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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 1646-ii i

HOUSE OF COMMONS

ORAL EVIDENCE

TAKEN BEFORE THE

Energy and Climate Change Committee

Consumption-Based Emissions Reporting

Tuesday 31 January 2012

Greg Barker MP, Ben Golding, Lord Taylor of Holbeach CBE and Sara Eppel

Evidence heard in Public Questions 122 - 208

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Oral Evidence

Taken before the Energy and Climate Change Committee

on Tuesday 31 January 2012

Members present:

Mr Tim Yeo (Chair)

Dan Byles

Barry Gardiner

Ian Lavery

Dr Phillip Lee

Christopher Pincher

Laura Sandys

Sir Robert Smith

Dr Alan Whitehead

________________

Examination of Witnesses

Witnesses: Greg Barker MP, Minister of State, DECC, Ben Golding, Deputy Director of Strategy, DECC, Lord Taylor of Holbeach CBE, Parliamentary Under-Secretary of State, Defra, and Sara Eppel, Head, Sustainable Products and Consumers, Defra, gave evidence.

Q122 Chair: Good morning and welcome to the Committee. I apologise for keeping you waiting this morning. Apparently, the webcast production team do not recognise the fact that you are all world-famous and recognisable, both visually and audibly, to anyone who might be tuning in, so we are asked to get you to identify yourselves first, perhaps just on a left-to-right basis.

Ben Golding: Ben Golding, Deputy Director of Strategy, Department of Energy and Climate Change.

Greg Barker: Greg Barker. I am the Minister of State, Department of Energy and Climate Change.

Lord Taylor of Holbeach: I am John Taylor and I am Parliamentary Under-Secretary of State at Defra.

Sara Eppel: I am Sara Eppel. I am Head of Sustainable Products and Consumers at Defra.

Q123 Chair: Thank you all for coming in. We are interested in this subject because of the very stark contrast between the measurement of emissions on a territorial basis and those on a consumption basis. One shows emissions going down and the other shows emissions going up. That is why I am particularly glad to have Ministers from both Departments here this morning. Could I start by asking what DECC’s view is about the impact that the UK has had on the climate since 1990, based on their measurement of territorial emissions?

Greg Barker: Mr Chairman, this is a quite complex subject with many strands. It might better inform the Committee’s questions, if I make an opening statement to set the scene as we see it and then you can get into the nitty-gritty, if that is all right.

Q124 Chair: We would be delighted if you would. Has it been cleared with Defra?

Greg Barker: The important thing is to start by saying that emissionsbased reporting would take a different approach to the internationally agreed methodology for estimating and reporting greenhouse gas emissions, which uses a territorial or productionbased approach under which countries are responsible for emissions generated on their territory. While we very much understand where the Committee is coming from in their analysis and their line of questioning, we need to be very clear at the outset that this is a very different proposition from that which is internationally agreed. While consumptionbased emissions can provide very useful insights into how to decarbonise economies and to track our underlying progress, we consider that there are a number of very significant difficulties with such a proposed approach that need to be borne in mind.

Firstly, and I think most importantly, it is not in accordance with the rules that are agreed internationally for reporting to the UN Framework Convention on Climate Change, the UNFCCC, the overarching UN body, the Kyoto Protocol or the EU. The fact of the matter is there is no pressure from other countries of any meaningful type for such a change. It would be in the current circumstances difficult or well nigh impossible to negotiate a global emissions reduction treaty on the basis of consumptionbased emissions, and we would almost certainly fail if we tried to do that. The attempt to do that could delay an effective solution on climate change potentially for years or even decades, given how slow the UNFCCC process works.

It would also, we believe, be impossible to base international emissions reporting and getting a true picture on agreements on embedded emissions figures because they are fundamentally much more difficult to calculate accurately. They are uncertain and very difficult to verify. It would also certainly be impossible to agree internationally on a mechanism for allocating consumption emissions to different countries and it is likely, even if you were to get round the first course, that that would then be challenged under the international trade regime, particularly by developing economies.

We only have direct influence over our domestic, home-produced emissions. We obviously have much less leverage over emissions that occur abroad compared to those in the UK. That is why we are working hard with our partners on reaching agreement on an international global deal. As you know, we did actually make significant progress, as I reported with the Secretary of State to this Committee, at the UN Climate Conference in Durban in December, including on a number of key issues important to both developed and developing countries. We have secured a roadmap to negotiate a new globally legally binding agreement no later than 2015. We also agreed that we would adopt a second commitment period of the Kyoto Protocol by the end of this year, and between now and the next conference in Qatar in November we will need to develop the detail of a second commitment period, including emissions reductions targets. We also made significant progress in building on the Cancun Agreement, including agreements to operationalise the Climate Fund.

This is a major step forward but there is still a lot to be done. If we were to now suddenly introduce into that process either a new proposition for accounting for carbon emissions or even just another discussion that was serious that could potentially undermine-and there are those that wish to undermine-the whole UNFCCC process or the dialogue or the credibility of the current emissions reporting regime, I think that could be very dangerous, given how fragile the climate negotiations are.

Formal negotiations, though, are, of course, only one part of the UK’s approach to tackling climate change. In parallel, we are already taking practical action on the ground, both in the UK and around the globe, to help tackle climate change beyond our own territory, most significant of which is the commitment of £2.9 billion over the spending review period to help developing countries adapt to climate change and move to a new low carbon growth path and the UK-China Low Carbon Co-operation Memorandum of Understanding, signed last year during a visit from the Chinese. We are collaborating on India, on the development of flagship energy efficiency projects.

Q125 Chair: Does any of this actually refer to the subject the Committee is looking at?

Greg Barker: Basically, what I am saying, Mr Yeo, is that consumptionbased carbon emissions are interesting, they are illuminating, but they are also potentially a huge distraction. If we were to pursue it, not as a line of academic interest but as a serious alternative or serious proposition to the current globally accepted basis, it could have perverse consequences, which none of us would want to see, by undermining the integrity of the current international regime.

Q126 Chair: You have been personally sufficiently interested in this subject for a very long time to know that there are serious flaws in relying exclusively on the territorialbased measurement and that is an obstacle for some countries towards reaching global agreement. I may say, incidentally, the ease of reaching global agreement is not conspicuously apparent in the progress that has been made in the last few years, relying exclusively on territorial measurements. Just going back a bit, if you look at the situation in the early 1990s, there was no international pressure then to reach a global agreement. It was the leadership that Britain particularly gave in the 1990s that achieved the outcome in 1997. We did not wait around to say, "Oh, we won’t do something until some other countries are pressing us to do it". We said, "This is a global problem that we understand better than almost any other country, due to the quality of our scientists, and we are going to get on and try to persuade other countries to do something about it". Now, what this Committee is suggesting is that we should at least consider the severe shortcomings in exclusive reliance on a territorial basis of measuring emissions and look at how we can at least take account of the, I think, perfectly justified concerns of some countries, to whom the West has largely exported its emissions in the last 20 years, for a more equitable approach. I hope that DECC will at least have the intellectual curiosity to explore the subject more widely than your prepared statement has suggested is likely.

Greg Barker: I think it is certainly a useful comparator. Obviously you want to take into account consumption-based emissions when considering the progress that we are making in our own economy and it is a very useful tool to compare and contrast. But what I think I am saying very clearly, Chairman, is that just at the point when we seem to have got the race started towards a global treaty, there is a danger that we are getting off our horse and trying to find another one to ride. The use of territorial rather than consumption-based emissions is the language of the international dialogue. While I can certainly see the advantages, and you would not want to ignore consumption-based patterns, if it were anything more than being intellectually curious, if it was anything more than wanting to use it as a check and a contrast and a control exercise, if this Committee were proposing, as you seem to be doing, that we should be pushing it forward as an alternative measure of accounting for global emissions, I think we would have severe problems with that. That would look like embarking on a new course of direction just when we are getting a glimmer of hope that we might be showing some success in the UNFCCC.

