House of Commons - The work of the Committee in 2008-09

The work of the Committee in 2008-09 - Environmental Audit Committee Contents

2 Key themes in Session 2008-09

Tackling Climate Change

Carbon Capture and Storage

3. In Session 2007-08 we produced a short report on carbon capture and storage.[5] The Government published its response to the Committee's report as a Command Paper[6] in August 2009, over a year after the Committee's report was published (see paragraph 41). There were several reasons for the delay but the main one seems to have been that policy on carbon capture and storage (CCS) was being rethought; significant changes in policy were announced in the Budget in 2009 and there was further consultation on policy in June on the framework for the development of clean coal.

4. Overall, the Government's response was positive and confirmed the Government's commitment to expanding the CCS demonstration programme. The response set out not only what is being done to take forward the demonstration programme but also the work being done to support the development of individual CCS components. We had called for a more strategic approach to the development of CCS. The Government's response provides little detail on development of a domestic strategy but describes efforts to develop a strategy for the international development of CCS. The Government continues to stress that coal has a vital role to play in the UK's energy mix and internationally. The Government accepted the Committee's recommendations on the need to step up efforts to drive forward the development of CCS and said also that it was exploring how emissions performance standards might be used. Any new coal-fired power station will have to have CCS fitted to at least some fraction of its capacity and if CCS is shown to be economically viable it will be retrofitted; limits on coal-fired generation will apply if CCS is not proven by 2020. It remains unclear from the Government's response (and our subsequent questioning of the Secretary of State for Energy and Climate Change[7]) what these limits might be. The Queen's Speech for the current Session announced that the Government would bring forward an Energy Bill;[8] this may offer an opportunity to follow up on our recommendations and for further scrutiny of these issues.

REDUCING EMISSIONS FROM SHIPPING

5. Emissions from shipping are reported to have doubled since 1990, but little attention has been paid to this issue. Under the terms of the Kyoto Protocol, developed nations were handed responsibility for working through the International Maritime Organization (IMO) to limit global shipping emissions. No agreement has been reached nor is one likely to emerge before the conference in Copenhagen in December 2009. We undertook an inquiry that focused on the action taken by the UK government in international negotiations to tackle emissions from shipping, whether and how it could take account of its share of international shipping emissions within its domestic carbon budgets, and how well it was supporting crucial research and development to reduce emissions from shipping.

6. We concluded that the Government should work harder to secure the inclusion of international emissions from shipping in the EU's climate change reduction targets and should continue to maintain a constructive approach within the IMO process.[9] We recommended that the Government should not wait for agreement at an EU or international level before taking action. We recommended also that it should adjust carbon budgets downwards for the rest of the UK economy to compensate for the UK's share of international shipping emissions. We called on ministers to clarify their position on the use of emissions trading for the shipping sector and to set out what kind of cap was required within a shipping emissions trading scheme.

7. The Government response[10] was a little disappointing. The Department for Transport and the Department for Energy and Climate Change disagreed with some of our detailed recommendations.[11] Of equal concern, however, was that the departments' position on many of our recommendations was to await international progress on agreeing strategies and targets for cutting emissions from shipping. The response emphasised that focusing on the required global solution 'precludes taking unilateral action which could obstruct or impede the achievement of this [global solution]'.[12] It advocated working through the IMO. This missed the point made by the Committee that the IMO had failed to make progress on this issue and other means should be sought to make progress, even if this meant taking action at an EU-level in order to help break the log-jam. We are concerned that the Government's approach could hold back the search for areas where UK or European action could make a real difference, and sooner. We intend to continue to monitor developments on this issue at the Copenhagen Conference and afterwards, and would encourage our successor Committee to review progress early in the next Parliament.

REDUCING GREENHOUSE GAS EMISSIONS FROM DEFORESTATION

8. Deforestation accounts for 17% of global greenhouse gases emissions, producing more emissions globally than transport. It is therefore vitally important that a global deal on deforestation is reached in Copenhagen—a deal in which developed nations commit to supporting developing nations in their efforts to halt deforestation. As part of this inquiry, we travelled to Cameroon to see first-hand the challenges faced by governments and local communities in rainforest nations (for details about committee visits see paragraph 48).

