Energy and Climate Change - Minutes of EvidenceHC 845

Oral Evidence

Taken before the Energy and Climate Change Committee

on Tuesday 18 December 2012

Members present:

Mr Tim Yeo (Chair)

Dan Byles

Barry Gardiner

Ian Lavery

Mr Peter Lilley

Albert Owen

John Robertson

Sir Robert Smith

Dr Alan Whitehead


Examination of Witnesses

Witnesses: Rt Hon Edward Davey MP, Secretary of State for Energy and Climate Change, Rt Hon Gregory Barker MP, Minister of State, Department of Energy and Climate Change, Pete Betts, Director, International Climate Change, Department of Energy and Climate Change, Ben Lyon, Head of International Negotiations, Department of Energy and Climate Change, gave evidence.

Q1 Chair: Good afternoon and welcome. Thank you very much for coming in. As we I think have notified you, before we get on to the issue of the COP and what happened at Doha we would like to spend a little bit of time on the gas strategy, which is a topical subject. The gas strategy was actually published after the last time you gave evidence to us, and it is clearly relevant to some of the discussions that will take place tomorrow and thereafter on the Energy Bill.

Perhaps I could start by asking why the Government thinks that new tax incentives for shale gas are needed. The Chancellor announced he is consulting on new tax incentives for shale gas, but why can shale gas not operate under the same regime that applies to existing oil and gas exploration and development?

Mr Davey: As you know, shale gas is in its infancy. It is very much in its early stages, whereas I guess North Sea oil and gas is at its quite mature stage. Some of the field development allowances that are needed in North Sea oil to make sure we can maximise the potential for the North Sea are meeting different needs. While we have to await the consultation the Treasury has put forward, and obviously the Chancellor will be looking at the responses to that consultation, I think there are some obvious differences.

Q2 Mr Lilley: Was there a different tax regime set up in the States to facilitate the drilling of 150,000 shale-gas wells there?

Mr Davey: I have not studied the States’ tax regime, I am sorry.

Q3 Chair: The gas strategy does make a reference to a possible upward revision in the Fourth Carbon Budget, but we understood that was going to be reviewed in 2014. Does this mean now we have pre-empted that review and there is an assumption that there will be an upward revision?

Mr Davey: No, absolutely not. The Government remains totally committed to all our legally binding targets on carbon emission reductions set out in the Climate Change Act and in the carbon budgets that have been published. In the gas generation strategy what happens-not unusual, I think, in those sorts of strategies-is that there is a different sensitivity analysis, different modelling to look at different potential scenarios. But the central assumption remains linked to the Fourth Carbon Budget.

Q4 Chair: You do not think that by this reference it introduces into the public debate the view that if there is to be a revision, it is going to be in an upward, not a downward, direction?

Mr Davey: No, because there is sensitivity analysis downwards as well in the gas generation strategy. It was both sides of our central assumption. It was not asymmetric. So, I do not see why anyone should reach that conclusion. It is already in the public domain that there was going to be a review of the Fourth Carbon Budget, so that is hardly news.

Q5 Chair: Given that there is going to be a review in 2014 of the Fourth Carbon Budget, why is it impossible to consider the question of the carbon intensity target for 2030 at the same time?

Mr Davey: Well, there was a discussion in Government about the timing of when we should set a decarbonisation target for the power sector. I think that is well known and well documented, and I think we talked about it the last time I came before the Select Committee. I heard you, Chairman, talking about this today on my television screen. There is a debate about it, but we came to a settled view as part of a wider agreement across the coalition that while we absolutely should set a decarbonisation target for the power sector for 2030, and that I thought was a real good position for the Government to take, we should take it when we set the Fifth Carbon Budget. Given that the timing of the Fifth Carbon Budget straddles 2030, there is clearly a link.

Q6 Chair: When the Prime Minister was giving evidence to the Liaison Committee last week, he said: "Those arguing for a firm decarbonisation target are betting that carbon capture and storage is available." Is it not the point of the decarbonisation target to provide an incentive that will drive the development of carbon capture and storage and thus make it more likely that CCS will be available by 2030?

Mr Davey: Well, the Prime Minister is quite right to say that the carbon capture and storage is really important. It is hugely important in our plans, along with our very ambitious roll-out of renewables, with energy efficiency and new nuclear, to meet our Climate Change Act targets.

Q7 Dr Whitehead: May I take you back to the scenarios you mentioned? The gas strategy looks as if it has three scenarios, but in reality there are two scenarios and one programme of action, are there not? That is: one scenario for 50 grams of CO2; one scenario for 100; and then a programme of possible intervention following what the EU does in 2014 with action following that that may turn out to have a much higher carbon emission outcome. Is that your reading?

Mr Davey: No, it is not my reading at all. The central planning assumption in the gas generation strategy and of our whole climate change energy policy is the 100 grams. That has been in the carbon plan. It is in the gas generation strategy. Let us be clear. When my predecessor agreed the Fourth Carbon Budget with the Chancellor and it was published and they said that it would be reviewed in 2014, my predecessors told Parliament that that review would take into account where the UK was relative to the European Union and particularly the EU ETS’s trajectory. That is all on the record. That is not new.

Q8 Dr Whitehead: Yes. The strategy itself says, "We will review our progress in early 2014, and if at that point our domestic commitments place us on a different trajectory from the one agreed by our partners in the EU under the ETS, we will revise up our budget as appropriate to align it with the actual EU trajectory". Is that what is planned?

Mr Davey: What we have also said quite clearly is that we would expect advice from the Climate Change Committee dealing with its criteria under the Climate Change Act.

Q9 Dr Whitehead: Yes, but is that what is planned, to have them? I have just read from the gas strategy.

Mr Davey: What you should refer to is that when my predecessor made the announcement to Parliament. He talked about the need to take into account Europe’s position as well, so that has been clear from the day the Fourth Carbon Budget was set.

Q10 Dr Whitehead: Yes, I think we are agreeing, but I would ask you this. The previous line states the UK is pushing for the EU to show more ambition by moving to a tighter 2020 emissions target, which in turn will drive a more stringent EU ETS cap. Is it your understanding that if in early 2014 that has not happened, then we will revise our carbon budgets upwards and then we will introduce a gas strategy, as is set out in the paragraph below, of 37 gigawatts of new CCGT running at 45% capacity? Is that right?

Mr Davey: It is a very, very important element to that review, along with evidence and advice from the Climate Change Committee. But to be as helpful as I can to you, Mr Whitehead, being clear about that trajectory, what it is going to be, how it might be affected by decisions taken in the EU between now and the Fourth Carbon Budget review in 2014, to try to be more precise than I have been is quite difficult. Already, as the Committee will know, the EU has met its 20% target for 2020. If you take into account the energy efficiency directive, that has increased that, effectively-because that is legally binding on member states and therefore we are going to do better than the 20%-and when you look at different options that are on the table, particularly around the EU ETS, the reform of that, whether it is the back-loading proposal that is on the table with a possibility of future structural reform, cancellation and set-aside of allowances, if that was to be agreed next year that would get us pretty close to 30% and you could see other agreements around HFCs, for example. There are a number of different measures that either have already been agreed by the EU or could be agreed by next year, which would significantly increase the EU’s ambition and, in fact, the EU’s targets. I think that would be very germane to the debate around the Fourth Carbon Budget review.

Q11 Dr Whitehead: Who would judge the veracity of the statement, "If at that point our domestic commitments place us on a different trajectory from the one agreed by our partners in the EU under the ETS, we will revise up our budget as appropriate to align it with the actual EU trajectory"? Who would judge whether our commitments did, indeed, place us on a different trajectory in early 2014?

Mr Davey: Well, Ministers are responsible to Parliament, and so it would be Ministers making that judgment.

Q12 Dr Whitehead: Ministers would decide on whether we are on a different trajectory, and if they so decided, we would revise our budget up and implement the 37 gigawatt, 45% capacity gas strategy? Is that right?

