Examination of Witnesses (Question Numbers
140-159)
Mr Murray Birt, Mr Matthew Farrow and Mr Dwight Demorais
9 JULY 2008
Q140 Chairman: I am a little surprised
that we have not heard an avalanche of representations that go
something like, "Trading conditions are difficult; life is
difficult; it's tough out there; yeah, we can't put our hand up
and say that we are subject to carbon leakage but this just adds
another marginal cost which makes life more and more difficult
and inevitably we become that little bit more uncompetitive internationally"
because ETS is by definition a regional scheme.
Mr Farrow: We may well find and I am
sure that we are finding that sectors in that position are making
a case to the Commission and, as I say, if they have a strong
case, they will be heard. I think that business perceptions may
vary across different European countries where the tone of the
climate change debate tends to be a little different. To be fair
to our members, they are recognising that climate change is a
genuine threat and, if we are going to tackle it, we are going
to have to have schemes like emissions trading and it is absolutely
right that we, as the CBI, a representative lobby, ensure that
the scheme works effectively and offer as much protection as the
scheme can deliver to sectors that are at real risk. British business
is recognising that carbon pricing is on the way and there are
sectors that will not find it easy but, over a transition period,
will need to invest and structure their operations over the next
decade or so to take account of that. We do see an important distinction
between sectors such as cement where we think that will just crucify
those sectors for no environmental benefit and other sectors who
need a transition such as—and this is something which we
may come on to—the system of international credits which
again at the margin can alleviate a bit of the pressure, but nonetheless
over time are going to face a carbon price. It is a difficult
judgment for us as an organisation to make but that is what we
have made of it.
Q141 Baroness Sharp of Guildford: I have
three questions on the auctioning issue. The first one is, what
position do you take on the Commission's proposals in particular
that all sectors should be subject to the 100 per cent auctioning
except for those subject to major carbon leakage? Do you support
the Government's view that a minimum level of auctioning should
be set leaving Member States to decide whether to auction a higher
or a lower proportion of the remainder? Lastly, in relation to
the revenues raised by auctioning, you advocate in your paper
that at least some of that revenue should be used to support climate
and renewable energy actions but argue that this should be left
to each Member State, but to what extent are you confident that
Member States will use those funds for that particular purpose
if it is not stipulated by legislation?
Mr Farrow: With regard to the proposals
for auctioning, I would not say that we are desperately enthusiastic
about such a big shift to auctioning but we do recognise that,
for the power sector, it is appropriate and I think that, if you
had the power sector representatives here today, they would give
you a similar view. For sectors which are not at risk of carbon
leakage, the Commission proposes a transition over the whole of
Phase 3 towards full auctioning and, while it is a difficult judgment
to make and will not be easy for every firm in that situation,
we do recognise that it is probably the right thing to do. For
sectors at risk of carbon leakage, we feel, as we have discussed,
that allocation based on benchmark is necessary. In terms of your
second question, I think that the Defra or UK Government positions
are for Member States to have some flexibility but only upwards.
I think that their preference might be for a minimum. We do not
support that. We are nervous that the Government's understandable
enthusiasm to be a climate leader, which in broad terms we accept
and support, might, on some of these marginal issues, as you were
saying, Lord Chairman, lead them to take some risks, shall we
say, with certain sectors where they convince themselves that
those sectors can bear more auction than elsewhere in the EU.
We would prefer the Commission approach which is to have a harmonised
level of auctioning which cannot be deviated from. In terms of
the revenues, we do not feel that it should be a European decision.
Are we confident that other Member States would spend the money
in our view appropriately? No, we are not, but we feel that that
is a decision for them fundamentally. Obviously, our interest
is in the UK and UK business and, as an organisation, we are nervous
about tax harmonisation at a European level and we feel that allowing
the EU to stipulate, "You must spend this proportion of money
on these particular things" is perhaps a slippery slope towards
more tax harmonisation. We are saying that it should be a Member
State choice; the Commission might advise and recommend but it
should be a Member State choice. However, within the UK context,
we feel that given the sums of money that will accrue to the Treasury
through auctioning and given that this money is coming from business
and consumers in order to pay a carbon price and given the challenges
that as a country we face in terms of R&D in energy technology
and adaptation and so forth, it is right that the Government earmark
a certain proportion of that revenue for spending in those areas
and in fact we have written, along with WWF, the environmental
NGO, to the Prime Minister to make that case. I do not know if
my colleagues want to add any thoughts on that.
