House of Commons - A 2010-15 progress report

A 2010-15 progress report - Environmental Audit Contents

2 Areas for further scrutiny in 2015-2020

Inquiry areas of future focus

21. From our inquiry work over the last five years covering five broad themes, described in the Annex in more detail, we have drawn out below those which will require follow up and further scrutiny in the next five years.

GLOBAL SUSTAINABLE DEVELOPMENT

22. The prospect of agreeing both global Sustainable Development Goals (SDGs) in New York and a climate change deal (paragraph 26) in Paris in late 2015, and related discussions and prospective agreements at the third UN Conference on Financing for Development in 2015 and the Convention on Biological Diversity in 2016, provide the next government with an exceptional opportunity to "achieve environmentally and socially sustainable economic growth, together with food, water, climate and energy security".[43] WWF-UK highlighted how the work on SDGs was "a one-in-fifteen year agreement that the new Government will need to prioritise early in its term".[44] It is imperative that ambitious and measurable SDGs are secured at the UN General Assembly in the autumn. In its input to the EU and UN, the next Government should actively lead and champion the inclusion of ambitious SDG targets for biodiversity and air quality, having a separate climate change goal, and addressing inequality reduction alongside efforts to tackle extreme poverty. The next Government must also start work on Financing for Development immediately after the Election, and ensure a coherent and ambitious approach to the opportunities for embedding sustainable development offered by the forthcoming UN conventions and conferences.

23. Agreeing the right domestic indicators for the SDGs is a vital step in ensuring that they have traction here in the UK. It is essential that the UK is accountable for its progress in delivering the SDGs. Appropriate and transparent data and systems need to be in place to monitor and report on the UK's own delivery of the SDGs.[45] The next Government must co-ordinate all departments to pursue policies that are consistent with sustainable development and the agreed SDGs, and transparently report performance against our domestic indicators. The next Environmental Audit Committee will no doubt have an important role in that accountability process.

24. The new goals will set a powerful vision for the next 15 years. The British Youth Council informed us that the SDGs were "an urgent priority [for young people] as they encompassed all of the other [sustainability] issues and provide an opportunity where the UK can have large, immediate influence".[46] It is critical that young people in the UK are engaged with the SDGs and involved in the development of national implementation policies and targets.

25. Our youth organisation witnesses suggested a 'Youth Environmental Audit Sub-Committee' to help our successor Committee to hold the Government to account in contributing to the SDGs.[47] They believed that more needed to be done to promote sustainable development and the Goals, and that "it is all very good having the SDGs but unless you link it into education … then they are fairly meaningless to young people".[48] It is crucial to build sustainable development in education and ensure the UK workforce has adequate environmental training to meet the sustainable development challenges ahead (paragraph 40). The next Government must make a commitment to 'education for sustainable development' and integrate it consistently across primary, secondary and tertiary education, with a duty for teaching sustainable development added to the National Curriculum.

RESPONDING TO CLIMATE CHANGE

26. The December 2015 Climate Change Conference in Paris will be vital for minimising the risk of dangerous global temperature rises.[49] The climate change agreement, together with the new SDGs, will "define the direction of international development and environmental policy for at least the next decade."[50] The recent halving of oil prices makes low-carbon energy relatively more expensive, but to the extent that lower prices reflect a falling demand for fossil fuel energy they also present an opportunity to drive an ambitious agreement in Paris to limit global emissions. It is critical that the next Government lead from the front in the EU and UN, building on the recent three-party climate change pledge, in order to help secure an ambitious international agreement that limits global warming.

27. With the UK's per capita carbon footprint one of the largest in the world, we have repeatedly called for strengthening of emissions reduction policies to put the UK on a credible trajectory for meeting the fourth carbon budget (covering the period 2023-27).[51] As an early priority, the next Government must set out new policies to deliver the carbon budgets, focussing on residential and commercial energy efficiency, electrification of heat and transport, power sector decarbonisation and reducing energy demand.

28. The Committee on Climate Change will publish its advice to the next Government on the fifth carbon budget in December 2015 (covering the 2028-32 period) and the Government will propose secondary legislation for that budget in 2016. The next Government must consider and act on the Committee on Climate Change's advice on the fifth carbon budget promptly. It must not repeat the lengthy hiatus that occurred in securing the agreement of the fourth budget and which served to damage renewable energy business confidence.

