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Joan Ruddock: This has been a particularly interesting debate, not least the closing remarks by the hon. Member for Worthing, West. I am sure that, with some assistance, I shall be able to provide him with the answers that he seeks, but if not, I will write to him after the Committee.
It is important to reiterate that the statutory instruments provide the first key steps to implementing the requirements of the Climate Change Act 2008 and, like that Act, demonstrate the commitment and leadership to set in legislation the parameters necessary to take action to tackle climate change.
The proposed level of carbon budgets will require that emissions are reduced by at least 34 per cent. below 1990 levels by 2020, a zero limit for the first budget on the amount of permits we can purchase to offset our emissions outside the existing EU ETS, and will help to ensure that the action we take to meet that target will take place in the UK. That is particularly important in the current economic circumstances, because we are determined to develop a truly low-carbon and, we hope, resource-efficient economy.
Let me try to answer the numerous questions I have been asked during the debate. The hon. Member for Bexhill and Battle asked about zero credits. He welcomed the fact that we said they would be excluded from the first of our budgets, but asked why they had not been excluded for all three budgets. We have said very clearly that it is our intention and our aim to meet those budgets if it is at all possible—we assume that it will be. If they were to remain at that interim level, we believe that we would be able to meet those budgets without the credits. However, we have also made it very clear—I say this to all hon. Members who have raised the issue—that our great goal is that global deal at Copenhagen.
In pursuing that goal, we need, of course, to keep that negotiating opportunity. Those of us within the EU negotiating envelope are saying that, if there is a global deal, the EU as a whole will move from 20 per cent. reductions by 2020, to 30 per cent. by 2020. Obviously, it is different if we have 34 per cent. reductions to achieve by 2020 rather than the 42 per cent. suggested by the CCC. At this point, we are obliged by the Act to simply set the limit for the first budget and we have said quite clearly that that limit is zero. However, we have also indicated our intention to proceed beyond that. The important signal for industry mentioned by the hon. Gentleman is already there. It is clear that we will meet a 2020 budget of 34 per cent. and that it is our intention, in pursuing a global deal with great vigour, to move to a much tighter regime.
The hon. Member for Bexhill and Battle criticised the Government’s strategies and gave us a long list of all the things that the Conservative party would wish to put in place. I do not think I heard a single thing in that list that is not already part of Government policy. There may be variations on a theme but, decarbonising the energy supply, decarbonising transport, greatly increasing the amount of renewables, household efficiency, and carbon capture and storage—we have led the world in thinking and development on that—are already part of Government policy. There will be a new renewable energy strategy and a low-carbon transport strategy published in the summer, so many of the policies that are necessary to meet those emission reductions are already in development, or are already happening.
The hon. Gentleman also asked about smart meters. The fact is, of course, that the roll-out of smart meters requires significant effort. We are talking about 49 million meters and that is a major national project. Every household would have to have their meters replaced. We do not believe that that can be done overnight. We are in the process of two years’ preparation and planning, which will mean an indicative table to complete the roll-out in the decade from 2010 to 2020. I wonder whether his party could commit itself to a faster timetable and what that would cost.
The hon. Gentleman also said that we should not reserve the right to purchase international offsets, and that we should have done something much bolder. I have made it clear, however, that we intend to meet the 34 per cent. target without using credits. The zero limit is already set in the orders for the first of the three budgets, but if the 34 per cent. target changes to 42 per cent., the CCC has itself acknowledged the need to use credits and has suggested that it could be possible to meet the whole of that difference through credits. We do not seek to go down that road, however, for the obvious reason that we are completely committed to establishing, in our own national interest, low-carbon policies. That will be an appropriate effort, because it will incentivise industry and create more jobs. We cannot and do not seek to return to a high-carbon, low-price energy economy. The provision exists in case it might be necessary, and we must acknowledge that none of us can be certain about the future.
On plan B, the hon. Gentleman asked what would happen if we did not have a global deal, but I am not prepared to countenance that idea at this point. We are making enormous efforts to try to get such a deal, and we should not begin to imagine a world in which we have not actually got it.
The hon. Gentleman spoke about future decisions on carbon budgets being ceded to the EU. I am sure he recalls and supports the fact that, within the EU ETS and other legislative frameworks, we are obliged to follow European law. We will clearly be part of the European element of a global agreement, so some measures will have to be determined in consultation with other member states and we will be bound by European agreements. However, we currently set our own carbon budgets, which are ahead of those of other countries, and we will continue to do so. We are the only country in the world that has a legally binding framework of that kind, so the issue that he raises is not a risk, although he might feel the need to make such a point owing to the point of view of some of his Euro-sceptic friends.