Mr Demorais: Simply to say that as a
company we would certainly agree and as a trade association we
would certainly agree with what Matthew has said about applying
the auction revenues to R&D. Certainly in the cement sector,
we have commissioned a report, which we are expecting to be published
very soon, by the International Energy Authority on carbon capture
and storage within the cement industry. A lot of work has been
done in the power industry on this. As members may know, the cement
sector has very concentrated levels of C02 in our stack gases
which have the potential to be captured and stored but the scale
for us is way away from where the power industry is. The whole
of the UK cement industry produces about as much C02 as a single
two gigawatt power station. So, when we are talking about scale,
it is entirely different. We believe that that is a way to go.
Sixty per cent of our emissions as an industry are from the actual
limestone process, only 40 per cent is our fuels. There is nothing
we can do about 60 per cent. If you are going to make cement,
you have to heat the limestone up to get the chemical change and
that drives off the C02. We believe that that is a way forward
for us but it is a technology that is out of our reach at the
moment but, if we had the option to recycle auction revenues back
into R&D in these sorts of areas, we would strongly support
that.
Q142 Baroness Sharp of Guildford: What
chance do you think there is of the Treasury accepting this philosophy?
Mr Farrow: Being honest, for the Treasury,
very little chance. The Treasury, as we all know, has a long-held
view although it is worth perhaps mentioning that, under another
trading scheme, a domestic only UK trading scheme for carbon reduction
commitment which is aimed at the commercial and public sectors,
which is a fully-auctioned scheme, the Treasury did accept for
that scheme that the money should be recycled directly to participants.
We feel that a precedent has been set but the Treasury tell us
that they do not feel that that was a precedent. Being honest
about it, we feel that it needs to be a political decision at
the highest levels. Our argument is that politicians tell us and
we in business agree that climate change is an unprecedented threat
and requires an unprecedented change to the economy in society
and therefore, given that these very significant revenues will
be accruing to the Treasury that they would not otherwise have
had without business being willing to accept some auctioning,
it seems an obvious opportunity. I think that some politicians
are open to the idea but the Treasury has always had a view which
I suspect we have all come across.
Q143 Baroness Sharp of Guildford: I note
that what you are actually calling for in your recommendation
is that a significant proportion of the auction revenue be devoted
to low carbon technologies and adaptations. What would you define
as a significant proportion?
Mr Farrow: Probably whatever the Treasury
is willing to part with!
Mr Birt: It is worth remembering that
the Stern Report says that the two fundamental pillars of addressing
climate change are putting a price on carbon which is what the
emissions trading does and then increasing the level of spending
on public research and development and demonstration of new technologies
and those are two equal pillars. So, even if the hypothecation
argument is not accepted directly, the need to increase the UK
and Europe's spending on public R&D which is then matched
by private spending on R&D and demonstrating technologies
is clear. So, I think that the Treasury and the Government should
be weighing those possibilities quite strongly in terms of increasing
the revenue going towards those ends.
Mr Farrow: Just to add to that, the UK
tends to perform quite poorly in terms of league tables of publicly
funded energy R&D. I think that we spend about a third of
the EU average as a proportion of GDP, so we do feel that this
is an area of weakness in the UK which is going to come back to
haunt us as we try and face up to the challenges of renewables
and energy security and climate change.
Q144 Baroness Sharp of Guildford: Except
for the pharmaceutical and aerospace sectors.
Mr Farrow: Indeed.
Q145 Lord Brooke of Alverthorpe: Following
up on that, do you see alleviating fuel poverty which is a consequence
that may come of course with increased costs on fuel prices, as
part of the hypothecation?
Mr Farrow: We have made a case for that
and we would recognise that a case could be made. We feel that
the fuel poverty question, which is obviously becoming a significant
issue as oil prices increase, is really a social policy question
for the Government as opposed to an energy policy one. To be honest,
if the Government said or a future Government said that they would
use a proportion of the revenues to support the R&D that Dwight
was talking about, a portion for adaptation, a portion for fuel
poverty, we would accept that as perhaps a reasonable package,
but it is not an argument that we have made ourselves directly.
Q146 Chairman: Is there a danger that,
if the Government do not get it right in terms of what to do with
the revenues, there is a significant inflationary effect possible
here?
Mr Farrow: Could you enlarge on that.
Chairman: You are putting costs up, are
you not? The Government are getting the revenue—
Lord Cameron of Dillington: You are going
to charge more for electricity.
