Energy and Climate Change - Minutes of EvidenceHC 1715-i

Back to Report

House of commons

oral EVIDENCE

TAKEN BEFORE THE

Energy and Climate Change Committee

OUtcomes frOm Durban UNFCCC COP 17

Tuesday 13 December 2011

RT HON Chris Huhne MP, Greg Barker MP, pete Betts and Ben Lyon

Evidence heard in Public Questions 1 - 54

Oral and Written Evidence

Taken before the Energy and Climate Change Committee

on Tuesday 13 December 2011

Members present:

Mr Tim Yeo (Chair)

Barry Gardiner

Ian Lavery

Dr Phillip Lee

Albert Owen

Christopher Pincher

John Robertson

Sir Robert Smith

Dr Alan Whitehead

________________

Examination of Witnesses

Witnesses: Rt Hon Chris Huhne MP, Secretary of State, DECC, Greg Barker MP, Minister of State, DECC, Pete Betts, Director of International Climate Change, DECC, and Ben Lyon, Head of International Negotiations, DECC, gave evidence.

Q1 Chair: Welcome. Thank you for coming in so promptly after your presumably slightly delayed return from South Africa, and welcome back to the Minister of State who spent the morning with us as well. As we heard or read your statement to the House yesterday, do you want to make any further opening statements or shall we just crack on with some questions?

Chris Huhne: No, it is probably best to crack on. Unless you want me to say anything, I think you have the thrust.

Q2 Chair: In advance you said that a single global and comprehensive legally binding instrument was one of the key objectives for Durban. Do you think that was achieved?

Chris Huhne: I do. I think that the key issue that we faced right at the end of the conference was that the Presidency tabled the text, which was very acceptable to us. I should perhaps introduce everybody. Pete Betts, who is our Director, and Ben Lyon, Head of International Negotiations, official side, and the Minister of State, Greg Barker who was also with us in the team. I think you have already had a session with this morning.

The key text that we had in front of us was a protocol or another legal instrument. That was, in our view, in terms of our legal advice, adequate. What then happened is that at some point that text disappeared off the table and it came back with a draft, which was a "legal outcome". "Legal outcome" was simply not acceptable since we knew-it was a point I made very firmly in the final huddle-that the Indian and Chinese delegations had in the past, in other contexts, defined a straightforward conference decision, a COP decision, as a "legal outcome". Therefore it would not have been binding in the sense that the Kyoto Protocol was binding. It would have been merely a continuation of the essentially voluntary track under the convention. So it was very important for us to get that removed from the final text and to put in instead the formulation, which we ultimately had, of an agreed outcome with "legal force". This proposal was made in the final huddle by the Brazilian negotiator, Luiz Figueiredo, and we had very rapid consultations, inevitably, about it with our legal adviser and the legal adviser who was advising the Gambians, and we concluded on the basis of that that this would, to all intents and purposes, be the same thing as the legal instrument that we had been arguing for previously. I think that it is clear what the outcome is. It is not possible to redefine it as some other aspect of the voluntary track, and therefore it meets our objectives.

Q3 Chair: Clearly that was a lot better outcome than it appeared not very long in advance of it. There was still quite a lot of detail however to be filled in and therefore a lot more work to be done. Given that we have already had Canada withdrawing from the process, are you concerned about how achievable the details about emissions reduction targets are, how long the period is going to be and so on? We spent three or four years trying to get to this point and some of these details will be even more thorny to resolve. What is your assessment of the probabilities?

Chris Huhne: I am going to ask Pete to come in in a minute just on what happens between now and the next time we have a big negotiation. I think what was crucial and what came out of Durban was not just the vision of a legally binding framework, which would be negotiated by 2015 and enter into force from 2020. It was also the fact that we managed to address the ambition in the interim. Of course part of that is the commitment to a second commitment period of the Kyoto Protocol for those that are bound by that. But also, absolutely crucially, it is what is in there for assessing the gap between doing what we need to do and what needs to be done to meet the demands of the science.

From Cancun last year and from Durban, a substantial step forward has been taken in recognising what we have to do. Compromise is all very well when it comes to the means of what we are going to achieve, but we have to recognise, as politicians, that there is one thing on which we cannot compromise: if the scientists tell us that there is a very clear and present danger from a particular level of emissions and from a particular consequence for the effect on temperature, we have to respect that and work within it.

I think there was a major step forward both last year and this year in accepting that process, but, Pete, would you like to add something?

Pete Betts: It will be an extremely challenging task to negotiate a comprehensive global agreement-that is clear. I guess this gives us three things. First, it gives us clarity that our objective is a legally binding instrument, and that makes the process much clearer if you know the end point. Secondly, there is very good language in here to signal that this new instrument will need to be applicable to all parties, and there is language in the preamble making it clear that there is a shortfall in ambition, and that it is a shared task because of the aggregate level of shortfall by both developed and developing countries. Thirdly, we have a forum where we negotiate this new ad hoc working group. So, all those are useful to frame what I agree will still be a very difficult task.

Just one point: Canada has not withdrawn from the process; they have withdrawn from the Kyoto Protocol, so they will still be part of this process to negotiate this new legal agreement.

Chris Huhne: They are still bound by exactly what was agreed, so although they will not be in the Kyoto Protocol in the second commitment period, they are still part of working towards this process of an agreed legal outcome in 2015.

Q4 Chair: It sounds as if they not are all that enthusiastic about going there, doesn’t it?

Chris Huhne: I think, Mr Chairman, we probably could have worked that out from the fact that they have not been foremost among Kyoto Protocol signatories in meeting their emissions targets.

Q5 Chair: Do you think this is enough to keep the temperature rise to 2 degrees?

Chris Huhne: Clearly not, in the sense that this is a process that we have launched into and, as Pete said, there are a lot of other bridges to cross before we get to that legally binding deal, which will deliver. So, clearly not. But what it does do is provide us with a very clear roadmap on how to get there-it is very hard to get anywhere if you do not know where you are going. So the fact that we have agreed on a destination seems to me to be quite important. The rest will be filling in the detail and making sure we get there. This is very similar in many ways to the Berlin mandate, which resulted ultimately in the Kyoto Protocol, and it sets out a clear vision of what we need. The final huddle, where we had that rather dramatic photograph of Connie Hedegaard and the Indian Minister sitting opposite each other and reaching the final compromise, was a very important moment. It was a moment when we came away with a clear understanding, having challenged the Indians to say, "Well, look, the legal outcome is not adequate precisely because it does not deliver anything other than a COP decision and we need more than that". We arrived at that phrase about "legal force", which I think was not what we had originally asked for. It is not what they had originally asked for, but it encapsulates what we are all aiming for.

Q6 Chair: Just coming back to the second commitment period; how long is that going to last?

Chris Huhne: That remains to be settled. The reality is that, in an administratively tidy world, it would probably be best if it were eight years. There will be parties, not least the small island states, who are very keen that it should be five years. For some reason, they like to have a little bit of disjuncture between the period and the start of the 2020 treaty. I think it would make sense, to be frank, if it ran up into the 2020 period, but that does remain to be settled, and from our point of view, we will obviously listen to the arguments.

Q7 Chair: How deep will the cuts be?

Chris Huhne: The cuts have to be enough to respect the science and the science will move. Clearly, the IPCC reports will come in from 2013 to 2015. We also have the process of looking at what we are doing of assessing the ongoing evidence. Very important-it is something that we have supported in the UK-is the effort that UNEP has put into looking at the emissions gap. We have now had two years of emissions gap reports from UNEP and they have had a very good effect in helping to frame the debate around the desirable level of ambition. So this is going to be a moving target, but, clearly, I do not know of many people who think that the science is going to tell us anytime soon that we can all go home and not worry about more demanding emission cuts than the ones that most of us are dealing with at the moment. The direction of the science is very clear. We are going to have to do more.

Q8 Chair: Outside the EU, who is going to be committed to this?

Chris Huhne: We will have to see which countries come in on it. Do you mean in terms of the second commitment period?

Chair: Yes.

Chris Huhne: In terms of the second commitment period, I think clearly it will be the European Union. I think a number of other countries in Europe will do the same. I would expect, for example, the Norwegians, Switzerland to do so. How many other countries come in is more doubtful. For example, it is unlikely, given what they have already said, that Japan or Russia would join. I think that it is a matter of doubt as well whether the political circumstances in Australia and New Zealand will be adequate to persuade them to join, given that they have a regional trading set of issues with both Japan and China that they are concerned about. But it seems to me that the commitment to the second commitment period of the Kyoto Protocol has always been about sending out a clear signal that the architecture continues, that it can be built on, that the framework is there for the subsequent treaty to pick up and build on, and that is the most important message we are sending out.

We made the point very forcefully to developing countries which regard the second commitment period of the Kyoto Protocol as totemic that, in fact, it would not have an additional effect in Europe compared with what we are already committed to under our existing commitments under EU law. Indeed, those commitments of course are binding under European law and enforceable in the European Court of Justice. There is actually an enforcement mechanism, which is rather stronger than anything that is provided for by the Kyoto Protocol.

