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It is worth noting that the world's two greatest economies, which are inevitably the world's two greatest producers of greenhouse gases, are also the world's two greatest investors in sustainable energy. Perhaps that is inevitably just a matter of scale, but we need to be a little careful about how we castigate places for not being interested in this subject. Those countries are, of course, the United States and China. The USA is blessedly open in its information systems and it is a fact that it has allocated $150 billion from its economic recovery programme to create jobs in the sustainable energy field. The USA actually has a target of producing 10 per cent of its electricity from renewable sources by 2012-that is the President's ambition-and that 25 per cent of its electricity should be produced from sustainable resources by 2025. If the President has his way, which I shall consider in a moment, he would wish to have in

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place an economy-wide emissions trading scheme to reduce greenhouse gas emissions by 80 per cent from the 2005 position by 2050. I have no doubt that Congress will have a great deal to say on this, but the fact of the matter is that a great deal of scientific and political opinion in the United States would support that position. We should not denigrate it. With regard to the United States, we also need to recognise that, rather unlike this country, which is now very unitary, individual states can also act, and do.

Sadly, there is less information about what is happening in China. China would greatly enhance its reputation internationally if it had the sort of open system that the Americans have. We know pretty much what the situation is across Europe. The European Emissions Trading Scheme works very well in some ways but it has been a profit centre for some of our industries because of the allocation of certificates. This morning, I received a very disconcerting report on the potential for fraud within that market. We shall need to think about that.

However, I emphasise that the three largest economic or trading groupings in the world are now all trying to move in a similar direction. If that is the case, my view is that, even if there is no international agreement, the inevitability of the consequences of that major move will drag the rest of the world along, despite anything that countries might feel. We live in a global economy. The businesses and industries that survive will be those that are capable of universal application across the whole planet and of being economically viable across the whole planet. We cannot absolutely predict where the road to 2050 will take us but we are travelling along it, perhaps slightly more slowly than we would have wished post-Copenhagen, but we are none the less travelling along it. We may not know the exact destination but we are certainly making progress.

2.11 pm

Lord Stern of Brentford: My Lords, I thank the noble Lord, Lord Stone, for initiating this debate. I was at Copenhagen for the second week of the conference. I was there as an independent, as a professor at the London School of Economics and as chairman of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics, and I was working very closely with Governments from Europe, Africa, the United States, India and others. I pay tribute to the leadership of the UK authorities-the Prime Minister and the Secretary of State-for their very strong input.

The outcome was disappointing in many respects and chaotic in others but there was significant progress. At Copenhagen we laid the foundation for future work. It is very important to be specific about that, not general and hand-waving, and I should like briefly to talk specifically about what was achieved and where we go from here. I look forward very much to sitting down with the noble Lord, Lord Lea, and looking at questions of discounting and economics. I have sent him some literature and we are going to go through it together. I have dealt in print very robustly with the points that he makes.

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For those who raised questions about the science, let us remember that this is about risk. This is 19th-century science, which is very well founded on basic physics, and it shows convincingly that the risks are very big. Is everything tied up? Of course not, but the argument that the risks are very big is clear. Although questioning is very good and should happen, those who want to do nothing on the basis of questioning the science will have to show that they are very confident that the risks are small. That is a very hard ask, given the evidence.

So what were the positives at Copenhagen? There was agreement on a figure of 2 degrees centigrade. The United States and China got together, with great difficulty but specifically and for the very first time, to discuss and propose action, along with other key players-in this case, Brazil, India and South Africa. On the road to Copenhagen, many targets were proposed by individual countries-indeed, most of them. I could go on. On transparency and monitoring, there was progress. Setting up work to show how new sources of funding can generate at least the $100 billion a year that we should be looking for was progress too, and I worked closely with Prime Minister Meles Zenawi of Ethiopia in trying to take that forward. I could go on but those are specific things of real value in the Copenhagen accord.

What were the negatives? There was no explicitness on overall emissions targets, although they follow very quickly from the issue of the 2 degrees centigrade, and there was no requirement for the individual country commitments to add up to the overall targets that we need. Those are serious drawbacks or negatives, and of course the Copenhagen accord drawn up by those five countries was simply noted by the assembly. Those were the negatives but we should not lose sight of the clear positives that came out. Our analysis of the way forward follows directly from the foundations that were laid.

I want to say one or two words on the substance and one or two on the process. On the substance, we have to get specific on what the 2 degrees centigrade means. It means at least 50 per cent cuts for the world as a whole from 1990 to 2050, going well below 20 billion tonnes of CO2 equivalent by 2050. That is the implication; let us just acknowledge that explicitly and then make sure that the individual country targets add up to be consistent with that. Some of us have done some work on what they do add up to. The targets are not near enough yet but they are not so far away that with strong further commitment, with people going to the upper end of their scale and with some tightening in key countries we could not set ourselves on that path by 2050. However, it will need strong action.

