This is a bit of a diversion, but I cannot resist it. I was tickled by the search of the noble Baroness, Lady Northover, of the BERR website. If we are into BERR-bashing, I must confess that when BERR recently published its statement of purpose and objectives, I put a quick word search into it looking for the word “environment”. It came up three times and I thought, “Yippee! This is really good: BERR saying ‘environment’ three times”. Alas, on each of the three occasions, it was talking about the business environment and there was no other mention of environmental issues. Of course, I could not possibly comment in terms of the amendment on whether that is a reason.
This is a very apt amendment because it is proportionate. It makes the point that the requirements to report must not be too onerous; they must reflect the size and impact of the business. It is not a one-size-fits-all amendment; it is therefore worthy of support.
Lord Redesdale: My Lords, I support my noble friend. We have just debated an amendment that deals with the 60 per cent reduction in carbon dioxide that we are considering. We should not forget that this is a 60 per cent reduction in carbon dioxide not from electricity or big business but throughout the country. We have a slight problem in that there is no way of measuring that, as many noble Lords have pointed out.
On Virgin Radio this morning, there was an advert from the Carbon Trust saying something like, “If you’re a business, we’d like to help you to reduce the amount of carbon dioxide you produce”. Perhaps that is the wrong way around. Business should have a moral obligation to do so if we are to push this forward. We risk producing a piece of legislation that does nothing more than be a piece of legislation, because there are other pieces of legislation. Local government has an obligation to try to reduce domestic carbon dioxide emissions by 30 per cent but no means by which to do so.
The first thing we must do is find out who the polluters are. The amendment would help to do that. I am not sure that business would see it as a bad thing. I was at a dinner with a lot of CSR representatives from companies. I think they would see it as a good thing. This is true especially of some of the big companies such as BT and Ikea, which have a good message to send. BT has just advertised that it has reduced its
31 Mar 2008 : Column 772
However, there is a problem here. DBERR—or is it BERR? I never know; it has changed its name three times. I still prefer DBRRE, or Debris, but that is just a personal thing. It rolls off the tongue better and does what it says on the tin—and Defra measure carbon differently. How is business meant to measure carbon? Is it meant to follow BERR’s measurement of carbon or Defra’s? That is just a brief point, but it is no bad thing because the real point of the amendment is to make directors of companies think about their carbon footprint.
I am a director of the Institute of Advanced Motorists, the commercial arm of which has been pushing fleet training. We used to sell that very successfully on the basis that the more white van drivers you train, the fewer accidents they have. The training also pays for itself very quickly because fewer accidents mean a smaller insurance premium. We now have a much more persuasive argument for companies. People who have been trained in advanced driving, which is actually safe and sensible driving such as not putting your foot to the floor when you are coming up to a red light, produce 10 per cent fewer emissions from the tailpipe. This is a very effective argument, which companies have been taking on board in the past two years. The saving in carbon dioxide, as well as the saving in fuel, is now resonating with fleet managers, whom we never thought we would get through to on the environmental aspect.
This is a good news issue, but one that must be thought about. We must appeal to company directors not only on main issues such as electricity but on every aspect from transport and procurement through to office management. This is an excellent amendment. If the Government do not accept it, little success will be built into the Bill in the next few years.
Lord Rooker: My Lords, I have just counted up the votes. I think it is eight or nine to one: or perhaps nine to zero, to be honest. As my noble friend Lord Whitty said—I realise that the Annunciator was not quite right when we came to the debate—the noble Baroness, Lady Northover, referred to moving the amendment and to the unsatisfactory nature of the way our first two debates were held at almost 11 o’clock on the first night. The general consensus was that it was not known that we had to stop at a certain time. I think it was a Wednesday evening, and the House does not sit after 11 pm on a Wednesday because of the early start on Thursday. The debate on Report, too, was held late in the day. This debate has not suffered the fate of the daylight hours debate, which started late on both nights and has not come back today. I take what the noble Baroness said about bringing this back at Third Reading, but it is not for me to pronounce on the rules of this place. It is on the Order Paper and therefore up for debate. It gives me an opportunity to set out the Government’s position.
First, as I have said before, we are not starting with a blank sheet. Many United Kingdom companies, such as the 1,000 companies in the EU Emissions Trading Scheme, are already required to disclose their emissions.
Lord Teverson: My Lords, I thank the Minister. He said this on Report. Clearly companies have to report because the Government run the system that measures the EU Emissions Trading Scheme, but that does not have to appear anywhere in any public company report, so it in no way meets the requirements of the Bill.
Lord Rooker: My Lords, I have only just got going. I know that I have said that before. I am simply setting out the facts—and being very careful with my use of words—that those companies are required to disclose at present.
