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At the end of the day, there will probably have to be regulation, but people will use new techniques and new instruments on a global scale. It would be quite wrong to come along with a whole list of regulations now to snuff out innovation and ideas, but we must bear in mind, as my noble friend said, that we must not lose billions of dollars, yen and euros down a black hole. That means that we may have to consider long-term regulation only when we know that we have not snuffed out innovative practices and new instruments that can help the planet to deal with the issue.

Earl Ferrers: My Lords, before the noble Lord sits down, can he answer my anxieties about costs and bureaucracy?

Lord Rooker: My Lords, I cannot in the detail that the noble Earl asks me for; I can do so only in the sense that such trades already take place. I understand that London is probably doing 40 to 50 per cent of the trading from around the world. The noble Baroness said that the Environment Agency is the mechanism for dealing with certain aspects of that. In other words, we are not inventing the wheel as a result of the Bill. Such arrangements already take place. As far as I know, no one has come along complaining about the thousands of extra bureaucrats and massive extra costs that the noble Earl referred to because the system is new. It will not start with a clean sheet after the passage of the Bill. Such instruments, such mechanisms and such trading already take place and there has not been a massive call that it is an extra cost and lots of red tape.

Lord Crickhowell: My Lords, I am grateful to the noble Lord for giving way. On the point about Clause 27, he will have noted—

Lord Davies of Oldham: My Lords, we are at Report stage. We have had two interventions on the Minister since he sat down. I think that that is probably enough and that the noble Lord, Lord Teverson, should sum up on the amendment.

11 Mar 2008 : Column 1427

Lord Teverson: My Lords, this has been an interesting and passionate debate, for which I thank your Lordships. I am interested that we have returned so much to the area of emissions trading schemes. As the noble Baroness, Lady Young of Old Scone, said, the amendment would not affect trading schemes, which mostly take place between national and international corporations. That would absolutely continue if the amendment were passed. The amendment would not affect trading schemes in any way; legally, it could not and would not be allowed to affect trading schemes.

All that the amendment would do is put a cap on the number of those schemes introduced into the accounting, not into the trading. Indeed, internationally, it would put no limit on the Government investing in foreign and developing countries’ emission reductions; the Government could carry on doing that. All that would happen is that, after a certain number, those reductions would not be included in the bean counting. The amendment would ensure that the Bill met its billing and the advertising that the Government and we, proudly, within the UK want it to meet in terms of UK leadership.

The Minister gave four reasons why the Government do not like the amendment. Funnily enough, I agree with them absolutely. I will not go through them all, but the amendment would not affect any of them. As the Minister said, there are limits on the number of CDM credits that can be included in the EU ETS. We already have those restrictions in certain areas. The Minister suggested that I was wrong about the Government’s present CO2 targets, which the amendment would actually loosen. He mentioned 2005, but the government commitment was made in 1997 and it was a domestic commitment. I do not know whether the Government changed the position in 2005-06, but it was a 1997 commitment, which made no difference to trading.

The one area on which I disagree with the Minister relates to giving faith. That is not because I do not believe in the Government’s excellent intentions in this area, because I do. He mentioned figures. The United Kingdom’s CO2 emissions since 1997-98 have stayed more or less the same, despite the good intentions of all of us to reduce them. I looked at the information from Defra at the end of last week. The last two bars on the graph for 2005-06 show a decrease, but the only reason for that is the inclusion of EU ETS credits. That is why we cannot just have faith.

The final matter that I will comment on is whether this should all be sent back to the Committee on Climate Change. The decision needs to be equally political and technical. I am disappointed that the Government have not moved at all since the Committee stage and, on that basis, I would like to test the opinion of the House.

4.53 pm

On Question, Whether the said amendment (No. 106) shall be agreed to?

Their Lordships divided: Contents, 179; Not-Contents, 147.