Q147 Chairman: At the very least, there
is a danger of adding to a wage price final.
Mr Farrow: Yes and the oil price issue
generally of course is also adding to that. Yes, those risks are
there. In a sense, if you put a price on carbon that gives businesses
an incentive and consumers an incentive where they can to move
away from carbon-intensive products and services, the incentive
is there for business to innovate and find less carbon-intensive
ways to produce the goods people want and for people to switch
their purchasing power or their purchasing choices, but obviously
where those products and services are essential, then you can
get an inflationary pressure which is something that the Government
are going to have to manage carefully. These are difficult choices.
Mr Birt: It is also worth thinking about
the energy poverty issue. It is not one that we touch on a lot
but it is almost the flip side of the carbon leakage issue in
that increasing energy costs can impact consumers and it can also
impact companies and there are varying impacts. They are almost
two sides of the same coin. Maybe potentially that is useful in
thinking about it.
Q148 Earl of Dundee: In terms of sectors
and gases, you will note that the broader the scope of the Emissions
Trading Scheme, the better. What makes you think however that
the Commission's current proposals necessarily advocate this at
all?
Mr Farrow: The Commission propose to
do things. They propose to include some additional sectors and
gases and, in broad terms, we support the move to do that. There
is a risk of some distortions at the margin and Dwight has an
example that he might give in a moment to illustrate that. There
is also I think a special case around aluminium which the Commission
propose to include and the UK Government propose should be kept
out given its particular vulnerability to carbon leakage issues.
Alongside that, the Commission are, one could argue, going the
other way in terms of taking the smallest emitters out of the
scope of emissions trading, but we think that is the right thing
to do because the transaction costs are quite significant for
the smallest emitters. Some estimates put them around £300,000
a year per site and because of the way the distribution of emissions
is skewed, it is possible to take out a large number of very small
emitters without taking much emissions out of the scheme and we
can talk about the numbers we have put forward around that. Dwight
will want to give you an example of how expanding scope makes
sensible in principle but one has to be careful at the margin
about the distortion effects.
Mr Demorais: In the cement industry,
we are trying to increase the amount of alternative fuels/waste
fuels that we use in the process, so we are trying to get away
from fossil fuels as much as we can and we are using a lot of
society's wastes, used tyres for instance and solvents, quite
a lot of biomass, meat and bone meal, sewage, sludge pellets,
plastics etc, and we are encouraged to do so. We are encouraged
to try and recover energy from waste. The interesting issue there
is that, in the EUETS, incineration and the gases from incineration
and from landfill are not covered by EUETS. So, while we would
get charged for emitting C02 but having captured the energy from
it, the incinerators do not. So, there is a little quirk there.
Q149 Earl of Dundee: I have taken into
account differences in special cases. Are you satisfied so far
that the Commission have taken these on board and have adjusted
within their proposals in order to achieve balance?
Mr Farrow: With aluminium, we think,
along with the UK Government that it probably has not, that aluminium
should not be included despite the Commission's wishes. Apart
from that, we broadly do think that they have covered the right
sectors and gases. We also support the proposed inclusion of aviation
which, as you may know, the UK Parliament is right now discussing
and plans to bring in at the end of Phase 2. We think that the
principle is right, the more sectors you have in, the lower the
overall costs of the scheme. However, one has to careful that
you are at the margin and you are not causing distortions or you
are not bringing in a large number of very small emitters who
actually are probably better off being targeted by different policy
measures.
Mr Birt: Even if aluminium is kept out
of the scheme, they will still be impacted by electricity prices,
so that is a fairly large concern for that sector.
Q150 Chairman: You mentioned transaction
costs being excluded from the small emitters. Do you have evidence
on transaction costs?
Mr Birt: The UK Emissions Trading Group
of which we are a member are currently doing some research into
this and they have done a sample from companies that are participating
in the EUETS and looking at what their transaction costs are and
having people and setting up systems to monitor their emissions
and make plans for reducing their emissions. The Government have
also estimated this but industry view is that the Government are
likely to have underestimated the cost of complying with the ETS.
That evidence is still being worked on but we would be happy to
send it to you when it is available.
Chairman: We would be grateful.
