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Both noble Earls asked about things going badly during the budget period. This is the whole point of our proposal for an annual indicative range, backed by the annual progress report of the Committee on Climate Change to Parliament. There will be full transparency about progress during the budget period.

Amendment No. 22 clearly has much in common with government Amendment No. 81, but government Amendment No. 81 is a better way forward in a number of ways. First, proposed subsection (1) in Amendment No. 22 seems to duplicate the existing reporting provisions of the Bill. The Bill already has a clear, transparent mechanism for an annual assessment of progress through the Committee on Climate Change’s report to Parliament under Clause 28. As I said, we have also proposed amendments, which we will come to later, that will strengthen this annual reporting progress, including ensuring that the Government respond to the points that the Committee on Climate Change makes. Proposed subsection (1) in Amendment No. 22 seems to repeat much of this but with no role for the Committee on Climate Change and we ask how this would sit alongside the committee’s annual progress report under Clause 28.

Proposed subsection (2) in Amendment No. 22 clearly has, as I said, a lot in common with both the amendment that we discussed in Committee and government Amendment No. 81. However, a number of issues still need to be addressed. Amendment No. 22 does not, for instance, address the role of the devolved Administrations if a budget is missed. Will they have a role? Obviously government Amendment No. 81 sets out a process for consulting the devolved Administrations.

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As I said in my opening remarks, the amendments aim at the same goal—to strengthen the Bill’s framework—but we think that government Amendment No. 81 is the better approach. I say to the noble Earl that I, too, would be much more relaxed if the groups of amendments were such that I could present the Government’s response to Committee to kick off the debate, but there is a procedure for dealing with amendments. I can kick off the debate on some—the next group, for example—but I have not been able to do that so far. I understand that that would be more convenient and make the debate flow better. Effectively, I am technically reporting back to Parliament at Report stage with suggestions from the Government, having listened to what was said in Committee and not trying to do a Committee stage again.

9.15 pm

The Earl of Caithness: My Lords, I am grateful to all noble Lords who have taken part in the debate and for the support for Amendment No. 22. Again, I thank the Minister for his reply. As he rightly said, there is not a great deal between us, because we are still heading in the direction that is common to everyone. He is right to say that this budgeting compliance mechanism, whether it is his or ours, will focus the mind of the Government.

I totally accept the Minister’s point about the devolved Administrations. When I was a Minister, I was told that you must never criticise—or, at least, criticise too much—the wording of an opposition amendment. If the gist of the amendment is acceptable to the House, it is the Government’s duty to put it in the right order. If the right format includes devolved Administrations, I shall happily accept that.

On the bone of contention between us—proposed subsection (1) in Amendment No. 22—I listened with great care to what the Minister said. I am not sure that he is totally correct. I want to look at this again in view of the amendments coming along, but we have a real problem in the delay caused through Clause 14. It will be a long time before the final result is known to Parliament. We need a mechanism that is not just the annual report or the stepping stones, although, again, we are grateful for that, as it was recommended by the Joint Committee. However, every Secretary of State should say, “Whoa, something is happening here. Even on a precautionary principle, we ought to be prepared to act”. The Minister said that there is no role for the committee under subsection (1), but there is a big role for the committee, which is to provide the information to the Secretary of State. The whole point of subsection (1) is that it is for the Secretary of State to act on that information from the committee.

However, I am grateful to the Minister. I will read with care what he said and will take account of future amendments to decide whether we should come back to this at a later stage. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Clause 5 [Level of carbon budgets]:

Lord Rooker moved Amendment No. 23:

Clause 5, page 3, line 22, leave out “, but not more than 32%,”

The noble Lord said: My Lords, the amendments in this group address a key issue to emerge in Committee concerning the 2020 target. In drafting the Bill prior to introduction, the Government’s view was that a range for the 2020 target would provide additional certainty for all parts of society as to our likely trajectory towards our 2020 target. However, we have listened to the views expressed in Committee. Having considered these in further detail, and as a result of discussions with business representatives and others, it is apparent that the clarity provided by a single target outweighs any additional certainty that is provided by a range. For this reason, with government Amendment No. 23, I propose removing the upper limit for emission reductions that are to be achieved in 2020.