11 Mar 2008 : Column 1428

Division No. 1


Addington, L.
Allenby of Megiddo, V.
Alton of Liverpool, L.
Anelay of St Johns, B.
Arran, E.
Ashcroft, L.
Ashdown of Norton-sub-Hamdon, L.
Astor of Hever, L.
Avebury, L.
Ballyedmond, L.
Barker, B.
Blaker, L.
Bonham-Carter of Yarnbury, B.
Bowness, L.
Bradshaw, L.
Bramall, L.
Bridgeman, V.
Brougham and Vaux, L.
Burnett, L.
Buscombe, B.
Butler-Sloss, B.
Byford, B.
Campbell of Alloway, L.
Carlile of Berriew, L.
Carnegy of Lour, B.
Cathcart, E.
Chelmsford, Bp.
Chidgey, L.
Clement-Jones, L.
Colwyn, L.
Cotter, L.
Craigavon, V.
Crathorne, L.
Crickhowell, L.
Dean of Harptree, L.
Dear, L.
Dholakia, L.
Dixon-Smith, L.
D'Souza, B.
Dundee, E.
Dykes, L.
Eccles, V.
Eden of Winton, L.
Elton, L.
Exeter, Bp.
Falkland, V.
Falkner of Margravine, B.
Fearn, L.
Ferrers, E.
Fookes, B.
Fowler, L.
Geddes, L.
Glasgow, E.
Glenarthur, L.
Glentoran, L.
Goodhart, L.
Greaves, L.
Greengross, B.
Greenway, L.
Hameed, L.
Hamwee, B.
Hanham, B.
Hanningfield, L.
Harries of Pentregarth, L.
Harris of Richmond, B.
Henley, L.
Hodgson of Astley Abbotts, L.
Hooson, L.
Howe, E.
Howe of Aberavon, L.
Howe of Idlicote, B.
Howell of Guildford, L.
Hunt of Wirral, L.
Hurd of Westwell, L.
Inglewood, L.
Jacobs, L.
Jay of Ewelme, L.
Jenkin of Roding, L.
Jones of Cheltenham, L.
Kalms, L.
Kilclooney, L.
Kingsland, L.
Kirkwood of Kirkhope, L.
Knight of Collingtree, B.
Krebs, L.
Lee of Trafford, L.
Lester of Herne Hill, L.
Listowel, E.
Liverpool, Bp.
Livsey of Talgarth, L.
Lucas, L.
Luke, L.
MacGregor of Pulham Market, L.
Mackie of Benshie, L.
Maclennan of Rogart, L.
McNally, L.
Maddock, B.
Mar, C.
Mar and Kellie, E.
Marlesford, L.
Masham of Ilton, B.
Mawson, L.
Mayhew of Twysden, L.
Methuen, L.
Miller of Chilthorne Domer, B.
Montrose, D.
Morris of Bolton, B.
Naseby, L.
Neuberger, B.
Neville-Jones, B.
Newby, L.
Newton of Braintree, L.
Noakes, B.
Northover, B.
Norton of Louth, L.
Oakeshott of Seagrove Bay, L.
Onslow, E.
Palmer, L.
Park of Monmouth, B.
Pilkington of Oxenford, L.
Powell of Bayswater, L.
Puttnam, L.
Ramsbotham, L.
Rawlings, B.
Razzall, L.
Redesdale, L.
Rennard, L.
Renton of Mount Harry, L.
Roberts of Conwy, L.
Roberts of Llandudno, L.
Rodgers of Quarry Bank, L.
Roper, L.
Ryder of Wensum, L.
St. John of Bletso, L.
St John of Fawsley, L.
Scott of Needham Market, B.
Seccombe, B. [Teller]
Sharman, L.
Sharp of Guildford, B.
Sharples, B.
Sheikh, L.
Shephard of Northwold, B.

11 Mar 2008 : Column 1429

Shutt of Greetland, L. [Teller]
Slim, V.
Smith of Clifton, L.
Soulsby of Swaffham Prior, L.
Steel of Aikwood, L.
Stewartby, L.
Sutherland of Houndwood, L.
Taverne, L.
Taylor of Holbeach, L.
Tenby, V.
Teverson, L.
Thomas of Gresford, L.
Thomas of Swynnerton, L.
Thomas of Walliswood, B.
Tonge, B.
Tope, L.
Tordoff, L.
Trefgarne, L.
Tugendhat, L.
Tyler, L.
Ullswater, V.
Vallance of Tummel, L.
Verma, B.
Vinson, L.
Waddington, L.
Wallace of Saltaire, L.
Wallace of Tankerness, L.
Walmsley, B.
Walpole, L.
Watson of Richmond, L.
Wilcox, B.
Williams of Crosby, B.
Williamson of Horton, L.
Willoughby de Broke, L.
Windlesham, L.
Young of Hornsey, B.
Young of Old Scone, B.


