Examination of Witnesses (Question Numbers
120-139)
MR JESPER
KJAEDEGAARD, MR
EDMUND BROOKES,
MR DAVID
ASPREY, MR
ROBERT ASHDOWN,
AND MR
PHILIP NAYLOR
28 OCTOBER 2008
Q120 Martin Horwood: Do not worry
it is increasingly clear that you are not environmentalists. This
idea of it being dangerous in some way to set a precedent and
pre-empt international agreements, do you think in retrospect
it was wrong for Britain to pioneer emissions trading, which it
did before it was adopted at European level?
Mr Ashdown: I believe emissions
trading was pioneered by the US with regards to sulphur emissions.
Q121 Martin Horwood: We introduced
an Emissions Trading Scheme in advance of the European Union scheme.
Do you think that was wrong?
Mr Ashdown: No, not necessarily,
because the Emissions Trading Scheme applies to land-based industries
and it is very difficult for those industries to relocate themselves
abroad, or to relocate their head offices. Shipping is entirely
international, and what we are talking about here really is not
the principle of emissions trading, but it is about the policy
levers you use to allocate and to enforce those legislative measures.
Q122 Mr Chaytor: Just pursuing the
Chairman's question about the Climate Change Bill, surely it would
be possible to include shipping as a sector within the Bill, and
agree that it should be within the carbon budgets, without deciding
now what the precise methodology should be? The Bill does not
say anything about methodology either for shipping or for aviation.
Mr Ashdown: We have always been
very supportive of the concept that shipping emissions, or the
UK's share of global shipping emissions, should be included within
the UK carbon budgets for the Climate Change Bill; and that is
because we believe the logic of the argument put forward by Friends
of the Earth et cetera, that if you were to have a clear trajectory
you would need to know what that trajectory is when shipping eventually
comes in as part of an international agreement. We think that
logic is impeccable and we can agree upon a measurement process.
I had a meeting with WWF last week and we all worked together
to try and define the most appropriate form of measurement. So
measurement is absolutely fine; but the difficulty comes in when
you try and include shipping unilaterally within the reduction
targets, because it is at that stage when you start changing behaviour,
when you may see unintended consequences.
Q123 Mr Chaytor: How can the carbon
budget be separate from the reduction target?
Mr Ashdown: Because I think, as
the government has recognised, you set the budget as a minimum
of 80%, with recognition that other sectors may need to do more
if the subsequent reductions made by shipping and aviation do
not quite meet up to expectations.
Mr Brookes: We could talk about
modal shift, for instance, the big coastal shipping industry in
this country which takes traffic off the roads and rail. All we
ask for is a level playing field. Therefore, it is a national
concern. Equally well, and my colleague David Asprey will comment
further, around the UK there are also international competitors;
and if they are buying their fuel outside the UK it could be outside
the UK system. If we are not careful we will end up distorting
the market with even possibly more traffic on the roads.
Mr Asprey: Just a brief comment
and, oddly enough, it follows on from something that Mr Challen
was saying earlier about tramp shipping. British coastal shipping
is characterised by that in terms of the movement of bulk cargoes:
not ferries; not so much those sorts of trades and aggregate trade;
but in bulk cargoes moving port to port it is part of a European-wide,
if not wider than that, source of shipping calling at one UK port
and another which has come from somewhere else; is going to go
somewhere else; has bought its fuel somewhere else; shipowners
and operators who have no place in business in the UK; they charter
their ship to a UK cargo owner and they move that cargo from Lowestoft
to Scotland. Bringing that kind of coastal shipping into a UK
scheme is going to be very difficult. It is difficult to see how
it would be done. The important thing is that if it is done it
has to be done in a way which does capture all trades equally,
and faces up to this difficulty from overseas.
Q124 Mr Chaytor: On the point about
refuelling elsewhere, surely that is only relevant if the method
of calculating emissions is based on bunker fuels? If there were
a different method of calculating emissions that would not be
a relevant point because it would not matter where they buy the
fuel?
Mr Brookes: You are quite correct,
but at the moment we do not know what the ground rules are. I
think that is the biggest uncertainty in our minds. If we are
seeming diffident on this, that is because ultimately the government
will lay down the policy as to how an ETS which, say, includes
UK shipping will apply. When we know how it does we can work it
out. If bunker fuels are bought abroad the effect can be brought
into the UK. What we do not want to see is a distortion which
could potentially have negative environmental effects as well.
Mr Kjaedegaard: Above all, we
do not want to create a sea of uncertainty whereby people may
not know where they stand in respect of the British flag. What
registry am I going to build my new ship towards? Under what flag
am I going to fly my future ships? If we do not make that very
clear now that, yes, we may include it in the Climate Change Bill,
however it will be with an objective of creating a level playing
field; and we should not in any way disadvantage the British flag.
Q125 Mr Chaytor: If I could give
an analogy that every heavy goods vehicle has a device in the
cab which logs the mileage travelled in order to regulate the
driver's hours. Is there not a similar device that could be easily
installed in each ship to log the miles travelled or calculate
the emissions? I understand that is some technology out there
which does that.
Mr Brookes: It is already there. Mr
Asprey: The difficulty is not counting the miles, just
as it is not difficult to count the miles of a lorry. The difficulty
is when you apply a tax to that lorry or to that ship, because
an overseas lorry driver does not have a base here.
Q126 Mr Chaytor: It is about the
methodology of calculating emissions. All I am saying is, it is
not the simplest methodology to install some technology on each
ship which calculations emissions? The bunker fuels issue is a
complete digression.