For all those reasons, I do not think that is the key issue. The key issue will be how we move the process for taking pledges, and the commitments under the Kyoto Protocol second commitment period, and how we move that on to a greater degree of ambition. I think that a legally binding deal in the long run is a necessary but not sufficient part of reaching a solution, and that we can have strong and credible movement from countries like China, for example, which are not bound legally by commitments on emissions under the Kyoto Protocol, and we can also have weak and incredible action from countries, which have been bound under the Kyoto Protocol like Canada.

The reality is that we need to build a process here, which brings in strong and credible action from all the parties, whether they are in the second commitment period of the Kyoto Protocol or not. What that second commitment period clearly does is preserve the architecture and provide an important stepping stone to that global overarching agreement, which we are committed now to negotiating by 2015, and which will enter into force from 2020.

Q9 Chair: Do you think at next year’s Conservative Party conference the Chancellor of the Exchequer will describe this as a commitment made by the EU and a couple of other small countries? Do you think he is going to describe it in the same-

Chris Huhne: I am sorry, the Chancellor of the Exchequer will be-say that again, Mr Chairman? I am probably going to ask my Minister of State to answer this. He is much better briefed on the internal workings of the Conservative Party than I am.

Chair: I particularly wanted your view about what you thought the Chancellor would say about this particular commitment made by the EU, and perhaps Norway and Switzerland, in the present political climate.

Chris Huhne: I think that the Chancellor is very committed to dealing with climate change. He is not in the same category as people who do not accept the science and do not accept the need to-

Chair: So previous Chancellors and their advisers?

Chris Huhne: You have to go quite a long way back, I think. Perhaps retired Chancellors would be a fair description, but retired Chancellors in my experience often have very different views from those that they had when they were in office. For a long time, the first thing every retired Chancellor did was say that they wanted an independent central bank, even though they had done nothing to achieve it when they were in office.

I think the Chancellor is committed to this and he has a concern, which is, in many ways, an institutional concern coming from his Department, which inevitably is always a Department that asks about the burdens on the economy: what the obstacles are, whether regulatory costs are necessary and what the public expenditure costs are. That is part of the DNA of the Treasury and you would not expect the Treasury Minister to do anything other than reflect a lot of that scepticism; it is the Treasury’s institutional role in Whitehall.

But I point out, and have pointed out repeatedly, that if you look at what we have done with the sign-off of the Treasury, and in some cases with the Treasury being the lead Department, for example on the carbon price floor and the announcement of the carbon price floor at the time of the last Budget, the reality is that we have a very good track record of working right the way across Government on this agenda. Whether it is the money that the Treasury gave us for a pioneering renewable heat incentive, whether it is the backing that they have given for bringing forward the renewables obligation banding review, which is going to unlock a substantial amount of investment in the North Sea and elsewhere, whether it is, for example, the fourth carbon plan approval-a whole set of issues has come up over the last year on which the Government has made very substantial progress, and I always urge people to judge us by what we do, not by what they think we say, which is sometimes not quite the same thing. Let me hand over to Greg.

Greg Barker: It is also fair to say that the very brief comments that the Chancellor made have become something of an urban myth. I have heard so many people recount different iterations of what they think he said or what they are certain he said and what they are certain he meant, when actually what he said was very short and to do with the fact that he wants us to deliver on the policy suite that we have, at the lowest possible cost to the consumer, and that the challenge for the UK now is not to strike out further alone but to bring the EU with us in our level of ambition, and the challenge for the EU is to bring the rest of the world with us. I think that is exactly what we took steps towards doing at Durban. The EU was much more effective this time round in building alliances-the Secretary of State has called it a coalition for high ambition. The work that we did in bringing Africa on board to share that ambition and the work that we did with the small island states, and so on, has infinitely increased the strength of that coalition, and I think the Chancellor will be very pleased by that, that it is not Britain in glorious isolation.

Q10 Sir Robert Smith: The language, "legally binding" is still being used a lot to describe the agreement, but it has been changed to "legal force". What is your understanding of that difference?

Chris Huhne: The most essential thing was that it could not just be a COP decision. It had to be something that had legal force in international law. We were given the definition of "legal force" in the advice that we had, admittedly very hurriedly, but we were the only delegation in the huddle, which is a bit like a rugby scrum, that had a legal adviser within touching distance able to give us a quick readout. Indeed, we also had advice from another legal adviser from an ally, from the Gambian Government. In both cases, the legal advice was very clear that this was not going to be able to encapsulate the COP decision, that it would be something with legal force. I think we are happy that this is exactly what you see on the tin.

Q11 Sir Robert Smith: But the Indians felt that they needed that distinction before they could join up?

Chris Huhne: I assume it was the Indians because they were the ones who were clearly defending it at the last. The Indians must have told the Presidency that they wanted this phrase, "legal outcome" and that was absolutely unacceptable to us, precisely because they had, and the Chinese had, in other contexts, described a COP decision as a legal outcome. There are many things that could be a legal outcome. A legal outcome is nothing more than to say it is not an illegal outcome, and there are many things that are not illegal, which are nevertheless not likely to tackle climate change any time soon.

Q12 Sir Robert Smith: Were there any other areas where there had to be compromise in terms of language?

Chris Huhne: I think that was the most important. That was the one that went to the wire, quite literally. I cannot even remember what exact time of the morning it was that we went into the huddle, but it was some time after 4.00, and it was not after 4.00 on the night that we were meant to end the negotiations, but after 4.00 on the subsequent night. This was, to a very large extent, negotiations by exhaustion, and we finally got there, but it was exhaustion tempered by adrenalin. It was quite hard pounding.

Q13 Sir Robert Smith: Has there been any movement on the division between developed and developing countries in the way they have to cut their emissions? Is it still just a binary divide?

Chris Huhne: No, I think the biggest breakthrough of the Durban platform is the fact that we are looking at a legally binding agreement that covers all parties. Clearly, it is under the UN Framework Convention on Climate Change, which has phrasing in it that commits us to common but differentiated responsibilities, and respect of capabilities, and that is absolutely a crucial phrase that is very important to developing countries. But it does mean that everybody would be bound and that for the first time the major emitters, the Indians, but particularly the Chinese, will be covered and given that China is now the world’s biggest emitter, that is an absolutely crucial step forward. When the Kyoto Protocol was signed, I think I am right in saying that it covered about 47% of global emissions, so it never covered everything. But the object obviously was gradually to go up to 100%. Effectively, with the second commitment period, we are going to be down somewhere below 15% and what we have to do with the 2015, 2020 treaty is get up to 100% and this clearly gives us a road map for doing that, so I think it is crucial. For a lot of the most vulnerable countries and the smallest countries, you would expect the least commitment to emissions reductions, because apart from anything else they have very low emissions anyway. But for China, in particular, I think it is going to be crucial because not only, as I have just said, are they the largest world emitter, but they also now have higher emissions per head of population than several developed countries in Europe. So that is crucial.

Q14 Sir Robert Smith: The other crucial thing is obviously the buy-in of the USA. Do you feel that the level of official that was sent by the USA or the level at which they came from the Government shows a readiness to buy in?

Chris Huhne: I do not think any of us has any doubt that Todd Stern, as the US representative, speaks for the US Government. All our experience has been that when he says something, he is able to deliver. So I think he does. I do not think either that, as a public official, he would have been prepared to go beyond his particular red light. What was particularly interesting about the US position, which is perhaps worth flagging up, is that one day before the final endgame, Todd Stern, in one of the small negotiating sessions that we were in, said that the US was prepared to accept, I think the phrase was "legal instrument", which was our ideal phrasing on this.

So the US had clearly made that concession before the endgame and the text was then rode back on with "legal outcome". That was not directly-I have no idea whether it was indirectly-to do with the US, given the public position that they had already taken in advance of the endgame in saying that they were prepared to accept "legal instrument". So I think that really does suggest that the US position was taken quite willingly.

Q15 Albert Owen: You said that, almost at the close of play, there was a delegation that got into a huddle. Mr Barker said or gave the impression that it was Britain leading this, the rest of Europe followed us and then the African states came in. In your statement yesterday you said you were operating within an EU delegation. Which one is it? Were you there with other Heads of State and lead delegates?

Chris Huhne: I am not a Head of State yet. We are working on that. I might have to change nationality since we are all great monarchists at DECC.

Albert Owen: Okay, "leading heads of delegations". Were you with them together in one room beforehand, where you worked out a game plan? How did it work? That is important.

Chris Huhne: I think it is important to unbundle the process here. We did a fair amount of thinking early on after Cancun about what we thought would be the most effective way forward building on Cancun to try and deal with that. We had in that process a lot of contact with our European partners, with the Commission, with the German delegation, the French delegation, at ministerial level and official level. What emerged over time was a European view-partly based on our thinking, German thinking and that of others-that we had to take a certain negotiating position; that we could not, for example, as some members of the Council had previously argued, merely unilaterally offer a second commitment period of the Kyoto Protocol, but that we should hold that back, say very clearly that we were willing to do a second commitment period, but that we wanted commitments from the major emitters to make sure that they were brought into an overarching treaty. It was the development of that leverage that became the core of the UK and the European Union position. I think there was a broad degree of consensus around that, which became broader as it became increasingly clear that that negotiating stance, that strategy, was having a good effect, because the developing countries were pressurising India and China to come along and be more flexible about both the roadmap and about the 2015, 2020 treaty, and the more that happened the clearer it became that it was working. So some of what I described as more herbivorous members of the EU on this issue, who were prepared to go and do a unilateral commitment to the second commitment period without asking for anything in return, went quieter and quieter. Indeed, we had, at the endgame, I think very importantly, real unity.