I see that the noble Lord, Lord Taylor of Holbeach, has tabled the same amendment. Both our amendments would have the effect that the 2018 to 2022 budget must be set so that it delivers CO2 reductions of at least 26 per cent below the 1990 levels. Government Amendments Nos. 27 and 31 are consequential on this change and tidy up the drafting of Clause 6. As I made clear in Committee, there is no doubt that the 2020 target will be challenging to meet. Analysis for the recent energy White Paper shows that the 2020 target will be met only by taking the upper range of savings estimated for existing policies and measures. This suggests that further policies will need to be introduced in the short and medium terms to guarantee that the 26 per cent target is met, let alone a higher target, and that consideration of these brave decisions has already begun within government. The Committee on Climate Change will also consider the level of the 2020 target as part of its review of the 2050 target. The approach taken in the amendments is the right one and I submit them to the House.

We considered Amendment No. 24 in Committee and our position remains the same. We do not consider that it is helpful to the Bill. Introducing further interim targets would pre-empt the work of the Committee on Climate Change in looking at the optimum trajectory for our 2050 target. We do not see how requiring further targets is helpful. The annual accountability process contained in the Bill, combined with a clear legal obligation on the Government to set each budget every five years, makes further target setting unhelpful and irrelevant.

Amendment No. 25 would have the effect that any target set for the period after 2050 may not be expressed as a range. This may be an unduly restrictive approach, simply because, at this stage, we do not know what kind of situation we are going to be in so far ahead. It may be that, in the international context after 2050, countries’ emission reduction targets are expressed as a range. In this situation,

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Amendment No. 25 would make that impossible, although I am sure that the Bill could be amended in the intervening decades.

Currently the Bill allows for a post-2050 target to be either a single-point target or a range. It will be set by the Government, following consideration of advice from the Committee on Climate Change and consultation with the devolved Administrations. With the detailed scrutiny processes in place before a post-2050 target may be set, we feel that it would limit our options to specify now that it may only be expressed as a single-point target. I do not see why, more than 42 years in advance, we need expressly to rule out the possibility that we might have a target at some time after 2050 in the form of a range. We have accepted the argument for a range for 2020, but that is only 12 years away. We do not see why this is of such great concern in respect of any target for the period after 2050. This argument is about demands for clarity. For 2020 it makes sense; for 2050 it does not.

Lord Taylor of Holbeach: My Lords, in speaking to the government amendment, I will also cover the amendments on targets in this group. We are very pleased that the Government have seen sense with regard to the top margin of their targets. We fully support their amendment to remove 32 per cent. It did not make sense to provide a range of targets that would legally penalise a successful Secretary of State for doing better than expected. Thus, we have tabled an identical amendment, which sits within the government amendments.

Other amendments within this group deal with interim targets. These are designed to strengthen the role of the Committee on Climate Change by ensuring that they are in charge of setting the framework of goals to be met. A substantial development in our knowledge of climate change is likely to occur. The Minister acknowledged this. This is why we have been arguing for a dual approach to targets, focusing on both the short and long term. We do not seek to dictate the trajectory to the 2050 target from the start, and nor do the Government, as I understand it. These targets can be amended with the advance in knowledge, as recommended by the committee. However, in terms of business and government planning, these interim targets provide the important scaffolding that will ensure that we reach our ultimate goal in 2050, whatever that may be.

Lord Redesdale: My Lords, we support these amendments because the upper limit of the target seemed rather arbitrary. Could the Minister say, in summing up, how 32 per cent was arrived at? Is it 32 per cent of the carbon budget itself? The Minister has mentioned brave decisions a few times. I used the expression advisedly because it was first used at Second Reading by the noble Baroness, Lady Billingham, from the Minister’s own Benches, in discussing the Government’s view on bringing forward this Bill. I thought it was an apt expression to use again, and I see that the Minister has now taken it up.