Q127 Chair: The Committee is not proposing anything at the moment. It is conducting an inquiry. We are going to reach some conclusions and we shall write a report that will certainly contain proposals. But what we do feel is that there are a number of dangers in relying exclusively on territorial measurements. One is that there may be a complacency in countries like the UK about our achievements, which look quite impressive on that measurement but look rather unimpressive on the other measurement. Perhaps we could ask Defra now what they think-since they use a different basis for measuring emissions-the UK’s impact on the climate has been since 1990.

Lord Taylor of Holbeach: Well, I will be going over similar ground, Mr Chairman, of course-

Chair: No need. We know all that.

Lord Taylor of Holbeach: -because inevitably we are basically in agreement on this issue, although we have slightly different roles in determining it. My Department has a key priority of supporting a strong and sustainable green energy. Over the past five years we have been building up evidence of the scale and nature of carbon emissions generated from our demand for products and services as UK citizens; in other words, comprehensive information on our carbon emissions. We know that we need to understand our impacts. We need to share this with business and to help them think about the impacts of their global supply chains.

Over the past few years we have developed a methodology and indicator to capture the trends in our consumption and we have begun monitoring total UK consumption emissions, as you know, on an annual basis. However, Defra and DECC agree that consumptionbased emissions reporting cannot replace the territorial approach to reporting. Reporting at territorial level is a requirement, as Mr Barker has said, for all signatories to Annex 1 of the Kyoto Protocol and there is no reason to change this approach. Territorial emissions reporting is secure. We can be sure that the data we report is right. We cannot be so confident of the data that is collected under the Global Trade Analysis Project, GTAP, because this is input by academics and industry trade associations around the world and we cannot, in effect, control it. Clearly, we cannot be so confident of the quality of this data.

We see the consumption emissions data as helpful in giving us a complementary perspective on our global impacts and the two approaches should be seen as complementary rather than alternatives. Taken together, territorial and consumption emissions provide a more complete picture of the carbon emissions associated with the activities of UK citizens and businesses. I hope the Committee will be in a position to agree with that.

Chair: I would not bank on it.

Lord Taylor of Holbeach: Total consumption emissions in 2008 were over 1,000 million tonnes of CO2, while territorial emissions amounted to 620 million tonnes of CO2. Consumption emissions, therefore, added an extra 75% impact to the territorial emissions level. While territorial emissions have fallen by 20% since 1990, consumption emissions have risen by the same level. Defra publishes in the Sustainable Development Indicators a time series of carbon dioxide emissions associated with consumption and in 2011 we published a breakdown of emissions by sector and country. We think this evidence helps business to better understand the macro impacts of the products and services they are providing to meet our demand. Businesses tell us that this evidence is valuable.

Government policy can target consumption emissions at several levels, from micro to macro. For example, at the product level we published the first international carbon footprinting methodology, PAS 2050. At the product group level, the product research forum that we fund through WRAP is publishing generic data on product groups to help an SME find open access information about, if I can quote, "the emission hotspots in supply chains".

Government’s own footprint, which we published in 2010, shows that 75% of our carbon emissions came from our procurement supply chain. The sector and country data, which we published last summer, and the UK’s international impact, using the multi-regional input-output model, are also areas that we study. By making data accessible, we can help overcome some of the major barriers to sustainable consumption and production. By supporting EU-wide product minimum standards and energy labelling, we can encourage people to buy the most efficient products and reduce their overall-

Q128 Chair: Could we table this as written evidence? I do not think we are getting very far. We are using up a lot of time now. We can table your statement.

Lord Taylor of Holbeach: Yes, I have finished.

Q129 Chair: We will publish it. If we had the Department of Transport saying their road safety policies are very successful, deaths have gone down by 10%, and the Department of Health saying actually hospital admissions from people injured in accidents have gone up by 10%, we would have a problem. We seem to be in that situation between these two Departments. Which of these measurements do you think is a better indicator of our performance on climate change?

Greg Barker: I think clearly territorial emissions. We do not have an economy stuck in aspic. We have a shifting global economy. The Coalition wants to address the shrinking manufacturing sector that we have seen over the last decade or more, or the last two decades, and we want to see us take more responsibility. I think consumption-based emissions are a useful tool. I would like to see more up-to-date data. The data sets that we inherited, I think understandably because they are so much more complex to gather, are pretty out of date. The most recent figures we have are 2008. Lord Taylor will be publishing the 2009 figures relatively shortly, but that is still quite historic. But they are much more complex data sets. I don’t want you to get the impression or the impression be given to the Committee, Mr Yeo, that we are antipathetic towards consumptionbased carbon emission analysis. It can provide a very useful alternative view on the economy and it is one that we need to take into account. What I am saying is that I do not think that we would want to see it replacing or detracting from the overall global effort and global framework, which is based on territorial emissions. But there are other countries that are nudging towards this sort of practice as an addition to their territorial, not as an alternative but as a helpful addition, such as the Netherlands and Germany. I hope that we will be able to increase both the accuracy and credibility of our reporting data and that other countries will join, but I don’t see it as being a magic wand.

The data I have at my disposal are relatively old, but the analysis from Defra showed that between 1992 and 2004, prior to the EU emissions trading system launch, there were four major drivers of decarbonisation. One was relocation, and I think this is what you are really concerned about with consumption emissions particularly. That accounted for about 30% of our effort. Efficiency was reckoned during that period to account for 32%, a shift towards services and away from manufacturing within our economy, which your Committee would also be interested in accounting for, 17%, and a switch to gas accounted for 21%. I think it is very useful to look at this and understand how our economy is evolving. What that taken together means is that 70% of improvement in territorial emissions over that period resulted from improved efficiency, the shift to services or a switch to gas.

Q130 Chair: Those figures are certainly helpful. I am not sure how much credit we can take in terms of successful climate change policies because our economy, for other perfectly good reasons, has switched to being a more service-based economy. It has been helpful but I do not think it has been the result of climate change policy. Finally on this section, how much account does DECC take of the consumption-based emissions figures in forming policy?

Greg Barker: I have to be honest, Mr Yeo, with figures like that, which are not in real time, and with the complexity, it is a useful way of comparing the territorial emissions data. Obviously, if there was a big counter-story emerging from that we would worry about it, but it is not the primary driver of policy at DECC, which remains territorial emissions. The fact of the matter is we have our targets set for us by the Committee on Climate Change, who recommend the carbon budgets. We can’t have lots of dashboard indicators. That is our primary goal and, as you know, any good chief executive or successful company does not have lots of different indicators they look at. They will focus on one or two key priorities, and our priority is territorial emissions, not to the exclusion of everything else, not without the context that comes from consumption, but we have to say that our first three carbon budgets, which are very stretching, we are set to overachieve by 96, 132 and 87 million tonnes respectively. That is on course to an 80% reduction in emissions by 2050. On complacency, or whether we are doing as much as we should, in order to do even more you would be taking us beyond the 80% trajectory in territorial emissions and almost into negative territory. I think you would start to stretch the credibility of these targets, certainly with the wider population and industry.

Q131 Chair: Let me put it to you that if a company chief executive had one indicator saying that profits were down by 28% and another one saying they were up by 20%-which is the divergence-that seems to me a pretty substantial divergence. It seems to be sufficiently large-

Greg Barker: Of the same company?

Chair: Yes. The DECC statistics show that territorial emissions fell by 28% between 1990 and 2009 and DECC have admitted that on a consumption basis they rose by 20% between 1990 and 2008-admittedly one year shorter. Again, a figure, I think from your own Department, acknowledged that the 2008 total greenhouse gas emissions was 620 million tonnes on a territorial basis; on a consumption basis, it is 75% higher than that. I think there are some quite worrying figures here.

Q132 Dr Lee: With reference to the use of consumption, future CO2 emissions in the world are going to be driven by the consumption of the Chinese. Do you think our emphasis upon territorial measures undermines our negotiations with the Chinese or enhances it?

