the Climate Change Act 2008. It
was the Conservative party, under the leadership of my right hon.
Friend the Member for Witney (Mr. Cameron), that first
called for a climate change Bill and, as it made its passage through
this House and the other place, we worked constructively, we hope, and
pushed consistently for a better and more effective Bill. My party
consistently called for the opinion of the Committee on Climate Change
to be strongly heeded when setting targets in the
Bill. The
CCC, under the chairmanship of Lord Turner, made its expert
recommendations to the Government last December, and I am happy to see
that today’s statutory instruments reflect many of those. There
are three statutory instruments before the Committee: the draft Carbon
Accounting Regulations 2009, the draft Carbon Budgets Order 2009 and
the draft Climate Change Act 2008 (2020 Target, Credit Limit and
Definitions) Order 2009. Like the Minister, I shall speak to the
substantive points in all three collectively.
My party
stated throughout the passage of the 2008 Act that expert scientific
and technological advice, not simply the political convenience of the
day, should guide public policy to address the climate challenge. We
welcome the amendment of the 2020 target in the 2008 Act from a 26 per
cent. reduction in CO2 to a 34 per cent. reduction in all
greenhouse gases from 1990 levels, in line with the recommendations of
the CCC and, as I recall, the concerns raised in
Committee. We
also welcome the introduction of the first three carbon budgets and
recognise the real challenge that they pose for the UK. A 22 per cent.
reduction in all greenhouse gases by 2012 and a 34 per cent. reduction
by 2020 are no small tasks. However, I can assure the Committee that,
whoever is in Government throughout that period, the Conservative party
is absolutely committed to achieving those reductions. It is not simply
a response to a planetary crisis, we also see the challenge as an
opportunity for Britain to re-engineer our economy to create new
well-paid and long-lasting jobs, to improve our national energy
security, to reduce our balance of payments deficit as our
country’s oil and gas supplies run low, and to show global
leadership in building a world-beating low-carbon economy. That is why
we welcome the Government’s announcement that there will be zero
non-EU ETS credits used in meeting the first carbon budget in 2008-12.
However, while we welcome the developments, concerns remain.
The
CCC’s advice, published last December, said that international
offsets should be excluded from all three interim budget periods to
2022, yet the Government have only ruled out clean development
mechanism offsets during the first budget, which only runs for another
two
and a half years. Will the Minister explain why international offsets
were not ruled out until 2022? What assurances can she give that the
Government will consider extending the zero non-EU reduction beyond
2012? Government failure to limit offsets for all three budget periods
weakens the vital market signal needed to make sufficient low-carbon
investments in our economy and to power the low-carbon transition that
we desperately need. We are at a
crossroads in British economic history. At this moment, we have the
opportunity to get on the path to a low-carbon future. If we do not
seize the opportunity now, it will become increasingly expensive and
difficult to recreate that chance in the future. The one thing that
collectively, as political parties as well as a Government, we can do
is give long-term signals to the private sector to aid the investment
decisions that it will have to
make. In
our green paper, “The Low Carbon Economy”, published in
January, the Conservatives made clear our intentions. We intend to
de-carbonise Britain’s energy supplies by investing in carbon
capture and storage technologies, providing market incentives for
biogas, community energy and offshore wind and other large scale
renewable projects; to de-carbonise the transport network by laying
incentives for the roll-out of a national electric vehicle re-charging
network; and to drive a revolution in energy proficiency by providing
every home in the country with £6,500 worth of efficiency
improvements.
There are many
more steps that we need to take. I do not doubt the Government’s
ambition to fight climate change, but I am concerned about the absence
of any comprehensive low-carbon strategy beyond the setting of these
specific targets. I was delighted to see the Government adopt the
Conservative’s policy on carbon capture and storage, or at least
80 or 90 per cent. of it, but I wish that they had done it in full and
adopted our emissions performance standard, rather than leaving the
door open to the large polluter coal, which would call into question
our ability to meet those exacting targets.
I was also
glad to see the Government follow the Conservatives in calling for a
universal roll-out of smart meters, but why must it take until 2020? I
see in The Times today that according to work done by Ernst and
Young, the Government may have underestimated the cost of a national
roll-out of smart meters by more than £6 billion. We should not
forget that despite the targets, the Government still intend massively
to expand air capacity at Heathrow. We are seeing too many tactics and
not enough strategy. We need to see how we are going to drive a dynamic
low-carbon economy at home in the UK, and today’s statutory
instruments do not provide sufficient signals to the market to maximise
that change at home between now and 2022.
We are also
concerned about the Government’s decision, as detailed in the
Treasury’s document “Building a low-carbon economy:
implementing the Climate Change Act 2008”, to reserve the right
to purchase international offsets
as “an
insurance option in the event that emissions are higher than
anticipated”.
Surely, if emissions are
higher than anticipated the Government response should be better,
bolder, more rigorous policies, not bigger loopholes. Otherwise, they
could continue to lock in increasingly high-carbon infrastructure, such
as an expanded Heathrow airport, and still meet their carbon budgets by
calling on the get-out clause and purchasing CDM reductions from
overseas. Under what circumstances would the Government consider taking
such action? Does the Minister agree that if that loophole is left, it
will allow for a high-carbon infrastructure lock-in that will be
increasingly expensive and difficult to get out of in future?
I want to
query the ambition of the Government’s 2020 target in the event
of the Copenhagen talks failing to secure a new global deal and the EU
agreeing to a weaker than anticipated target. Clearly, we all hope that
that will not be the case, and I know that the Minister and her team
are working hard to ensure that Britain does its bit to make sure that
Copenhagen is a success. We wish them well with that, of course, but it
would be prudent to have a plan B.