Q151 Lord Cameron of Dillington:
May I continue with the de minimis threshold question there. It
would seem to me that you want the scheme to work effectively
and therefore, to raise the de minimis threshold, which is what
you are proposing, from 10,000 tonnes to 50,000 tonnes—the
Government will go only go as far as 25,000 tonnes—you are
making the scheme less effective. My second point is, would the
small people therefore have a competitive advantage over the bigger
people if they are not involved with the scheme and what is to
stop the bigger people from splitting themselves up so that they
fall below the minimum threshold particularly if it is as high
as 50,000 tonnes?
Mr Farrow: To give some explanation of
why we have gone for the higher threshold, I think that the numbers
are quite striking because of the skewed distribution. At the
moment, if you were to raise it to 50,000 tonnes, you could remove
about 70 per cent of emitters from the scheme, but actually you
would only be removing five per cent of emissions from the scheme.
We think that does show that the scheme is better targeted at
the big emitters who are more able to work within a quite sophisticated
scheme. What is very important is that the small emitters excluded
from the scheme do not get a sort of get out of jail free card,
as it were, and in fact the Commission proposal makes it quite
clear that they must be subject to comparable restraints. The
Carbon Trust has undertaken some analysis on this—and their
work tends to be pretty even handed—and their view is that,
within the UK, being subject to the uplift of electricity prices
which all firms will face anyway plus the payment of the climate
change levy plus potentially being subject to climate change agreements
or the carbon reduction commitment does mean that firms who are
removed through having a higher threshold would in fact be faced
with comparable carbon restraint measures but at a lower transaction
cost. So, that should discourage larger firms from going through
the complexity and difficulty of trying to break themselves up.
Clearly, if that suddenly appeared to be happening, we would need
to revisit this but although people argue about the precise threshold,
it does seem to be broadly agreed across all the stakeholders
that actually the smallest emitters are probably better being
subject to different policy measures rather than the full complexity
of ETS.
Mr Birt: It is also worth remembering
that part of the emissions trading proposals from the EU is a
cap for Member States on the non-traded sectors and as well the
UK Climate Change Bill sets firm limits on the entire economy.
So, there will be defining measures and the policy measures currently
in place do create a carbon cost for those sectors if they are
excluded from the ETS.
Q152 Chairman: Is that the way to tackle
agriculture then?
Mr Farrow: To be honest, agriculture
is not a sector at which we have closely looked. We do not feel
it is appropriate for ETS though I would have thought that some
of those measures would make more sense. I will be honest, it
is not my area of expertise.
Q153 Lord Brooke of Alverthorpe: Perhaps
I could continue with this as I was to come in with a question
later on non-traded sectors and I think that it is probably appropriate
that we pick it up now. How content or otherwise are you that
the balance has been appropriately struck in terms of sharing
the emissions reduction burden between the different sectors between
the traded and the non-traded?
Mr Farrow: Our initial view when the
appraisal came out was that it seemed to bear too heavily on the
ETS sectors because they face a much sharper reduction than non-ETS
sectors. Having said that, what we then did was go back to some
work that we commissioned from McKinsey for our Climate Change
Report which came out last year which looked at the marginal abatement
cost curve for the UK and worked out where those cost-effective
emissions cuts could come from and Murray did some rough analysis
working out which of those emission cuts would be designated as
ETS and non-ETS sectors and that did actually suggest that probably
the Commission balance was broadly comparable to what we would
expect from the UK and I think that what partly explains that
is a measure like more energy efficient electrical appliances
for households which one sees as a sort of nothing to do with
ETS. It does not actually show up of course as a reduction in
the ETS cap because the power companies have to supply less power.
So, having initially been concerned about the balance, our analysis
suggests that it may actually be broadly appropriate for the UK.
Q154 Lord Cameron of Dillington:
May I ask a question about the new entrant reserve. You seem to
indicate that five per cent is too much and also perhaps that
the definition of a new entrant is not helpful enough, shall we
say.
Mr Birt: On the definition, in Phase
2 which we are currently in there is a new entrant reserve and
it is defined as including new facilities and new installations—they
are opening up greenfield sites—but then also including
expansion of new sites, putting in a new production line and a
new kiln at an existing facility. That is already the definition
currently used. The Phase 3 proposals were restricted to only
new sites, so it really removes the opportunity for a company
to, say, close down a facility and then move their production
to another site and expand their production there as that might
be more efficient. That is the definition issue. The UK Government
on the size of the reserve have done some analysis; they have
looked at it and said that they are also of the view that five
per cent is too large and that actually 1.2 per cent is probably
the size that would reflect the needs better. We want to have
a little bit of leeway just in case the economy is growing faster
and in case the calculations are a little bit off, so we are suggesting
a new entrant reserve size of two per cent.