Q16 Albert Owen: Secretary of State, not Head of State. Okay, I am clear on the European angle. What I saw on the news was that you were at this moment, you were very tired and were negotiating as one block. But was the alliance of small islands the same? Were they speaking with one voice? As an observer, I thought that was a tipping point.

Chris Huhne: Let me just make clear one other point on how the thing worked for the EU when we got to Durban. The way this works is not like the trade talks. It was a situation where the Commissioner spoke for the EU, supported by Marcin Korolec, the Polish Minister, who is the President of the Council, but there were two other Ministers from the EU also present at all the key negotiating sessions, right up to the endgame. That was us, the UK, and the German Minister Norbert Röttgen, and on a couple of occasions the French Minister stood in.

However, the key representatives that the Council of Ministers, the Presidency had decided should be there were obviously the Presidency, the Commissioner, the UK Minister and the German Minister, and that was the team that effectively represented the EU. I have to say that Connie Hedegaard was the lead spokesperson in all the public debates on this and I think she performed tremendously and has been a very effective operator. We got a lot out of it as a result of the unity that we have displayed as a European Union. We would certainly not have been able to achieve what we have achieved without that unity.

On the small island states, I think it is more difficult for both the small island states and the least developed countries because they do not have the habits of co-operation that the European Union has. They do not have the fact that we meet at ministerial level on a regular basis through the Council. They do not have all the personal relationships between themselves that we have inevitably developed over time in the European Union. Even so, they were able to put forward-

Albert Owen: Quite emotive what they were saying.

Chris Huhne: Absolutely. They feel very passionately about it and if I were in their position, so would I. They are looking at a matter of survival for their cultures, for their people, and they are very passionate that we should, as an international community, address that. It is really crucial to see the amount of support that we had right the way across some of the most vulnerable, least developed countries, not just the small island states, but countries like Bangladesh, and the good relationship that we have had over time, that we have built up there, has been very important. I pay tribute to the fact this is not just one Department: this has been very much working with DFID, Defra, and the Foreign Office. This is very much an exercise of four Departments managing to deliver. The credibility, which we had among the least developed countries, in particular, because of the commitments that we have made on development aid, has been absolutely crucial.

Albert Owen: Thank you, and you have answered the question and clarified the point you made yesterday on the European Union.

Q17 Ian Lavery: In Durban in the last two weeks it was agreed how the Green Climate Fund would be managed, but there was no mention of how, or where the finances would come from. Where will the funding come from and what is the position of the UK on the source of the funding?

Chris Huhne: We very much welcome the outcome on the Green Climate Fund. It was one of the four things that we went into Durban wanting to see come out of it. It represents a very good outcome for all the parties and it has the potential to be a major improvement on the existing architecture dealing with climate finance. I am personally very committed to this because I was on the Secretary-General’s advisory group on finance that made the recommendations. I took over from Gordon Brown after the change of Government and was at the tail end of that process.

So I think that finding adequate sources of finance to make that commitment to the Copenhagen commitment of $100 billion a year by 2020 is crucial. We wanted to protect the draft governing instrument that had been developed by the transitional committee, detailed work over the period between Cancun and Durban, and we were pleased that the COP approved the instrument unchanged. We wanted to agree clearly on how setting up the Green Climate Fund would be taken forward, and the decision accompanying the governing instrument sets out how the GCF will be developed in 2012.

Obviously there are still details to be sorted out. In terms of making it operational, parties have been requested to nominate members to the board, and the deadline for nominations is 31 March 2012, and that board will further develop GCF policies and procedures. We certainly aim to support the setting up process and once it has been set up, we will look at supporting it. So far in Durban I think Denmark pledged €15 million, Germany pledged €40 million to the Green Climate Fund and South Korea pledged support for the running costs of the board and secretariat in 2012. This is a process by which it will gradually become operational over this year.

Q18 Ian Lavery: Are you happy that the funding will be found?

Chris Huhne: I think there was some misunderstanding, I am not sure whether you are falling into this trap, but perhaps I should clarify. The overall total that we are pledged to mobilise of the $100 billion is meant to come from private and public sources, so it is not just the Green Climate Fund. The Green Climate Fund will form an important part of it and, precisely because the Green Climate Fund is mobilising public money, it is likely to be particularly crucial in dealing with-as I was responding to Mr Gardiner yesterday-the adaptation side because on mitigation, just as one can get electricity market reform going in the UK with private money, provided you set a good framework of policy, it is much more difficult, for example, to see why the private sector should fund flood defences. It is hard to see what the revenue stream from flood defences is, and therefore it is a straightforward public good and requires funding from Exchequer sources. It is precisely that sort of issue that is crucial.

I would like to ask Greg to say a bit more, particularly on the private finance issues because the Minister of State has been very heavily involved in leading our work in trying to mobilise private finance, and I think there has been quite a breakthrough at Durban as well in the new commitment, which has been very under reported, to new ways of mobilising private finance on a market-based instrument.

Greg Barker: I think it is absolutely fair to say that when this pledge at Copenhagen was made to mobilise $100 billion per annum by 2020 into developing economies there was a large assumption from the developing economies themselves that the vast majority of that would have to come from public sources, and that when developed economies were talking about private sector finance it was, in a way, to wriggle out of their commitments to public sector finance. There was definitely a lack of understanding in language and meaning between the developed and developing economies, and I think we have gone a long way over the last two years to narrow that gap of understanding and to increase significantly the credibility and potential of private sector finance.

One of the initiatives that I launched following the Oslo finance meeting in 2010, post-Copenhagen, was the capital markets climate initiative here in London, which basically is the Government convening all the major players in this future market in the UK, so the large investments banks, the insurance companies, the pension funds, the straight lending banks, actuaries even, to drive forward an agenda of what exactly we need to do to create investment grade products that will be useful to developing countries, and what they need to do to create investment grade projects that can be invested in by international investors.

That dialogue now involves the world economic forum and is becoming recognised. It was very heartening to see at Durban that it is becoming increasingly recognised by other major institutions like the World Bank and the OECD as being of significant value in helping not just to change the climate of opinion in a much more favourable way to see the potential of private sector finance, but to mobilise that finance itself. We are looking to not just talk about things but sponsor exemplar projects on the ground in Kenya, in India and, beyond that, in sub-Saharan Africa. We are trying to drive the market into places that otherwise it would be slower and more reluctant to grow but ultimately has potential to offer.

Chris Huhne: If I can just add one other point. We touched on this a bit in questions after the statement yesterday, but if we are going to get a real success here, it is absolutely crucial that development, at whatever level of income per head a country is, is not seen as being in contradistinction to dealing with environmental problems and climate change. Therefore this whole mobilisation of finance on the private side and the public side is absolutely crucial to making sure that there is a widespread acceptance that these goals are not in conflict. I was particularly pleased to participate at the launch of the Ethiopian low carbon growth strategy. We have gone through a lot of support for countries at different levels of income to show that there is a real green growth pathway, which provides the prospect of good and rising living standards while respecting international obligations. The Indian Minister made a passionate appeal on that right in the closing stages of the plenary saying that we cannot compromise on development goals, and I think she is absolutely right.

If we are seen as attempting to get developing countries with very low levels of income to compromise on their absolutely legitimate aspirations for raising living standards, we will lose this battle. Therefore it is absolutely crucial that these two things are seen to be moving arm in arm, hand in hand, and that we are going to be committed. Therefore, getting the practical work that Greg has been doing on the private side, and practical demonstrations of successful projects and of growth models, is essential.

Greg Barker: I would say that the UK has particular authority on this, not least because we hope that the City is the leading global hub for raising green capital. Interestingly, while we were in Durban we saw the $1 trillionth invested in the global renewable energy economy, according to, I think, Bloomberg New Energy Finance. The UK also has a strong position because of the coalition’s commitment to the international climate fund: £2.9 billion running through to until 2014-15, which is a longer period than any other developed economy has given. When we are talking about mobilising private finance, our ability to do so in conjunction with our public sector finance and use at least a significant part of our budget to crowd in additional private sector finance, is what the developed economies need to see-the additionality that private sector finance brings.

Chris Huhne: We very much hope to go on working both with Minister Natarajan and other partners in the developing world on these issues.

Q19 Ian Lavery: There have been a number of suggestions on where finances could come from. I just wonder what your views would be on the high profile suggestions that include the removal and redirection of fossil fuel subsidies and an international tax on aviation and marine fuels. Do you support these types of initiatives?

Chris Huhne: The proposals for a particular bunkers tax came out of the AGF report that I was on and we certainly support efforts to make progress towards a global regime for addressing emissions from international aviation and maritime transport, i.e. international bunker fuels. Our preferred option would probably be to extend the sort of arrangements, which slightly controversially have already been extended in Europe with the extension of the emissions trading scheme to aviation. We would like to see a global emissions trading scheme, but we support further work being undertaken in both the ICAO and the IMO. Indeed, I saw the Secretary General of the IMO briefly in Durban, and I know that there are ongoing work streams there, and we will be talking together about that. So I think that that is crucial.