Mr Davey: I have always said, twice already at this Committee, that the Climate Change Committee advice will be very, very important. They were set up as an independent advisory body under the Climate Change Act; we would take their advice into account as we are legally required to do. But the Climate Change Act still puts the onus on Ministers to take the final decisions and to be held to account for those, so that has really been obvious with respect to the Fourth Carbon Budget review since the day the Fourth Carbon Budget was set and announced.

Q13 Dr Whitehead: With respect, this particular line suggests not whether we are in line with the recommendations of the Climate Change Committee or not but whether we are on a different trajectory than that agreed by our partners in the EU under the ETS.

Mr Davey: Well, I have already said that that would be a very important element. I think I said the words, a very, very important part of our considerations. It would be a really critical part. That is what Chris Huhne told Parliament when he announced the Fourth Carbon Budget. The reason I am pushing back is that there has been no change. There has been no change of policy as it was originally announced when the Fourth Carbon Budget was published.

Q14 Dr Whitehead: But there is suddenly a 37 gigawatt new strategy. Where previously there were two scenarios, now there are three.

Mr Davey: It is not a strategy. As I said-

Q15 Dr Whitehead: So there has been a change, has there not?

Mr Davey: No, there has been no change. We are still working on the central assumption but, as is quite common with Government strategies and publications, there is sensitivity analysis both up and down.

Q16 Dr Whitehead: I am sorry; I can’t believe you are serious.

Mr Davey: You don’t think we should do sensitivity analysis?

Q17 Dr Whitehead: No. It is there. I have read out what it says and there are three analyses there, one of which stems from action we may take in early 2014 relating to what we think the EU is doing on its commitments and its arrangements under ETS. As far as I can see, if the EU takes a particular stance on EU ETS, we then move to a different form of strategy than those that have hitherto been put forward in sensitivity analyses. So it is not the same. It is a different set of circumstances which predicate a different strategy.

Mr Davey: We are working on the assumption that the EU will improve its climate change ambitions. It is a coalition agreement that we push for the EU to move to 30%. I have already described both the decision that was taken this year that helps us move in that direction; that there is a proposal on the table already, tabled by the Commission, which would move us further in that direction; and that there are proposals for at least one other major change, and arguably two or three, which would get us towards that ambition. So it is not unreasonable that that should remain our central planning assumption.

Q18 Dr Whitehead: So it is all the same as it has always been, and what the Chancellor thinks he has done in the Autumn Statement with the new gas strategy is just what was there before. Is that right?

Mr Davey: Let us be absolutely clear. The main purpose of the gas generation strategy was to show to investors in gas what the framework was for gas investment. It dealt with a whole range of things that are completely unrelated to the Fourth Carbon Budget which you have been talking about, with respect, Mr Whitehead.

Q19 Dr Whitehead: No, I have been talking about the ETS strategy.

Mr Davey: Well, no, we are talking about gas. You have just mentioned the gas generation strategy, and if you look at the gas generation strategy there are not just some words about the Fourth Carbon Budget. There are issues around capacity mechanisms, issues around planning. There is a whole set of issues set out in the gas generation strategy following a call for evidence that my Department published, which is all about how we can get the gas investment that this country needs. As I think I said the last time I came to the Committee, I strongly support investment in new gas capacity. Our central scenario, both in the carbon plan that was published in 2011, and it remains our central scenario, is to see significant new amounts of gas power stations built.

Q20 Dr Whitehead: I accept that, yes, of course. And under the 100 gram scenario, 26 gigawatts of capacity comes forward. However, under what looks like a 200 gram scenario, 37 gigawatts is installed running at an entirely different capacity level than either of the capacity levels suggested by the other two scenarios. That is new and that comes about, apparently, from the narrative box immediately above those figures, which appears to suggest a mechanism by which that higher trajectory may be entered into. What I am asking you is this. Is the scenario that is painted, not for 2030 but for 2014, correct as far as that strategy is concerned in terms of who will take a judgment about the extent to which our commitments are different from those adopted and accepted by our EU partners, and how will that trigger a change in trajectory and hence strategy as far as gas is concerned? It is clearly the case that in the Autumn Statement the Chancellor thinks there may well be a change in gas strategy as a result of something or other. This appears to be it. Would you be able to explain whether that actually is it or not?

Mr Davey: Well, the gas generation strategy does not prejudge the Fourth Carbon Budget review. I do not think anything announced in the Autumn Statement prejudges the Fourth Carbon Budget review as announced in 2011, I think it was. We will go ahead, as always planned, with the fourth carbon review in 2014. If under certain circumstances it is felt by Ministers that the Fourth Carbon Budget needs to be changed, that was always envisaged. You are not going to do a review and it not be possible for a change. A review means there could be a change. Of course, it could be both ways. It could be tightening or loosening.

Q21 Dr Whitehead: But is the purpose of the review to revise our budget as appropriate to align it with the actual EU trajectory? At that point, would the purpose of the review be that, as it says in this document?

Mr Davey: It is one factor, and it is a very, very important factor that we will take into account during that review. I have said that repeatedly now. Indeed, my predecessor said that when he announced the Fourth Carbon Budget. That is why I keep saying this is not new.

Q22 Dr Whitehead: Should there have been some more words in here, perhaps, that might have underlined the different factors that were at work?

Mr Davey: Given this long dialogue, maybe there should have been, because it would have maybe reduced the length of it.

Q23 Sir Robert Smith: I must remind the Committee of my interest in the Register of Members’ Financial Interests and, in particular, a shareholding in Shell.

Just on this whole debate about the role for gas, the Committee on Climate Change has suggested that if there were to be a dash for gas it would not be compatible with meeting the UK’s 2050 climate change targets. Do you think the potential for a dash for gas would undermine our credibility in international negotiations in achieving climate change objectives?

Mr Davey: We have legally binding targets for carbon emission reductions from the Climate Change Act. We have the carbon budgets. I am now getting ahead of myself: I hope the Energy Bill gets a Second Reading in Parliament tomorrow, which I think sets in place some of the key reforms that are needed to deliver practical terms on those targets. When you add into that a whole range of other things we have done as a Government, I think we have a huge amount of credibility in international negotiations. Certainly, whether it is around the council table at the EU or my recent experience at Doha at the UNFCCC negotiations, I think we are seen as a leader both in terms of what we are doing domestically and the contribution we make internationally. I do not think colleagues should worry. Let us be clear, I do not envisage a dash for gas in the way you describe it. I do envisage a sensible investment framework, as set out in the gas generation strategy, to get the gas power stations that we need.

Q24 Sir Robert Smith: Do you think in terms of the leadership we are in the right place when it comes to carbon capture and storage and the role it could play globally?

Mr Davey: I would like to think we are. We have quite an ambitious programme, whether it is the billion-pound competition, which is now entering its second phase; whether it is the Levy Control Framework, or the room we have for having feed-in tariffs, contracts for difference to support carbon capture and storage projects that get the go-ahead. We have quite an ambitious package for carbon capture and storage and that is even before you run into the money we are spending on research and development and the collaboration that we already have and that we might well develop further with other countries looking at carbon capture and storage.

You will know that there are other countries looking at this. The States has quite a number of projects, of course, and a number of other countries have, too. But I think we have some comparative advantages in CCS, often stemming from our experience in the North Sea with oil and gas there and the skills and expertise that we have, and also the fact that the general public seem more relaxed about storing carbon in the North Sea than they do underground in some of the continental European countries, where there has been a bit of a public reaction to carbon capture and storage plans. I think we are well placed, but we cannot be complacent. We have to get on with it.

Q25 Sir Robert Smith: One other thing to do with carbon budgets is the treatment of aviation and shipping. I think the Government is meant to bring forward its proposals for doing that by the end of the year. Is that still-

Mr Davey: That is a legal requirement. We are publishing a report to Parliament possibly even this week, I would guess.

Sir Robert Smith: The year is running out. Thanks.

Q26 Chair: Will that give us the answer that we are all hoping for?

Mr Davey: If I can read your mind, Chairman, certainly we have taken advice from the Climate Change Committee. We have listened to them. It is not an easy area at the moment because of what has been happening at the international organisations, the International Civil Aviation Authority and IMO, and the debate around the EU ETS and international aviation and shipping emissions. That has created a degree of uncertainty, so we have had to be grappling with that. But when we publish our report you will see how we have grappled with that, and I like to think it is in a place that you and others will be content with.