Greg Barker: I think it clearly enhances it. I think to get into a consumption argument with the Chinese would have a potentially very damaging impact on trade relations. The welcome news is at Durban last year there was acceptance of the need for a single global legally binding treaty, based on common but differentiated responsibilities, but with everybody accepting that all nations need to come within the purview of the single treaty and that we look at global emissions as a whole. That is the most accurate and feasible way of assessing the impact of climate policies in the round. It would just be well nigh impossible for us to take responsibility. It is one thing to analyse, it is one thing to observe, but to take responsibility for emissions that we have indirectly caused in China-

Q133 Dr Lee: I am not suggesting that we take responsibility for it but I am suggesting that the reason that our footprint has gone up in the last decade in consumption terms is because of human behaviour, the way in which Britons have chosen to purchase plasma screens or whatever. In the future that will be the Chinese doing that and they may also be producing it. If we have adopted an approach of patting ourselves on the back and saying, "Well, we have reduced our emissions territorially" but actually our human behaviour has not changed and indeed has become worse in climate change terms, and we go to the Chinese and we say, "You have to get your act together, you are consuming too much", I suspect they are going to turn round and say, "Well, that is pot, kettle, black". That is my point.

Greg Barker: That is not my experience of talking to the Chinese in international negotiations. I think there is an appreciation in both developed and developing economies that we need to change our economic model, that we need to become much more efficient, we need to decarbonise our energy sectors, we need to decarbonise the methods of production. It is not plasma screens fundamentally or people watching television or people buying things that necessarily creates high emissions. It is the way these products are manufactured. If we are able to work with the Chinese-and the Chinese can work with themselves, they lead in some of these issues-if they are able to decarbonise their energy sector with a greater emphasis on energy efficiency, a greater emphasis on production of renewables, then I think you are going to see a totally different model of economic growth and that is what we are planning for, both here in the UK and abroad. I think the view that the UK takes is that if we can become a model for successful, prosperous, low carbon growth, if we can demonstrate to developing economies that it is possible to increase your share of manufacturing trade, which is what we aim to do, if you can increase consumption while lowering carbon footprints, that is the most useful thing to do rather than shift it on to other countries.

Q134 Barry Gardiner: Minister, are this Government’s policies on climate change adversely affecting the competitiveness of UK industry?

Greg Barker: No.

Q135 Barry Gardiner: In that case, you must think that the Chancellor was wrong in his 2011 autumn statement to introduce compensation measures worth £250 million for electricityintensive industries, mustn’t you?

Greg Barker: No, it is precisely because the Chancellor did that that I do not think we are damaging British industry. The Chancellor said-

Q136 Barry Gardiner: Sorry, I asked you about your climate change policies.

Greg Barker: Yes. We are bringing forward a much more sensible, nuanced approach to climate change than the one-club golfing of the previous Administration. We recognise that due to the laws of physics there are some industries that will find it very difficult to lower their carbon emissions at the rate and scale that taxation sometimes seems to assume. As a result, within the constraints of public spending, we are adopting a model of economy that will be much more akin to that of Germany where they recognise the difference between energy-intensive industries, particularly the electro-intensive industries, the steel, chemical and-I have left one out.

Barry Gardiner: Cement?

Greg Barker: No, not cement-aluminium industries. They have particular difficulties and there needs to be a greater appreciation of that. The Chancellor has recognised that, which means that we can say with much greater confidence that the impact on our overall competitiveness in the long term-of course there are short-term impacts-will be enhanced if you take together the package of measures. Obviously, you may be able to-

Q137 Barry Gardiner: If one has separated them out, what you are saying is that the Chancellor has offset the adverse effects on industrial competitiveness in those sectors from your climate change policies by giving that compensatory package.

Greg Barker: What I am saying is that this Government, and specifically the Chancellor, is taking a more balanced view of the need to ensure that our climate change policies do not have perverse consequences or unintended consequences by hitting those that are unable to respond in the way that we would like them to and that we have a more sophisticated way of dealing with that, more akin to Germany rather than the one-club golfing of the last Government.

Q138 Barry Gardiner: Well, we can get into an argument about Germany but let’s just focus on the UK for the moment. Will the companies that receive the Chancellor’s compensation be obliged to commit to energy carbonsaving measures?

Greg Barker: I expect so, but I do not think we-

Q139 Barry Gardiner: You expect so?

Greg Barker: We have not published the detail yet.

Q140 Barry Gardiner: I would have imagined that it might be something that you would insist upon, Minister.

Greg Barker: You will be aware, Mr Gardiner, that all of the companies that are likely to be impactful already will be likely to be taking part in climate change agreements or the climate change levy. They will already be under obligations to increase their energy efficiency. Of course, if energy is 70% of your business as a cost base, as it is for a chemical business, I do not think you will find many of these companies are really reluctant. The sorts of businesses that are being targeted are not typical of British industry as a whole. Typically, the energy costs of the average British business are much less than 10%, usually about 3%.

Barry Gardiner: But there are other things than energy, aren’t there?

Greg Barker: If I might finish my point, we are talking about businesses where the cost of production is around 70% energy, so this is not something that you can hide. But there is a law of physics that means that you can’t create chemicals with current technology without a decarbonised electricity sector.

Q141 Barry Gardiner: My point is, Minister, that the Government is saying that it has to give a quarter of a billion pounds to these industries in order to get them to feel comfortable about putting in place the policies that you have suggested because otherwise they might reduce their competitiveness. Therefore, it would be sensible, would it not, to take the opportunity, while you have the carrot of a quarter of a billion pounds dangling in front of them, to ensure that in all sorts of other ways they are taking effective measures on energy efficiency, on waste, on other elements that would contribute to climate change?

Greg Barker: Absolutely, and there are lessons from Germany there. Where we can get some additionality I am sure that we will want to, but we have not yet announced the exact details of that, Mr Gardiner, and I am afraid I am not in a position to announce it now. The principle I think we actually agree, yes, but we just need to be a little bit pragmatic about that.

Q142 Barry Gardiner: You will have seen the graph that has been presented to us where the discrepancy between the territorial-based emissions and the consumption emissions shows China going very firmly down in a green line and-

Greg Barker: For ease, could you just identify the graph?

Barry Gardiner: It looks like that.

Greg Barker: Do my officials-no, we don’t have that, I am afraid.

Barry Gardiner: Let me give you mine.

Greg Barker: Very kind. Oh, that is clear.

Barry Gardiner: Now, if I can look over Alan’s shoulder at his, basically it shows China down at the bottom in the green line. In between or above China it shows India, then Germany, then Japan, then Canada, then the USA, and then at the top it shows the UK. For many of those countries we like to feel that we are doing better than the USA, we are doing better than Canada and so on, but what this shows is that on a consumptionbased analysis-

Greg Barker: Whose analysis is this?

Barry Gardiner: The UKERC, apparently.

Greg Barker: Sorry, it is who?

Barry Gardiner: UKERC, the Committee’s-you are very welcome to question the provenance of the figures in this-

Greg Barker: No, it is just that I have not seen it before so I-

Barry Gardiner: -and try to undermine them as best you may, Minister, but if we can just look at the data that we have-

Greg Barker: I am just rather impressed they have rather more up-to-date figures than I do.

Barry Gardiner: -you see the gap between the UK and the territorial-based emissions, a substantial gap that seems to be increasing, that shows that our consumption patterns relative to our carbon production is diverging very sharply.

Greg Barker: I would think that would in large part be because we have done far more to reduce our territorial emissions than these other countries have. It would obviously be a factor, compiling a graph like that-the better you are at increasing. If your consumption were to remain static but you were to dramatically decrease your territorial emissions, you would expect to show that, wouldn’t you, Mr Gardiner?

Barry Gardiner: Oh, indeed.

Greg Barker: The fact of the matter is the UK has been very successful, far more successful than any of these other countries I think, in reducing our territorial emissions. In actual fact, the way that this graph is extrapolated is true but without seeing a corresponding graph on to the same scale that shows territorial reductions, it is not very helpful.