I am convinced, as a result of those discussions in the AGF, that a financial transaction tax, although we are open-minded about a global financial transactions tax if it can be made to work globally, is not a runner with a significant number of the parties and therefore I think that the bunker fuels route is much more likely to be successful than the financial transaction tax route.

I particularly remember some very robust discussions with Larry Summers, who is the US member of the advisory group on finance, in which he made it clear that there was going to be no US support for a financial transaction tax in any circumstances at any time, whatever happened, and I think that the US position is peculiarly adamant on this.

Q20 Ian Lavery: Much of the climate finance has been channelled through the international institutions such as the World Bank and given in the form of loan subsidies and equities. To what extent is that true of the UK’s pledges?

Chris Huhne: It is true that one of the things that we have done is set out, as the Minister of State pointed out, very clearly-so far we have spent about £1 billion or £1.5 billion of fast start finance. We also have a total commitment of £2.9 billion to climate finance over the whole comprehensive spending review period. A very substantial part of that is going through the multilateral development institutions, precisely because they already have the means and the mechanisms to do that, and we do not believe in trying to duplicate mechanisms that are already out there. We have some capacity and willingness to do bilateral support but, in general, we have gone through the multilaterals, and I would say that there is an important role for equity grants, loans and guarantees, and we are doing a very substantial amount.

I am very happy, Mr Chair, if you would like us to do so, to send you a note on specifically what we are doing on international climate finance, or I can give you some of the key points from my briefing, but it is quite an impressive list now of projects that we are supporting both bilaterally and through the multilateral development banks.

Q21 Ian Lavery: Finally, do you think it was legitimate that Saudi Arabia argued for compensation for oil-producing countries for revenues lost as a result of climate change?

Chris Huhne: How diplomatic am I allowed to be, Pete? The answer is that sometimes in international negotiations everybody has to come away with a bit of an apple, and that was the one for the Saudis. I think the reality is that there will continue to be substantial resistance to that, obviously because, as you know, in current circumstances of high and rising fossil fuel prices, it is not obvious that the highest priority for development among the developing countries are the oil and gas-rich developing countries. There are substantially higher priorities among the low income group.

Q22 Dr Whitehead: Notwithstanding the fact that this was a great success against a background of very low expectations, as you said, the situation that the pledges prior to Durban were quite insufficient to get to the 2 degrees limit still pertains, and no new pledges were produced at Durban. I think a UNEP report just on the eve of the conference suggested that the gap that remained, even with all the Copenhagen pledges, would perhaps be up to about 11 gigatonnes, which is about the total of greenhouse gas emissions, the whole world energy supply, so it is pretty serious. What do you see as the real difference that what has been agreed at Durban may make about that gap as opposed to actually bridging that gap now?

Chris Huhne: You are absolutely right, that we did not broach in detail the subject of how much each country would meet. That was not one of our key asks here. The focus was very much on establishing the principles of how we would approach this, and making sure that we had an agreement on a process for doing so. However, on bridging the gap, I would say that we have a number of key options: reducing energy subsidies, for example, and there are still a lot of subsidies for fossil fuels around the world. That is estimated by the International Energy Agency to lead to something like a 1 to 2 gigatonne effect. There is International Climate Finance, beyond supporting the delivery of current pledges or countries without them, so estimates have been as high as 2.5 gigatonnes there, but that obviously depends on the level of finance and efficient use. You have the aviation and maritime points and UNEP, I think, has estimated there that you can get 0.3 to 0.5 gigatonnes. With an increase of national ambition, if countries without pledges reduce their emissions, 15% below business as usual would equate to around 1 gigatonne. If there was some extra ambition from the annex 1 countries, the developed countries, each extra 10% below 1990 would save about 1.75 gigatonnes, and if developing countries with pledges increase their ambition, each increase of a quarter-of 25%-in ambition would reduce emissions by about 0.75 gigatonnes.

Inevitably what we have to do here is establish the process, establish the size of the gap, and see how we can get to a situation where we are seriously addressing that, and I think we can. These are not impossible numbers. These are numbers that are attainable, which are not going to be an impossible ask for countries and are not going to create insuperable economic or political problems. Indeed, in many ways, they will open up great economic opportunities. The key test always for us in approaching Durban, was: is what comes out of here going to be credible? Is the commitment to the 2015, 2020 treaty going to be credible in terms of being legally binding? Is the process for ratcheting up ambition and trying to close the emissions gap going to be credible?

On the credibility test, it is a process. We are not there yet and I am the first to admit that. We have a lot more work to do, but I think we have come away from Durban with a credible road map for tackling this in the period up to 2020 and in the period from 2020.

Q23 Dr Whitehead: India and China are still accusing developed countries of not cutting their own greenhouse gas emissions, and whether those particular reductions that you have talked about could come about, clearly unless they change their practical tune, as opposed to their theoretical tune, I guess we are still a long way from even starting that road map, aren’t we?

Chris Huhne: There will always be a fine reading of reports, particularly among negotiators who are always trying to put each other on the back foot, like the report from the Stockholm Environmental Institute, which that is an indirect citation from. The reality is that if you look at what countries are doing, if you look at what China is doing, it is doing an awful lot. In fact China, despite the fact that it did not have a Kyoto binding pledge for emissions is doing a lot more than some countries that did have a Kyoto binding pledge.

Just leaving aside for a minute the rhetoric, which does tend to fly around these negotiations, the reality is that we can see adequate process but we are not at the 25%, 40% reduction for developed countries as a whole that the IPCC recommended, and we clearly need to do more. For example, in the European Union, we have been pressing, and we will continue to press for raising our level of ambition in the European Union from 20% to 30%. I had discussions with the new Danish Minister who has just come in, who is going to be the President of the European Council in the first six months of next year, and we will be working on attempting to improve our ambition in the European Union on this.

Q24 Dr Whitehead: Do you think, during this period of looking at what can seriously chip away-to put it at its most basic-those enormous figures of difference on the 2 degrees, that we in the UK will come under examination in terms of, for example, the fact that our emissions produced have gone down, but emissions of our imports are going up? There are possible beginnings of different methods of reading this. The question of additionality on offset projects and whether they really save the greenhouse gases that the mechanisms suggest that they do and our involvement in that, and indeed our continuing condoning, shall we say, of UK bank investments in overseas coal and intensive energy use, when we know that G20, for example, pledged to end those fossil subsidies-do you think those sort of discussions need to go on in the UK?

Chris Huhne: I have absolutely no doubt that it is inevitable, given the enormous change management programme that the whole process of transition to a low carbon economy involves, that we will have false starts, have policies that do not deliver exactly what they hoped to deliver, and other policies, which may not even be operating properly in the way that we would hope in terms of value for money. We will have to go on looking at our whole set of policies to make sure that they are doing that.

We are pioneering a set of policies, which have never been tried before-take the renewal heat incentive, to name but one, or the Green Deal and Pay As You Save energy saving. These policies have never been tried in any other country before and it would be astonishing if everything that we pioneered were things that were going to work straight off without any need for tweaking or course adjustment. I think that that is absolutely right and there will be an ongoing debate about that at international level. We may well find ourselves the recipient of criticism of some of our work as a result, but I have to say so far that we have a lot of international interest in the things that we are doing because nobody else has done them yet.

It was particularly interesting that the Germanwatch report, which I cited in the House yesterday, came to the conclusion that we were the second best performing country on climate change policies in the European Union, only after Sweden. That is a pretty good league to be in. We will aim for number one, but I am quite happy to be number two and trying hard.

Q25 Albert Owen: If we can move on to carbon pressures, you said you are a member of the UN Group on Climate Financing. That group has reported that a carbon price of between €15 and 19 per tonne of CO2 equivalent in 2020 was necessary. Do you think that is achievable?

Chris Huhne: It clearly is potentially achievable if we were to move rapidly enough, but you would have to say, looking at the carbon price in recent weeks and months, that we have been going, if anything, rather in the wrong direction because, of course, the carbon price is not just a consequence, sadly, of the policies that we put in place to curb emissions but also a function of the demand, which has been very heavily hit by the adverse developments in the international economic outlook.

Q26 Albert Owen: The Swiss bank, UBS, has said that the €210 billion costs could have been put to better use on closing down the dirtiest power plants; do you agree with that?

Chris Huhne: Put to better use than what?

Albert Owen: Than the equivalent carbon pricing and everything-the way it is being used-rather than having a scheme that could be targeted at closing dirty plants down.

Chris Huhne: I will be interested to see it. I am not aware of that particular study and I will be very happy to have a look at it and come back to you.

Q27 Albert Owen: What is your opinion on the principle of, rather than having the scheme, just closing down the dirtiest plants?

Chris Huhne: I am very much in favour of looking at the most cost effective ways that we can find of reaching our climate change ambitions. I have absolutely no appetite for either sadism or masochism and therefore I am very keen, as a good Liberal Democrat, that we should try and deliver our policies in the most cost effective and cheapest way possible. If there is something that I have missed with this certified report-

Albert Owen: So you will look into this?