Acton, L.
Adams of Craigielea, B.
Adonis, L.
Ahmed, L.
Alli, L.
Anderson of Swansea, L.
Andrews, B.
Archer of Sandwell, L.
Ashton of Upholland, B. [Lord President.]
Bach, L.
Barnett, L.
Bassam of Brighton, L.
Bernstein of Craigweil, L.
Billingham, B.
Bilston, L.
Borrie, L.
Boyd of Duncansby, L.
Bradley, L.
Bragg, L.
Brett, L.
Brooke of Alverthorpe, L.
Brookman, L.
Burlison, L.
Campbell-Savours, L.
Chorley, L.
Clark of Windermere, L.
Clarke of Hampstead, L.
Clinton-Davis, L.
Corbett of Castle Vale, L.
Corston, B.
Crawley, B.
Cunningham of Felling, L.
Darzi of Denham, L.
Davidson of Glen Clova, L.
Davies of Coity, L.
Davies of Oldham, L. [Teller]
Dearing, L.
Desai, L.
Dixon, L.
Dubs, L.
Elder, L.
Evans of Parkside, L.
Evans of Temple Guiting, L.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Filkin, L.
Foulkes of Cumnock, L.
Gale, B.
Golding, B.
Goldsmith, L.
Gordon of Strathblane, L.
Goudie, B.
Gould of Potternewton, B.
Graham of Edmonton, L.
Griffiths of Burry Port, L.
Grocott, L.
Harris of Haringey, L.
Harrison, L.
Hart of Chilton, L.
Haskel, L.
Haskins, L.
Haworth, L.
Henig, B.
Hilton of Eggardon, B.
Hollick, L.
Hollis of Heigham, B.
Howarth of Newport, L.
Howells of St. Davids, B.
Howie of Troon, L.
Hoyle, L.
Hughes of Woodside, L.
Janner of Braunstone, L.
Jones, L.
Jones of Whitchurch, B.
Kennedy of The Shaws, B.
King of West Bromwich, L.
Kinnock, L.
Kirkhill, L.
Layard, L.
Lea of Crondall, L.
Leitch, L.
Lofthouse of Pontefract, L.
Macaulay of Bragar, L.
McDonagh, B.
Macdonald of Tradeston, L.
McIntosh of Haringey, L.
McIntosh of Hudnall, B.
MacKenzie of Culkein, L.
Mackenzie of Framwellgate, L.
McKenzie of Luton, L.
Mallalieu, B.
Marsh, L.
Maxton, L.
Mitchell, L.
Monson, L.
Montgomery of Alamein, V.
Moonie, L.
Morgan, L.
Morgan of Drefelin, B.
Morris of Aberavon, L.
Morris of Manchester, L.
Morris of Yardley, B.
Patel of Blackburn, L.
Pendry, L.
Plant of Highfield, L.
Prys-Davies, L.
Quin, B.
Radice, L.

11 Mar 2008 : Column 1430

Ramsay of Cartvale, B.
Rea, L.
Rendell of Babergh, B.
Richard, L.
Rogan, L.
Rooker, L.
Rowlands, L.
Royall of Blaisdon, B. [Teller]
Sandwich, E.
Sawyer, L.
Scotland of Asthal, B.
Sewel, L.
Sheldon, L.
Simon, V.
Smith of Leigh, L.
Snape, L.
Soley, L.
Stern of Brentford, L.
Stoddart of Swindon, L.
Stone of Blackheath, L.
Strabolgi, L.
Taylor of Bolton, B.
Thomas of Macclesfield, L.
Thornton, B.
Tomlinson, L.
Tunnicliffe, L.
Turnberg, L.
Turnbull, L.
Turner of Camden, B.
Uddin, B.
Vadera, B.
Warner, L.
Watson of Invergowrie, L.
Wedderburn of Charlton, L.
West of Spithead, L.
Whitaker, B.
Wilkins, B.
Woolmer of Leeds, L.
Young of Norwood Green, L.

Resolved in the affirmative, and amendment agreed to accordingly.

5.04 pm

Clause 21 [Carbon units and carbon accounting]:

Lord Taylor of Holbeach moved Amendment No. 107:

The noble Lord said: My Lords, I shall speak also to the other amendments in the group, which includes government amendments.

The amendments concern the definition of a carbon unit and the procedures for changing this definition through regulation. Amendment No. 107 seeks to ensure that the definition of a carbon unit coincides with international practice. It was brought forward to bring greater precision to what is meant by a carbon unit and to ensure that the international context was taken into account.

Government Amendment No. 114 seems to cover our concern by placing a duty on the Secretary of State to take into account the committee’s recommendation with regard to changing the definition of carbon units. This seems to be sufficient as it is unlikely that the committee would suggest a definition which is wildly inconsistent with international practice. It is an example of a situation in which the Government have heeded the calls from this side of the House to put the committee in a more prominent role.

The two other amendments in the group add further circumstances which would require the affirmative procedure should these changes be made. We welcome the chance to scrutinise any changes to the amount a carbon unit will be worth, as it were, in terms of the net UK carbon account. Therefore we are grateful for the Government’s concession here to allow more transparency and parliamentary accountability.

Considering the importance of administering the carbon accounts, will the Minister comment as to why any changes to the scheme of administration would not also be subject to the affirmative procedure? I beg to move.