Q143 Barry Gardiner: I absolutely grant you what you have said, Minister. What it does show also is that the trend of consumption emissions in the UK is up while the trend of production-

Greg Barker: I think it is impossible to extrapolate without knowing the balance between consumption and territorial emissions.

Q144 Chair: Just for the record, let me say this was a document that was submitted to us in evidence. It has been available publicly on the website. Its existence was drawn to the attention of your officials before you came to this session so they could brief you about it if they thought it was sufficiently important to address. That is, I think, important for everyone to know, both for the Committee and publicly. The figure is actually the consumption minus the territorialbased emissions.

Greg Barker: Yes, so if your territorial emissions have decreased then you would expect to be at the top of the graph. We would be doing much better if our territorial emissions had increased, wouldn’t we? If our territorial emissions had increased, it would improve our performance.

Chair: It is designed to show exactly the point that I made earlier on, which is that there is a very sharp divergence between the measurement of territorial emissions and the measurement of consumption emissions. It is particularly sharp in the case of the UK, which is exactly why I think it is the sort of issue on which the UK might be able to show some international leadership of the sort we showed 20 years ago and about which DECC seems, I think, disappointingly reluctant even to engage in an intellectual debate.

Q145 Barry Gardiner: Sorry, Minister, if I can just pursue the point. If our consumption emissions were proceeding at the same rate and in the same direction as our production emissions then they would be-

Greg Barker: That would be a miracle.

Barry Gardiner: Indeed it would, but they would then be flatlining together; they would be coterminous. What we have here is a graph that shows us that our consumption emissions are increasing while our production emissions are decreasing.

Greg Barker: But that is not what the graph shows.

Lord Taylor of Holbeach: If I may interrupt, I don’t think we deny that. We have shown you a graph in the joint submission that we made-

Q146 Barry Gardiner: Indeed, your own Department, Minister, says they have increased quite substantially.

Lord Taylor of Holbeach: We have shown and we are well aware of the fact that the percentage of consumption emissions in the British economy is growing and I don’t think either of us have denied that. But I think, as Mr Barker says, it is a reasonable point to make that the graph that you have presented to us would show an even more extreme situation had we been even more successful in pulling down our territorial emissions. It is interesting but it only reinforces information that we ourselves have provided for you in our joint submission.

Greg Barker: I think the lesson is you can’t rely on one indicator alone. I think we would share your view that consumption emissions are something that need to be taken into account. We do not believe that they should supersede territorial emissions or in any way undermine the UNFCCC.

Barry Gardiner: Minister, you have made that point both in your-

Greg Barker: This graph in itself is not particularly helpful in isolation.

Q147 Barry Gardiner: Can I just return to the question that I would like you to answer? Given that you have helpfully, both of you, agreed that our consumption emissions are increasing, while I acknowledge and I am very pleased that our production emissions are going down, do you recognise that as in some sense representing a carbon debt, that space, that gap?

Greg Barker: I don’t know about carbon debt. I think other countries clearly have more to do to make their economies more efficient and that represents an opportunity to increase the competitiveness of their economies. It is not just a debt. I think if China is able to produce high-end consumer goods consuming less fossil fuel, that is not a debt that we redeem, that would be something that will be to the competitive advantage of China or any other country that is able to make a leap forward to decarbonise. I think it is not always helpful to talk about carbon debt. No, Mr Gardiner, I think it is an emotive term. I think it is a useful matrix to look at, but I think introducing terms that could be emotive and may be aligned with financial debt, for example, is not particularly helpful.

Q148 Sir Robert Smith: I had better remind the Committee of my entries in the Register of Members’ Interests as a shareholder in Shell, an energy company, and an energyintensive user, RTZ. Just bringing together what has happened so far, how successful has the UK been in decoupling economic growth from greenhouse gas emissions?

Greg Barker: I think we have been relatively successful. If you look at our reduction since 1992, we estimate that we are currently in excess of 25% below-not on officially released figures, but our estimate is that we are above 25%. That certainly stands up well relative to the growth that we have seen in the economy. Certainly, we are not complacent, though, and we realise that there is a lot more that we need to do. It gets harder as you eat up the low-hanging fruit. A significant part of that figure would have been made up from the "dash to gas" under the previous Conservative Administration. There were years, particularly in the earlier part of the decade, where there was not a strong trend of decarbonisation relative to economic growth, but we think we have made progress and the policies that we have in place are really going to be helping us deliver that fundamental break between economic growth and carbon emissions.

Q149 Sir Robert Smith: Yet back in 2008 when Defra commissioned a report on an embedded carbon emissions indicator, the Defra officials briefed the Secretary of State, Hilary Benn, that Government needs to be cautious about over-claiming on its achievements in decoupling economic growth from environmental degradation. Is that still the view of Defra?

Lord Taylor of Holbeach: I think we are right to be cautious because the last thing we would want to do is to introduce a concept that Government was complacent in this area. There is still a great deal to do. It would be easy to say that when the figures are produced in March on this last year, updating the consumption figures, the expected fall-the anticipated fall-in those figures is due to the downturn in the British economy. There are links, of course, but the drive to reduce greenhouse gas emissions is an absolute, regardless of the state of the economy, and that is the commitment made under the Climate Change Act on which we are both signed up.

Greg Barker: It might be helpful if the Committee were to look at industrial output, which since 1990 has averaged about 1% increase per year, while emissions from the industrial sector have fallen by 46%. In buildings, emissions have fallen by 18% despite the growth in population and housing. Obviously, regulation and changes in practices have contributed to that in both sectors.

Q150 Sir Robert Smith: Would the industrialisation partly be the outsourcing of the supply chain?

Greg Barker: I am sure there are many reasons.

Q151 Sir Robert Smith: Do DECC and Defra discuss together how to present this?

Greg Barker: How to present it?

Sir Robert Smith: As to how well we have achieved or not achieved in terms of decarbonisation?

Greg Barker: Well, we certainly take the view that we want to put as much information into the public domain as possible. DECC has just published in December the Carbon Plan, which is a very weighty tome indeed, which is certainly information rich. It includes an analysis of our progress to date, the problems we have encountered, the challenges that we have to face going forward, and it does get progressively more difficult, obviously, but it also charts the policy landscape we are putting in place.

Q152 Sir Robert Smith: In 2010, during the second reading of Lord Teverson’s Bill on consumer emissions, DECC officials briefed their spokesman in the other place that measurement of emissions on a consumption basis was too complex and time consuming, when Defra is doing that actual job.

Greg Barker: Well, there is no duplication then, is there?

Q153 Sir Robert Smith: No, but how can DECC take a view that it is too time consuming and complex when Defra is actually able to do it?

Greg Barker: Well, we wouldn’t do it if Defra are doing it.

Q154 Sir Robert Smith: But the actual practice. You actually do see it as not too complex?

Greg Barker: Our overall view is that it is a given-there are very few people who would disagree with you-that trying to put together an accurate and reliable and credible consumption-based emissions report is incredibly complex and extremely difficult. Defra are doing an excellent job but I don’t think anyone in Defra would say that it is easy and simple.

Lord Taylor of Holbeach: No-

Q155 Laura Sandys: But it has been achieved?

Lord Taylor of Holbeach: It has been achieved, but I think in my presentation to the Committee, Ms Sandys, I made it quite clear that we acknowledged that it was a less reliable set of data because it was based, of course, on information that we ourselves did not control. I think it is really important. I understand exactly the thrust of Sir Robert’s questioning, and indeed the views that the Committee is expressing on these matters, but I think it is very important to get back to the original thing. We are sibling Departments. I remember when we shared the same nest, so to speak. We are perfectly capable of coordinating our efforts and there is no difficulty between the two Departments, but it has been Defra’s responsibility to collect consumption-based data. We are doing that on behalf of the Government and it is the Government’s view that consumption-based data is a useful steer but it is not the whole picture. The one element that we can control is the territorialbased data. We are obviously obliged to collect that data, we control the accuracy of it and we have an international obligation to use that data properly. The consumption data is less tightly defined, but it is a useful steer to Government and it is not being ignored.