9. Our report[13] concluded that halting deforestation required three things: support for rainforest nations so they can manage their development without continued deforestation; management of the demand for commodities whose production encourages deforestation; and the introduction of a mechanism to pay developing countries for maintaining and recreating their forests. It is necessary but not sufficient to devise a payment scheme to pay for forests; any such scheme can only be successful if accompanied by other measures to tackle the supply- and demand-side drivers of deforestation. We called on the Government to lobby for a global climate agreement in Copenhagen that would work to reduce the economic drivers of deforestation; provide a mechanism to support capacity building and effective governance; protect local communities that depend on the forests; and identify and address the supply- and demand-side issues that drive deforestation. We were particularly concerned that negotiations to date had concentrated almost exclusively on establishing a payment mechanism, and had not sought to address the causes of deforestation.

10. Demonstrating the cross-departmental nature of the subject, three departments—the Department for Energy and Climate Change, the Department for the Environment Food and Rural Affairs and the Department for International Development—contributed to the Government's response.[14] The Government response focused a little too much on the international negotiations around REDD (Reducing Emissions from Deforestation and Forest Degradation) but engaged positively with most of our recommendations.

11. The Government accepted the points we made about capacity building and reform of governance in rainforest nations. It accepted also the need to increase bilateral spend and maintain a suitable level of expertise within Government. It also recognised that UK Overseas Development Assistance should contribute to the development of a low carbon economy. We had called for a review of global agriculture and greater use of sustainability standards. The response identified a number of things that will contribute to this but the Government did not go as far as we had originally envisaged it might; it is still collecting evidence rather than moving ahead with actual policies. We called for a ban on illegal timber and other measures to manage demand for timber in the UK. There was no commitment to a ban in the UK in the Government's response but it stressed the work that it is doing at a European level to prevent illegal timber being placed on the market. The Government response stressed also the work that it being doing on procurement, including in the wider public sector.

12. We made some recommendations on systems to pay for protecting forests and on the wider impacts of deforestation. The Government recognised carbon markets had a part to play in tackling deforestation in the longer-term but agreed with us that there is no place for 'forest credits' within the EU Emission Trading Scheme currently. The Government envisaged a phased approach to the development of any payment mechanism.

CARBON MARKETS

13. We have for several years tracked the progress of the EU Emission Trading Scheme (EU ETS).[15] This EU policy is central to the UK Government's efforts to tackle greenhouse gas emissions. We launched an inquiry into emissions trading in January 2009. Rather than focusing just on the EU ETS, we were keen to look at the role of global carbon markets more generally. We started taking evidence in March. Our deliberations were helped by a very useful visit to the United States of America (for details about committee visits see paragraph 49). We finished taking evidence in June and are currently preparing our report.

CARBON BUDGETS

14. In February 2009 we held a one-off evidence session with Lord Turner of Ecchinswell and David Kennedy, respectively the chairman and chief executive of the Committee on Climate Change.[16] This interesting session explored the basis for the carbon budgets recommended by their Committee, and built on a one-off session we had held on the scientific basis for action on climate change in Session 2007-08.[17] We decided that this issue warranted further investigation and in March 2009 we launched an inquiry into the suitability of carbon targets and budgets, and the compatibility of current Government policies with achievement of the overall carbon budget.

15. We started taking evidence on 9 June and held three evidence sessions before the summer recess.[18] During the course of the inquiry the Government launched its Low Carbon Transition Plan in July 2009,[19] and the Committee on Climate Change produced their first progress report for Parliament on the carbon budgets in October.[20] We felt it was important to draw on both in our inquiry and we held a fourth evidence session in October to address these specific developments.[21] We intend to publish a report as soon as is reasonably practicable.