Q27 Chair: I should also draw attention to my entry in the Register of Members’ Financial Interests, with which I am sure you are by now quite familiar.

On that last point, I think up until now successive Governments have accepted the advice of the Climate Change Committee on all the issues on which it has been requested.

Mr Davey: I believe that is the case, yes.

Q28 Chair: So it would be a breach of that precedent if the Government was not to accept the advice of that Committee on aviation and shipping?

Mr Davey: Well, we have sought to work with the Committee to make sure that we can take this debate forward. There is likely to be a time when the Government does not accept the advice of the Climate Change Committee. That is always likely to happen. But if that time were to come, I think the Government and Ministers would have to set out why and be held to account for taking the decision.

Q29 Chair: I suspect that at the time that Committee was established by Act of Parliament you could have got quite good odds against it being a Liberal Democrat Secretary of State who was the first one not to accept that Committee’s advice.

Mr Davey: You might have got good odds on there not being a coalition between Liberal Democrats and Conservatives as well.

Q30 Barry Gardiner: Secretary of State, I want to move on to Doha and I, too, must draw your attention to my entry in the register of interests. I spent three days at Doha with Globe International. Before I do, I want to turn to another "d", and that is differentiation, because, of course, your party leader yesterday set out the wonderful policy of differentiation. I just wanted to give you the opportunity to clarify exactly where you stand on this after the wonderful stonewalling that you did against Alan on the dash for gas and the relationship with the Chancellor. Are you and the Chancellor at one with your objectives in terms of future gas supply in this country? If you are not, what are the differences? And who won in the battle that there was between you?

Mr Davey: Colleagues will have noticed that we had some lengthy and detailed discussions.

Q31 Barry Gardiner: I called it a battle; you call it lengthy and detailed discussions, yes, but let us cut to the chase.

Mr Davey: It is not unusual in any Government for there to be a long discussion. What I tried to do during those last few months was bring together a whole range of different issues, whether it was the Levy Control Framework, whether it was aspects of the Energy Bill, whether it was issues around the decarbonisation target, issues around the gas generation strategy and so on, in order for us to have a rational debate within Government covering a whole range of different issues that logically fitted together so we could come up with a coherent, consistent agreement. That is what we have done. I think that was really important because although it was not always pretty and people read different things in the papers that had different levels of inaccuracy about them, nevertheless I thought it was important to get an agreement across Government for investment. One of the most undermining issues for investment is to see a Government disagreeing. Let us remember we have to attract tens of billions of pounds of investment, whether it is in gas or renewables, whether it is in CCS or the transmission distribution network. Therefore, I wanted to get to that agreement.

Q32 Barry Gardiner: And have you got it? Sorry, we have limited time and stonewalling is turning into filibuster now.

Mr Davey: Well, I am trying to answer your question, Mr Gardiner, and I personally think we have got an extremely good deal for the Government and, more important, the country.

Q33 Barry Gardiner: Okay. If I were to summarise your response, it is that you now believe that you have got a result of those discussions that both you and the Chancellor are equally happy with, and you are united in your position, and there is no differentiation between you. And I presume that is what Focus leaflets up and down the country will be saying.

Mr Davey: We have a united clear Government policy-

Barry Gardiner: Thank you.

Mr Davey: -and that is the critical thing if you are going to say to international investors and industry, "Come and invest." They know what the policy is. They know what the score is.

Barry Gardiner: Great. You and the Chancellor are one; love it. Let us move on to Doha.

Q34 Chair: Just before we do, Barry, does your Minister of State-not the colleague who is with you today-share your view that one of the most undermining things for investors is the appearance of disagreement?

Mr Davey: My Minister of State, Mr Hayes, absolutely welcomes the fact that we have a cross-coalition agreement on energy policy, and I know he will do his very best to pursue that.

Q35 John Robertson: Secretary of State, I was also fortunate enough to be in Doha. I saw a number of your performances and I cannot say I was unhappy with them. You said a lot of good things, some of the things that you are now hedging, Secretary of State, if I may say, from what was said over there.

My problem is, I went to a number of events there and the part where you said about leadership and how we are seen as a leader did not quite come out when I was talking to some of my colleagues in Europe in particular; we were not seen as showing leadership. As a matter of fact, they think we are backing off a bit in relation to the leadership that we have shown in the past. Any reasons why they would say that?

Mr Davey: They may have read some of the reports running up to the agreement, but when they read the agreement, read the reports of the agreement, I think they will have taken a different view. Certainly, given that we were in Doha after the agreement had been reached, the Ministers I was speaking to really felt our level of ambition and our level of leadership. Obviously, we had a number of meetings of the EU grouping. Every morning we would come together as a group and the Ministers were there to discuss our position as the different negotiation texts were developing. We were showing leadership there and I think that was welcomed by those other member states who are ambitious on climate change like we are.

Q36 John Robertson: This is going back a question or two, but I think it also fits in. In relation to gas there was a presentation that I was listening to about gas and how it was seen as being a saviour, particularly between now and 2030, but from about 2030 onwards it starts to become a genuine problem. Now, you have already said that we are going to have to build all these gas power stations. What are we going to do to replace them? Because that was one of the things that they were coming up with.

The other thing they were saying, basically, was that carbon capture and storage, particularly in gas, which is something we have not really been very good at, technically we were not going to be able to produce anything in a scale that was going to be, shall we say, at an industrial level. How are you going to replace all these power stations post 2030?

Mr Davey: If you look at the Energy Bill, if you look at our energy strategy, the whole aim is to develop all the different low-carbon technologies that are there. I think we are doing increasingly well on the renewables side, whether it is wind, on/offshore, solar, biomass, energy from waste and so on and so forth. On carbon capture and storage the expectation has always been that it would be in the mid 2020s when we would hope that carbon capture and storage would be cost competitive, maybe the late 2020s. Of course, we are proceeding with our new nuclear strategy, so it is these types of low carbon technologies that we believe will be at the centre of our energy generation strategy in the mid 2020s and beyond. Most of our predictions show that the gas load factor will be reduced much more significantly in the late 2020s and early 2030s and it will be very much more of a backup source.

Q37 John Robertson: Yes, I accept that, and it is one of these ones you can switch on quickly and get a return from it.

Having said that, you seem to be now pushing into an area where there is not the same reliability as there is with, say, nuclear or gas or coal. When you are putting a lot more eggs in the basket of renewables, it does not strike me as being safety conscious.

Mr Davey: I think it is. You are right to say that at the moment there are issues around intermittency for wind and solar, but as technologies develop, as we have smarter grids, as we have development of storage technology, I think many of those issues can be dealt with. Equally, there are renewables that have other characteristics. It is not that all renewables are intermittent. It is certainly not the case with biomass. It is clearly not the case with tidal and marine, although, of course, we do not necessarily expect them to be cost-competitive until the back end of the next decade.

Q38 Barry Gardiner: Secretary of State, before Doha you said that you wanted to pave the way for the new global deal while delivering more action now. Did any more countries come forward?

Mr Davey: Not as many as we would have hoped. In terms of new pledges it was the Dominican Republic who made the only new full pledge at Doha. However, this I think is really quite promising: there were four Gulf states that pledged to make a pledge next year. I am going to bring Mr Barker in here because he had a meeting with the Saudi oil and gas Minister. But it was Saudi Arabia, which surprised a lot of people, who said they were going to make a pledge next year; Qatar themselves; Bahrain; and UAE. That actually caused a bit of a frisson at the COP, because people did not expect those Gulf states to say they were going to make a pledge. We obviously have to see the nature of that pledge. We will not know that until next year. Greg, did you have a view?

Gregory Barker: Yes, I had a bilateral meeting with the Minister for oil, gas and minerals of Saudi Arabia, who has been in that post for a significant period of time. We had a very cordial bilateral. I was actually really surprised with the conviction with which he expressed his concern about both the impact of man-made climate change and the determination of Saudi Arabia to be part of the solution. Clearly, they will require further time to put their pledges together, but absolutely they see themselves ultimately on the same side of the equation as us in terms of being prepared to take action against it.