Greg Barker: I would wholeheartedly endorse that. I think Lord Taylor has encapsulated the view of Government brilliantly. I think the Committee is trying to suggest that somehow DECC is antipathetic towards consumption-based data. We are not. It is a very helpful way of having a check on our progress, but we do not see it as an alternative system that would be preferable to the territorial emissions data, which is the language of the UNFCCC. We probably should use it more going forward than we have in the past. We certainly need to improve the reliability of that data and it is complex, it is difficult. We can improve on that and use it more in the future, but I do not quite understand, if the Committee is saying we should replace territorial with consumption-based in terms of supremacy, we would not be going that far.

Chair: The Committee is not saying anything. It is asking questions, trying to find out what the Government’s view is.

Greg Barker: Yes.

Q156 Sir Robert Smith: One final sort of connection between Departments, Lord Taylor’s predecessor at Defra, Lord Henley, was briefed when he joined the Department that although technological efficiency has improved the CO2 impacts of our products, the rising UK consumption has outstripped the improvements achieved, reducing the overall effect. Is that something DECC would agree with?

Greg Barker: I have not seen the exact emission, but it does not sound out of line. I think the Committee seems to be assuming that other countries will not be able to follow the decarbonisation progress of the UK. The fact of the matter is we are a low carbon leader. We have among the best record of any major economy in reducing our emissions, for a whole range of different reasons. We expect the whole global plan is based on the fact that other countries will be able, to varying degrees, based on common but differentiated responsibilities, to decarbonise their economies as well. While consumption has gone up because of the things that we import from the Far East, as their climate policies kick in as ours have, we would expect that profile to change.

Q157 Barry Gardiner: But behaviour is not just about reduction, is it, Minister? Behaviour is also about consumption. If our behaviour pattern has managed to reduce our production carbon but our consumption is increasing, don’t we need to do something to affect the way people behave in their consumption patterns as well, because that is driving climate change around the world?

Greg Barker: Well, obviously behaviour is important. We have seen that in the way in which the Government has approached its own 10:10 campaign, the way in which over the first 12 months of the Coalition we were able to reduce carbon emissions from central Government buildings by 13.5%. A significant portion of that came from behaviour change. So I would agree with you, Mr Gardiner.

Q158 Barry Gardiner: It is all behaviour change, isn’t it?

Greg Barker: It is not all behaviour change, no, absolutely not. There is a significant part that is behaviour change; there is a very significant part that comes from technology and increases in efficiency and the retirement of old, inefficient equipment. Behaviour change and technology often go hand in hand and if you give people a more attractive alternative they will take it, and often it is technology that makes it more attractive.

Q159 Sir Robert Smith: If I understand then, your long-term position is that we get a binding, successful treaty on production emissions across the world and, therefore, by definition we tackle the climate change because wherever our consumption goes it is lowcarbon.

Greg Barker: Everyone is going to have a budget, yes.

Sir Robert Smith: But we have not quite reached that binding-

Greg Barker: Correct.

Sir Robert Smith: The worry is that we as a country are still impacting on the environment in the same way because our consumption has gone to those parts of the world where emissions are still high.

Lord Taylor of Holbeach: I think it is wrong, if I may say so, to assume that we are impacting in the same way. Of course, there has been some-

Sir Robert Smith: There is a worry.

Lord Taylor of Holbeach: Yes, I understand the Committee’s concern. I hope, although, Mr Chairman, you were reluctant to admit that the Committee had an agenda, the thrust of the-

Q160 Chair: We have no agenda. We are genuinely trying to conduct an inquiry into a subject that has not had much attention, which should have more attention, but which may just check the complacency of a country that considers that we are doing so much better than anybody else. It is not absolutely clear that on an alternative measurement we are doing anything like as well as some other countries.

Greg Barker: Which, Mr Chairman? Which other countries?

Chair: Wait and see what the report says. We will ask the questions. We will try to persuade you to give the answers.

Lord Taylor of Holbeach: I was trying to put my answer in some sort of context because I was acknowledging, I think, the reason for you asking us these questions, if I can put it that way round then. But there are ways in which Mr Gardiner’s question about behaviour can be influenced and the Government is trying to deal with that through eco-labelling and energy-labelling. These are areas where consumer behaviour is hopefully being influenced, and every sign is that it is being influenced. I think that this is a pragmatic and practical way in which we can impact on supply chain carbon emission, which the consumption figures tell us is something that we should address as well as mitigating carbon emissions here in the UK. I accept that totally.

Q161 Laura Sandys: I am fascinated because what we sort of have or what appears to happen is that both Departments are trying to justify why Defra has spent-I do not know, I would love to know, and maybe the Committee would like to know, how much it costs to get this data that Defra is collecting. You are collecting all this data. As a collective, both between DECC and Defra, it seems like, "Well, it is sort of useful data but we look at it and then we put it to the side and it does not really inform policy", and-

Dan Byles: You think it is useful but you don’t know what to use it for.

Laura Sandys: Absolutely, but Defra thinks it is useful. DECC does not seem to feel that it is very useful-

Greg Barker: The fact that it is so out of date is not helpful.

Q162 Laura Sandys: Could I just possibly finish? Well, yes, but the point is there is certainly trend analysis. Government makes policy on figures that are much further out of date than 2009 in so many different fields. I am interested in at what moment did Defra feel that it was important for it to invest the money in this interesting-and in DECC’s view theoretical, in our view maybe much more than theoretical-project but that it does not then inform policy. Maybe the Minister for Energy could explain whether any policy in the DECC agenda has come out of these figures. It is either irrelevant and you should stop doing it because it is wasting money, or it is important and as a result policy should emanate from it. Forget the international side as well.

Greg Barker: The only way to affect consumption, fundamentally, is not to stop consumption but is for the countries that are exporting the goods to us to take greater measures to ensure that the products that they export to us have higher standards and a lower carbon footprint.

Q163 Chair: That is not the only way. Obviously, it is one of the ways but there are some demand side measures that will directly affect consumption: greater energy efficiency, better building standards and so on. They are not reliant on decisions taken abroad. They are decisions that we take here.

Greg Barker: Absolutely, and we are pushing this.

Q164 Laura Sandys: What policies have come out of the data collection that Defra obviously feels is important and is obviously spending money on?

Lord Taylor of Holbeach: I think it is very important to emphasise that one of the key users of this data is not the Government itself but also business. It is through business examining their supply chains and identifying carbon costs within their supply chains that you can influence business decisions and actually reduce not only territorial emissions in this country but also consumption emissions that may be elsewhere.

Q165 Christopher Pincher: It seems, Lord Taylor, that you are accepting that a consumption measure of emissions is better than a territorial measure of emissions because you said in your statement that 75% of emissions come from the procurement supply chain. That is quite a lot.

Lord Taylor of Holbeach: Yes.

Christopher Pincher: I think you would accept that a large chunk of that supply chain is extra-territorial, so aren’t you accepting that a consumption measure is better than a territorial measure?

Lord Taylor of Holbeach: No, on the contrary, I think I also said that the difficulty with consumption-based is that the data on which we calculate it is less refined and less reliable, but it is an indicator. It is better than nothing but it is not perfect. The one thing, however, that we do control are territorial measurements, which we are obliged to because we are obliged under UK law, under the Climate Change Act, and we are obliged also in our international obligations. We can’t transfer allegiance from one measurement to another. That is not pragmatic and it is not going to help us, but what we can do is to make sure that we make these consumption figures available because they do inform the debate and also those people who make decisions every day, which can reduce carbon emissions globally. We think that that is a worthwhile exercise.

Q166 Laura Sandys: This is a service to business that you are offering, not something that is changing policy or advising different Departments to look at different policy measures. No policy has come out of this?

