BUILDING A GLOBAL CARBON MARKET (15585/06)
Letter from the Chairman to Ian Pearson
MP, Minister of State for Climate Change and the Environment,
Department for Environment, Food and Rural Affairs
Sub-Committee B considered this document, and
your Explanatory Memorandum, at its meeting on 8 January 2007.
As you may be aware from our recent report,
Including the Aviation Sector in the European Union Emissions
Trading Scheme,[20]
we share your support for the extension of the ETS to aviation.
We note from your EM that the Government considers that the Commission's
analysis of the possible inclusion of surface transport "did
not cover options that the UK feels merit further consideration".
Could you clarify which options the UK would like to see explored?
We are content to lift scrutiny on this document,
and will await the legislative proposals which you anticipate.
9 January 2007
Letter from Ian Pearson MP to the Chairman
In your letter of 9 January 2007 you asked about
the potential inclusion of surface transport in the EU Emissions
Trading Scheme (EU ETS). As explained in the UK Climate Change
Programme 2006, the inclusion of surface transport in CO2 emissions
trading mechanisms could be a way of delivering low cost carbon
reductions. There are however a number of issues that need to
be addressed before a decision were to be taken, including the
route for implementation, the potential impact on EU ETS carbon
price and where the emissions reductions will take place.
The European Commission's review of the EU ETS
provides an opportunity for these issues to be considered further
and the Government would like to see that this opportunity is
not lost. The European Commission tasked ECOFYS to support it
in developing the scope of the review of the EU ETS and published
a paper alongside the Commission's communication "Building
a global carbon market". While the ECOFYS paper briefly touched
on the down stream option of trading between individual emitters
(vehicle owners) and at the mid-stream level with trading between
manufacturers, these options were ruled out due to difficulties
over the ability to monitor and verify emissions and administration
costs.
The Government believes that another option
that also merits consideration is that of upstream trading focusing
on the fuel producers. You will be aware that the EU ETS directive
lists transport as one of the sectors that should be considered
when assessing whether to expand the scheme. We therefore feel
that it is appropriate for the Commission to kick-start a serious
debate now around this subject and for further work to be carried
out as part of this process.
22 January 2007
Letter from the Chairman to Ian Pearson
MP
Thank you for your letter of 22 January 2007,
replying to my letter of 9 January. Sub-Committee B considered
your letter at its meeting on 19 February.
We were grateful to you for clarifying the options
which the Government would like to see included in the Commission's
review of the EU Emission's Trading Scheme. We share your hope
that this provides a "kick-start" to a serious debate
on the scheme, which in our view is much needed.
We would be further grateful if you could expand
on the Government's plan for upstream trading for fuel producers;
and how this would be related to reducing carbon emissions.
26 February 2007
20 21st Report of Session 2005-06, HL Paper 107. Back
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