One of the positive things that are flowing out of that meeting is an invitation to take a trade mission from the UK solar industry to Saudi Arabia. I do not know if the Committee have seen, but the Saudis have said that they are going to be spending $109 billion on solar energy over the coming decade into the 2020s. That represents a very real opportunity for the UK supply chain not to go there with the potential for manufacturing cheap commodity products but for the added valued treatments that we excel at.

Q39 Mr Lilley: Do we produce any solar panels?

Gregory Barker: No. If you listened to my answer, Mr Lilley, what I said is we are not going there as a cheap manufacturer. We do produce solar panels, both at Romag in the north-east that I visited last week, and also at Sharp in Wrexham. But what we do have is a supply chain that-

Q40 Mr Lilley: Supplying what, if not solar panels?

Gregory Barker: A supply chain, for example, for building integrated solar. There is the basic commodity that goes into the solar panel, but then there is a whole range of added value treatments that go to create a product. That is really where the value is, in the supply chain. For example, Saudi Arabia has extreme heat. Solar does not work well in extreme heat conditions. This is a treatment that we are working on. There is a company called Naked Energy that I met last week at Romag who are developing an innovative way of adopting a system to do that. For example, in Saudi Arabia the dust is a big problem obviously because of their geographical conditions. The sorts of treatments that Imperial College are working on can be applied to solar arrays. The sorts of advances in glasses that Pilkington is-

Q41 Barry Gardiner: Minister, forgive me, I am interested in what you are saying but I want to focus on where we were in terms of Doha and, preliminarily at least, looking at the overview of Doha.

Secretary of State, you said that you wanted to encourage a move to a more ambitious EU 2020 emission reduction target of 30%. First, what progress have you made on that front? Secondly, how does our own revised view of our 2030 commitments square with leadership on that agenda?

Mr Davey: Well, I do not think we have made a revised view of our 2030 targets, so I am not quite sure what you are referring to there.

In terms of our leadership in the EU, first of all, we are doing an awful lot of work with other member states who share our ambitions; whether it is working with Danes, Martin Lidegaard, my counterpart; the Germans, Peter Altmaier; the Finns; the new Dutch Minister, all of whom I think share the UK’s view that we need to be ambitious on climate change. Building those relationships, building that support across the Council table is really critical.

Clearly, this year getting the energy efficiency directive agreed was important, a bottom-up approach to move us above the 20% and into the early 20s. That was an important thing that we have achieved.

Working with other member states and the Commission looking at their proposals for reforming the EU ETS that I referred to earlier: really important.

We have the proposal for back-loading on the table. We do not think it is ambitious enough. We think we want to see both back-loading and cancelling, because that could make a significant difference to increasing EU ambition almost in one leap.

There are issues I referred to earlier, I think in response to Mr Whitehead, on HFCs. There are a number of initiatives, some of which have happened this year, some of which are ongoing, some of which we hope will be-

Q42 Barry Gardiner: Was there anything specific that you discussed with your colleagues during the Doha discussions?

Mr Davey: It was not so germane to the text that we were negotiating in Doha, because the EU ambition was more related to our commitment to the second period of the Kyoto Protocol. The big issue there was around hot air and the AAUs, which no doubt you will want to come on to later. There were lots of bilaterals, of course, that you have at these events, where I was raising that issue and others were raising it with me.

Q43 Barry Gardiner: Okay. Can I ask you about the group Colombia, Peru, Chile, Panama, Costa Rica and their statement where certainly in their view they were trying to break through what they saw as the deadlock between the developed countries and the BRICs to get a rather more flexible narrative on the table? What was the EU’s, and specifically your own, response to that initiative from them?

Mr Davey: The Pacific initiative-there was certainly an initiative during Doha-

Barry Gardiner: Sorry, Mr Betts, it may be helpful-

Mr Davey: Do you know the initiative that he is referring to?

Pete Betts: A group of countries who we have worked with very closely over recent years within the Cartagena Dialogue-Colombia, Chile, Costa Rica and others-came together in a more formal grouping and began speaking as a group and exercised quite a constructive, moderate, middle ground position. We have been working with them very closely and will continue to do so.

Q44 Barry Gardiner: Good. What do you think over the next three years, really, or two years now up to 2015, is going to be the most significant way of making sure that in 2015 we can achieve the progress that we all wish to see from the Durban platform? Where is that progress going to come from in the next two years?

Mr Davey: There were two elements to the Durban platform. There is the raising mitigation ambition pre-2020; that work-stream. Then, of course, there is getting the legally binding treaty in 2015.

In terms of raising mitigation there is a work-stream that is looking at how that can be done, whether it is more pledges or other activities. There is some political dimension to that. It was very good that the UN Secretary-General, Ban Ki-moon, suggested that there should be a high-level political leaders’ meeting in 2014. That would focus, I guess, on both tracks. Even within the Kyoto Protocol second commitment period there is a proposal for us raising ambition in 2014-those countries that have joined the second commitment period. So there is a set of initiatives and work-streams to raise ambition to meet that aspect of the Durban platform.

In terms of getting to 2015 so we can sign that treaty, which I guess is the critical thing, in many ways Doha was all about creating that space, because it showed that we were not rowing back from Durban. That was critical because there was some fear going into Doha that there would be countries wanting to take us back away from the Durban platform. That did not happen. That might sound a bit of a negative thing but actually was quite important. Moreover, going forward from the Durban platform, we needed to cut away some of the undergrowth that was there from the past, the negotiations on long-term co-operative action, the so-called LCA track, as well as the second commitment period of the Kyoto Protocol. Those negotiations were concluded. That creates a space for one set of negotiations going forward. We have two COPs before the 2015 COP in Paris, so those negotiations are going to be critical for preparing for the 2015 treaty.

I think there are two other things that are going to be really important. One is creating the political space so that a number of countries around the world who have been less keen on this agenda, less keen on moving from the old regime of Kyoto Protocol to a new regime where all countries are party to legally binding agreements, can move away from their previous positions. Clearly, that is important, whether it is the BRIC countries, whether it is the US and so on.

I think another part that very much links to that is showing on the ground how some of these mitigation activities can be really very positive-positive for development and positive for growth. A lot of the international climate finance that we are allocating is designed for that in developing countries in particular.

Q45 Barry Gardiner: I was hoping that unbidden you were going to talk about the role of national action and national legislation. You have talked in indirect terms about creating space, but now that I have bidden you, could you just say how important you think that element is over this next four years?

Mr Davey: I think it is important, and thank you for the heavy hint about what you wish me to address myself to. Because there are many elements to the political space, I think the legislation is really important, and the work that Globe does-I know you are an active member of that-is really significant. We have seen a number of countries adopt climate change legislation in recent years, which is fantastic, and the more countries that do that the better. It is in many ways a bottom-up approach where people are seeing the legal framework that relates to them and their country and their circumstances, because one size does not fit all. It is looking at the technology and seeing the technologies working. It is trying to convince people that in many ways many of these actions are very good for their development and growth. We are already seeing with solar power, which Greg was talking eloquently about-you stopped him in his tracks. I am sure he could spend a long time talking about that.

Barry Gardiner: I heard it anyway.

Mr Davey: We are seeing that in sub-Saharan Africa and other parts of the world, developments in solar technology and the reduction in price are offering a potential for economic development and social development that was just simply not there in the past. That is showing how things can work in people’s developmental interests.

Q46 Barry Gardiner: Thank you for that. The first phase of Kyoto had specific targets to lower emissions by an average of 5% below 1990 levels in that five-year period of 2008 to 2012. What level of emissions reductions are we going to see in the second commitment period?

Mr Davey: From the EU’s perspective I think we are still committed to the 20%. But we agreed, and we were very keen on this, that there was a review clause. Sometimes during the discussion it was called a ratchet-up clause because a number of other groups, AOSIS in particular, were worried that if we had an eight-year Kyoto Protocol second commitment period at existing ambitions, those lower-level ambitions would get locked in. The European Union, with others, talked about this review clause so we could raise levels of ambitions. I do not know exactly where we will end up when we get to that point of raising levels of ambitions, but it follows from the answers I have given previously, particularly in respect to the EU, that I hope we would be able to raise those ambitions significantly in 2014.