Lord Taylor of Holbeach: I think all Government notes these figures because they are of interest and they do demonstrate that we still have a considerable global responsibility to encourage countries to reduce their carbon emissions. That is DECC’s policy and that is Defra’s policy. As I see it, there is no conflict between the two of us in that respect.

Q167 Chair: Just to address directly one of the concerns expressed by the Minister of State about the use of the consumption figures, that they are out of date, is it Defra’s view they are going to show a sudden dramatic reversal of the trend of the last 20 years in the post-2009 period, or is it your view the trend will probably continue in the same direction?

Lord Taylor of Holbeach: I haven’t seen the figures. I would expect they would probably show a reduction.

Chair: Really? A reversal of the trend?

Lord Taylor of Holbeach: Yes. But I am not in a position to confirm that because I haven’t seen the figures.

Chair: There might be a reduction obviously based on the recession but-

Lord Taylor of Holbeach: I think I alluded to that when I was answering Sir Robert on his earlier question about linkage between industrial capacity and the figures.

Greg Barker: It remains our view that the single most effective policy for addressing this issue is in an internationally-binding global legal agreement and anything else is going to be very much secondary to that because of the difficulty of getting reliable, auditable figures.

Q168 Dr Whitehead: How did DECC calculate the basis for the Emissions Performance Standard that is coming forward in electricity market reform?

Greg Barker: Sorry, how did we calculate?

Dr Whitehead: Yes.

Greg Barker: This is completely different to the-

Q169 Dr Whitehead: What were the emissions levels that were calculated in-

Greg Barker: It was done in reference to a modern gas-fired power station.

Q170 Dr Whitehead: Yes, and coal-fired power stations, how was that calculated?

Greg Barker: Sorry, I don’t follow the question. We referenced the Emissions Performance Standard for what you would expect from a modern, efficient gas-fired power station and that was set as a benchmark. Coal is substantially a lot higher than that.

Dr Whitehead: 700 per kilowatt hour, isn’t it?

Greg Barker: Yes, something like that but coal is significantly above so it doesn’t really come in, in terms of the calculation of the Emissions Performance Standard.

Q171 Dr Whitehead: Did the Department calculate all the emissions that arise from the coal-fired power station? For example, 51% of our coal is imported; is that counted?

Greg Barker: You don’t need to count it because it is impossible under our emissions performance standard to come anywhere close. If you did count it, it would take you even further away from being able to meet it.

Q172 Dr Whitehead: So, we didn’t count it or we did count it?

Greg Barker: I would have to get back to you but it doesn’t need to be counted because the Emissions Performance Standard sets a minimum that coal and the current technology, without carbon capture and storage, doesn’t get close to meeting. The only difference was it doesn’t meet it or it doesn’t meet it by a mile or doesn’t meet it by 100 miles.

Q173 Dr Whitehead: I think my point is that if you did go back and find how well you had counted all the coal that had gone into UK power stations, as far as emissions are concerned, the answer would be yes, whether it was imported or not.

Greg Barker: The answer would be yes to what?

Dr Whitehead: That you had counted all the coal coming into UK power stations for the purpose of calculating the emissions arising from UK power stations that are run by coal.

Greg Barker: Sorry, I thought you were talking about the Emissions Performance Standard.

Q174 Dr Whitehead: When you drew up the Emissions Performance Standard you stated that the emissions from a modern coal-fired power station were about 700 grams per kilowatt hour.

Greg Barker: We were talking about the direct output measurable on the site.

Q175 Dr Whitehead: Yes, from the coal that had gone into the power station. That is what produces the emissions, how we consume the coal.

Greg Barker: Yes, the emissions performance side is something that is technically measurable on the site. We are talking about the direct emissions.

Q176 Dr Whitehead: Yes, absolutely, but do we make any distinction, when we are deciding on that measurement, whether the coal has been imported or not?

Greg Barker: I don’t quite understand your line of questioning, because the Emissions Performance Standard sets a minimum threshold. It makes no difference to the coal whether or not-

Dr Whitehead: Absolutely, where it comes from, you are absolutely right.

Greg Barker: No, but the coal doesn’t meet the Emissions Performance Standard, the EPS, and it is not met.

Q177 Dr Whitehead: It could come from China, for example.

Greg Barker: Yes, but it doesn’t matter where it comes from, it is still not going to meet the EPS.

Q178 Dr Whitehead: We are consuming it in the UK, we have imported it from abroad, we measure it against the emissions standard that is coming out of the UK. Isn’t that a consumption-

Greg Barker: No, I think you are confusing things.

Dr Whitehead: Isn’t that a consumption measure of emissions?

Greg Barker: Dr Whitehead, I think you are confused in your line of questioning. Are you talking about emissions or are you talking about the Emissions Performance Standard?

Q179 Dr Whitehead: We came upon an emissions performance standard as a result of measuring the emissions from coal-fired power stations that we then put into the Emissions Performance Standard alongside that from gas-fired power stations and other forms of energy production and we have done that regardless of the source of the energy that is producing those emissions, which is a consumption-based measure of emissions.

Greg Barker: I am sorry, I think there is a difference in terminology here. The Emissions Performance Standard specifically refers to the policy that we have of imposing a moratorium on-

Q180 Dr Whitehead: Forgive me, I understand the policy. The point I am asking you to think about is what we do, what policy we carry out, as far as measuring the emissions in terms of our consumption of coal-based on what source it comes from. My suggestion is that we don’t do that. We don’t look at the source of coal, do we? We simply measure the emissions.

Greg Barker: That is different to the Emissions Performance Standard, I think.

Dr Whitehead: One leads to the other.

Greg Barker: I rather suggest it is a part of the EPS as a policy that is embedded in the EMR proposals and you just look at emissions from coal and I am sure-

Q181 Dr Whitehead: Wherever it comes from?

Greg Barker: What we talk about in terms of emissions that come from a coal-fired power station is the emissions that are created in the burning of that coal on-site. You are quite right, we don’t look at it, but I don’t see the relevance of that to the Emissions Performance Standard.

Dr Whitehead: I am looking at the relevance in the other direction, which is that my thought on this is that you have said that we are responsible only for our territorial emissions and-

Greg Barker: We are not responsible; they are the things that are under our control.

Dr Whitehead: Yes, indeed. That is what we can measure and that is what we should go ahead on, but as far as the policy that the Department runs as far as coal is concerned-leading, among other things, to the Emissions Performance Standard-that is not what we do, is it? We do something quite different. We measure what emissions arise from the coal wherever it comes from.

Greg Barker: The Emissions Performance Standard will prevent the burning of coal.

Dr Whitehead: We are running a consumption-based emission measure as far as coal is concerned in the UK, that is my point, and the Department is deriving policy from it, isn’t that right?

Greg Barker: I am sorry, you have lost me now, I am afraid.

Q182 Chair: If I can mediate, I think the point is that the way we measure emissions at a coal-fired power station-which of course eventually may become impossible to operate for other reasons-at the moment is on a basis that comes into both categories. It is both a consumption-based measurement and a production-based measurement. We are treating the burning of coal, imported from somewhere else, as a UK emission, both in terms of territorial-because that is how it is done-and also in terms of consumption. I think the point is, isn’t this a sort of tacit admission by DECC that the consumption basis has some validity? Have I interpreted that right?

Greg Barker: Mr Chairman, we wouldn’t disagree for a moment that there is some validity in consumption-based. I think what Lord Taylor and I have been trying to say is that we think it is a useful measure, so far as you are able to use it. I must say again, we are not antipathetic to this. We would like to see greater reliable data. We would like to see it more up to date. We would like to see greater rigour in the data sets that are available. We would like to see more countries do this, not just the handful of countries that currently undertake similar exercises to those which Defra undertake. It is a useful benchmark, I don’t think we are disagreeing with that, but it does feel that you are trying to push us into a position that we are not taking. We think it is helpful to produce this information; that is why Defra does it. We don’t overestimate how reliable it is nor do we underestimate the complexity of gathering it, but it is still a useful data-set and is useful to set alongside our territorial emissions.