Lord Brooke of Alverthorpe: I liked your
briefing; I thought it was very good. One marginal complaint as
someone who struggles increasingly to read small and smaller print—
Q155 Chairman: He did read it at half-past
11 last night and did not sleep as a result!
Mr Farrow: It might just send one to
sleep!
Q156 Lord Brooke of Alverthorpe: I thought
that it was very helpful, indeed. In particular, I read about
the external damage which is what I would like to raise some questions
on. You indicate your support for the use of external credits
in Phase 3 but accept that their role should not be unlimited.
It seems that you regard the limits proposed by the Commission
as too restrictive. Could you explain where those limits should
be placed and why.
Mr Farrow: We have not been able to come
up with a precise figure but let me try and explain where our
thinking sits and the band we think might be appropriate. There
are two purposes to allowing external credits to be part of the
scheme as we see it. One is to support the international carbon
market which we think is important and the second is, at the margin,
it may ease some of the competitiveness pressures if the carbon
price is very high within ETS and CDM credits, for example, are
trading at lower prices. The Commission has quite an ambitious
tactic in the package aimed at the Copenhagen discussions where
it says that if an international deal is done at Copenhagen, there
should be a quite significant access given to international credits.
If no deal is done or no acceptable deal is done, there should
be very little access at all, and the thinking basically is to
offer an inducement to developing countries by saying, "If
you are willing to sign up to a decent deal at Copenhagen, we
will unlock flows of credits and that will help your economy and
so forth". We accept that and it is quite an ambitious negotiating
tactic, but I think that it is so important to try to get a good
deal at Copenhagen; we accept that as a tactic as a part of the
package. Where we disagree with the Commission is on the view
that if no deal is able to be done, there should be almost no
access at all to credits. We feel that, even if that were the
case and the negotiation did not produce an acceptable deal, it
would still surely be important in the years after 2009 when no
doubt international politicians were trying to resurrect some
sort of process to keep the international carbon markets going
to some extent and equally I think the competitiveness concerns
that we have talked about today are going to be as sharp as ever
if not more sharp in the absence of an international deal | On
that basis, we feel that surely there should be an option to use
a proportion of international credits even if no deal is done.
To get the differential right, we feel that if you are going to
have a limit of, say, 50 per cent, which we think is about right,
in reduction effort post deal, which is broadly in line with the
Kyoto approach to the use of credits, then the volume of credits
to be allowed without a deal has to be below that to offer an
inducement, but rather than the Commission limit of a couple of
per cent, I think Murray, we think that something around maybe
20/30/35 per cent would be broadly appropriate, but we have not
been able to come up with the precise figure and we still doing
some analysis on that and again it is a judgment.
Mr Demorais: I would like to add to that,
if I may. As a company, Lafarge Cement is active and has been
active in the international CDM field. We believe quite strongly
that it is in every company's best interests to do as much as
they can wherever they are located at every installation. That
is good business. We do also see the importance of developing
technology in developing markets where, if we save a tonne of
carbon in Malaysia, it is just as good as saving a tonne of carbon
here. I had the privilege of being project manager for Lafarge
on a CDM project in Malaysia which is now producing 60,000 tonnes
a year savings. Another part of Lafarge in Morocco introduced
wind turbines which are saving 30,000 tonnes a year. Yes, we need
to do all we can in every installation we are in, but the opportunity
to do work through the CDM benefits not only us but the host country
as well.
Mr Birt: I would like to add to that.
What the Commission have done in the absence of a deal is that
they have slightly changed the rules retroactively. There are
CDM limits allowed throughout Phase 2 but the proposals in the
absence of a deal would extend that pool of credits over the entire
Phase 3. So, they are taking the limit of Phase 2 which would
be over five years and saying that it should now be spread over
12 years instead of over five years. So, it is significantly reducing
the amount of credits that companies are able to use through both
Phases 2 and 3 or it might end up that the limit has been totally
used up in Phase 3, so that is a significant concern. A lot of
the carbon market is based in the UK and that is a real strength
and is actually one of the bright spots in the economy currently
and we want to maintain that going forward. So, it is important
that some more access to CDM credits is allowed but we have not
been able to pin down what that number should be.
Q157 Lord Brooke of Alverthorpe: How
do you think the EU can best prepare for possible linkages between
ETS and other regional emissions trading schemes around the world?