Q47 Barry Gardiner: I was hoping you might give a figure that did not just apply to the EU.

Pete Betts: You have targets from countries who are in the Kyoto Protocol second commitment period and from the others. I think the figure for the second commitment period for the Kyoto Protocol countries would be about 0.7 gigatonnes; 0.7 billion tonnes. According to UNEP, if you look at all the countries who have committed to targets for 2020, which represent about 80% of global emissions, then on the most optimistic scenario they may deliver about 6 gigatonnes. If we come back to the UNEP numbers, business as usual might take us to 58 gigatonnes. We need to be at between 44 and 46 gigatonnes to be on a cost-effective trajectory. It is a significant chunk, but less than halfway, of which the Kyoto element is a proportion but it is not the biggest element.

Q48 Barry Gardiner: Indeed, and you switched to talking in gigatonnes. Could I ask you, for the benefit of the Committee, to translate that into percentage reductions on a 1990 base period?

Pete Betts: The Secretary of State gave you the number for the EU. It was 20%.

Q49 Barry Gardiner: Yes, but for KP2 as a whole?

Pete Betts: I do not have that.

Mr Davey: We can get back to you on that.

Q50 Barry Gardiner: If you could, that would be helpful; thank you.

We had 193 countries in the Kyoto Protocol originally. We now have some notable absentees: Canada, Japan, Russia. How many do you think there are going to be in KP2? What do you think are the key factors that are keeping Canada, Japan and Russia out? What prospects do you think there are for encouraging them to come in or, at the very least, to take significant other positive action?

Mr Davey: Clearly, we would like more countries in the second commitment period. There are, as you have said, some notable countries that are not in. In many ways, that was not the issue. We did not go into Doha thinking there would be a whole range of new countries joining the second commitment period. The issue was keeping alive a regime that has rules, has measurements and has processes, because that was quite important as we negotiate the new regime. We want to make sure that those tools, those instruments, that framework, can continue so we can get some benefit from it, but also that it is the model on which the new regime can be built. The critical thing for the next regime is to make sure that it applies to all countries.

Q51 Barry Gardiner: I absolutely agree with you that it is necessary to keep that rules-based international framework in place. No question about that, so we are not at odds there. But what I would like to hear from you is more about your analysis of how effective KP2 is going to be. Yes, rules are important. But if you are not playing the game, then you do not have to abide by the rules. That is part of the problem here, is it not: that there are significant players who are not playing? The game is important, the rules are important, but it has increasingly less traction. It is a matter of saying, how are you going to get those countries who have now resiled from the Kyoto Protocol more engaged, because you cannot just ignore that. There has to be a strategy there as well.

Mr Davey: I do not disagree with that. It is quite clear that the emissions that are covered by the countries who have signed up to the second Kyoto Protocol commitment period are only 15% of the world’s emissions today. By 2020 it is going to be less, maybe about 12% of global emissions. There are an awful lot of emissions that are not covered by it. That is absolutely clear. So if we were simply relying on the Kyoto Protocol for emission reductions to 2020 we are not going to go very far. There needs to be work with others to try to get them to reduce their emissions. Some of that will happen because countries are taking unilateral decisions, whether it is a move towards a more low-carbon power generation system or because they are switching from coal to gas. Some of those emission reductions are going to happen, and they will be outside the UNFCCC process.

One of the things that probably does not have the coverage that it deserves is some of those initiatives outside the UNFCCC process. For example, I attended a side-event that was hosted by the Climate and Clean Air Coalition looking at a whole range of initiatives, which is completely outside the convention but initiatives involving both developed and developing countries, which will make significant differences in reducing emissions.

You are right to say that we should not simply focus on the Kyoto Protocol. There are a number of other areas that we should be focusing on. It is also true to say that there are countries outside the Kyoto Protocol that will look at and use Kyoto Protocol accounting-Japan and New Zealand, for example. I think there are lots of things to point to. If we simply just looked at the fact that the second commitment period only covers 15%, I think we are doing down what is being achieved and what can be achieved.

Q52 Barry Gardiner: If the IPCC Fifth Assessment Report does recommend that we tighten global ambition to 1.5 rather than 2 degrees, if it sets that as the level of dangerous climate change instead of 2 degrees, will you press for the EU to increase the level of effort under KP2 in 2014?

Mr Davey: Clearly we will look at that report and reflect on it seriously, but at the moment we are some way from hitting 2%, as you are aware. The emissions gap has been growing, so we have to raise ambition levels anyway. We have to be more active anyway. I think we should focus on just trying to create that political space so the world can do far more than it is doing at the moment.

Q53 Mr Lilley: Did anybody at this great conference mention the fact that a third of all the CO2 and other greenhouse gases emitted by mankind have been emitted since the Kyoto agreement was signed in 1997 and much of that growth was the counterpart of the rise of living standards in the developing world, which hopefully will continue but will not continue without further growth in the burning of hydrocarbons? Happily-this is almost irrelevant-over the same period there has almost been no rise in the surface temperature of the earth. I do not know whether any of those inconvenient facts were mentioned at the conference.

Mr Davey: There was a speech at the formal dinner on the first night by a world-renowned professor-we can get you his name-who talked about the fact that there used to be a discussion led by Vice President Al Gore about inconvenient truths and now it was turning into convenient untruths pushed forward by some people who doubt the climate science. I think it is fair to say those sorts of discussions were not really heard at the COP itself. So I think the answer to your question is that some of those points I did not hear made.

Q54 Mr Lilley: Yes. They seem rather relevant to me.

Getting back to the less relevant points of the rather trivial contribution this country can make to it all, is it not the case that the biggest single contributor to our own success in meeting the Kyoto targets has been the dash for gas in this country-the replacement of coal by gas?

Mr Davey: Certainly, the replacement of coal by gas has reduced carbon emissions. We are seeing that in the United States as well, and that is to be welcomed. But it does not follow that that is long-term sustainable, because the burning of gas also gives off carbon emissions. All the climate scientists’ analysis and models show that we cannot simply continue by burning gas, and that is going to be a way out. We have to move to much cleaner energy than any hydrocarbon can offer.

Q55 Mr Lilley: But could one not stick by the maxim that half a loaf is better than no bread? If we can emit only half as much carbon dioxide by the dash to gas or further dash to gas, given that still nearly half our electricity comes from coal, we should not shrink from doing that rather than making the best the enemy of the good.

Mr Davey: Well, I am sure you were pleased when I announced that the suspension of fracking for shale gas in Lancashire was lifted and that we would explore whether we could get shale gas in the United Kingdom. You will have been pleased by the gas generation strategy, which suggests that we could build 26 gigawatts as our central planning assumption of new gas power stations and that was consistent with our legally binding targets for reducing carbon emissions. It is true to say that in the near and medium term gas has a role to play. The question, though, is-because we are dealing with long periods; very, very long periods-is that sustainable in the 2030s, 2040s, 2050s? The climate change science suggests that it is not, and that we have to find other technologies as well.

I sometimes think this debate is a bit sterile because it suggests that it is gas or renewables. I think that is quite a simplistic way of looking at it. Gas clearly has a role to play. Much, much longer term we have to move away from hydrocarbons completely.

Q56 Mr Lilley: One reason often given for the self-flagellating policies that we adopt-given that we already have a lower level of emissions per head than most of our European counterparts but nonetheless are going further and faster and pride ourselves on being committed to 80% targets legally binding and so on-is that this will exercise a leadership effect on the rest of the world. I have always thought this was part of the post-imperial hangover. But if you are subject to that, did you see any evidence that, for example, Germany is not going to go down the route of closing its nuclear and moving to coal, often lignite, burning, which has in the case of lignite three times as much emissions as gas and almost infinitely more than the nuclear they will be replacing? We are moving in one direction. Our partners in Europe-or a major partner in Europe-are moving in another direction. Were they not moved by the sight of us making difficulties for ourselves to make difficulties for themselves?