However, the word “brave” is particularly interesting when considering these targets. Many

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noble Lords have talked about electricity production in meeting the 2020 targets, but that will form only 30 per cent of the target to be looked at. Another 30 per cent is to come from transport, 30 per cent from the domestic sector and 10 per cent from agriculture. However, I have seen different proportions assigned depending on the report you read. What is important is that a 26 per cent reduction needs to be made across the board, and that means a 26 per cent reduction in transport, which is one of the larger areas. The Mayor of London has had problems recently with Porsche over his proposal for a £25 congestion charge for high-emission vehicles. The fact is that he may face judicial review. Such examples prove that meeting the target will be an issue. Whether budgets and the decision-making function of the climate change committee on setting those targets will act as a lever in any judicial review of curtailing certain aspects of transport is one of the issues that may form the basis of other Bills. I do not believe that this is going to be the only Bill for 10 years; I am quite prepared to see further legislation if not next year, then certainly the year after.

We support these amendments and we thank the Government for listening to the concerns expressed.

Lord Rooker: My Lords, I promise not to use the word “brave” again tonight. The source of the 32 per cent upper limit comes from the 26 to 32 per cent range arising out of the energy White Paper published in 2003. I do not think there is anything further I need to say in response to what has been said during the debate, and I am grateful for the support which has been expressed for the amendment.

On Question, amendment agreed to.

[Amendments Nos. 24 and 25 not moved.]

The Duke of Montrose moved Amendment No. 26:

Clause 5, page 3, line 37, leave out “the number of years in the period” and insert “five”

The noble Duke said: My Lords, I shall move this amendment on behalf of my noble friend Lord Taylor of Holbeach. We are bringing this amendment back on Report because of the persistent confusion surrounding the process of bringing our budgets in line with those in the international community as well as tying them in with the devolved authorities. In Committee, the noble Baroness, Lady Morgan, explained the Government’s reasons for keeping the wording as,

“the number of years in the period”,

instead of changing it to “five”, which is the number of years required in the Bill as it stands. She noted that at the moment the five-year budget period mirrors the length of the commitment periods under the Kyoto Protocol and the EU Emissions Trading Scheme. The reason that we should not specify the number “five”, as she expressed it, is that there is no way to assume that the five-year periods will be maintained when the Kyoto Protocol is renegotiated in 2012. That makes a certain amount of sense to begin with, but what other areas of the Bill will be affected by such a decision? The Bill states that there is a duty to comply with international regulations and

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that changes will be made using the affirmative resolution procedure, but is there any concern about the timeframe for this? Can the Minister assure us that orders will be laid promptly? What other aspects of the Bill would these changes in international agreements affect?

There is also the challenge that will face those who form the Government at any time between now and 2050—I dare say it will not always be the party opposite—and there is a question regarding the devolved assemblies. It is right and proper that the Secretary of State should be swift in bringing the Act into line with the treaties that affect it, but like some of the amendments we have just been discussing, we are still faced with the challenge of deciding on the mechanism for the devolved authorities. Would they be compelled to mirror these agreements as well? How would it work in practice? Are the national authorities required to lay similar orders under this legislation or because of the international agreements? I would appreciate clarification.

If these mechanisms are not adequately in place, it might be proper to insist more vehemently on a fixed timeframe in order to avoid unnecessary ambiguity. I beg to move.

9.30 pm

Lord Teverson: My Lords, I apologise if I have not understood the noble Duke entirely. From these Benches, we welcome making all budgetary periods and everything to do with them last for five years. The post-2012 settlement will be beyond five years, but we should keep this at five. When I read the amendment, I did not understand why it fitted into this part of the Bill rather than an earlier part. Perhaps the noble Duke will explain that further in his reply to the Minister. However, a decision that we should go for five years would be a positive contribution at this stage.