29. WWF-UK wanted the Government to focus on "setting a carbon intensity target for the electricity sector in 2030 … [and] prioritise the transition to a low carbon heat sector if we are to meet our [emissions reduction] targets".[52] We too had called for a decarbonisation target in earlier inquiries.[53] DECC/BIS minister Matthew Hancock MP subsequently told us that the Government:

Whilst we recognise the need to have a "good portfolio of [mixed energy] projects in the hopper",[55] there is an inescapable need to bring forward "high-volumes of low-carbon [renewable] electricity at decreasing cost".[56] It is important that community energy projects have ready access to the electricity grid.[57] If the energy sector is to achieve the agreed carbon budgets the next Government will need to set out a clearer direction with a consistent focus on renewable energy in place of fossil fuel energy. It should set a carbon-intensity target under the Energy Act 2013 as an early priority.

30. Government subsidies for fossil fuels and providing export-insurance for fossil fuel projects overseas are inconsistent with the UK's international obligations to eliminate harmful fossil fuel subsidies.[58] The Government has provided additional and longer-lasting subsidies for new nuclear than those for renewable energy. The next Government will have to consider the deal finally negotiated for the Hinkley Point new nuclear power station, taking account of the NAO's planned value for money audit and our own initial scrutiny.[59] The next Government must reconsider UK Export Finance's remit which allows it to support fossil fuel energy projects abroad. And at home, the next Government should set out a clear and straightforward position on the role of subsidies for new nuclear and renewables.

31. Shale gas cannot be regarded as low-carbon energy and questions remain about whether fracking will be consistent with carbon budgets beyond the fourth carbon budget, by which time large scale extraction of shale gas in the UK might be possible.[60] The danger is that, if fracking takes place at a volume that jeopardises the budgets, the Government of the day might be tempted to loosen the budgets rather than seek to turn off shale gas production. The next Environmental Audit Committee should monitor the Committee on Climate Change's analyses of shale gas and carbon budget compatibility, required under the recently passed Infrastructure Act, as well as scrutinise the Government's response.

32. Adaptation to climate change will be increasingly important as extreme weather events become less uncommon. If the next National Adaptation Programme, due in 2018 and reflecting the Adaptation Sub-Committee's advice later in 2015, is to be effective, it will need to present a more top-down strategic direction.[61] The next Government must respond quickly and positively to the advice on the National Adaptation Programme from the Adaptation Sub-Committee later in 2015, and indeed to our recent report on this subject.

33. The Arctic ice-cap continues to shrink and thin as a result of climate change.[62] There continues to be debate about how quickly the region could be ice-free in summer, potentially speeded up by methane releases. The risks to the environment from oil exploration in the region remain significant, despite recent operational setbacks for oil companies there and recent US Government moves to strengthen environmental safeguards on drilling.[63] The next Government's revision of the Arctic strategy (paragraph 12) should reconsider the current version's arms' length approach which leaves Arctic regulation of UK-based oil companies to the Arctic states.

PROTECTING THE ENVIRONMENT

34. Our 2014 Environmental Scorecard found none of the 10 environmental areas we examined were achieving satisfactory progress. We called for an environmental strategy, overseen by an 'office for environmental responsibility'.[64] The next Government should set out an Environment Strategy, setting out the actions needed to embed environmental protection into policy-making, and underpinned by an independent 'office for environmental responsibility'. But, in the absence of such a body, the next Environmental Audit Committee might wish to repeat and update our Environmental Scorecard assessment.

35. Protecting the environment and valuing natural assets were clear ambitions of the Natural Environment White Paper.[65] Whilst we were concerned about poor progress in some areas in our Environmental Scorecard, we welcomed the work of the Natural Capital Committee, whose 3-year remit has now been extended by six months (to September 2015).[66] Our recent ongoing inquiry into Local Nature Partnerships has shown that more work is needed on this important initiative of the White Paper, to get all Local Nature Partnerships to fulfil their potential.[67] The next Government must quickly consider the NCC's position, and put it on the long-term footing needed to take forward their recommended 25-year plan to improve our natural capital.