Secondly, there are non-financial issues, which are relevant to the development of performance in a business. Environmental matters can be included, as noble Lords have already said. The good companies will include them, and for lots of reasons. At the end of the day, being good companies, they see that the bottom line improves as well as the customer base. The Companies Act business review requirements require that, and we expect that many companies will report on climate change issues in their business reviews. We will start to get a picture of that in the next few years, which will feed into the proposals.
On the standards for reporting, I understand that debates, in which I was not involved, during the passage of the Companies Act 2006 concluded that, rather than mandatory standards for narrative reporting, we could encourage minimum compliance with guidance and a voluntary approach. That would ensure that directors gave proper consideration to reporting. A lot of work is being done to support voluntary reporting. I must point out again that UK companies are already global leaders—I may fall foul of this; I am not claiming that they are the best—in voluntary environmental reporting.
The noble Lord, Lord Taylor, asked about the National Audit Office report. As that report says, UK greenhouse gas reporting follows international reporting requirements and, as I think I said during the passage of this Bill, we follow the best practice guidelines and have been favourably reviewed by international experts from the United Nations climate change convention and the Kyoto Protocol. If that is not enough, Clause 29, which came across our radar earlier, requires that UK emissions,
There are some issues relating to what Defra is doing. We are supporting the secretariat to the Climate Disclosure Standards Board, which was launched at the World Economic Forum in January 2007. David Miliband attended as the then Defra Secretary of State. The objective of the board member organisations is to align their core requests for information from companies to ensure that they report climate change-related information in a standardised format that facilitates easier comparative analysis by investors, managers and the public.
I know that some people take the old-fashioned view that company reports are simply for the shareholders and that everyone else should mind their own business, but we have gone way beyond that. I am in a position
31 Mar 2008 : Column 774
Baroness Northover: My Lords, I am not sure what I am supposed to do now. I thank the Minister very much. When he said that it was eight or nine to one, it may have reflected how he really felt on this. I very much appreciate the participation of Members on all sides of the House, but especially the Minister’s agreement to the amendment.
On Question, amendment agreed to.
Schedule 1 [The Committee on Climate Change]:
Lord Rooker moved Amendment No. 10:
On Question, amendment agreed to.
Schedule 2 [Trading schemes]:
The Duke of Montrose moved Amendment No. 11:
The noble Duke said: My Lords, I shall speak also to Amendments Nos. 12 to 14 in this group. Having read carefully the Minister’s reply to my amendments on the final day of Report stage, I am left with the impression that those who were advising him were unable to shake off their predilection for the top-down approach where the Government define the area of the economy to which each scheme applies. As such, several of the answers appeared to be a bit wide of the mark.
As we have just heard, we are back to the question that runs through all our minds. Just how urgent is the saving of carbon emissions to our future? Opinions vary from those who propose the Gaia theory, where the problem is so serious that it is too late for us to do anything about it, to those who think that the current ideas are all far too theoretical and are influenced by forces so far beyond our control that what we are doing is a waste of time. My impression is that the Government find themselves in a dilemma because they would like to appear to be green by taking action
31 Mar 2008 : Column 775
As the Minister pointed out during the previous discussion on this subject, the nearest approach that the Government have made to what my amendments seek to achieve was the first UK Emissions Trading Scheme. It was certainly admirable in its way and it exceeded its targets by some considerable amount, but again it was taken up by only 32 fairly large businesses. As the Minister will be aware this scheme has now closed for new entrants and continues only for those for whom it has a little longer to run.
Part 2 of Schedule 2 would allow the Government to bring forward a similar scheme, but that is unlikely as they will be concentrating on their auctioning of allowances, in a scheme such as the carbon reduction commitment, to targeted industries rather than seeking to provide another £215 million or whatever to subsidise a new scheme. If we are anxious to pursue every meaningful opportunity to save carbon emissions and take account of the urgency that most of us feel, I am left rather quizzical about the Government’s rejection of the mechanisms required to participate in the whole project-based mechanisms offered under joint implementation.
At Report stage I asked the Minister if he could explain the Government’s reasoning. If the Minister is unable to do that now, I would be most grateful to receive an explanation in writing. This group of amendments would allow the climate change committee or the Government to consider an opt-in scheme for project-based enterprises within the UK. It would dovetail in with the tradable allowance concept in much the same way as the project-based schemes that are approved under joint implementation can dovetail in with the national allowances and credits generated under CDM for those who are meeting their Kyoto targets. Amendment No. 11 proposes that meaningful enterprises from any sector of the economy can put forward schemes that provide the necessary savings defined by the objectives to be achieved. At the earlier stage, the Minister expressed some concern that my amendments would leave out the obligation for a consultation process as required by Clause 40.