Mr Asprey: No, it is to do with
measures. Counting is not the problem. I agree with you—counting
is not a problem. It is when you come to apply measures.
Q127 Mr Chaytor: It is the assignment?
Mr Asprey: Yes. Q128 Mr Chaytor:
At the moment we are not counting. We are still argument about
different methods of counting—whether it should be based
on bunker fuels, or whether it should be based on the cargo that
is delivered to each country. Why do we not just forget that and
concentre on an accurate method of counting by installing the
technology on the ships?
Mr Brookes: If you do that we
can do it.
Mr Ashdown: What I understand
you are seeking to do is you are seeking to determine the appropriate
bubble of shipping emissions that the UK should be responsible
for. If a ship comes into Felixstowe from Asia you will know that
it has travelled X thousand miles and you can use a carbon calculator
to work out the associated greenhouse gas emissions, carbon emissions,
from that journey. If only 2,000 of those boxes have unloaded
at Felixstowe and then it goes on to Rotterdam, which proportion
do you take of that journey? If it stopped two or three times
en route, at which stage do you start to break down the emissions
which we can count and then decide that they are appropriate for
the UK government to take responsibility for? That is the difficulty.
Q129 Mr Chaytor: The assignment is
the difficulty; not the calculation?
Mr Kjaedegaard: It is not impossible
but it just has to be agreed globally. That is what we are aiming
at.
Q130 Martin Horwood: Obviously connected
to this is the Climate Change Bill in which shipping is almost
certainly to be included this afternoon or this evening. You have
already accepted that to have a truthful picture of UK carbon
emissions you must include shipping; and, therefore, surely you
must also accept that for us to budget accurately ourcarbon emissions
we must include shipping, surely?
Mr Brookes: Yes.
Q131 Martin Horwood: The only issue
is, on a provisional basis pending a global scheme, how we decide
what is our share of shipping emissions? The same question you
have been discussing with Mr Chaytor.
Mr Brookes: Agreed.
Q132 Martin Horwood: Would you be
in favour of presumably any scheme that was not taking emissions
based on the flag of the vessel but on either something linked
to the economic activity or the volume of goods landed, or something
like that?
Mr Brookes: Our biggest concern
is unforeseen consequences and distortion—not only distortion
of trade but distortion of emissions equally. If you can address
that concern in legislation I think we are comfortable.
Q133 Martin Horwood: How would including
something on that basis in the UK Climate Change Bill or its subsequent
regulations distort shipping? Can you just explain that to us?
Mr Brookes: It would not distort
shipping if you can allocate purely to the UK. That is the point.
Q134 Martin Horwood: The reason that
the UK is trying to set its own targets initially—just explain
to us how doing that, or how one methodology rather than another
might distort the market specifically?
Mr Ashdown: The reason we always
advocate legislation through the International Maritime Organisation
is because the policy levers for international shipping are very,
very weak for enforcement and allocation. The more global a scheme
is the more effective it is. If you talk about a unilateral scheme,
if the UK was to impose a carbon tax on shipping, how would that
impact shipping? It is very likely then that the container ships
would no longer touch at the UK to deliver cargo; they would perhaps
go into Rotterdam and then use feeder ships to bring the cargo
across from Rotterdam so that you only then paid the carbon on
the very short journey across the North Sea. The entire leg from
Asia up to Rotterdam would be exempt. That is one way. There are
many, many other ways that that could happen. Some ships may choose
not to make port calls here; and those who touch for cruise purposes
may choose not to call at a certain port.
Q135 Martin Horwood: Surely the nature
of the port call would determine whether or not they need to do
it, not whether or not it is included in a UK carbon budget? Inclusion
in the UK carbon budget does not actually mandate any particular
form of taxation, levy or anything else. Why would a ship that
had been planning to make a port call, and presumably either take
on fuel or land goods, not do so just because it was in the UK
carbon budget?
Mr Ashdown: If you are talking
purely about measurement, which I think is what the Bill is talking
about, then you are absolutely right; that would not change behaviour
at all
Q136 Martin Horwood: We are talking
about inclusion in the budget, just to be clear?
Mr Ashdown: Yes, but for measurement
purposes only, not for the target reductions.
Q137 Martin Horwood: The budget—not
just measurement but the budget? In other words, a self-imposed
limit but without mandating a particular way of taxing that?
Mr Naylor: The answer perhaps
is whether it costs any money to the shipping company. The behaviour
will be conditioned by the cost of the activity. Just to include
it within an inventory for the UK, or within the UK's carbon budget
if you want to put it that way, would not alter behaviour. If
the inclusion and behaviour then resulted in the imposition of
a cost on the shipper or the company bringing that ship to the
UK then there might be some unintended consequences as a result
of them trying to avoid incurring that cost.
Q138 Martin Horwood: What I am trying
to get at is you said they might avoid port calls at UK ports.
They are not calling at those UK ports just to have a look round
Southampton, are they? If they are landing goods and, let us say,
it was goods ordered by UK companies designed for the UK market,
they are not going to not do that because of inclusion.
Mr Kjaedegaard: Instead of a huge
ship coming into the UK and only discharging one-third of the
capacity, you might discharge everything in Rotterdam and then
use that as a satellite and then just move with small ships with
lower levies and lower costs into the UK.
Q139 Martin Horwood: That implies
that the carbon budget would include the material that was destined
for other economies. Why would that be the case?
Mr Kjaedegaard: On the carbon
base maybe then that could be a solution, rather than on the ship.
| 