36. The Woodland Trust reminded us of the Government's pledge to introduce a Forestry Bill to help secure the Public Forest estate and the essential protection of irreplaceable ancient woodland, WWF-UK and the RSPB echoed our earlier concerns about fragmented wildlife protection laws and the long-term funding of the Wildlife Crime Unit, the Royal Society called for an assessment of the environmental provisions of the reformed Common Agriculture Policy, and Buglife advocated further scrutiny of the use of neonicotinoid pesticides and the National Pollinator Strategy.[68] There are many environmental protection uncertainties still unresolved from a number of our inquiries. The next Government should set out clear policies in regard to biodiversity offsetting, the use of neonicotinoid pesticides, environmental safeguards for HS2 and other major infrastructure programmes, fracking and forestry (including its position on the 2015 review of EU timber regulations). It should also act early on to give long term financial certainty for Kew Gardens (potentially with DfID providing some of its funding) and for the Wildlife Crime Unit.

37. The definitions of 'protected groundwater source areas' and 'other protected areas' linked to the environmental safeguards on fracking activities provided for in the Infrastructure Act 2015 are to be determined by secondary legislation.[69] We have concerns that this approach does not allow for sufficient scrutiny of these important, and not inconsequential, designations.[70]

38. We have produced three reports on air pollution in the last five years, and still it continues to cause a significant number of early deaths.[71] The next Government will have to complete the revision of the Air Quality Strategy, currently underway, and reach decisions on a potential national framework for low emission zones and a rebalancing of the tax treatment of diesel and petrol. It will have to urgently consider its approach to meeting EU air pollution targets to reduce the likelihood and scale of possible infraction fines, and before the end of 2015 set out clear demarcations in responsibility for tackling air pollution between central and local government.

39. In several policy areas, including pesticides and marine protected areas, the Government is increasingly relying on industry to fund environmental research and undertake monitoring. Companies should indeed take some responsibility for the costs of their activities.[72] Nevertheless, the next Government must review its environmental research resources to ensure that it has the necessary future capacity to give itself, and the public, sufficient independent assurance on the effective operation of environmental protections.

TRANSITIONING TO A GREEN ECONOMY

40. The Government's approach to the green economy has lacked a sustainable development grounding. The next Government must demonstrate its commitment to a green economy that balances the three elements of sustainable development—economy, environment and society, and produce a green skills strategy to ensure that skills and training provision supports the aspirations of green economy policies.

41. Despite its pivotal role in shaping Enabling the transition to a green economy in 2012, the Green Economy Council has not met since January 2013.[73] The next Government must reactivate the Green Economy Council and put it at the heart of the Government's further work on the green economy.

42. Subsidies and incentives for low-carbon energy are part of the solution to closing the 'green finance gap', but a green economy also needs wider Government support, targeted environmental taxes and alternative sources of finance. The Green Investment Bank was a key strand in efforts to close the green investment gap by making finance available for renewable energy and waste projects that found it difficult to get funding, but it could do more if it were permitted to borrow to invest. The next Government must give early consideration to granting the Green Investment Bank borrowing powers, to allow it to significantly scale up its investments.

43. The transition to a green economy requires investors to take account of a carbon constrained world, but stock markets are currently inflating a 'carbon bubble' by over-valuing companies with fossil fuel reserves that would be unburnable if a global climate deal is agreed (paragraph 16). The Deputy Head of the Bank of England's Prudential Regulation Authority, said in March 2015:

The Bank of England Financial Policy Committee will review of the status of 'stranded assets' during 2015,[75] and the next Environmental Audit Committee could monitor their assessment of the risks. The next Government must produce a green finance strategy that ensures that markets price-in the cost of carbon, and creates greater market certainty and a more favourable investment outlook for low-carbon energy by clearly setting out policies on the linkages between the green economy, climate change action and Industrial Strategies.