In a project-based mechanism, the Government will not be laying down enterprises to which they want a scheme to apply, so the need for that obligation would be at the most formal, or even unnecessary. There would be plenty of opportunity for the Government to determine whether applicants are aware of the requirements placed on them once the application has been received.
In response to my amendment regarding carbon credits at that earlier stage, the Minister said that paragraph 17 would provide for the issue of credits. But my understanding is that the Government’s approach to the issuing of credits is that it will be totally their decision. My Amendment No. 12 highlights the possibility that projects first proposed and then approved can generate a right to certificates which would be issued as part of a UK trading scheme. Amendment No. 12 recognises the fact that the definition of credits is
31 Mar 2008 : Column 776
One of the objections the Minister was trying to flag up about those earlier amendments was that the existing paragraphs in the Bill,
But this is a hint of all the uncertainties that the top-down approach contains—such as what should be the level of allowances foreseen for each enterprise? What level of reductions in emissions can be envisaged without making areas of British industry uncompetitive in the global economy? I understand that the renewables obligation is taken to be adding about 15 per cent to our energy prices. At what level should the price of the allowances issued be set before the market has stabilised?
Does the Minister accept that the project-based approach contains its own regulator? If the price of carbon in the main scheme of allowances starts to become too dear, more enterprises will be attracted into the scheme and will help to contain the price. But if the price of carbon begins to be too cheap, no proposals will come forward to aggravate the position and so will considerably reduce an existing area of uncertainty. In the present proposals, anything of this nature could require government intervention. Amendments Nos. 13 and 14 would give the limited element of official control to the scheme that would be necessary. I beg to move.
Lord Rooker: My Lords, we discussed similar amendments on Report, and I thank the noble Duke for bringing these back. However, rather like the earlier group of amendments moved by the noble Lord, Lord Taylor, I do not have much more to add before the Bill goes to the other place. As I have made as clear as I can, and if we understand the intention of these amendments correctly, nothing in the Bill would exclude what the noble Duke seeks to provide for.
The Bill provides a framework approach. There is nothing in Schedule 2 to prevent the development of a trading scheme allowing people to opt in or to do anything that this group of amendments seeks to ensure. Obviously, decisions on issues such as this would need to be taken in the context of individual schemes if and when they are established under the Bill.
As I noted on Report, the Government set up the voluntary UK Emissions Trading Scheme, which ran for four years from 2002. That was a bottom-up scheme of the kind mentioned by the noble Duke. It involved large and small organisations such as Ford, Tesco, the Natural History Museum and, indeed, Kirklees Council. The scheme delivered carbon savings well in excess of those anticipated, and was a valuable learning experience. The example demonstrates that we are willing to look at the issues raised by the noble Duke. As I said, however, we are in no position at this stage in the Bill’s progress to come back with a demonstrable government acceptance. No doubt these issues will be discussed in the other place.
I apologise because I have repeated what I said on the previous occasion. I cannot take the matter any further at this point in the Bill.
The Duke of Montrose: My Lords, it is interesting to note that the Minister has indeed come back with the same arguments he made at the earlier stage. I think it is quite likely that the Government could decide that they will bring in a scheme of this nature, but it is very much a government decision in the first instance. I am seeking to ensure that the possibility exists in the Bill. However, in the light of what the Minister said, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 12 to 14 not moved.]
An amendment (privilege) made.
Lord Rooker: My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Lord Rooker.)
Lord Taylor of Holbeach: My Lords, I hope that it is proper at this stage for me to thank the Minister for the way in which he has conducted the passage of the Bill through this House. It has been a challenging Bill and many of us have learnt a lot about things of which we knew relatively little when we embarked on the process, but it has been conducted by the Minister in a most agreeable and pleasant fashion, and it must be to his liking that he has been able to accept amendments made at Third Reading in the way that he has today.
I also appreciate the support given by the Bill team to making this a sounder piece of legislation than it was when it started. The Minister said that he knew it would leave this place in a very different form from that in which it arrived. I hope that it has been improved and that the work of your Lordships will be considered in another place. I thank noble Lords for all their contributions, and here I refer to the cadre of skill that has come from the Joint Committee of both Houses chaired by the noble Lord, Lord Puttnam. I hope that noble Lords have strengthened the Bill and thus ensured that its implementation is that much more likely to be successful.
Lord Teverson: My Lords, I should like to add to those words. I have not taken a Bill through the House from these Benches before but I have found this a positive process. Much of that is down to the Ministers involved, particularly the noble Lord, Lord Rooker. The Bill team has also been particularly helpful; they have been involved in many useful discussions and supplied amazingly comprehensive briefing papers. I tried to fire off a few myself but the salvos came back very quickly. I still think that mine were right and theirs were wrong, but there we are.