The Committee
on Climate Change proposed an interim 2020 target of 34 per cent. and
an intended target of 42 per cent. in the event of a global deal being
secured at Copenhagen. Do the Government plan to raise the 2020 target
from the interim to the intended budget in light of a global deal? If
so, what percentage of the difference between a 34 per cent. and a 42
per cent. reduction does the Minister envisage being made in the UK, or
does she see all the difference being met on the international
carbon markets? Might that explain why the Government have been so
reluctant to rule out non-EU ETS reductions beyond 2020 as per my
previous point? Moreover, how would our ambitious national targets
square with a weaker than expected EU climate deal?
The Treasury
document on implementing the 2008 Act
states: “As
the UK negotiates internationally on climate change as part of the EU,
the Government expects to agree the UK’s emissions reduction
target under any future international agreement at European
level.” Does
this policy mean that future decisions on carbon budgets will be ceded
to the EU and that our national ambitions for a low-carbon economy
could be undermined or watered down by a weak EU climate deal? Surely,
if the UK is to seek maximum economic advantage, as well as playing our
part in the solutions to the planetary crisis in ensuring that we lead
the transfer to a low-carbon world, we should not allow our ambitions
to be hamstrung by a Brussels deal that could be vulnerable to fierce
lobbying by countries that wish to water down any robust agreement or
go at a slightly slower pace.
These are
comprehensive and detailed statutory instruments. We have made a number
of clear points on them and look forward to hearing the
Minister’s
response.
5.9
pm Nigel
Griffiths (Edinburgh, South) (Lab): I welcome you to the
Chair, Miss Begg, and I am grateful to you for giving me the
opportunity to participate in the proceedings of this Committee. It is
considering the UK’s carbon budgets and the short-term emissions
target, which I believe are now the most important part of the Climate
Change Act 2008.
We only have
one chance to get it right on climate change. It is the action that we
and the rest of the world take in the next five or so years that will
determine whether or not we can avert catastrophic runaway climate
change.
I am
particularly grateful to Parliament for passing the 2008 Act. I tabled
two key amendments to the original Bill and I commend the Minister on
her support for those amendments within Whitehall. They were to
increase the 2050 target, to realise an 80 per cent. reduction in
emissions, and to include marine and aircraft emissions in this
groundbreaking Act, which I am pleased to see reflected in the 2020
target order before us
today. We
know that capping emissions at the right level and rolling out the
policies to transform the UK into a low-carbon economy would not only
demonstrate our serious intention to play our part in the reduction of
emissions but would show the leadership that is desperately needed in
the run-up to Copenhagen.
Last month I
was in the German Bundestag, talking to those who see us as climate
change leaders and who want a similar Act to our own Climate Change Act
2008. Next month, with Tony Juniper, I will be meeting Irish
parliamentarians from the Dail, who are seeking to overcome opposition
to a climate change Bill in their own country.
I believe that
the next stage, which involves capping emissions at the right level,
will allow us to grasp the economic and social advantages of
efficiency, jobs and slashing fuel poverty, which, given that I am a
former Minister with responsibility for fuel poverty, is another issue
close to my heart. Therefore, although I congratulate the Government on
setting the carbon budgets, I have grave concerns about the content of
these draft orders.
Sadly, I think
that this has been a missed opportunity, in three respects. First,
there is the scale of ambition. The Committee on Climate Change advised
that there should be an intended target of 42 per cent. The Government
do not appear to have followed the Committee’s independent
advice. However, the science is clear and the empirical evidence has
become even starker since the Committee published its report. A cut of
42 per cent. is the absolute minimum needed for us to play our part,
both in bearing our share in the cut in emissions and in continuing to
set the example, as we have done in our Climate Change Act 2008, to the
rest of the world.
The Committee
on Climate Change says that a 42 per cent. target presents a 50 per
cent. chance of a 2° temperature rise. A rise of more
than 2° would mean a billion people without water. That is just
one reason why having the lower 34 per cent. target is simply taking an
unacceptably large chance of dangerous climate change
happening.
That is
recognised by more than half the members of this Committee today, who
signed the early-day motion that I tabled, which was referred to my
hon. Friend the Minister. It called for the 42 per cent. target to be
implemented without
delay. My
second area of concern relates to the carbon loopholes in the budgets.
The Climate Change Act 2008 involves us in taking responsibility for
the UK’s grossly disproportionate historic and current
emissions, and in setting the framework for cuts at home. As the
inventors and leaders of the industrial revolution, and as the
major beneficiaries of it for more than two centuries, we have a duty to
give a lead now and to desist from supporting policies that allow
pollution. Offsetting in
the non-traded sector has been kept
as: “an
insurance option in the event that emissions are higher than
anticipated.” I
fear that that is a catch-all option that would allow us to carry on
with polluting policies and still meet the carbon budgets by buying in
credit from abroad. The response to higher than anticipated emissions
should be stronger policies, not bigger carbon loopholes. We must not
forget that the Committee on Climate Change advised that emissions in
the non-traded sector should be achieved at home for all interim
budgets. The draft order restricts offsetting for only the next two and
a half years of the next carbon
budget. Thirdly,
there is a problem with how emissions are accounted for. Under the
draft orders, the emissions we count in the traded sector will be based
on the amount of carbon credits that are allocated, not on the actual
amount of emissions. That is extraordinary and unacceptable. We can do
so much better. The stretch scenario of the Committee on Climate
Change, which indicates how we could reach various targets, makes it
clear that a 34 per cent. target will mean business as usual. Reaching
it will require only policies that the Government are committed to
already. To avert this catastrophe, we need radical action and an
Apollo mission level of ambition and urgency. Although they are a huge
step forward, these carbon budgets sadly do not equal the scale of
ambition that is
needed. 5.16
pm
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