But there is the big danger, which you haven’t mentioned in this Committee, of double-counting, that when you don’t have a universal, global methodology for the calculation of consumption-based emissions it is almost impossible to do so without double-counting. The emissions that are embedded in the extraction and export of coal from any given country will be included in that country’s emission profile. We can’t have double-counting. They can only be counted once and it depends where they come from.

Q183 Dr Whitehead: But DECC does that in terms of how we measure the coal that is coming into the country, as far as the emissions are concerned.

Greg Barker: We only count towards our-

Dr Whitehead: Laura Sandys asked a moment ago whether DECC undertakes any policy consideration of consumption-based emissions. Well, clearly DECC does do that and in principle DECC, therefore, double-counts. But if DECC didn’t double-count then the question of coal would look very different because coal would come in at 350 grams per kilowatt, because that is the only territorial responsibility we have, and then it would look very good as far as the EPS is concerned.

Greg Barker: Can I come in? That is not my understanding at all, Dr Whitehead. Coal burnt in a modern power station emits significantly more.

Dr Whitehead: That is not my point.

Greg Barker: The emissions performance standard that we will be introducing-

Dr Whitehead: I don’t think we are going to get anywhere with this, are we?

Greg Barker: -relates to the burning of that energy source on the site.

Q184 Dr Whitehead: Yes, I appreciate that. What presumably we have to do in terms of your statement, Minister, that we should be a model of prosperous, low-carbon growth, is account, among other things, for the backpack that that growth is carrying along with it.

Greg Barker: Not if it creates double-counting. What we want is a-

Q185 Dr Whitehead: No, that is right, providing it doesn’t create double-counting, but a model of prosperous, low-carbon growth presumably has to look at the lifecycle of what has gone into that growth, as far as carbon is concerned. It is absolutely right that we should not double-count but if, on the other hand, we are ignoring a part of the backpack because it doesn’t happen to sit within our territory then we will come up with rather strange results as far as what our low-carbon growth actually looks like.

Greg Barker: I think we would agree with you but it is an important reference point. I think it is very difficult to extrapolate, from the figures and data that we have available on historic consumption, anything other than that we need to do more. We are still in the foothills of decarbonisation. This Coalition Government wants to see more manufacturing, not less; we want to have an export-led recovery, not boost domestic consumption and fuel imports; we are trying to reshape the economy. There are a whole number of challenges that don’t lend themselves to simplistic analysis by one single data set. The only thing that we can be absolutely certain of is we can control our territorial emissions to a much greater degree than we can both control and accurately analyse our consumption.

We are not saying that this should not be an important measure. If we were to see a significant divergence-I haven’t seen them yet but Lord Taylor has said that he expects the next set of figures to show a significant drop in consumption-based emissions-obviously we want to take that into account, we would be mindful of it, and if we were to see some extraordinary divergence we would want to look into that. But I don’t think we are seeing that yet and I don’t think we would want to take in isolation the graph that the Committee has provided because it doesn’t take into account the fact that we are doing much better than many other countries to reduce our territorial emissions.

Chair: That is not a graph the Committee has provided. It was sent in evidence to us and we were asking your opinion about it. It is nothing to do with the Committee. It has already been published on-

Greg Barker: No, but it is the graph that we asked to express an opinion on.

Chair: We asked you to comment on it, that is right. It is not published by the Committee; it is evidence we have received from a body that we thought was worth publishing. There can be different opinions about its value, and you have expressed yours, but it is not published by the Committee. It is not a Committee graph.

Greg Barker: I wasn’t suggesting it was.

Q186 Chair: They have not spent weeks trying to produce it. They just took evidence from somebody else.

Can I ask you a very direct question? Do you think if we were more transparent about our consumption emissions that would give us more locus in talking to other countries about the emissions for which they are responsible on a territorial basis but for which we are responsible on a consumption basis?

Greg Barker: I think greater transparency is always a good thing. I am sure it would be helpful and I would very much welcome an improvement in the reporting of consumption-based emissions and greater transparency and greater up to date. But, as Lord Taylor said, we don’t underestimate the difficulty in doing that, particularly when we are doing it in isolation and when there are only a handful of other countries who are attempting to unpick this global puzzle.

Q187 Chair: Do you think the way to try to increase the number of countries that are tackling this is to emphasise the difficulty of doing so or perhaps to emphasise the value of the results that might be achieved?

Greg Barker: I think what I would be mindful of is that it is not seen-as I think there is a danger that it could be misinterpreted as-as a way of imposing tariff barriers and a new form of carbon duties on developing countries. This Committee has not mentioned the very significant scepticism and concern that there is in developing countries that when we talk about consumption emissions we are talking about ways to limit imports from the developing world who depend on that. That is the realpolitik, the elephant in the room that we haven’t discussed. The mood music in these negotiations is so important, let alone the actual proposals, and if countries like China and India see that suddenly we are trying to have a big push on consumption-based emissions and to gather a global picture they will ask why are we doing this and it could be open to misinterpretation.

Q188 Barry Gardiner: I absolutely agree with you on that point. I think it is a very important point and I am glad you have made it, but you will acknowledge that there is another factor that plays into those discussions as well and that is that they would very much like to have on the table the fact that their consumption is so low. That is something that we have rather liked to sideline because we haven’t liked to look at the per capita basis-we haven’t liked to look at these things. Perhaps if you would agree that, while a bit more transparency on our talking about our consumption could have the impact that you suggest in the international arena, you would also acknowledge that if we were a bit more transparent about the per capita consumption and the per capita emissions of other countries, that would create a much better global picture where there could be improved dialogue and understanding.

Greg Barker: I think it is very helpful. The interesting thing, though, is the huge divergence between economies. For example, in India the per capita emissions are about two tonnes, whereas in China they are higher than France and Italy per capita.

Q189 Chair: Does the Indian figure include domestic aviation?

Greg Barker: I assume so.

Q190 Laura Sandys: In many ways, let’s say moving from the global to the local, when you start to look at consumption-based assessments do you not feel-and this is something I bring up with DECC quite a lot about behaviour change, the consumer and so on-that these consumption measures are extremely useful to help with behaviour change? Lord Taylor was mentioning that business use your data already. What measures are you going to be using to disseminate this and how are you going to translate it into a way that could assist with demand-focused policy?

Greg Barker: I totally agree. The Government is involved in supporting businesses to tackle emissions through their supply chains. We specify products that are lower carbon in manufacture and use, through mandatory EU standards, also voluntary labels and procurement specifications and these definitely create a pull through for green products in the market. Perhaps Lord Taylor would like to talk about it. A lot of this is led on by Defra.

Lord Taylor of Holbeach: Yes. I think I mentioned before the role we have and, particularly by using WRAP to give us product research, we think this is an important way of informing public consumer choice as well as informing business in these decision-making procedures. It can be direct energy and also it can be indirect energy consumption in the manufacturing process that will build a picture of where we feel markets could support and sustain the greener alternative.

Q191 Laura Sandys: Do you feel that you have made headway in this and do you feel that you have policies in place that will reach the consumer? It concerns me that sometimes this becomes very much a carbon-to-carbon conversation rather than a carbon-to-consumer engagement.

Lord Taylor of Holbeach: Yes. We will all have had the experience of perhaps going into a white goods store and looking at fridges. We have labels on there about energy consumption that do inform decision making. I think most of us tend to shop with that information available to us and make our choices accordingly. Eco-labelling, energy-labelling may be relatively micro in their impact but cumulatively, of course, this is the way in which we influence consumer behaviour. Trying to reduce carbon emissions in the UK is essentially something in which consumer behaviour has a very large part to play.

Q192 Laura Sandys: I would totally agree with you but I would say that we haven’t gone very far. When did we introduce those labels for white goods? It was a long time ago. I haven’t seen policies develop from the perspective of consumption since then. Maybe I haven’t gone to the right shops. But I think that it has stalled this agenda and I would propose that-

Lord Taylor of Holbeach: It is something that I get quite involved in. Eco-labelling, in particular, is something that is developing all the time. I think that we shouldn’t underestimate that providing consumers with this information can be very useful and I think an informed purchaser is likely to make a better decision.