The Parliamentary Under-Secretary of State, Department for Innovation, Universities and Skills (Baroness Morgan of Drefelin): My Lords, I am delighted to respond to the amendment again at Report stage. I am hoping for a little bit of inspiration, which may be coming my way.

As the noble Duke pointed out, I explained in Committee why we have an issue with the amendment. We have not changed our view. He asked how the devolved authorities play into changes to the length of carbon budgets. I am advised that the carbon budgets are UK-wide and therefore all the questions that we had before about how the Bill, as a UK Bill, affects the devolved authorities would apply in this situation. It is therefore the Secretary of State’s decision to take following consultation with the devolved authorities. That is set out in Clause 9. The noble Duke also asked which other areas of the Bill will be affected by changing carbon budget lengths. The answer that I am given is none. The periods for consulting devolved Administrations will remain the same.

I shall be happy to review the noble Duke’s questions to ensure that we have picked up his concerns—I will follow up in writing if I have missed

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anything—but perhaps I may summarise our arguments for the record. It may be necessary to amend the length of a budgetary period in order to maintain consistency within commitment periods at EU level and under any post-2012 international agreement. In the event that we do so, specific requirements that the annual equivalent emissions should be measured in terms of the overall budget divided by five would mean that the term “annual equivalent” was applied to a period different from a year. As noble Lords will be aware, this was the point that we made in Committee. In this context, since the Committee stage, the European Commission has proposed an eight-year budget period from 2013 to 2020. Although this is still being discussed at a European level, clearly if it was to be agreed we would want the ability to reflect it domestically. The amendment would add significant complexity to the situation for what we see as no gain. I therefore hope that the noble Duke will consider withdrawing his amendment.

The Duke of Montrose: My Lords, it is useful to be discussing this subject. I hope that I can provide some clarification. The noble Lord, Lord Teverson, asked why we tabled the amendment at this point in the Bill. The answer is that this, so far as I can see, is the first moment in the Bill where the number of years in the period is mentioned. It is about the length of the budgets.

The Minister’s reply did not quite take up our point. We are talking about any changes in international agreements. Those agreements affect the type of units that are looked on as carbon units, the length of the budget period, the trading and all sorts of things. We were interested to know how the changes, which the Government, having signed up to Kyoto and having passed this Bill, will be legally bound to reflect, will be passed on to the devolved Administrations. I think that there is a little more to be found on this topic, but in the mean time I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 6 [Amendment of target percentages]:

Lord Rooker moved Amendment No. 27:

Clause 6, page 3, line 42, leave out “percentages” and insert “percentage”

On Question, amendment agreed to.

[Amendments Nos. 28 to 30 not moved.]

Lord Rooker moved Amendment No. 31:

Clause 6, page 4, line 14, leave out “percentages” and insert “percentage”

On Question, amendment agreed to.

Clause 7 [Consultation on order setting or amending target percentages]:

Lord Rooker moved Amendment No. 32:

Clause 7, page 4, line 34, at end insert—

“( ) As soon as is reasonably practicable after giving its advice to the Secretary of State, the Committee must publish that advice in such manner as it considers appropriate.”

On Question, amendment agreed to.

[Amendment No. 33 not moved.]

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Lord Rooker moved Amendments Nos. 34 and 35:

Clause 7, page 4, line 43, at end insert—

“( ) If the order makes provision different from that recommended by the Committee, the Secretary of State must also publish a statement setting out the reasons for that decision.”

Clause 7, page 4, line 44, leave out “The statement” and insert “A statement under this section”

On Question, amendments agreed to.

Clause 8 [Setting of carbon budgets for budgetary periods]:

Lord Taylor of Holbeach moved Amendment No. 36:

Clause 8, page 5, line 9, at end insert—

“( ) A carbon budget for a budgetary period may only be set by the Secretary of State if—

(a) it is in accordance with a recommendation made by the Committee; and(b) the recommendation is approved by a resolution of both Houses of Parliament.”

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