My hon. Friend the Member for Edinburgh, South is to be congratulated on his role in all our climate change deliberations. He has always driven the Government and others forwards in terms of progress and ambition, and we appreciated his co-operation on our deliberations on the 2008 Act, while he simultaneously pushed us on it. It is, however, grossly unfair of him to criticise the Government for a lack of ambition. When he speaks about other nations, such as Germany and Ireland, he is right to say that we have led the way and that we continue to be seen as leaders, particularly within the EU. When there was real doubt about whether the 2020 climate and energy package would hold because of the onset of the recession, the UK led the cause to remain strong and ambitious together, and we continue to do that. Wherever I travel in the world and engage in climate change talks, I see the way in which the UK is valued as being at the forefront of the debate.
My hon. Friend said that because the CCC advised on intended targets of 42 per cent., that is the minimum needed for us to play our part, but that is not what the CCC told us. It said that it was now appropriate to go for the interim targets and that we should move to intended targets if we got a global deal. We believe that to be correct, and we do not wish to give away the negotiating ploy of being able to say to other developed nations, “There is more to come from the EU if the rest of you get into this deal.” We have to remember where the US, Japan and Russia stand. It would be foolish to give away that bargaining ploy, and if the UK acted unilaterally our contribution could simply be banked within the EU and no further ambition would be entertained. We are clear about why we are staying with 34 per cent., but we obviously wish for more and are more than prepared to go further in the context of the global deal.
My hon. Friend referred to the carbon loopholes. While I understand that people want us to make a huge effort at home—as a Government, we believe that we should—in any international agreement there will nevertheless be more and more need for financial flows to developing countries, and one way to do that is to be willing to use a trading mechanism that provides offsets within those countries. In principle, it would be entirely wrong to want to deny developing countries the benefit of trading schemes, and it is of course our hope that eventually we can get into a global trading scheme that will benefit all countries in different ways, according to their needs.
The hon. Member for North Southwark and Bermondsey went over similar ground on whether it would be better to move to higher targets and what those targets should be. He spoke about our previous target of a 20 per cent. reduction of CO2 by 2010, and he knows that he and I have rehearsed this before. There is a real difference between what we are discussing here and our aspirations of some years ago—from about 1995-96. We have been in the process for some time, and today we really know what the path is like. We understand carbon accounting and we have done well, nearly doubling our Kyoto commitment, but the difference is that what we speak about today is legally binding. That makes a huge difference to how and when we have to put measures in place and secure achievement. He said that we should accept 42 per cent. now. I hope that I have answered his questions, even if not to his satisfaction.
The hon. Gentleman also asked about carbon liabilities for companies. I think we have been clear that under the 2008 Act the Government will publish guidance on the reporting of carbon by companies. We will produce that guidance by 1 October this year. We will review the benefits of carbon reporting by 1 December 2010—clearly there will be consultations between now and then—and if we then see that something useful will be produced, we will be able to put that in place. We must also require companies to report their emissions, through regulations, by 6 April 2012. If we do not think that that is the way forward and do not put that in place, we will have to explain why. I think that we have provided for that, although perhaps not at the speed that the hon. Gentleman requires. The provision is there; it came out of the debates during the progress of the Climate Change Bill.
The hon. Gentleman spoke about the ease of dealing with the trading of credits—allowances—in a recession. He said that it would be much easier and therefore there was a risk that there would not be an achievement and there would not be reductions. The price of the units is affected by the recession, so it is cheaper to do the tasks required. However, it is the cap that determines the outcome. That is already set, and we all agree that we have to have tighter caps in the future.
I think that I have dealt with the hon. Gentleman’s question about the interim and intended budgets and with most of his other points, unless he jumps up to tell me otherwise, because they were raised by others. He repeated that he thought that there should be less opportunity provided by having the options of international credits, but I think that I have dealt with that in relation to the EU ETS cap and the points that I made about the need for finance flows to developing countries.
Simon Hughes: Will the Minister allow me one further question?
Joan Ruddock: I will, because I may well have forgotten something.
Simon Hughes: There is one thing that I do not think the Minister has answered; I apologise if she has. I think that I am right in saying that the accounting regulations will require counting of allocated emissions, rather than actual emissions. I asked whether it would not be better, for obvious transparency, to know the actual emissions, rather than the allocated emissions, under the ETS system.