11 Mar 2008 : Column 1431

Lord Rooker: My Lords, as the noble Lord said, this group of amendments deals with the carbon accounting system established under the Bill and how to ensure it will be robust, transparent and subject to proper parliamentary scrutiny. We are all trying to achieve the same thing.

Amendment No. 107 would create a link between the carbon accounting system and international carbon reporting practice, but we are not sure that it is the best way to ensure that we have a robust and credible system. The concept of international carbon reporting practice is defined in Clause 75 more in terms of the protocols for measuring greenhouse gas emissions than in accounting for carbon units, credits or allowances. We think there are better ways to design the necessary safeguards, to which I shall come later.

The Bill already limits what could be recognised as a carbon unit. In order to be recognised it must meet one of the three criteria set out in Clause 21(1). It must represent a reduction in greenhouse gases which has taken place; the removal of greenhouse gas from the atmosphere; or form part of a scheme which caps the amount of permitted greenhouse gas emissions.

Amendment No. 113 would add to the list of situations in which the affirmative resolution procedure was required relating to changes in the body administering the carbon accounting system. We do not think this is justified, nor do we believe it is necessarily the most important issue when looking at the robustness of the scheme as a whole. The body appointed as the scheme administrator is only one aspect of the way in which we will manage our carbon accounts and, while it is an important issue, we do not see why it should be given greater priority.

Instead, we feel the priority to ensure a robust carbon accounting system is to ensure that any carbon units used under the Bill are of the right standing and environmental rigour. Government Amendments Nos. 112 and 114 will ensure this by providing for independent advice and proper parliamentary scrutiny before any new types of carbon units are recognised under the Bill. I shall speak to and move these two amendments in due course.

Clause 23 already provides that the first set of carbon accounting regulations should only be made following advice from the Committee on Climate Change and a vote in both Houses under the affirmative resolution procedure. The two amendments provide that where new types of carbon unit are recognised as being valid for compliance purposes, or where the value of existing carbon units has been changed, the same safeguards will apply. Any such changes could only be made following advice from the Committee on Climate Change and a vote in both Houses. The two government amendments are intended to provide further safeguards, on an ongoing basis, to ensure the environmental rigour of the rules on carbon accounting. They will ensure that, every time a new carbon unit is recognised as counting towards the UK’s targets, and every time the value of a carbon unit is changed, the Government must seek expert independent advice from the Committee on Climate Change, and be subject to full parliamentary scrutiny in both Houses through the affirmative procedure.

11 Mar 2008 : Column 1432

These amendments go beyond the recommendations of the Delegated Powers Committee, which recommended that the first set of carbon accounting regulations should be subject to the affirmative procedure,

We have accepted this recommendation already, in Clause 23, and now propose to go even further. The question of which carbon units are used, and how much they are worth, is more important in terms of the overall robustness of the system than a change in the body administering the scheme, which is proposed in Amendment No. 113.

This touches on the concerns raised by my noble friend Lord Puttnam in our previous debate about the quality of the carbon units that we can count towards our targets. Amendments Nos. 112 and 114 would prevent any Government from seeking, in some way, to smuggle through fundamental changes to the rules on carbon accounting, without proper advice or scrutiny. I hope that the amendments provide noble Lords with confidence about the Government’s commitment to the robustness of the system we are establishing under the Bill.

Lord Taylor of Holbeach: My Lords, I thank the Minister for his response. It is agreeable to note that the Government have listened to the Committee debates and brought their own amendments which address largely the issues that our amendments were looking at. I am disappointed with his view on Amendment No. 113. However, given the substantial movement that the Government have made in this area, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 108 to 110 not moved.]

Clause 22 [Net UK carbon account]:

[Amendment No. 111 not moved.]

Clause 23 [Consultation and parliamentary procedure for regulations]:

Lord Rooker moved Amendment No. 112:

“(aa) they specify a carbon unit of a kind not previously specified in regulations made under those sections,(ab) they alter the amount by which—(i) a carbon unit that is credited to the net UK carbon account for a period reduces the net UK carbon account for that period, or(ii) a carbon unit that is debited from the net UK carbon account for a period increases the net UK carbon account for that period, or”

On Question, amendment agreed to.

[Amendment No. 113 not moved.]

Lord Rooker moved Amendment No. 114:

(a) the first regulations to be made under those sections, or(b) regulations making provision of the kind described in paragraph (aa) or (ab) of subsection (2).”

11 Mar 2008 : Column 1433

On Question, amendment agreed to.

[Amendment No. 115 not moved.]

Clause 25 [Emissions from international aviation or international shipping]:

Lord Taylor of Holbeach moved Amendment No. 116:

(a) lay the regulations referred to in subsections (3) and (4) within the period of five years beginning with the day the Act is passed, or(b) lay before both Houses of Parliament a report explaining why the regulations have not been laid within that period.
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