The
Committee consisted of the following
Members:
Chair:
Mr
Joe Benton
†
Barker,
Gregory (Minister of State, Department of Energy and Climate
Change)
†
Brake,
Tom (Carshalton and Wallington)
(LD)
Creasy,
Stella (Walthamstow)
(Lab/Co-op)
Donaldson,
Mr Jeffrey M. (Lagan Valley)
(DUP)
†
Freeman,
George (Mid Norfolk)
(Con)
†
Gapes,
Mike (Ilford South)
(Lab/Co-op)
†
Gilbert,
Stephen (St Austell and Newquay)
(LD)
†
Gyimah,
Mr Sam (East Surrey)
(Con)
†
Hillier,
Meg (Hackney South and Shoreditch)
(Lab/Co-op)
†
Hoey,
Kate (Vauxhall)
(Lab)
†
Lefroy,
Jeremy (Stafford)
(Con)
McDonnell,
John (Hayes and Harlington)
(Lab)
†
Nuttall,
Mr David (Bury North)
(Con)
†
Offord,
Mr Matthew (Hendon)
(Con)
†
Rees-Mogg,
Jacob (North East Somerset)
(Con)
Sharma,
Mr Virendra (Ealing, Southall)
(Lab)
†
Vara,
Mr Shailesh (North West Cambridgeshire)
(Con)
†
Wilson,
Phil (Sedgefield) (Lab)
Mark
Oxborough, Committee Clerk
†
attended the Committee
Fifth
Delegated Legislation
Committee
Thursday
5 May
2011
[Mr
Joe Benton
in the
Chair]
Draft
Greenhouse Gas Emissions Trading Scheme (Nitrous Oxide) Regulations
2011
8.55
am
The
Minister of State, Department of Energy and Climate Change (Gregory
Barker):
I beg to
move,
That
the Committee has considered the draft Greenhouse Gas Emissions Trading
Scheme (Nitrous Oxide) Regulations
2011.
It
is a pleasure to serve under your chairmanship, Mr Benton.
On this important day for voters and the voting system, we shall not
detain the Committee too long on what I hope will be a relatively
uncontroversial
measure.
The
objective of the regulations is to extend the European Union emissions
trading scheme—the EU ETS—to include nitrous oxide
emissions in the United Kingdom as soon as possible this year. The
policy has the clear benefits of reducing emissions of a very potent
greenhouse gas, protecting jobs in British manufacturing and
stimulating early investment in low-carbon technologies in the
UK.
Nitrous
oxide is a highly potent greenhouse gas. Its global warming effect is
310 times that of carbon dioxide, so it makes sense to ensure that
emissions of the gas are reduced as much and as soon as possible. A
major industrial contributor to nitrous oxide emissions is the
production of nitric acid to make fertiliser. In the UK, there is
significant potential within the nitric acid production sector for
dramatic reductions in nitrous oxide. However, for that potential to be
realised, businesses require the incentive of a carbon price and the
benefits that that can provide. The EU ETS is the Government’s
favoured policy for putting a price on greenhouse gas emissions.
Emissions trading provides businesses with flexibility on how and where
they will reduce their emissions. That ensures that emissions
reductions can be made where it is most cost-effective for businesses
to do
so.
The
EU ETS focuses primarily on tackling carbon dioxide emissions. However,
there is provision in the ETS directive for member states to opt in for
additional greenhouse gases and sectors. There are clear benefits for
the UK to use that provision to opt in nitrous oxide emissions from the
nitric acid production sector. Moreover, while all member states will
include nitrous oxide emissions from nitric acid production in the EU
ETS in its third phase, which starts in 2013, there are strong
incentives for the UK to move
early.
The
regulations will mean that the UK opts in nitrous oxide emissions for
the EU ETS two years ahead of the majority of Europe. That will save
the equivalent of about 1.6 megatonnes of carbon dioxide equivalent
throughout 2011 and 2012. To put the savings in context, those
emissions are equivalent to what 300,000 UK
homes emit annually. Extending the EU ETS to nitrous oxide production in
the UK will therefore help to provide increased certainty for the UK on
meeting its national carbon budgets. However, far from being something
that will be difficult or a barrier for businesses, opting in early
will actually help to incentivise early investment in green technology,
thus giving the UK nitric acid production sector an advantage when the
whole EU nitric acid production sector is included in the system in two
years’
time.
The
regulations will apply in practice only to the UK’s largest
fertiliser manufacturer: GrowHow UK Ltd. We have obviously consulted
closely with it in preparing the regulations, and it is already
investing £10.5 million in nitrous oxide abatement
technology.
I
welcome GrowHow’s commitment to making significant emissions
reductions. Moreover, the installation of such advanced technology will
protect up to 80 full- time jobs in the UK nitric acid
production sector, which is an important step in building a low-carbon,
modern manufacturing sector in the UK. It is therefore clear that the
economic and environmental benefits of the opt-in outweigh any
additional administrative cost. There is a win-win situation,
particularly because the sector in question is already covered by the
EU ETS, so minimal additional administrative work will be
required.
There has
been a constructive and close working relationship with GrowHow to get
the details of the opt-in right, and particularly to ensure that the
correct balance has been struck between providing incentives for
investment in abatement and the cost of such technology. We have
further ensured equal treatment for the UK by adopting the same
benchmarks as those set by Austria and the Netherlands, which are the
other member states that have opted their nitrous oxide emissions in to
phase II of the EU ETS. I acknowledge the important work that was done
in the first stages of the process by the previous
Administration.
The opt-in is
fully in line with our broader climate change commitments and, most
importantly, it will not increase the overall EU ETS emissions cap. The
UK opt-in will use trading allowances that were previously allocated to
closed installations, which means that we can maintain the
environmental integrity of the EU
ETS.
Looking
at the bigger picture, the policy, which reduces greenhouse gas
emissions, safeguards jobs and improves the competiveness of UK
industry, sends a powerful message to other countries about the
potential benefits of green growth, particularly in the fertiliser
sector. I commend the regulations to the
Committee.
9.2
am
Meg
Hillier (Hackney South and Shoreditch) (Lab/Co-op):
It is
a pleasure to serve under your chairmanship, Mr Benton.
The
Opposition fully support the proposals. The early opt-in is sensible,
and we know that nitrous oxide will be included along with carbon
dioxide on a mandatory basis as part of a third phase of ETS from 2013
anyway. Several of our European neighbours, including the Netherlands,
Norway and Austria, have similarly recognised that situation and gone
early. As the Minister said, the
regulations should provide incentives for early reductions, as well as
bringing about lower long-term costs. We hope that emissions will
reduce quickly.
The European
Union emissions trading scheme has had its problems. Will the Minister
write to me to update us on his progress in the EU on improving
registry security following the cyber attacks on the trading registers
earlier this year and to detail the discussions that he has had with
his European counterparts on registry security? What assessment has he
made of the current state of market confidence following those attacks?
I am sure that he would agree that it is vital that
such matters are tackled if we are to get the scheme up and running and
making its proper contribution to tackling climate change.
We support
the regulations. We believe that they make sense economically, given
the predicted benefit of an early opt-in, and they will help the UK to
reduce our greenhouse gas emissions.
Question
put and agreed to.
9.4
am
Committee
rose.