Chris Huhne: I am very happy to look at it as one of the options that we have. Generally, in an ideal world my approach to this issue, as somebody from an economics background, is, as you might expect, that in an ideal world we would have a carbon price that was enough to drive this whole process, then all of us could go home. We would know that the market price would be enough to set the incentives. Greg and I and everybody else would not have to worry at all and we would just sit back and arrive at some point in the future where we had a low carbon economy because the carbon price had been high enough to drive it all.

Sadly, we know that things are not quite as simple as that and there are a lot of potential fallbacks. We are very committed to the carbon market but where the carbon price is not delivering we are prepared to step in, as the Chancellor did with the carbon price floor to underpin that price with a very clear signal, and we also, of course, have a whole array of other policies, which have similar effect. Some of them regulatory, some of them tax and some of them other means, subsidies. So inevitably we are working on other fields as well, but the intellectual consistency of what we are trying to do is that, in an ideal world, we would have the same carbon pricing that would be adequate to drive the whole process, but in a less than ideal world, we must try and align our policies so that at least the implicit carbon prices are similar. There was quite an interesting piece of work from the last OECD-

Albert Owen: So you have not seen this piece of work but you will have a look at it?

Chris Huhne: I am very happy to.

Q28 Albert Owen: You mentioned the fall and the record lows of the carbon price which leaves the EU open, does it not, to accusations that its own climate mitigation policies are not adequate?

Chris Huhne: Yes. As I say, unfortunately the carbon price is not just a result of climate mitigation policies. It is also a result of the general state of the business cycle and the fact that the international economic environment, particularly the European economic environment, is not everything that any of us would wish it to be and that is obviously having an effect on the carbon price as it is having an effect on many other markets.

Albert Owen: As simple as that.

Chris Huhne: That is, I think, absolutely key, but remember that one of the things that we are committed to-and were committed to before the latest developments in the carbon price-is raising the level of ambition in the European Union. That would be one way of increasing the signals sent out by the carbon price but it would, in current circumstances, merely compensate to some degree for the effect on the carbon price that is coming from the lower level of economic activity than had previously been anticipated.

Q29 Albert Owen: But is it not harder for the EU to argue to lesser developed countries and others that they need to take these steps when the EU schemes do not appear to be working?

Chris Huhne: To be fair, remember that we have not been-and although I say in an ideal world we would have a carbon price and that would be it, and we could all go home, in reality, we have all recognised that that is not-

Q30 Albert Owen: We are working in the world of reality now, and you are negotiating from a perspective, and telling other countries they need to adapt schemes and that the market can come into the less developed countries but it is more difficult when the EU trading scheme itself is not working at this moment in time.

Chris Huhne: I think it is very clear what our commitment to the carbon market is. I think it is very clear that it is affected by the short-term economic situation and we have always in the European Union had other policy instruments as well. I can remember, for example-

Q31 Albert Owen: So will you be encouraging others to use other methods as well?

Chris Huhne: It is inevitable I think. Just to give you one example of a spectacularly successful one, which initially had enormous pushback from the industry affected: the various requirements that were put on the car industry to reduce carbon emissions. That has had a spectacularly successful effect on the European car industry.

Q32 Albert Owen: That was targeted, wasn’t it?

Chris Huhne: It was very targeted.

Albert Owen: That is my original question: is a more targeted approach not a better approach?

Chris Huhne: I think that there is-inevitably, it is right that there is-

Albert Owen: You are beginning to agree with me now.

Chris Huhne: I am not beginning to agree with you, I think I would always agree with you on this. I think that in the real world we have never and are never likely to get to a point where the carbon price is sustained at a level where on its own it does all the business we need to do and, therefore, there are lots of other things which we have done. That is why, for example, we are doing the Green Deal and Pay As You Save, that is why we are doing public finance for the renewable heat incentive and why we are doing £1 billion for carbon capture and storage. We are not a one-trick pony and it is inevitably the case that we are going to do other things. I think it is important that we should try and be as consistent as possible so that the implicit carbon price set out by regulatory or tax means is broadly in line. I was going to say that, in the last OECD country report on the UK, there was a very useful analysis of how different the implicit carbon price is for many of our policies and we, in an ideal world, will move towards the situation where that is a little more consistent.

Q33 Chair: You mentioned carbon capture and storage, Secretary of State. We wrote to you, and I realise you have been away and haven’t had time to answer yet, but you can pre-empt it by telling us. It appears that the Treasury have now deferred any expenditure on carbon capture and storage until well in to the next Parliament. Is that correct?

Chris Huhne: No. Let me explain the situation. The Treasury has first and foremost said that the £1 billion is still available and that is absolutely key, and I think the Treasury knows that the amount of money set aside for carbon capture and storage is a strategically important programme for the UK in terms of our energy security as well as climate change policies. Because of the Longannet Project, the £1 billion had previously been all scheduled into this comprehensive spending review period. Now, it is inevitable, given that the NER process is a little later, that part of the funding stream-part of that £1 billion-is going to fall outside this comprehensive spending review period and in the next comprehensive spending review period. But I have made it very clear to the industry and I have made it very clear elsewhere that the £1 billion is there, that the Treasury signed up to it and if we were to have projects that needed that profile to be adjusted, I will be happy to go back and see whether we can bring forward whatever is necessary, when it is necessary, but obviously the Treasury quite rightly, as a result of the failure of Longannet, sees that some of the £1 billion is going to fall into the next CSR period.

Q34 Chair: Do you still want our timetable-the UK’s timetable-to be aligned with that of the European Commission for a project to be operational by the second half of 2016?

Chris Huhne: In an ideal world, that would be absolutely right.

Chair: So there is no chance of that at all now?

Chris Huhne: I don’t say there is no chance of that.

Chair: In an ideal world.

Chris Huhne: I think it is ambitious. I think even the Commission would recognise it is an ambitious timetable, but we should try and work on it because it is absolutely crucial. I was at a very encouraging meeting with a number of other people from across the world at Durban who are very keen on carbon capture and storage. It is absolutely crucial that we get a power station at commercial scale operating with carbon capture and storage, both for our national strategic interest in terms of the use, particularly potentially of gas and coal, but also because of the enormous global market which exists. In my recent visit to see a pilot CCS plant in Inner Mongolia, I can report back to the Committee that frankly we need this and we need it for China, for India, if we are going to get a grip on the world’s problem as well as on our own.

Q35 Chair: I am sure almost everyone in this room understands that very clearly. Do you think anyone in the Treasury understands that?

Chris Huhne: Yes, I do. Do not fall for the easy story that the Treasury is somehow unsympathetic on these goals, because on this in particular, I would say, that the Treasury understands from a national point of view, the importance to us of being able to have low carbon electricity generation from whatever source is most cost effective for the UK economy and cheapest for the UK consumer. That may be renewables, it may be nuclear or it may be clean coal and gas from carbon capture and storage. We simply do not know yet because the technological uncertainties are so great, nor do we know because the market uncertainties are great. We just had, if I remember rightly, a 38% increase in the world gas price, winter to winter, for the UK but there is a still a very low gas price in the US; there are still discoveries of shale. We certainly still believe, with the right environmental regulations, that shale can be an exciting potential source of low carbon energy in the UK with carbon capture and storage. If we are going to have that route available to us and if we are going to have a portfolio of technologies that can withstand all the uncertainties both on the technology and on the market, CCS is absolutely key to that and the Treasury does understand that-Treasury Ministers, Treasury officials, absolutely.

Q36 Chair: Some of us simple souls unfortunately fall for the easy story about the Treasury because it appears to be the only one that fits the facts. The timetable for the first CCS project is rapidly disappearing towards 2020. Charles Hendry, apparently, is discussing arrangements with the Treasury for the funding of four more schemes. Any idea of how those discussions are going?

Chris Huhne: Remember that one of the things that we will have from the point at which we get the next Energy Bill through the Commons and the Lords, as I hope we will in the second Session, is the ability to do contracts for difference. That ability will be available to support carbon capture and storage just as much as it is available to support other low carbon forms of electricity generation. So we are not just talking about the £1 billion that was always envisaged as an upfront capital subsidy, and it is very regrettable that we were not able to deliver Longannet for the £1 billion that had been allocated in this comprehensive spending review period, but every single party who was in the negotiations over Longannet came away clearly of a view that we could deliver another CCS project for within the £1 billion. Indeed, we have had expressions of interest about Peterhead exactly within that budget, so I am pretty confident that we can do that.

Chair: I should remind the Committee of my entry in the Register of Members’ Financial Interests.

Q37 Dr Whitehead: Just for my personal clarification, if a CCS competition were to be accelerated and agreed, and £1 billion was allocated for that but it was spread over two spending review periods, would that mean that, as soon as that was agreed and DECC signed it off, whatever fell this side of the spending period as opposed to what fell on the other side would also automatically be signed off by the Treasury?

Chris Huhne: It means exactly what it says: that the Treasury is committed to the £1 billion and that means that the £1 billion, wherever it falls, will be spent to support CCS.

Dr Whitehead: When required by DECC?