Mr Davey: I do not really accept the way you caricature German energy policy. They have invested significantly in renewables, far more than we have. They are spending far, far more than we have.

Q57 Mr Lilley: They still have more emissions per head.

Mr Davey: I am just telling you what their energy policy is, and it is costing their bill payers a lot more than we have asked our bill payers to pay. They have some very ambitious energy efficiency targets and they really are ambitious in this area. You are right to say they have been burning more coal recently, but then so have we.

Q58 Mr Lilley: No, they are planning to build 20 new coal-fired power stations. We are talking long-term, as you emphasised in the case of our gas power stations.

Mr Davey: Well, I have not seen those, but I have heard allegations that there are those plans. But I have also seen what they are doing and if you look at what they actually are doing, their deployment of renewables is on a much greater scale than ours and they are getting quite a lot of industrial benefit from that.

Q59 John Robertson: On that point, I was at an event with some German MPs in Doha. One of them made a statement that Germany does not really have a policy on renewables; they just see it as a way of making money and that is why they are going down that road, because they think nobody else is and they can make money on it rather than worrying about emissions. If they are going down the road of also bringing coal back online, does that not really support that?

Mr Davey: I have to say I have seen no evidence of the way that the German position is being characterised. I have worked a lot with their Minister, Peter Altmaier, and he is one of the advocates of the EU going to a 30% carbon emission reduction target, which rather suggests that they share our vision of higher ambition and they are committed to their fair share of it. It is not that they are saying Britain should take it; they are saying "We"-Germany-"will take it." I had the privilege of listening to Chancellor Merkel early this year at one of the preparatory meetings held before the COP in Doha. I was extremely impressed by the leadership she personally is giving this agenda in Germany. She is a former Environment Minister, so she knows and understands it. She is a former scientist, I believe, by profession. So I think the commitment by Germany to move to a low-carbon future is a very deep one.

Q60 John Robertson: I do not doubt that, but it is maybe the motives I doubt. It was a German MP-what do I know-and a UK MP.

Moving on a bit, you said after the last round that it was a modest step forward. I spoke at a meeting the other week and I preferred to put it in such a term as, "If it was a road map, the car is still on the road." There was not, to me, the same step forward that would appear to be as you put it. I also have a great worry about the next round in Poland, where we go to a country that has been in a lot of ways obstructive in terms of reducing emissions. How do you think we are going to take this step forward and meet our 2015 target?

Mr Davey: Maybe there are different ways of describing modest progress, Mr Robertson, but I hope people felt that was a realistic assessment. I was not asking people to hang out the bunting.

Q61 John Robertson: Some people said very modest. I was just being helpful.

Mr Davey: Yes. To be honest, we met our objectives at Doha. We did not think there was going to be a dramatic step forward.

John Robertson: No, that is true.

Mr Davey: We did not say that beforehand, and I do not think Minister Barker said it when he came to give evidence to this Committee. We were always of the view that it was about making sure there was no rowing back from Durban, that there was a clearing of the past negotiation tracks, and setting out a work programme going forward. We wanted to see more action on mitigation pledges. We saw just a little bit of that, although there were other things outside the UNFCCC that I think should give people heart. I think my description is a fair one. As I said in answer, I think, to Mr Gardiner earlier, in terms of what happens now, whether it is Warsaw in 2013 or, as we suspect, Paris in 2015, we have a huge amount of work to do. No one can be complacent, but I think we now have the site cleared. We do have a road map and the engines revving, and we are raring to go. Of course, it is an electric car we are in.

Q62 John Robertson: I do not disagree with you and I want to agree with you wholeheartedly, but there were a number of politicians who were there who voiced, either privately, or not so privately, that they felt there could be genuine problems in the next COP.

Mr Davey: Absolutely.

John Robertson: The reason being that where we are going, you are in an area where there is a lot of coal and they are not quite as happy as others to cut it off.

Mr Davey: I think the next three years are going to be really difficult. I do not want you to think that I think anything else. We have a huge amount of work to do preparing for Warsaw and preparing all the way to 2050, and, I hope, working with this Committee and other Members of Parliament, we can make sure Britain plays its part to try to make that successful, but there is certainly nothing preordained.

However, let me point to one or two things that I think should make us a bit more optimistic. I think it is an extremely good thing that President Obama, in his acceptance speech and his first press conference as President, has talked about the climate change agenda, showing levels of ambition in that area. It is very early days yet, but nevertheless I think that mood music coming out of the second-term Obama administration was welcome.

As part of the Chinese transition we saw the emergence of a new theme of Ecological Civilisation. While that might mean a number of different things, I think it is certainly a sign that the new Chinese leadership wants to address environmental issues, both domestic and potentially internationally.

So these are early signs, but if we can build on those, if we can make sure the EU continues to have ambition, if we can work with developing countries, whether it is AOSIS or the LDCs, their different groupings, I think we can create that space that is going to be needed to do the deal in 2015.

So it is horrendously difficult. If you look back at the history of COPs, whether it is Copenhagen or others, that did not work quite so well, no one can be complacent. But I think we now have a challenge. We have a three-year period in which to bring this about. So unlike other periods where it has been the next year, the next 12 months and everything has to be done then, I think at least we can step back and take a more strategic view and act more strategically so that by the time we come to 2015, there is a real chance that we can get the deal.

Q63 John Robertson: I do not disagree with you. I think the USA and China have done quite a lot that people do not give them credit for, and they are definitely obviously on the right track. It would of course be helpful if they would sign up to the next protocol, which would certainly push it down the road, but I have my doubts on whether they will do that; but we can but hope.

Maybe it is just me-and usually my glass is half-full, as you are obviously a half-full person-but in relation to the developing world my problem was this. I went to a meeting about our forests in the world, and I can see a split between Europe and Brazil and Bolivia, who were on the other side, who in this case were supported by China, which disappointed me. We seem to be having a split in an area where we really want to encourage them to come along with us. I saw that as a negative. How can we get countries like Brazil and Bolivia and the South American nations and those others with deforestation, on board with us to realise that we really do need these trees?

Mr Davey: Before we went to Doha, we were extremely grateful that His Royal Highness the Prince of Wales hosted a meeting at Clarence House that Ministers and I attended where we were able to make an announcement of some of the climate change finance plans we have on forestry. We particularly focused on a programme we have entered jointly with Colombia to develop what are called silvopastoral systems so that forests are not always cut down for ranches, but there are other systems that can make their agriculture more productive, which reduces deforestation. So, ahead of Doha, we took an initiative. It was warmly welcomed, and at that meeting at Clarence House we heard some very positive stories. Maybe we should have heard more of them at Doha. Take Brazil, which you mentioned: Brazil has cut the rate of deforestation by two-thirds since 2004. That is huge progress and they deserve a huge amount of credit for that. They have shown a number of the policy initiatives that can be made to work. I know Mr Gardiner knows an awful lot about this, through the work that he has done. If you see the things that Brazil has been doing, yes, it has been laws, creating areas of forest that are sanctuaries, but it has also been technology, with satellite monitoring. So I think there is progress there. We need to do more.

One of the frustrations when I came in and looked at some of our programmes here was that there has been difficulty spending some of the money that has been allocated to prevent deforestation, not just by the UK, but by other countries. So some of the initiatives we have been taking have been to see if there are other models that we can adopt to try to be more active on and be more front-foot and get more money out of the door, if you like, to tackle deforestation. One of the areas that we are looking at, and this was touched on at the Clarence House meeting, is working with the private sector, who are in many ways the drivers of some of the deforestation, because they are after some of the commodities there, whether it is beef, whether it is soy, whether it is palm oil and so on. If we can almost mirror what the world managed to do with hardwoods and timber in the last decade, if we can create sustainable supplies of these commodities so that the private sector is able to supply their markets, but in a way that does not cut all the forests down-

Q64 John Robertson: Sorry to cut you short. I understand what you are saying, and I do not disagree with you. But my point is how do we get these developing nations to come on board with us when, in a lot of ways, it is not financially worthwhile to them, particularly if they are smaller countries? Brazil is probably not one of the examples.