Sustainable Development

The Export Credit Guarantee Department and sustainable development

16. In March 2009 we published the Government's response[22] to our Report on the Export Credits Guarantee Department and Sustainable Development, which we had published in Session 2007-08.[23] This response was disappointing because the Government seemed to suggest that ECGD had no part to play in sustainable development beyond satisfying itself that any applications for credit met prevailing international standards. We had made various recommendations about transparency and leadership. The Government's response focused on the practical difficulties that could arise from further disclosure of information and it found practical difficulties with our recommendations on the application of ECGD's own business principles. The Government response was particularly disappointing on the approach taken to ECGD's renewables initiative to support exports by sustainable and environmental industries, where it offered only the prospect of the ECGD considering how the initiative might be incorporated into a new Government initiative to coincide with the Copenhagen Conference.

17. There was, however, a more positive response on carbon impact assessments. An ECGD assessment of emissions from aircraft would not be made at the time ECGD considers its decisions on the provision of support. But, in the light of our report, ECGD was to explore with airlines during 2009 the feasibility of them being able to report periodically the emissions of the aircraft that benefit from its support, so that there would be evidence of the actual emissions over time. We will be looking for opportunities to follow up progress on the recommendations we made; we hope to secure a debate on our report and the Government's response to it.

GREENING GOVERNMENT

18. During this Session we conducted the eighth in a series of inquiries into the sustainability of government operations.[24] We aimed to examine not only the Government's performance against its own sustainability targets, but also the appropriateness of those targets and the actions necessary to ensure that targets were achieved in the future. This inquiry was particularly important this year, following the Government's commitment to stretching targets for the reduction of carbon emissions across the UK economy.

19. We were disappointed by the Government's poor progress against its target for the reduction of carbon emissions from its own office estate. Moreover, we were unconvinced by the Government's plans to meet this target in future years and heard evidence that government departments were not making the investments necessary to cut carbon emissions in the long term. We urged the Government to produce credible plans for meeting its target, but also recommended that it commit to more ambitious targets in line with its own policies on sustainable development and climate change. We also recommended that it should set out a timetable and a detailed plan for extending coverage of the targets to the wider public sector, such as the NHS, outsourced operations and its own supply chain.

20. The Government response[25] acknowledged that a new more challenging target framework must be developed. It reported that proposals for a new set of targets were under consultation across Whitehall, with the Sustainable Development Commission included in the review to help ensure that new targets deliver 'the right level of ambition'.[26] As part of that review of targets, the Government were also considering the mandatory inclusion of bodies which currently report only on a voluntary basis. The outcome of the review would be announced by the end of 2009. Looking ahead, the response also announced that DECC would be leading a cross-cutting review of public sector energy efficiency as part of the Treasury's Public Value Programme.

Environmental Protection

Biodiversity

21. In February 2009 we published the Government's response[27] to our Thirteenth Report of Session 2007-08 on halting biodiversity loss.[28] The Government's response welcomed our report as a constructive contribution and stressed the part that the Natural Ecosystem Assessment, which is due to report in 2010, would make to many of our recommendations. The Government accepted that it would not meet its 2010 target on biodiversity and agreed that there would need to be a successor to the 2010 target. It also set out how work on the cross-government PSA 28 (Secure a healthy natural environment for today and the future)[29] would address the issues raised by our Report, particularly at a regional level. The Government accepted the Committee's recommendation that there needed to be more effective and better integrated support for addressing the loss of biodiversity in British Overseas Territories.

ENVIRONMENTAL LABELLING

22. In Session 2006-07 we identified environmental labelling as an area in which the Government should take a more active role; our Sub-Committee on Environmental Information concluded an inquiry into this subject at the end of February 2009 and we published our report on it in the following month.[30] We found that 'greenwash'—the use of insubstantial or meaningless environmental claims to promote a product—was a growing problem. The Government has an important role to play in policing the use of environmental labels and in intervening directly to remove those found to be inaccurate or misleading. Our Report recommended that a sector-based universal labelling scheme, comparable to those emerging for food products, should be developed.

23. The Government's response[31] to our report welcomed our conclusions and drew attention to a number of research projects and consultations the Government was undertaking into product information, environmental labelling and promotional claims in marketing. We hope to see this research being transferred into a practical scheme or, at least, pilot studies.