Joan Ruddock: I think that again, in a sense, I have dealt with the point. What happens with allocated emissions and actual emissions is recognised under the protocols. In terms of gaining credits, there is an understanding that each unit amounts to 1 tonne of carbon. That is agreed internationally. I am talking about what the credits are equated with when it comes to budgeting, and that is the international agreement. It is not a case of there being an actual and there being a presumed; they are presumed to be the same. One unit is equal to what I have said. [Interruption.] I am being told that, notwithstanding that, we will be publishing actual emissions, for transparency purposes. I understand that they will be the same, but perhaps they will not. [Interruption.] I am being told that the accounting is different for the purposes of budgets. That is why there will be a publication of actual emissions as well. I am delighted to be able to satisfy the hon. Gentleman on that point in a way that I had not expected to be able to.
Let me see whether there are other questions. The aviation question was about—
Simon Hughes: Interim flights and touching down.
Joan Ruddock: Yes, I know the answer to that. An international flight that happens to have a couple of stops in the UK is an international flight.
Peter Bottomley: I once looked at the schedule of a plane that I took from Southampton to somewhere, and I think that during the day it made four international flights and two or four domestic flights, each of which had a separate code number. At some stage, I would be interested to know which of those would be caught by the measures.
Joan Ruddock: I suspect that the answer is that because we have not yet negotiated any international means of making those records, that matter will undoubtedly exercise those who endeavour to make such an international accounting system work.
The hon. Member for Worthing, West asked who would scrutinise the accounting system. The answer is indeed that the Environment Agency is operating the UK carbon account at the moment and it will provide many of the data for the system into the future. He may know, as he has obviously read the explanatory notes carefully, that there was a suggestion that it might be necessary to set up a new agency, but we are confident that it can do it, because we already have a great deal of expertise and experience in the field.
Peter Bottomley: I know that we are running short of time, but the Minister might then ask the Environment Agency if at some stage it will make plain to Parliament who provides the validation of the system that it will use. I am not challenging the agency; it is just that it is always useful to know who will do that.
Joan Ruddock: One thing that might be relevant and of interest to the hon. Gentleman is that it will come within the national statistics regime. I think that will probably satisfy him, as that is independent, of course.
Regarding the impact assessment for the carbon accounting regulations, one was published with the carbon budget levels and the EU 2020 package at the time the orders were laid. However, no IA is required specifically for the accounting regulations as they do not impose any additional burden. Costs, which are expected to be very low as the system uses existing systems, will be borne by Government.
Finally, with regard to the equation, apparently it is all pluses and minuses so there are no brackets. The items are arranged in a logical order to help the reader. I am sure that the hon. Gentleman would like, with that piece of advice, to re-read those notes and see whether he can make more sense of them. I read them and thought I understood them at the time but I do not wish to debate it any further with him today.
Peter Bottomley: They did make sense and they were sensible. I was just checking that they said what was intended.
Joan Ruddock: I am sure that they did.
Miss Begg, this has been a lengthy SI debate and quite comprehensive in its range. I would like to say to all hon. Members that we have been engaged in an historic exercise. These are the first carbon budgets in the world and this is the first Government to have restricted their economy in terms of carbon emissions—an economy that we believe will improve immensely because of that constraint. We will move to a low-carbon economy, which will be in everybody’s interests. I thank everybody who has contributed to the debate. I am delighted that, despite some small questions and criticisms, there is all-party support for the measures, as I hope we will see as we end the debate. That is extremely important because, when I go abroad to international meetings, people are amazed that in this country we have a population that by and large is tremendously supportive and enthusiastic of such measures. It is the duty of every Member of Parliament to ensure that we keep up that impetus and that when we get to Copenhagen, this country leads the way and is a catalyst to getting that global deal.
Question put and agreed to.
That the Committee has considered the draft Carbon Accounting Regulations 2009.

draft Carbon Budgets Order 2009

That the Committee has considered the draft Carbon Budgets Order 2009.—(Joan Ruddock.)

draft Climate Change Act 2008 (2020 Target, Credit Limit and Definitions) Order 2009

That the Committee has considered the draft Climate Change Act 2008 (2020 Target, Credit Limit and Definitions) Order 2009.—(Joan Ruddock.)
5.58 pm
Committee rose.
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