Chris Huhne: When required.

Dr Whitehead: By DECC?

Chris Huhne: Obviously we don’t, as yet, have a clear project and part of the NER process is to decide what the best project should be to back. But when we have that, we will obviously go and discuss in detail the profiling of the spend necessary to support that project, or projects, with the Treasury. All I would say is remember that we also have not just the £1 billion but-this is quite crucial in the context of the negotiations at Longannet-the ability to support CCS projects and the running costs through these contracts.

Q38 Dr Whitehead: But you would have to go then and discuss the profiling of that with Treasury.

Chris Huhne: Anything that has such a significant impact on both public expenditure and indeed more broadly on the economy as the cost of energy, is something that is, in my view, a completely legitimate subject for the Treasury to discuss with any Department. I would absolutely expect that and that is precisely why we agreed the levy control framework and why we have ongoing discussions on these sorts of issues. Energy costs are absolutely crucial to business as we have seen with what we have announced on the energy intensive industries, and absolutely crucial, obviously, to the consumer. We want to make sure that we can go on showing in every annual energy statement that the overall impact of our policies-low carbon policies and energy saving policies-is to reduce the average bill compared with what it would otherwise be. I think that is a tremendously important assurance to give to consumers.

Q39 Dr Whitehead: But the agreed level of ECO is outside the levy control framework?

Chris Huhne: It is because the ECO is not regarded as being a levy, but it is within the bill impact assessment, so the bill impact assessment that we published at the annual energy statement takes into account the impact on bills of the ECO, both positive and negative, and gives a time profile as well for what we think is going to be the effect. I think it is important for those of us who foresee this transition to a low carbon economy as one that will take time and requires therefore, by definition, public support right the way across the board, which is, after all, what I think is crucial to all of us and also in preserving the political consensus that exists across the major parties behind this. It is absolutely crucial that I can honestly go and say, "Quiz our DECC economists as much as you like but our best estimate is that the total impact of our policies-the low carbon policies and energy saving policies-the net effect is to reduce average bills compared with what they would otherwise be". That is a very, very strong defence against the charges that are very freely made in some parts of the press that I am out there to levy appalling charges on poor innocent consumers and put the British householder out of business and so on. So I think this is a very important part of what we do and we are committed to being totally transparent on this and to giving as much detail as anybody needs up to and including the point at which they are bored to tears.

Q40 Sir Robert Smith: I, too, must remind the Committee of my entries in the Register of Members’ Financial Interests especially to do with oil and gas and a shareholding in Shell. Secretary of State, you made the point that the crucial role for CCS probably in the UK context will be gas because we have supplies of gas and it is a flexible fuel, and Peterhead is a gas-fired project. Maybe you will have to write about this but what are the hurdles that the Peterhead project would have to go through to access the £1 billion?

Chris Huhne: I will happily write if there is any more detail that officials think we should provide to you, but the key point obviously at this stage is that we are looking at the criteria at the moment, that the absolute bottom line of what we are trying to do with CCS is to get in a position where there is enough certainty around the costs of investment in CCS and the running costs of CCS that people are going to be able to treat it as a seriously commercial proposition. To come back to the Chairman’s question about the Treasury, one of the reasons why I genuinely think that the Treasury is on board with this is precisely because they can see the advantages of having another electricity generation source providing real competitive tension in the overall market for electricity generation. The potential prize from having that real competitive tension enormously outweighs any short-term costs that there may be from accelerating the process. So I think there is a real commitment to making sure that we get this up and running but the key point is what is the learning? Now, the NER already has criteria. There are already projects in there and we will be making clear, in due course, what else we are looking for in terms of the outcomes. We have already talked a bit about the outcomes that we are looking for from CCS projects, and that will obviously determine how we spend the £1 billion, but the key thing is getting the industry, as a whole, certain enough about the capital and running costs of CCS projects for the power industry that will enable people to take big private sector investments and introduce real competitive tension into the market.

Q41 Barry Gardiner: Secretary of State, first of all, many congratulations to you and your team. I think it is tremendous that the EU negotiating stance came off in the way that it did and also the way in which you managed to garner the support of countries that have not traditionally sided with the EU. It is significant that you managed to do that.

In your statement to the House yesterday, you spent just 13 words talking about reduced emissions from deforestation and degradation. Given that it comprises 17% to 20% of the emissions, and if you were to add it with LULUCF, Land Use, Land-Use Change and Forestry, and agriculture, you would be looking at about 30%. Could you say something about the progress that was made in this area at Durban and, in particular, could you make reference to the rationale behind the adoption of the baselines?

Chris Huhne: I will try and answer that question. This is a part of the negotiation that I wasn’t intimately involved with because it didn’t fortunately have to surface at the endgame because I think we made quite a lot of progress before. I am going to kick over to Greg in a minute to add the points that I have not made. Sorry about that-that is one of the advantages of being the Secretary of State. We wanted to agree what REDD+ reference levels should be and how they should be designed. We have agreed that reference levels are benchmarks against which we will measure the effect of REDD+ and that these are in terms of carbon dioxide emissions and should be based on historic information. The final decision invites developing countries to submit their proposed reference levels, so that was one key objective. We also wanted a decision affirming the safeguards agreed in Cancun and text describing what information forest countries will need to report on how these safeguards are being implemented. The decision achieves those aims as well. The parties agreed that information on how safeguards are being implemented should be provided in a national communication. So there was a good bit of progress there, but Greg had been very heavily involved in this area, so perhaps you would like to take it up.

Pete Betts: Maybe I could just say one thing before Greg. Even for the techies like me, this was a relatively complex area. I think it is true to say we would have liked faster progress on REDD at this meeting. We did get some progress on setting baselines and on safeguards and we are pleased with that, and we kept all the financing sources in play, but I guess we are also very conscious that a lot of the action on REDD is now at country level and trying to overcome the practical challenges to delivering the finance on the ground, to taking account of the drivers from the private sector, addressing the governance issues and I know that is an issue where Greg has been-

Q42 Barry Gardiner: I wanted to come onto that but if we could stick just with the baselines and also specifically with LULUCF because my understanding is that while the baseline was agreed for REDD+, they should be based on historic data. That is not the case for LULUCF and, indeed, the EU negotiating position that Jim Penman adopted was very far removed from that and I wanted to probe that a little bit with you.

Pete Betts: Yes. The objective with certainly baselines for LULUCF has always been incentivised action and the problem, at least in relation to LULUCF, with setting them in relation to historic levels is you either-net emissions from forestry, as you know probably better than I, fluctuate with the age of trees and the age of forests and all the information we had was that setting baselines on historic levels would lead either to hot air for some countries or to not rewarding good behaviour, as it were-

Q43 Barry Gardiner: I understand that argument but that is only if you consider the historic level as a threshold and not as a franchise. The argument has always been that the incentivisation is not there if you regard it as a threshold; absolutely right, it is not. But if you regard it as a franchise where, if you achieve through to that, let’s say-we can pluck a figure out of the air-1,000 tonnes saving by getting down to your historic level, and then you go over that by one tonne, you get to 1,001, so the incentive would be there but it would still be referenced on historic levels and it appears that that is not something that, as a negotiating stance, you are prepared to countenance and I want to know why.

Pete Betts: I am not clear, or on top of the detail of why that particular model was not followed. Clearly this was an area that has been negotiated for years and it has huge implications for a number of countries, so negotiability would have played a part, but I think there were also technical challenges associated even with that.

Chris Huhne: There were also, on the LULUCF side, some quite difficult issues for some of our own member states with slow growing forests, particularly the Finns, and so-

Barry Gardiner: But the point of this whole process is to reduce emissions and if one doesn’t do that against a reality of a historical basis, then we can play at baselines and-

Chris Huhne: Yes. I don’t think that was the problem with the Finns. The problem was that they were getting hit-

Barry Gardiner: It was a lack of incentivisation.

Chris Huhne: They were getting hit in ways that were unexpected and a law of unintended consequences was operating in that. But what we will undertake to do, since we don’t have a forestry expert with us, unless Ben or Greg wanted to come in-and Mr Gardiner is very expert in this area-we would love to continue that discussion and we will do so and do anything we can to inform you about the basis of that decision and that EU negotiating stance. We are very happy to undertake to do that.

Q44 Barry Gardiner: Yes, please. If Mr Barker could address the issue of private sector funding and how to get that?

Greg Barker: Yes, I think it is fair to say that there wasn’t anything transformational on forestry that happened at Durban, but the overall atmosphere around forestry was very positive. I spoke at the launch of an initiative covering the whole of the Congo Basin, which, although it wasn’t announcing new finance, was bringing together significant finance into one initiative along with an undertaking for improved governance and MRV. I think there was a real tangible sense that we are making progress, certainly with REDD+ and there is consensus, as a result of Durban, that all the financing mechanisms remain on the table and a growing view that we will need all the different financing. We will need public sector finance, we will need to mobilise additional resource from private sector sources and, in due course, that will also mean a market, but there is a lot more work to be done in order to put the flesh on the bones of those individual finance sources. We also need to do more work next year on MRV systems and how to address the drivers of deforestation. It is still very much a work in progress but I see a much greater consensus between developed and developing economies on our overall approach to handling this issue.