Green Taxation

Vehicle excise duty

24. Early in the last Session we published the Government response[32] to our Tenth Report of Session 2007-08 on Vehicle Excise Duty.[33] Our Report had looked at the changes to vehicle excise duty (VED) announced in the Budget in 2008. We welcomed the introduction of first-year rates of VED for new cars—a form of 'showroom tax'—designed to encourage buyers of new cars to choose the most efficient model in each class. We had noted that raising the rates of VED on high emissions cars could encourage sales of more efficient models in the second-hand car market, but acknowledged concerns about the financial effects of raising car tax on existing vehicles owned by lower income households. We had urged the Treasury to consider the introduction of a 'car scrappage' scheme, to pay motorists to trade in their cars for more efficient models, and returned to a recommendation we had made previously that taxes on high carbon cars could be used to pay for rebates on low carbon cars.[34]

25. The Government's response was delayed until after publication of the 2008 Pre-Budget Report in November 2008 (for details of our work on the Pre-Budget Report see paragraph 26). Major changes were made to the policy on VED in the 2009 Budget (having been announced in the 2008 Pre-Budget Report), with previously announced increases in VED rates for existing cars purchased between 2001 and 2006 reduced considerably. The Government response was largely positive. The Government said that it would monitor the French car scrappage scheme although it had no plans to legislate for one in the UK. A scheme designed to support the motor industry in the economic downturn has been introduced recently. It has not been introduced as an environmental measure and perhaps an opportunity has been missed to make something introduced as an economic measure achieve more than a 'neutral or modest positive environmental impact'.[35] In its response the Government said it did not see VED as an environmental tax but a tax charged on an environmental basis. Perhaps again this is an opportunity missed to get a greater environmental impact. The Government rejected our call for wider and faster reform of VED, preferring a more gradual approach.

THE PRE-BUDGET REPORT

26. Our report[36] on the 2008 Pre-Budget Report reviewed the Treasury's planned "green fiscal stimulus" package. Our report criticised the size and focus of the Treasury's proposals for 'greening' the UK's economic recovery. We argued that the Treasury needed to do far more to ensure its stimulus measures are sufficient to help the UK transform to a low carbon economy. We pointed out that the majority of the £535 million in the package was not new money, but had been brought forward from 2010-11 budgets, meaning less will be available to spend in future years, and recommended that the Treasury adopt a target for the proportion of GDP to be spent on green fiscal stimulus in the current and future spending reviews, and that the 0.8% of GDP suggested by Lord Stern and others in February 2009[37] would be a good starting point.

27. We said the Government should make clear the overall environmental impact of its fiscal stimulus package. We pointed out that the majority of the £535 million fiscal stimulus package would be spent on the provision for 200 new rail carriages and questioned whether this qualified as a 'green stimulus'; this can only be the case if the use of planes and cars is discouraged and there is a modal shift to rail.

28. We recommended that the Government reinstate its plans to replace Air Passenger Duty with a 'per plane' charge and suggested that the Treasury introduce both fuel duty and VAT on domestic flights to encourage people to switch to low carbon rail travel.

29. We felt that the Government response[38] was complacent in dealing with the size of the challenge it faces. It argued that public expenditure is a poor measure of commitment to climate change objectives. While a further £10.4bn would be spent over the next three years on low-carbon and energy investment, the important thing was to focus on outcomes, including those derived from regulation and policy instruments, which would enable some £50bn of low-carbon investment over the Comprehensive Spending Review period. During our carbon budgets inquiry, Professor Sir David King compared unfavourably the extent of the UK fiscal stimulus that would stimulate a move towards a low carbon economy (8%) with the position in South Korea (80%).[39] The Government response also claimed that the UK had made more progress against its Kyoto targets than any other G7 nation, and that it was on track to meet its first three carbon budgets and target for 2020.[40] Since then, however, the October 2009 progress report from the Committee on Climate Change has called for a 'step change' in emissions reductions to deliver the carbon budgets.[41]