44. The next Government will have to engage quickly with the already underway negotiations of the EU/US Transatlantic Trade and Investment Partnership, and work with the European Commission to ensure that there is no 'race to the bottom' in environmental regulations. The next Environmental Audit Committee could scrutinise the deal emerging from those negotiations during 2015, to follow up the potential issues of concern flagged up in our recent report.[76]

45. DEFRA Minister, Dan Rogerson MP, told us "being more efficient and using the resources we have more efficiently will allow us to be more competitive on the world stage … and we can be at the forefront of innovation."[77] In light of the recent decision of the European Commission to drop a prospective directive on the circular economy from its 2015 Work Programme, the next Government must consider what action it might take at national level to facilitate a circular economy, with less waste and greater resource efficiency. An ambitious circular economy approach, advocated in our 2014 report,[78] should be taken regardless of the European Commission's future work programme[79] and we hope the next Environmental Audit Committee will explore ways of strengthening UK and European measures to reduce waste and increase resource efficiency.

46. The Aldersgate Group and others highlighted the importance of the Treasury for delivering sustainability in Government policy-making.[80] The next Environmental Audit Committee might consider the scope for a 'Sustainability in the Treasury' inquiry, to complement the inquiries we have undertaken in three other departments (paragraph 7).

EMBEDDING SUSTAINABLE DEVELOPMENT IN GOVERNMENT

47. Our scrutiny of the performance of Government against sustainable development targets—'Greening Government Commitments' (GGC)—identified actions required to make government policies and operations more sustainable. Public and Commercial Services Union believed that "for the Government to meet its [climate change] obligations [it] needs to get its 'own house in order' and lead by example."[81] Continuing areas of weak performance indicated that sustainable development had still not been fully embedded in departments.[82] We welcomed BIS and the Home Office's establishment of a senior 'Sustainability Champion' (paragraph 7) and expected to see this and additional sustainable development staff training expanded across all departments.

48. A delay in issuing the 2013-14 GGC results until February 2015, with no indication of performance expectations for the now imminent end of the GGC period, is regrettable. Despite this, progress towards meeting the targets appears to have been made in 2013-14, although not consistently across departments.[83] Dan Rogerson MP told us the GGC was:

The next Government must introduce a system to address sustainable development policy gaps in departmental plans, and initiate action to improve government sustainable procurement standards. New departmental targets for emissions, waste, water and procurement must be introduced after the Election. Targets should be established as long term goals aligned with UK sustainability and emissions commitments, with interim milestones for each five-year Parliament.

49. In advance of the proposed Restoration and Renewal of the Palace of Westminster, the next Environmental Audit Committee might have an opportunity to scrutinise the role of Parliament itself, in leading by example and embedding sustainable development in its own estate and operations.

50. The Prime Minister stated that we should be "measuring our progress as a country not just by our standard of living but by our quality of life",[85] but we found that well-being measures were not receiving the same consideration as economic ones.[86] Lord Stern has said "you have to be a complete idiot to think that GDP sums up prosperity"[87] and the Royal Society told us that "the measurement of national wealth must move beyond just Gross Domestic Product to comprehensive wealth measures".[88] That could open up scope for policy-making more directly linked to well-being data and analysis. Professor Tim O'Riordan highlighted a need for a more active engagement in the social pillar of sustainable development, including 'social investment', in the face of the increasing challenge likely to come from a "new sustainability".[89] Well-being and inequality will be increasingly urgent public policy issues. These considerations must increasingly influence policy decision-making and the next Government should immediately start to use the increasingly available data to identify new policies.

Wider ranging issues for the next Parliament

51. Our work over this Parliament has identified additional issues in which further work will be needed, and some resolution obtained, in the next Parliament, as we discuss below. These cut across the subject themes we have discussed above, and comprise issues which will require a more fundamental debate about the way we as a society approach sustainability.

ACHIEVING A BETTER BALANCE OF SUSTAINABILITY

52. Our work over the last five years has demonstrated that the Government has failed consistently to strike a balance between the three elements of sustainable development, with economic growth too often trumping environment and social well-being. That has increasingly prevented opportunities to tackle widening inequality being missed.