Mr Davey: The Colombia one I think is a classic example, where it is going to be in the ranchers’ interest to not cut down the forest but to adopt these new agricultural systems where rather than having one head of cattle per hectare, they can have three or even four head of cattle per hectare because they become more productive, because there is more foraging. It is those sorts of systems, which are not rocket science, that could mean that they could still have their agricultural development, but not at a cost of deforestation.

Q65 John Robertson: One last question on leadership: will David Cameron attend Ban Ki-moon’s meeting of world leaders in 2014? Maybe Mr Barker knows.

Mr Davey: Let’s be clear, that was an announcement made by the UN-

John Robertson: Because you two may not be talking by that time.

Mr Davey: I think we will be. And you and I will be talking, Mr Robertson, I predict. But the UN General Secretary made this broad announcement. He did not specify whether it was going to be Heads of State, to my knowledge.

Gregory Barker: High-level.

Mr Davey: High-level; so, the invitation is there.

Q66 John Robertson: But surely leadership means you want the highest level there? Is that not leadership?

Mr Davey: First of all, I cannot prejudge who the UN General Secretary is going to invite to this summit or this meeting. I think that is up to the UN General Secretary.

Q67 Barry Gardiner: On the point that you made, Secretary of State, about Colombia and the forestry initiative there, the forestry initiative in Colombia is a wetland initiative, as I understand it, of the Minister for the Environment there. I spoke with the Minister just two weeks ago in his office, and he explained it to me. What they want to do is an initiative of ranching in the wetland, such as they have in Pantanal do Sul in Brazil, if you look at the Glabene ranch there and what they have done on that, on the SOS Pantanal. But it involves major legislative change. The bilateral that we set up with them for the £15 million that has now been given by the UK, which they are very grateful for, needs some real technical assistance to allow them to then be able to go and replicate that sort of ranching development in that area on a sustainable basis. At the moment, they do not have it, so it is an area that we need to follow up on.

Mr Davey: We are clearly engaging with the Colombians, and, as you say, they are delighted that we are working with them on this. The Colombian-Amazonian rainforest is hugely precious. I think they are seized of the need to act, and I think they have noticed how successful Brazil has been. I am very happy to write to you, Mr Gardiner, about the details of the silvopastoral initiative. My understanding is that it was not in a wetland.

Gregory Barker: I saw pictures. It is not like any wetland I have seen, not least because it is quite hilly.

Q68 Barry Gardiner: Yes, that is right. We can talk about it later, but it is an area that is susceptible to flooding. The higher level land is where the forest stand is and it is just like Pantanal do Sul, and it is a way of ensuring that the ranching can take place there sustainably, but there are legislative changes that will need to be done in order to instantiate that properly.

Look, I am really glad that you talked about REDD+ because one of the areas that I wanted to touch on was that, but in particular around the whole issue of fast-start finance. Where the UK has met its targets, that is great. But also I think the funding that has been given to date has not met its full quota. Also it was agreed at the beginning that it would be 50% for adaptation and 50% for mitigation, and my understanding is that it is only 34% of adaptation. I am not talking about the UK specifically; I am talking about the whole pot. I think the UK in fact has been good on this matter of adaptation. But how are you going to ensure that the adaptation commitment is fulfilled for the fast-start funding, and also deal with the problems that have been identified by the IIED on lack of transparency, money not being new money and that the funds are not being channelled through the UN? I think we are also guilty of this, in that we are giving a number of these from the pots in a bilateral fashion, rather than channelling it, as it was supposed to be done, through the UN.

Mr Davey: First of all, you are quite right to say the UK has met its fast-start climate finance targets. A full £1.5 billion will be allocated to specific programmes. So we are on track. We had a number of reports from developed countries at Doha on this. They indicated that the fast-start finance contributions totalled around $33 billion between 2010 and 2012, which exceeded the commitment that was set in Copenhagen, which was approaching $30 billion.

Q69 Barry Gardiner: The IIED report in November said it was $23.6 billion.

Mr Davey: Maybe the IIED will redo its figures on the basis of what was announced and was reported at Doha. There might be a reason for the discrepancy, which I was going to come to, because there clearly are different views about what counts as climate finance. As one of the issues that we are ultimately going to have to tackle, because we need to reassure countries around the world, developing countries in particular, that we are meeting the $100 billion goal by 2020, we are going to have to have a discussion about what counts as climate finance and I think that is a reasonable discussion to have. In a way, it is slightly surprising that that has not been nailed down yet. I do not see definitions being agreed in the immediate future, but, as with a number of the issues around accounting and climate change finance and climate change generally, we are having to pull a number of countries to a more ambitious position.

One of the big, big issues, whether it is on finance or whether it is on carbon, is trying to make sure measurement verification and reporting are consistent and clear; and we need to do more work in that area, I freely admit that, and the UK has been one of the champions for arguing for that.

Q70 Barry Gardiner: You have mentioned the problem of finance as a whole, so let’s turn to long-term finance: $100 billion per year by 2020. At the moment, only $6 billion has been pledged for the period up to 2015. When do you think we are going to see pledges made by the USA and other developed countries? The UK is among a handful of countries that have made concrete pledges beyond 2012.

In particular to Minister Barker, your capital markets climate initiative was seeking to get progress from the private sector to get private companies mobilised here on a low-carbon agenda. How is that going, and what sort of sums do you hope to see from that coming through towards 2015?

Mr Davey: Greg can come in in a second.

On your first point, I do not know when the United States and other developed countries are going to make their full bids, their offers of climate finance. This was a big issue at Doha. I was pretty pleased with the way the UK managed to play its hand, because although it was not quite clear in the reporting in the UK, we were able to announce the money that had already been announced in many ways back in 2010, after the spending review, and that we were still committed to spending £1.8 billion between now-

Barry Gardiner: Secretary of State, you are not saying that you double-announced something, surely?

Mr Davey: We re-announced it, but we make no secret of it. The newspapers did not seem to realise it was a re-announcement-

Barry Gardiner: What a shame.

Mr Davey: What it did do was it saw other countries come forward to announce climate finance, and we saw Germany, we saw France, we saw the Dutch, we saw the Danes, the Norwegians, the Swedes, and it helped change the atmosphere. So although we did not get numerical pledges from a number of the countries, the United States and others, I think that change of atmosphere-which I think we led on-helped reassure some of the countries who were looking to see bigger numbers that people were continuing beyond the fast-start climate finance period. And there was agreement. The exact phrasing of the words: was it that the developed countries agree that they would keep going with climate finance at the average of the 2010 to 2012? There was a phrase we managed to get into the text that I think people found quite reassuring. It was not as ambitious as some would have liked.

Q71 Barry Gardiner: Sorry, but that sounds like a rolling back from the $100 billion a year commitment.

Mr Davey: No, it was not. Again, the text was quite clear: that we reconfirmed the commitment to the $100 billion.

Barry Gardiner: Right. It is ramping up towards the 2020 target.

Mr Davey: Not unreasonably, if you are in one of the AOSIS or LDC countries, you are worried about 2013 and 2014, because some of them felt that after 31 December 2012, after the end of the fast start, there would be nothing. So we wanted to show through our leadership that there was going to be money to 2015. The text that I have just quoted was about that period. The text is as follows. It is paragraph 68: "Encourage developed country parties to further increase their efforts to provide resources of at least the average annual level of the fast-start finance period for 2013 to 2015". You immediately see that that was a negotiated text and it was not necessarily the text that we would ourselves have wanted, but it gave some reassurance to countries that there was still going to be more money available.

Q72 Barry Gardiner: But it is not a ramping-up. It is a hope that the status quo between 2010 and 2012 will continue. But it is not a ramping-up, is it?

Mr Davey: It increases spend from our position and indeed one or two other countries who made numerical bids. But we did talk about the need to mobilise not just public but private sources as well. There is quite a lot of work going on that, and maybe I should hand over to Greg, who is doing a sterling job in this area.