We hear about the states in America preparing themselves for it
if they may go ahead. How do you think they can do preparatory
work for linkages of that kind?
Mr Farrow: This is a complex area and
again, to be honest, it is not a subject that we have done our
own analysis on. I think that the principles are that it is absolutely
right that the Commission should be looking to potential linkages
as a way to develop or to move us towards a global carbon market
which must be the long-term aim. I think that one has to be careful
to make sure that you do not link two very different trading schemes,
so if you have the ETS scheme in Europe which has an absolute
cap for example and you link that with a scheme which had perhaps
a low buy-out price or a carbon-intensity scheme, you could undermine
the rigour of the European scheme and that must be guarded against.
Our feeling is that on the detailed mechanics of the scheme, so
things like how the auctions will be run for example and the verification
systems, it must make sense for the Commission to develop detail
of the proposals, to look at what is going on in parts of the
States, in Australia and in Canada where cap and trade schemes
are being talked about and worked up to try to make sure that
our system in detail is evolving in a way which would allow it
in time to be linked as opposed to going down some different models,
perhaps running the auctions or something, which then in three
or four years' time turn out to be incompatible. Those are our
broad principles but, to be honest, we have not done some detailed
work in this area.
Q158 Lord Cameron of Dillington:
Are your fellow organisations in the States as signed up as you
are to this whole agenda?
Mr Farrow: What is interesting is how
far they have moved in recent years. Going back to, say, 2004,
we were looking to do some joint work with them around emissions
trading just as an issue which business throughout the world was
having to think about and there was, to be honest, a reluctance
to get involved for political reasons which I think we can all
understand. That shifted very markedly and, in the last couple
of years in particular, we have developed much stronger links
on those issues and Richard Lambert has had meetings with his
counterparts. Having said that, I think that while we are all
encouraged that the debate in the US particularly led by business
has become more akin to the debate here, I think we should recognise
that it still lags behind where we are in the UK on some of these
issues.
Mr Birt: I would like to mention that,
as part of the follow-up to the CBI's Climate Change Taskforce
Report, we are engaging quite purposefully with our business counterparts
all over the world and we will be developing views on what international
agreement should look like and also trying to encourage other
business federations to take a constructive view on climate change
and trying to share experiences in how the CBI has come to take
the views that it does on climate change and climate policy. For
instance, the experience of how our taskforce was set up and operated
and trying to share that experience across a number of business
federations globally. So, that is part of our ongoing work.
Q159 Baroness Sharp of Guildford: Do
you have concerns about the monitoring of CDMs?
Mr Farrow: Yes, we do. We recognise that
there are some genuine questions being asked about the quality
control of CDMs in the whole carbon offset market. I think that
there is a risk of babies and bathwater here. What struck me working
on this issue in recent years is that, if you go back perhaps
a couple of years—and I am talking about the carbon offset
market more wider than just a pure CDM market—many companies
were looking to, as Dwight said, make reductions that they could
in their own operations and then it was seen as a good thing to
do to be buying offsets/remissions you could not easily have used
in the short term. Then there was a sudden sort of press backlash
with the NGOs and so on saying that all these credits are not
worth the paper they were written on and all of a sudden companies
are now very, very nervous about getting into those markets at
all and I think that we need a middle course here. The carbon
markets are important and, yes, there probably are some issues
with some credits and they need to be addressed. In terms of the
Commission package, what we are a little edgy about is that the
Commission seem to feel that they are best placed within Europe
to say, "Right, we are going to have our own quality standards
and we will only allow into the EU scheme credits which meet the
quality control of every Member State". Our feeling is that
this is about trying to build a global carbon market, so let us
address quality control concerns at the root of the UNFCCC process
and solve them there rather than Europe or individual Member States
have their own quality control systems. We recognise that it is
an issue and, as I say, there may be a baby and bathwater factor
and we prefer it to be tackled at a UN level if possible.
Mr Birt: I would like to add that the
schemes already are very rigorous. It takes months and months
and it is a very complicated process to get a CDM credit created
through the UN Executive Board and that is a concern. We need
to be encouraging more emission reduction activities but at the
same time getting them to be environmentally rigorous. That is
a tricky balance but it is worth trying to improve globally through
improvements to the UN process itself.
Lord Brooke of Alverthorpe: Just on a
concluding note to a degree—
Chairman: As a number of members have
now left, we have lost the percussion and the brass and we only
have the violins left now!
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