53. In overseas aid programmes the Government has found itself unwilling or unable to focus its support for exporters in ways that promote sustainability.[90] Instead, the UK has continued to give export support to fossil fuel projects, on the grounds that its position as a global leader in some fossil fuel technologies is not one to be discarded.[91] On the Arctic, the Government's focus has been on economic issues—leaving it to UK oil companies to deal with Arctic countries' regulatory regimes, rather than itself weighing the potential impact of further fossil fuel extraction against the global need to curtail emissions.[92] The National Planning Policy Framework has been criticised by us, and others, for following a mainly economic agenda in its "presumption in favour of sustainable development" (paragraph 69).[93]

54. On some policies the environment appears to have been considered only as an after-thought. We found that the Regional Development Grant initiative, which prioritises economic and jobs objectives, did not proactively seek information on environmental aspects (applications could highlight ancillary environmental benefits of their proposals but BIS did not require environmental information when there might have been environmental disbenefits).[94] Many Local Nature Partnerships, with limited funding support from Government, are struggling to get their environmental agenda taken forward when much more significantly funded Local Enterprise Partnerships are following a narrow growth and jobs agenda.[95] The Industrial Strategies, we found, had also given little or no consideration to environmental or climate change considerations, even when there would clearly be disbenefits that should at least be recognised and weighed in any trade-offs. We noted for example that the Aerospace Industrial Strategy emphasised the need to maximise aircraft manufacturing without considering the emissions implications of greater air travel. The Oil & Gas Industrial Strategy sought to maximise North Sea extraction without any assessment of the climate change context;[96] an issue which resurfaced subsequently in our inquiry into fracking (paragraph 16). As a result of our work, the Green Economy Council undertook a review of sustainability in the Industrial Strategies which concluded, as we had done, that the environmental and social aspects of sustainability were not getting the same attention as economic factors. The review concluded that both Government and industry needed to look beyond the immediate needs of the economy and seek to broaden the Strategies' vision to include an unequivocal commitment to environmental and social sustainability.[97]

55. The definition of a green economy adopted by Government did not address all three pillars of sustainable development: focussing on the economic rather than the social well-being and environmental pillars. Furthermore, our review of the Transatlantic Trade & Investment Partnership identified potential environmental regulatory risks which will have to be addressed as negotiations on the prospective treaty continue later this year and beyond.[98] On the other hand, where the primary focus of a policy is intended to be environmental, such as Marine Protected Areas, there appears to have been little difficulty for the Government in addressing the economic aspects.[99]

56. Our work on monitoring the progress of the Government's efforts to embed sustainable development in Government departments identified a focus on sustainability-proofing policies that come forward within departments. That was welcome, but did not go far enough because such policies are typically the product of an agenda directed primarily at economic considerations, such as deficit-reduction. We had recommended that the Cabinet Office's reviews of departmental business plans also include an assessment of where sustainability gaps existed and then identify the scope for new policies to fill them,[100] but this was not taken forward by the Government.[101] This could become a growing issue in the years ahead as the Office for National Statistics develops 'subjective well-being' metrics to a state which increasingly allows analysis of causes and effects.[102] One way of shifting the balance away from the dominating focus on economic factors would be to assign responsibility for monitoring the overall state of the environment to an 'Office for Environmental Responsibility,' to complement the existing Office for Budget Responsibility (paragraph 34).[103]

57. The next Government's approach to the UN Sustainable Development Goals (paragraph 22) will be a litmus test for a much needed policy rebalancing to reflect all aspects of sustainability, not least because the SDGs will be directed at developed countries, including the UK itself, as well as developing countries. As the next Government feeds into the European Union's discussions on the SDGs, which in turn will have to shape a coherent input to the UN negotiations during 2015, many of the themes of the SDGs will require assessment of the relative balance of the three pillars of sustainable development. For example, will reducing inequality—a social pillar aspect—be a feature of poverty reduction efforts—a more directly economic matter?[104]

58. In the next Parliament, greater effort will be needed to ensure that a more appropriate balance between the three pillars of sustainable development is followed in identifying policies and in policy-making, and existing major policies such as the National Planning Policy Framework refocused to follow a genuinely sustainable approach.

FOLLOWING THE PRECAUTIONARY PRINCIPLE

59. Our work has shown an often inadequate weight given to the precautionary principle in Government policy-making, to avoid irreversible environmental damage.