Gregory Barker: Yes, private sector finance was one of the key themes at Doha. I co-chaired on behalf of Ban Ki-moon a session with the Environment Minister of Singapore, in which the Secretary General brought together a number of participants. At that meeting, the Secretary General said that he thought the 2020 figure of $100 billion a year would be met 25% by public sector finance and 75% by private sector finance. I had not heard that figure before, and it sounds quite ambitious. But nevertheless, it is very important when we do talk about the $100 billion a year that we recognise that a very significant portion is going to come from private sector finance. We still have a long way to go to mobilise the private sector at that sort of scale. The CNCI that you mentioned now has over 80 members from the City of London across a whole range of different asset classes, banks, investment banks, pension fund managers and so on.

In order to give this agenda a further push, what I also announced in Doha was that in January I would co-host, along with the Environment Minister of Abu Dhabi, an informal round table bringing together the world’s largest development banks, global sovereign wealth funds and private sector investors, small but basically to compare notes and exchange ideas informally on how we really drive this agenda forward. Unfortunately, most of the conversations that take place tend to be dominated by public sector bodies and public sector officials. We do need more to engage the private sector investors who are going to be writing the cheques or sit on the investment committees on how this is going to work. I did sense that there was certainly a greater sense of momentum at Doha around the appetite and ability and realism about what will be required to mobilise private sector finance than at any of the two previous COPs that I have attended.

Q73 Dr Whitehead: Secretary of State, before Doha, you were quoted as saying, "As things stand, the world is plainly not on track to keep the total temperature increase from climate change below 2°" and I assume that you stand by that assumption.

Mr Davey: Yes. Unfortunately it is true after it, though we did not really expect Doha to get us back on track in one leap.

Q74 Dr Whitehead: One of the issues is that the gap between what you might say are the current bank of pledges to cut emissions and what might be required to keep that temperature rise below 2° has been increasing rather than decreasing. So when do you think the trend might be going in the other direction? Do you think you will have a third COP?

Mr Davey: I do not have a crystal ball. What I would say is that getting a legally binding treaty in 2015 is going to be critical to changing that and most of the climate science says that we have to move pretty rapidly, because if we do not take action very soon, and more ambitious action very soon as a world, the costs of mitigation and adaptation later on are going to be much, much greater. So it makes perfect sense to act as soon as possible and that is why 2015 is such a critical-a crucial date.

Q75 Dr Whitehead: Particularly in relation to that critical date, what steps do you think will be needed to get countries such as the USA and China to increase their levels of ambition?

Mr Davey: Part of that is political: to make sure they have the political will to win the arguments based on the science.

Also, it is building up the arguments on the economics, against the argument that says, "This is all terrible for our economies and very costly"; that that is not true, and that the costs will be much greater if we do not.

And very practical things; one of the things that the Americans are really good at is looking at the practical sides of it. I mentioned earlier the Climate and Clean Air Coalition, which has a whole range of different elements to it. A lot more countries are now joining that coalition, taking action outside the international discussions, which will make a real difference.

There are other things that I think are the low-hanging fruit of this, which we should be pushing hard on. We were talking earlier about forestry. That is clearly something we should be redoubling our efforts on, and fugitive emissions in the oil and gas sector; and HFCs. These are the things that if we can get early political commitment on, we could begin to close that gap ahead of a new treaty that, let’s face it, will not come into effect until 2020, even if it is signed in 2015.

Q76 Dr Whitehead: How much is the extent to which we continue to have a high ambition in the UK relevant, do you think, to those sorts of goals as far as other countries are concerned? How did that come across at Doha?

Mr Davey: I think our continued level of ambition is a factor. People do listen to us, both in the EU-

Gregory Barker: Because the Secretary of State was involved in so many of the negotiations, I did more of the external-facing events with stakeholders and had a wider discussion on this.

I have to say, whatever we may think, or the Committee may think, about any sort of shortcomings in domestic policy, the fact of the matter is that on any test the UK is still incredibly respected on the climate change agenda. There is huge interest in what we are doing here. The number of people that were interested in the fact that we had established Europe’s first green investment bank, capitalised with an initial £3 billion at a time of austerity; the fact that we are launching Green Deal, a potentially world-leading model for financing energy efficiency at scale; the fact that we are going forward with taking the feed-in tariff model to a new level and a new scale of ambition; that we have the world’s largest offshore wind programme; and that we have one of the world’s largest CCS programmes. There is huge interest in what we are doing. I think occasionally we can get slightly obsessed with the Westminster chatter on a short term and lose sight of the bigger picture. Here in the UK, building on what happened under the previous Government, we still are seen out there globally as a leader on this agenda, and also because of the skill of our negotiators.

Mr Davey: May I give you one practical example of that? The 2050 calculator that was built in the Department, which looks at different scenarios about how we can get to the 80% reduction by 2050, and gives you a whole series of different policy levers: the fact that that is now being adopted by a whole range of different countries who are tweaking it and changing it to their circumstances, including China, I think is extremely powerful. The amount of money that was spent on that 2050 calculator is almost peanuts compared with the other things that we are doing, yet it is helping other countries plan and think about their options, think about their strategies in a way that they did not before.

When I spoke to the Chinese team who have been developing the Chinese 2050 calculator, they took our model, where the design was very open, so people could comment on the assumptions behind the different financial and energy models, they said it was a really amazing experience. Many researchers, academics, people in industry in China fed into how they were developing their calculator, in many ways as happened here, and it has begun to change their thinking. So in many ways it is a small example, but I think it is quite a significant example, of how we in the UK are exercising leadership, not necessarily through spending huge amounts of money but working with others in real partnership to show how this can be done and how it is not against a country’s interests. So I think we do ourselves down a little bit. I think a lot is going on there and the UK has been leading it. Some of the work that the former Deputy Prime Minister, John Prescott-Lord Prescott-did with some of the connections he made in China: he is well remembered there.

Q77 Dr Whitehead: I imagine that if we were to downgrade our ambition, that would be rather damaging in terms of those particular initiatives and the way in which we are held worldwide as far as future climate talks are concerned.

Gregory Barker: If you look at our being one of the very few countries that has on statute a legal commitment to reduce our carbon emissions by 80% by 2050, that is what they focus on, and no one is suggesting any-

Mr Lilley: Very few emulate.

Gregory Barker: They are increasingly emulating.

Mr Davey: I think Mr Gardiner and Mr Yeo would tell you about the number of countries who are adopting climate change legislation.

Chair: Which we will be looking at again with the January summit of Globe.

Barry Gardiner: 32 out of 33 of the top emitting countries; 32 out of 33, and growing.

Q78 Mr Lilley: Why do they look at us as particularly special?

Mr Davey: Because we led the way.

Q79 Chair: One of the outcomes was the decision to establish an international mechanism for loss and damage. Why was that significant?

Mr Davey: I think it is significant because there is this sort of conceptual discussion about what else needs to happen. People are aware of mitigation and what that is all about, trying to reduce future carbon emissions. And they sort of understand about adaptation and how so many countries-and this has not been mentioned today, and I am glad I am getting a chance-are already faced with what climate change has already happened, the impact that it is having on their countries and their people and therefore we need to support adaptation. But there is another bit that, in my mind, is not all captured by adaptation. The clearest way of describing it is an example: imagine you are on a Pacific island and the sea level rises and the island disappears. What is going to happen to the people who live there?

So I think as a world you have to start thinking about that, and I do not think the conceptual framework of mitigation and adapation is sufficient for thinking about when people are losing their homes in that way. So it was an important part of Doha. I think it did get a little bit misreported in some areas. People seemed to think that this was a new commitment to compensate different countries, and that is not the case. There was no mention in the text of compensation, and we certainly do not think that is the right way to go. We are not in favour of some sort of global insurance mechanism, which some people have talked about.

We have been supporting the development of some regional insurance mechanisms. There is one in the Caribbean, which is the most obvious example. So there are things like that.

I hope the debaters in this area-we take this forward in future COPs-look in particular at risk management. I think what we are learning from the experience of how climate change is affecting different countries is how we should not just be adapting to that but managing those risks in a far more proactive way. That is going to be a big theme going forward, so I think it opens up another part of the debate, and I think it is a genuinely important one.

Chair: Good. Thank you very much indeed to all of you for your time this afternoon, and we look forward to seeing you again before long.

Mr Davey: Thank you very much.

Prepared 19th April 2013