Conclusions and Recommendations
76. If the EU's Emissions Trading Scheme is to
achieve its fundamental objective of delivering GHG reductions
as cost-effectively as possible, it must eventually include
as many sectors as possible. However, sectors should only be included
if their emissions can be reliably monitored and verified. In
view of the quality of data and methodology currently available,
we support the proposed scope of the EU ETS from 2013, but recommend
that this aspect of the Directive be kept under regular review.
77. We note that the inclusion of agriculture
and forestry sectors in the EU ETS may pose particular practical
difficulties due to monitoring and verification problems and the
large number of small enterprises involved. We nonetheless
consider that these sectors have a major role to play in reducing
greenhouse gas emissions, and urge both the Commission and the
UK Government to accelerate work on assessing how those sectors
can contribute most cost-effectively to a reduction in greenhouse
gas emissions, drawing lessons from the experience of other countries.
78. Swift action must also be taken to tackle
emissions from shipping. If a sectoral
agreement cannot be reached through the International Maritime
Organisation in the near future, we believe that the sector's
inclusion in the EU ETS should be given serious consideration,
and should be delayed no further than 2013 for the largest emitters
in the sector.
79. The development of a reliable and commercially
viable method of decarbonising coal is urgently necessary, as
coal is likely to remain a significant—and growing—source
of energy. We therefore wish to see significant investment
in carbon capture and storage, to establish whether this technology
could meet that need. We support the provision in the draft Directive
stipulating that operators need not surrender allowances for emissions
that have been captured and stored, as it should help to stimulate
such investment.
80. We accept that the de minimis emissions
threshold proposed in the draft Directive may be too low, and
that a large number of small emitters accounting for a relatively
small proportion of overall emissions could be removed from the
scope of the ETS in the interests of better regulation. We
would therefore support a raising of the de minimis threshold
as proposed by a number of our witnesses.
81. We note, however, that unintended consequences
may flow from a de minimis threshold, such as incentives
to build smaller, possibly less efficient installations, and
recommend that such effects be monitored closely and pre-empted
where possible. In this respect, we welcome the Government's
assurance that small installations in the UK that are excluded
from the scope of the ETS will instead be covered by the Climate
Change Agreement scheme or by the Carbon Reduction Commitment.
82. We note that the UK Government is making
some efforts outside of the ETS to tackle climate change but we
would urge the Government to intensify its pursuit of cost-effective
emissions reduction measures across the economy, particularly
in sectors remaining outside the ETS such as agriculture, forestry
and road transport. Emissions reductions in other parts of
the economy are no less important than those within the sectors
and installations covered by the ETS.
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