60. There has been no dispute that neonicotinoid pesticides harm pollinators. The question, which we examined over the course of two inquiries, was whether such pesticides affected the viability of pollinator populations or jeopardised the benefits of the pollination services they provided to our agriculture and our wildlife. We concluded that under the precautionary principle these chemicals should be banned, and the European Commission and most member states agreed with us (paragraph 9).[105] The Government, in resisting those calls for a moratorium on the use of the chemicals, claimed to adhere to the precautionary principle but in doing so applied an unwarranted economic filter. Elsewhere, a precautionary principle approach has been behind particular policies, from Non-native invasive species[106] to Marine Protected Areas.[107] Most recently, we identified the need for more effective planning for Climate change adaptation in the face of future risks whose scale and location inevitably remain unknowable.[108]

61. Sometimes the precautionary principle requires taking action; at other times avoiding it. The environmental and climate change risks of Fracking of shale deposits were sufficient, we concluded, to impose a moratorium until the environmental risks were addressed and the Committee on Climate Change could assess whether fracking could be accommodated within longer term carbon budgets (paragraph 16).[109] A similar approach might be needed on the Transatlantic Trade & Investment Partnership negotiations, to prevent EU and US regulations being aligned where existing regulations could not be shown to be essentially the same, and to prevent investment dispute provisions being introduced if this brought a chilling effect on necessary future environmental or public heath safeguards.[110]

62. In the next Parliament, a clearly understood concept of the precautionary principle will need to be articulated and agreed by the Government and stakeholders, to reduce the likelihood of environmental risks being insufficiently addressed.

ENGAGING UK CIVIL SOCIETY AND YOUNG PEOPLE

63. Engaging civil society and young people in policy development remains essential if the inter-generational fairness of sustainable development is to be centre-stage, as it needs to be. This is why we decided to hear last month from a range of youth organisations, all of which provided ample evidence of an appetite for engagement on the sustainability agenda.[111]

64. We emphasised the importance of this in a series of reports on the Rio+20 Earth Summit.[112] The approach taken in the National Pollinator Strategy in this regard, putting a significant emphasis on the contribution that the public could make, is the right one.[113] The development of the SDGs over the rest of this year (paragraph 22), and then once they are agreed, their implementation, requires an active engagement of civil society and young people, both in terms of domestic policy and in overseas aid support.[114]

65. In the next Parliament, new avenues will need to be opened to engage proactively young people and civil society in the sustainability agenda and ensure that their perspectives are able to inform policy-making.

LOCALISM

66. The sustainability roles and responsibilities of local authorities and central government have been a central issue in many of our reports, and one that has yet to be resolved.

67. The issue was at the heart of our two inquiries on air quality during this Parliament (paragraph 11).[115] With the Government putting the emphasis on local authorities to monitor and tackle air pollution, and potentially bear the cost of any European Commission infraction fines, it is vitally important that local authorities have the means to be able to discharge their responsibilities. Some authorities have welcomed those responsibilities, while others regret a lack of guidance from Government and have concerns over funding. The Government's proposals for a consultation later this year on the division of responsibilities for air quality (paragraph 11) will be key in bringing forward the acceleration of progress needed in this area.[116] The Government's approach in rejecting our repeated calls for a long-needed national framework for low emission zones, leaving it to local authorities who cannot bring the economies of scale to bear that Government could do, has shown the limits of localism in this policy area.

68. The arms' length approach of Government was also evident in our ongoing inquiry into Local Nature Partnerships, where some have been left to "struggle" while others have made useful progress.[117] In our Transport and accessibility to public services inquiry we found that the Department for Transport were no longer monitoring Local Transport Plans or authorities' performance against them, leaving services to those who depended on transport at risk from local budget reallocations.[118] Some local authorities will use new freedoms to good effect, optimising services to meet local assessments of need. Others, however, may not do so or be unable to do so because of conflicting pressures on service-delivery and the potential for funding realignments enabled by less ring-fencing within local authorities' budgets.