Q45 Barry Gardiner: In terms of financing, REDD+ has always been seen as one of the lower cost ways of reducing emissions and if you look at the McKinsey cost curve, it’s right there at the intersection. I wonder whether you feel that’s true? One of the things I was struck by in discussions with Mexican delegates a few weeks ago was when one of the guys said, referring to us in developed countries, "You think that we’re just cutting down forests to plant corn. Well, it’s not corn, it’s cannabis and it’s other high value crops like avocadoes" and I wonder if, in fact, the funding flows that you think may come through from the private sector, because they will take a rental value off those funds, off REDD+, are going to be sufficient to drive the engine of REDD+. I have my doubts because I think we are imagining that it is going to be able to be bought too cheaply.

Greg Barker: You are absolutely right, Mr Gardiner. Interestingly, we hosted a visit from the President of Columbia shortly before the Durban conference and one of the points that the Columbian Environment Minister made strongly was that one of the key drivers of deforestation in Columbia, but also elsewhere in South America, is narcotics and not just cannabis. So a very strong drug enforcement policy cutting off demand and supply routes is a powerful weapon against deforestation. It is a message that I had never heard before and one that may indeed resonate with people, particularly young people I think, who maybe have a slightly different approach to casual drug use and aren’t persuaded by health arguments. The real substantive point you make-whether we have to recognise that the real value of standing timber may be higher than some of the basic assumptions that we have made-is correct, whether that is cocaine or avocadoes. But I think there is good work and we need to make sure that we also reward the good guys, who simply are not cutting down their standing timber, as well as always focusing on the problem cases. We have to make sure there is equitable access to REDD+ finance and we are very keen, in the UK, to do a lot more bilaterally so that we can showcase more effectively and build confidence in the whole system. I think you can do that on exemplar projects, if they are done bilaterally rather than through multilateral projects that sometimes get rather blurred as to where the funding is coming from or the credibility of the project. So we, as a team, are very keen to use part of our ICF, where we have focused £300 million on specific forestry action as part of our fast start finance, and more to come beyond that, on projects.

Chris Huhne: £600 million in total up to 2015.

Greg Barker: Yes. So this is something, but you are right, I think it is a far more complex situation than is sometimes assumed. We don’t pretend to have the entire answer.

Chris Huhne: Can I add one other thing? I think the way you are thinking about it is absolutely right in the sense that we should properly think about this as an opportunity cost issue, where people have an opportunity to do something else and that opportunity may well change. It is not just drugs, narcotics or whatever. There is also a general issue, which is that we have had, uniquely for post-war recoveries, a continued very high level of commodity prices both in oil and gas and also soft commodities. That is obviously one of the important drivers of deforestation. So we have to make sure that the policy settings for this take adequate account of the fact that it has to be a moving target and if soft commodity prices increase then, by definition, you are going to make sure that the forestry regime takes that into account and provides correspondingly larger incentives.

Greg Barker: There is a bigger play-through with our development goals because forests, directly and indirectly, contribute to the livelihoods of 90% of the 1.2 billion people living in extreme poverty. This isn’t just about a few tribes.

Chris Huhne: The only other thing I think is worth adding is that this is an area where we have to work with the private sector. We have worked with the private sector in terms of demand as well as on the ground on exemplar projects. There are some exciting things that we’re doing in forest nations, or trying to do in forest nations. So, for example, the Unilever commitment to sustainable palm oil is an important bit of fixing the demand side of the equation, so we need to work on that side too.

Chair: I appreciate that we are getting close to the end. We just want to touch on, quickly if we can, adaptation.

Q46 John Robertson: Secretary of State, in your statement, you talked about the progress that was made in several parts, one of which was the creation of the Adaptation Committee, which will provide "advice and ensure coherent action on adaptation". The Committee was named in Cancun, but we don’t know who its members are. Who are the members of the Committee?

Chris Huhne: I think you’re right in that Durban was a great success for adaptation. It was the key element to the framework that we agreed in Cancun and is now operational, and setting up the Adaptation Committee and defining the process for medium and long-term national adaptation planning were key deliverables that were agreed at Durban, which will help the least developed countries move now to address the devastating impact of climate change. The Adaptation Committee has been operationalised as a Technical Advisory Committee without formal links to the financial decision making bodies. You want to know the national representation on it?

John Robertson: I think it would be helpful if we knew who the members were.

Chris Huhne: What happens with these, and it is the same with a number of the other groups that we set up, is that parties will nominate who they want to have on the Committee and that process, as I understand it, is underway and there is a deadline.

John Robertson: It is still a work in progress.

Chris Huhne: It is clearly there and it will take a bit of time. We will very happily write to you on exactly when we are expecting to be able to tell you who is on there. The conference sets up a process where parties nominate people and by some mysterious smoke signal effect, they are then decided. It urges regional groups in making their nominations to consider the special needs and concerns particularly of vulnerable developing countries, so effectively, the regional groups will take soundings. They will then go ahead and make nominations. So, "It encourages parties to nominate experts to the Adaptation Committee with a diversity of experience and knowledge relevant to adaptation and climate change while also taking into account the need to achieve gender balance."

Q47 John Robertson: I think our researchers already have some of the details from that and done a fairly good job on it. Was the need for the adaptation overshadowed by the negotiations of legally binding mitigation?

Chris Huhne: No, I wouldn’t say so. I would say that it was clear that we were able to make considerable progress in this area and that I think there would have been a major block on progress in the final huddle on the legal binding if we hadn’t made progress on other areas, but this was not one of the ones that were ultimately a deal breaker. The finance side was absolutely crucial and the fact that we were able, I think as the UK, as I said, to show what we are doing, gives us a street cred among developing countries that is valuable.

Q48 John Robertson: You mentioned the regional groups and I am wondering how that is going to pan out for individual countries that perhaps want to identify their own priorities, or don’t they get that? Do they have to do it as a region rather than an individual country?

Chris Huhne: What the agreement says is that the regional groups will make the nominations and obviously it is hard for us to go behind that and we wouldn’t want to determine what regional groups decided were the appropriate people to nominate but, Pete, do you want to say a bit about that process?

Pete Betts: I guess we delivered on all the things that developing countries were looking to us to deliver as part of the package on adaptation, so we set up the Adaptation Committee and established a process on, for example, loss and damage, that was important to them. I guess the reality is that an awful lot of the real action on adaptation is about how you spend the money, which necessarily needs to be country driven.

Q49 John Robertson: My fear is that a small country will get swallowed by a larger country in a region where all of them have problems but the smaller, shall we say, poorer, less important country will get missed out so the individual country will not have its opportunity if it is part of a region.

Chris Huhne: I suppose theoretically that will be the case. Pete might want to add something, but my impression, for example, is that some of the smallest countries have managed to have a very effective voice in the whole COP process. I would not describe the small island states as being, in any way, backward in making their concerns felt and in making very direct appeals to the rest of the conference to make sure that we are taking on board their concerns. Some of them are very small states, literally tiny; tens of thousands of people.

Pete Betts: I think it is a very legitimate concern. Lots of smaller countries do have concerns that they might be left out and that is one of the reasons that this architecture was set up, the Adaptation Committee, the Standard Committee and so on, to kind of oversee where the finance was going and see that there are arrangements in place to deal with this "orphans and darlings phenomenon", as it is known.

Q50 John Robertson: I say that because we have information that Eastern and Southern Africa will get £15 million to build adaptation capability in Ethiopia. They will get £6.7 million for Kenya but there are lots of countries in that area that will probably need money as well. I have picked some of the bigger ones.

Chris Huhne: Are you referring to the UK’s particular support?

John Robertson: Yes, this is our support, which would appear to be a lot better than anybody else and you should be congratulated on that. I am not having a go. I am just trying to secure some kind of financial reward for countries that might not have the kicking power that the bigger countries have.

Chris Huhne: To be honest, and I don’t know whether Greg will want to talk about this as well, but this is something that clearly we have discussed with DFID and we are aware of the problem and we are obviously trying to aim off the problem. I think there is some substantial UK aid support for smaller ones.

Greg Barker: The OECD has just published an updated table, unfortunately I don’t have it with me, that sets out the collective adaptation and mitigation commitments of the developed countries and the UK comes right in the top of the adaptation portion of our climate spend. We really are helping lead the world. Now, relative to what needs to be done, in addition to that going forward, we are only just making a beginning but I think we are in a good place and we certainly have a lot of shared learning in terms of how we apply that adaptation budget and how we scale it up.

Chris Huhne: Let me give you an example in Africa. You have mentioned some of the bigger recipients but Rwanda is not one of the bigger countries and we have a programme there, but I think the Adaptation Committee will oversee where the spending is going and it will specifically look at spotting orphans. So if we have orphans, there is a way of trying to identify them, spot them and help them.

Q51 John Robertson: So there is definite progress since Cancun? We are moving forward?

Chris Huhne: That is right. It is obviously the case for the UK that we can’t fund everyone, but we can make a substantial contribution, and we have ongoing relationships with a number of the smallest countries and the most vulnerable countries.