Q193 Laura Sandys: But how are you informing me?

Lord Taylor of Holbeach: By the labelling process.

Sara Eppel: Just to give you a bit more information about the process on the energy-labelling, we have 25 products that we are working through Europe-wide, so that is 27 Member States negotiating the minimum performance standards for each of these 25 products and then applying an A to G label on each of them. We have done 12 and we know that once stock has turned over we will be saving 7 million tonnes of CO2 in the UK alone, just from those, and we are working through the next 11. So it is not stalled; it is very active.

Q194 Laura Sandys: Okay. When one starts to look at this consumption there needs to be an education of the consumer as well to reiterate how consumption and how their behaviours will impact the overall carbon consumption of the UK. That would be a Defra responsibility and not a DECC responsibility.

Lord Taylor of Holbeach: I think it is a Government responsibility really, in all Departments. BIS are involved as well. That is why the presentation we made was a joint one.

Q195 Sir Robert Smith: It is a bigger challenge to consumer behaviour, because the consumer goes into the white goods shop, buys the A-rated fridge, gets home, moves the old fridge in the kitchen, puts the A-rated fridge in. What do they do with the old fridge? If they put it in the garage for keeping their beer in then they are increasing their consumption. So it also feeds over to DECC in terms of actual energy usage in the home. Labelling helps but behaviour change is quite a big-

Greg Barker: But as we know from the HFC story, a lot of fridges are thrown away. A lot of people, particularly in cities, don’t have the space to create their own little pile of white goods.

Q196 Chair: On this point about labelling, I was disappointed to read in the Financial Times this morning that Tesco has decided to drop their scheme after four years because of poor take-up by other retailers. It may not be accurate but the Financial Times has carried that.

Could I just pursue this point about consumer decisions, which is very important? If we only look at a territorial measurement, decisions made by British consumers to source lower carbon products from other countries, which have a beneficial effect on global emissions, will not appear in our territorial measurement at all. They would, of course, appear in a consumption measurement. I think we are all agreed that we need to enable consumers to make lower carbon choices wherever possible, and labelling is an important part of doing that, but it might be encouraging to consumers if they saw more visibility from the consumption figures because they would know that something they are doing voluntarily was having a beneficial effect.

Lord Taylor of Holbeach: It can also affect territorial emissions. Not all the carbon content, if one might say, of goods that consumers are buying are imported. Having good labelling and buying carbon efficiently can affect our territorial emissions as well as consumption emissions, of course.

Q197 Chair: Of course it can, and I think we are all in favour of good labelling, but I was trying to get to the point that if we are trying to encourage consumers to make low-carbon choices, the benefit of their doing so will be less apparent if we emphasise always territorial measurements.

Lord Taylor of Holbeach: I don’t think we do, in the sense that we publish consumption-based data, and indeed I hope I have made some contribution to the discussion on the value that I think that can bring to supply chain knowledge for business as well as for consumers themselves.

Q198 Chair: When will the next consumption figures be published?

Lord Taylor of Holbeach: 8 March.

Q199 Chair: That covers the period-

Lord Taylor of Holbeach: Ending 2009.

Q200 Chair: So, they are three years out of date?

Lord Taylor of Holbeach: Yes. The current set is maybe four years out of date. Part of the difficulty is collating this information from databases that are far from perfect, and I think I have made that clear. This is why we have to be careful not to get too hooked up on consumption-based data. It is the robustness of the data.

Q201 Chair: This will, of course, be the first year that the recession was really biting for a full year. Could I go back to the Minister of State. Government Ministers are fond of saying that the UK is responsible for only 2% of global emissions. Do you think that that is an entirely accurate picture?

Greg Barker: Based on territorial emissions it is.

Q202 Chair: Right. So we should always have that caveat when that statement is made?

Greg Barker: I think you have to appreciate that is the language of the UNFCCC. That is the language of international climate change negotiations. It is very difficult to unpick that picture and have a credible picture of consumption-based emissions, not just for the UK but for the global community, because simply that data doesn’t exist.

Q203 Chair: You don’t see the insistence on only using-

Greg Barker: But, Mr Yeo, while we emphasise this point, we are not insisting on only using-we are not antipathetic to consumption-based emissions reporting. Defra does it. We will be publishing new consumption-based reporting. We would like to see an improvement in the integrity of that reporting. We would like to see other countries join with us. We think it is a useful measure, that is the point; we are not antipathetic.

Q204 Chair: Perhaps if I just finish the question. You don’t see the insistence on only using territorial emissions measurements for the purposes of international negotiations-which is the present situation I accept-as any kind of obstacle to the change in the views of some developing countries about accepting a legally-binding agreement to have explicit caps on every country signing the treaty? You don’t see it as any obstacle?

Greg Barker: I think it would be perhaps not a very helpful generalisation to say there are going to be explicit caps on every country. I think that anticipates the nature of the global deal that is going to come under differentiated responsibilities. Certainly developed countries will have explicit caps and I think that explicit caps is something that we will move towards and that must be the ultimate goal. But I think introducing a parallel set of data that lacks integrity, is complex and is open to wide interpretation would not be particularly helpful if it opened up a parallel negotiating track.

Q205 Chair: Let me try to put the question another way in that case. Do you feel that the reluctance of some countries, developing countries particularly, to accept a national cap might be because of the flaws in a purely territorial-based calculation?

Greg Barker: The reluctance, primarily, of the major emitters in developing countries to accept a cap is not because of a preference for a consumption versus territorial emissions regime but because of concern that any cap, however defined, will act as a brake on prosperity and economic growth, which they need to lift millions or billions of people out of poverty.

Q206 Ian Lavery: Local authorities, for example Manchester City Council and West Sussex County Council, have been measuring their emissions and setting targets based on a consumption basis. They appear to have made a lot of progress. Has DECC been monitoring any of this progress made by these local authorities?

Greg Barker: I think we would want to encourage that. The more reporting, the greater transparency, the greater the rigour, the better, so that would be helpful but, again, not as a way of superseding. It is not an either/or. We very much see consumption-based and territorial-based emissions, whether that is locally or international, as complementary. We do not see one as superseded by the other.

Q207 Ian Lavery: In the local regions, aviation consistently makes up a significant proportion of consumption-based emissions. Is there any role for Government to reduce that, perhaps through the APD or the EU ETS?

Greg Barker: Sorry, I wasn’t quite clear about the first bit of the question.

Ian Lavery: Aviation in different localities in the regions has consistently been a large, significant proportion of consumption-based emissions and the question is, is there a role for the Government to reduce that, perhaps by the EU ETS or perhaps by the APD?

Greg Barker: Absolutely, and this year we will be bringing aviation into the EU ETS. Whether it is through territorial or through consumption-based mechanisms, aviation is a big challenge and one that we can’t duck. I am not familiar with what the profile of aviation to consumption emissions would look like specifically, compared to territorial, but I am happy to look at that further.

Q208 Ian Lavery: Would you agree that the experience of the local authorities shows that considering consumption-based emissions generates the potential for new policy options?

Greg Barker: Yes, I am sure. As I said, the more information you have and the more localised and more specific it is to the people who are affected, the more helpful it is. Certainly, with behaviour change it may be an important yardstick and help inform local residents, or local businesses, about the things that they can particularly do. For example, we definitely encourage Scope-3 reporting-that is, reporting of supply chain emissions-but recognise that by definition it is something that is out of the company’s control in some cases and is difficult.

Chair: I think the message we had was you would like to finish by midday, so I apologise for that fact that we are two minutes behind target. Thank you very much indeed for a very illuminating evidence session and we have lots of material to work on. I can assure you we did not start the inquiry with any prejudged conclusions.

Prepared 7th March 2012