69. We found that localism was not universally working to the benefit of the environment in regard to emissions. Our continued calls for local authorities to be set emissions reduction targets were rejected on the basis of localism, creating a serious risk of inaction because of authorities' constrained fiscal position.[119] In other areas, the Government has reduced local authorities' discretion, to the detriment of sustainability. In 2011 we criticised the then draft National Planning Policy Framework (NPPF) for devolving planning responsibilities to local authorities without them being able to define Local Plans which deviated significantly from the centralised NPPF template. We also criticised it for its ambiguous "presumption in favour of sustainable development" when the Government appeared to mean 'a presumption in favour of development'.[120] The Communities & Local Government Committee recently re-examined the now-finalised NPPF and highlighted a continuing confusion in the guidance on how the three aspects of sustainable development should be considered together.[121] We also criticised the decision to abolish the Code for Sustainable Homes in 2013, because local authorities would no longer be able to set planning standards for energy and water efficiency at a more ambitious level than those embedded in national building regulations.[122]

70. In the next Parliament, the debate on the appropriate respective roles of central and local government will need to be resolved, to place environmental risks with those best placed to manage them and to avoid uncertainty over responsibilities preventing necessary action.

THE ROLE OF THE MARKET

71. There has been considerable interest over the course of this Parliament on how valuing natural capital can serve to inform policy-making. The Natural Capital Committee (NCC) was specifically tasked with developing a framework to take this forward (paragraph 8).[123] In the process it has identified particular 'ecosystem services' that are being degraded and recommended a 25-year plan to protect these aspects of natural capital. We acknowledged that there are inherent risks from measuring natural capital, that in doing so it becomes something that can be monetised and traded off against other 'capitals' (including economic capital). Such a risk was evident in the Government's proposals for Biodiversity offsetting, which threatened to weaken the biodiversity 'mitigation hierarchy' or potentially allow some irreplaceable assets (such as ancient woodlands) to be bargained away (paragraph 13).[124] We found similar risks in our inquiry into HS2.[125] We nevertheless shared the NCC's assessment that not to measure and value natural capital would present the greater risk that what is not measured is usually ignored.

72. Valuation of ecosystem services potentially offers scope for making those responsible for environmental damage pay for it, including through taxes. We have identified principles needed for 'environmental taxes', including hypothecation of the revenues for environmental purposes.[126] We supported the Government's proposals for a charge on plastic carrier bags to help reduce litter which harms habitats and wildlife but were concerned about exemptions which would dilute the message to avoid using such bags in the first place.[127] We favoured the use of taxes and incentives to help drive a circular economy[128] and to reduce the number of air-polluting diesel vehicle engines.[129]

73. The NCC envisages work, over the course of a 25-year plan for natural capital, to find a machinery to allow the beneficiaries of ecosystem services to pay the 'owners' of natural capital assets. Such an approach could help, for example, in producing more effective climate change adaptation action.[130] But in some areas markets are not necessarily serving our wider sustainability purposes. As we have previously mentioned, stock markets have been inflating a 'carbon bubble' by over-valuing companies with fossil fuel reserves that under an international climate change deal will have to be left unburned (paragraph 43).

74. In the next Parliament, there will need to be further debate on both the risks and the benefits of valuing ecosystem services, and the scope for taxes and fiscal incentives to help rather than hinder environmental protection.

43 HM Government, The Natural Choice, Securing the value of Nature, June 2011, p58 Back

44 WWF-UK (LEG0006) para 5.1. See also Professor Tim O'Riordan (LEG0012). Back

45 Environmental Audit Committee, Seventh Report of Session 2014-15, Connected world: Agreeing ambitious Sustainable Development Goals, HC 452 Back

46 British Youth Council (Written evidence submitted to the Environmental Audit Committee's Outcomes of the UN Rio+20 Earth Summit inquiry) para 6.5 Back

47 Q225 Back

49 Aldersgate Group (LEG0010). See also Society for the Environment, Environment: Priorities for the next Government (March 2015) Back

50 Royal Society (LEG0001) para 12 Back

51 Environmental Audit Committee, Fifth Report of Session 2013-14, Progress on Carbon Budgets, HC 60; Ninth Report of Session 2013-14, Energy subsidies, HC 61; Twelfth Report of Session 2013-14, Green Finance, HC 191 Back

52 WWF-UK (LEG0006) para 7.5-.6. See also RES (LEG0008) Back

53 Environmental Audit Committee, Fifth Report of Session 2013-14, Progress on Carbon Budgets. See also Society for the Environment, Environment: Priorities for the next Government (March 2015) Back

54 Q8 Back

55 Q71 Back