Ben Lyon: One bit of progress that we did make was to elaborate a lot more guidelines on the national adaptation plans, very much with the focus on least developed countries and that comes under the decision that was adopted under the national adaptation plan submitted. So these plans, which help lever finance now; they are not a guarantee in themselves, but those guidelines should improve those plans for least developed countries, which will be a useful vehicle to try to help lever finance. There was also a specific request to the global environment facility to provide funding to support that. I think it’s certainly our view, and the view of donors who have been replenishing the global environment facility, that it certainly has sufficient funding to do that at the moment.

Q52 Dr Lee: I am conscious of time and we were going to go on and talk about the Met Office and its recent report on the impact and so on but if you allow me, just donning my Vice Chair of the Parliamentary Space Committee hat, the UK is the only country without an earth observation satellite, and, in view of the fact that what we are all talking about here is trying to get a global agreement on man’s impact on the environment, and that the World Bank has predicted carbon credits to be worth 2 trillion by 2050, this is going to require policing and eyes in the sky looking down. I just wondered if there was any cross-departmental view on this in terms of our use of space, our exploration of space and, as is always the case at the moment, UK PLC getting a cut of the action and whether you might want to speak to other Ministers about perhaps private government funding of satellites and trying to get a piece of that earth observation business that is going to be a thriving business in the future.

Chris Huhne: I think that is absolutely right, not just, but particularly in the forestry area, there has to be an important combination of top down in terms of understanding what the real level of emissions is or just the spatial coverage of forests and so forth, and bottom up, which is dealing with schemes that can deliver on the ground and deliver on the incentives that the top down aspect can put in place. I certainly had discussions with David Willetts at BIS on some of the exciting aspects of work in the UK on this. It is something that we are interested in looking at and I intend to have further discussions on this in the Department with our chief scientist, next time I have one of my regular meetings with him, to see how important that is in terms of prioritising our science and our technology support, which is not an insignificant budget and one that we can use to support key technology, so that’s one thing. Greg, you I think also, have you had a chance to discuss this?

Greg Barker: Only that I know that David Willetts is very keen on the whole industry of carbon management. I know that Oliver Letwin has also taken an interest, a cost-cutting interest, in the technology of satellite observation and the big leaps forward that we have made. Obviously in any sort of effective MRV process on forestry, particularly as you get into a market driven mechanism, the integrity of the information is going to be absolutely key and here, technology can play a critical role.

Q53 Dr Lee: Even the Americans, I gather, outsource to get information because they don’t have enough satellites to do it, so I think there is an opportunity here for a relatively modest sort of sum in Government terms, tens of millions, for us to put a few more up there and thereby generate some income for this country.

Chris Huhne: I will talk about it with Professor David MacKay when I next see him because this is an area that a number of members have talked to me about. The budget for support for scientific projects is not unlimited and it has a lot of potential calls on it and so drawing the line and deciding what is the key priority, whether it is this area or some of the other key challenges we have, for example, improving battery storage, improving the technology when it comes to some of the big renewables and moving that on so we can get costs done. These have all had to be fairly carefully balanced within a pretty restrained budget, but I will undertake to discuss this as I was intending to do and I would be happy to let you know informally or formally what conclusions we come to.

Q54 Chair: One final point arising directly out of Durban; although the outcome was much better than feared, nevertheless, we are still groping for post-Kyoto and we haven’t had the sort of continuum we hoped for two or three years ago. Looking at what is happening in terms of bottom up progress as well, in some areas it is very encouraging, China is one example. Do you think that, in terms of practical advances, bilateral agreements between say EU and China may offer as much scope for immediate practical advance as the UNFCCC process?

Chris Huhne: There is a lot of work which we are doing with China and with other countries. For example, work on our low carbon zones that are now covering more than a quarter of the population, so yes, there is stuff we can do. I think it goes hand in hand. I don’t think a bottom up approach on its own would work and I don’t think a top down approach on its own would work. Both have to work and they have to meet in the middle where you have practical delivery. But you are absolutely right, Mr Chairman, I am impressed every time I visit China with what they are doing. Sadly, they are also spectacularly emitting, so the coal-fired power stations are reaching such a point in China where they are the world’s largest emitter and emitting more per head than a number of European countries, as I said earlier. So we have to work on that. One of the reasons I believe that the Chinese changed at Durban is that they can see three factors. First, they are doing an awful lot, so they have a lot of businesses that have an interest in this green growth story and want there to be a world market that they can continue to thrive in, whether it is solar photovoltaics, where they are now the world market leader or six of the biggest renewables companies in the world. Secondly, I think there is the emissions point. They are more vulnerable. They can’t say, "I’m Tuvalu. Don’t mind me, I’m a little developing country". They are now the world’s biggest emitter and emitting more per head than a number of developed countries means also they are bound to receive criticism unless they are very clearly seen to be taking on commitments and moving forward. Thirdly, if you look at what happened in China in the last five-year plan, they must have increasing confidence that they can deliver because they have the policy instruments in place that give them increasingly the certainty that if they take on commitments-and after all we are talking about binding commitments from 2020-they are going to have the policy instruments to be able to deliver them. So for all those reasons, I think that was an important shift. We need bottom up and top down.

Chair: We much appreciate both you and your officials coming in so soon after getting back from South Africa, so a very useful session for us and keep up the good work.

Chris Huhne: Thank you very much, Mr Chairman. It has been a pleasure being here and thank you for your kind words. I would just like to say again what I said in the House. I think we had a fantastic team out in Durban. The British team played a blinder and was, in my experience, the best of all the teams out there, even though by no means the biggest. They have tremendous expertise and knowledge of the subject and of the people. Also the relationship building was very important. So that is great and I was very proud to lead them.

Chair: Thank you.

Memorandum submitted by the Foreign and Commonwealth Office

Thank you for your letter of 31 October, about the forthcoming seventeenth Conference of Parties to the UNFCCC taking place in Durban 28 November-9 December and the UK’s objectives going into the negotiations. The Government is committed to building an international climate change regime which will limit global average temperature rises to below two degrees above pre-industrial levels. We continue to see a legally binding agreement under the UNFCCC as the best way of achieving this.

The Secretary of State for Energy and Climate Change will lead the UK’s delegation to Durban and I understand that Gregory Barker MP, the Minister of State at the Department for Energy and Climate Change, has already written to you setting out our objectives for the Conference.

I agree with Mr Barker’s judgement that the immediate priority will be to further action the implementation of the agreements made at Cancun, continuing to put in place the global climate architecture. We also want to make progress towards a long-term objective of a legally binding instrument committing all major economies to binding targets to lower their emissions. Success at the Conference of the Parties (COP) in Durban will be measured by how far it takes us closer to this end. We will be pressing for agreement that we need to work towards a single legally bindinq instrument with a clear mandate or roadmap for doing so.

The publication of the World Energy Outlook this month makes clear the extent of the challenge facing us if we are to meet the two degrees target. That is why, at Durban, we want to acknowledge that the emissions reduction pledges on the table so far are collectively not ambitious enough to get us where we need to be to keep below two degrees. It is important that, at the COP, we make progress in understanding the size of this gap and how we can close it.

The Foreign and Commonwealth Office (FCO), working with DECC and other government departments, is playing a leading role in the run up to Durban and will continue to do so after the conference. I and other FCO Ministers are raising the issue with our foreign counterparts. Climate change attaches in British Embassies and High Commissions all over the world have been raising this issue with foreign governments and other influential groups, urging a high ambition approach on climate change, both at Durban and beyond. We remain committed to doing so in the future.

November 2011

Memorandum submitted by the Department of Energy and Climate Change

Thank you for your letter of 24 October concerning the Government’s priorities and criteria for success for the 17th Conference of the Parties to the UN Framework Convention on Climate Change (UNFCCC)—COP17—in Durban 28 November to 9 December. Our key objectives for Durban are of course consistent with those agreed at the Environment Council on 10 October.

A key objective is to make progress on implementation of the agreements made at Cancun, continuing to put in place the global climate architecture (including for climate finance, adaptation, forests, technology and measuring and reporting emissions).

We also want to make progress towards a legally binding instrument which commits all major economies to binding targets to lower their emissions. We will be pressing for agreement to a clear process towards this. While the delivery of this outcome will take time to achieve, the COP in Durban can take an important step towards this end. Our other key objective is around mitigation. The emissions reduction pledges on the table so far are collectively not ambitious enough to deliver the UNFCCC objective adopted at the Cancun COP last year to keep the increase in global temperatures below 2 degrees. We need to make progress in Durban in understanding the size of this gap and how we can close it.

If you would like a more detailed explanation of these objectives, we would be happy to arrange a meeting with officials ahead of Durban.

November 2011

Memorandum submitted by HM Treasury

Thank you for your letter of 31 October on HM Treasury’s objectives for the 17th Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC)—COP17—which will be held in Durban, 28 November to 9 December.

I have seen Greg Barker’s letter of 10 November outlining the Government’s objectives for COP17, and am pleased to confirm that HM Treasury supports the objectives as outlined by the Minister of State.

I would also note that the Government’s objectives are both challenging and ambitious, and that achieving balanced progress across the piece would be a considerable achievement.

I am copying this letter to Greg Barker.

November 2011

Prepared 19th April 2012