There are many things to do in demonstrating what does and does not work. However, there are many examples of countries and communities making very strong investments and investments in R&D. I join my noble friend Lord Browne in emphasising the importance of private firms in this regard. We should also recognise that some of the countries that have been criticised as a result of Copenhagen-I think particularly of China-have invested in railways and solar and wind energy,

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Those are examples of where we have to go forward. I hope that the high-level panel on finance will be established before too long and that it will get down to doing its work. One could go on, but all this extra work following Copenhagen has to be based on a recognition not only of the great dangers of inaction but also of the huge opportunities from setting forward strongly on the path of a new energy revolution. In my view, it is an energy and industrial revolution that will be more dynamic than that of the railways, electricity or even, more recently, information technology. There is a huge opportunity to avoid the great danger that we face.

Very briefly on the process, we must use small groups. I agree very much with the sentiment expressed by my noble friend Lord Giddens and others. A small group was put together in Copenhagen. It happened a bit late-more or less on the Wednesday night/Thursday morning of the second week-but it exists and it could be taken forward. I hope that the Secretary-General of the UN will do exactly that, together with Calderón, who will chair the next COP. Europe must get together much more strongly. I think that it can, and indeed must, in order to be more effective as we go forward.

Finally and most importantly on the subject of the process, we must, as a rich country, work together much more closely with the developing world. A fundamental mistake in the run-up to Copenhagen was that the rich countries got together, worked out what they thought and then tried to put it to the developing countries. They may not have thought that they were doing that, but that was certainly the perception of the developing countries and there is some evidence for that view. We have to ensure that proposals are put together in a collaborative way that recognises that the two defining problems of our century are overcoming poverty and managing climate change, and we have to deal with them together. Confrontation with people who are seen as miscreants, difficult or recalcitrant just will not work. The propositions and processes have to be collaborative.

2.18 pm

Lord Puttnam: My Lords, it falls to me as the last Back-Bench speaker to thank my noble friend Lord Stone on having stimulated an extremely informed and informative debate.

The Copenhagen Climate Change Conference was probably unfairly billed as the last chance for world leaders to agree an international climate agreement that would prevent global temperatures increasing by 2 degrees centigrade above pre-industrial levels-the figure that the International Panel on Climate Change recommended as being the safe limit. It is worth noting that it is a figure that is already viewed by many of the more obviously vulnerable states as being too high.

It is divisions such as that between developed and developing nations that illustrate the difficulty in driving forward any effective global response, with the result that, in the short term at least, the future of our planet remains very much in the hands of individual Governments, businesses and communities. To borrow a phrase from Shakespearean tragedy, the "corrupted

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currents of the world" have worked in such a way as to ensure that the response of a minority of nations to this unparalleled threat has been little more than an exercise in the worst form of geopolitical cynicism.

So, as ever, it will all come down to people: people in the form of bold political leadership and consistent upward pressure from across the whole of civil society. It is my hope that the democratising power of technology will enable citizens-most particularly young people-to make their voices heard in such a way as to make it impossible for the world's political leaders to ignore them.

At national level, the UK is already legally bound by the Climate Change Act to reduce greenhouse emissions by at least 34 per cent by 2020, and 80 per cent by 2050 when compared to 1990 levels. A series of five-year carbon budgets established by this House will hopefully ensure that these long-term goals are met. This means that, regardless of what replaces the Kyoto Protocol, we as a nation are already committed to the type of tough emission reduction targets that are likely to involve substantial and difficult changes to society as we know it.

Until now, that has been a very hard sell politically. People are understandably reluctant to change aspects of their lifestyle that they have come to enjoy and take for granted. They also, equally understandably, cling to any thread of hope that encourages them to believe that perceptible sacrifice might prove unnecessary. I was reminded of this at the weekend when reading Max Hastings's excellent recounting of Churchill's war years. On page 112 of his book he quotes the MP Harold Nicolson as remarking that:

"As long as Britain appeared to face imminent catastrophe, its people displayed notable fortitude ... it was a striking feature of British wartime behaviour that the moment peril fractionally receded, many ordinary people allowed themselves to nurse fantasies that their ordeal might soon be over and the spectre of war had been banished".

By exploiting this all too human trait, those who for many years cynically promoted the belief that there was no proven connection between smoking and lung cancer were able to spin a web of confusion, leading in many cases to fatal delay. It is my personal belief that their direct successors, those who promote the interests of nations and companies to whom global action to avert climate catastrophe represents a similar commercial threat, will be exposed over time in the same way as have the tobacco kings and their lobbyists who, by spending millions actively peddling ignorance, now stand guilty for tens of thousands of unnecessary deaths.

In the United States, there is even disturbing evidence that some of the cancer deniers and the more recent climate deniers are in fact one and the same. I am sorry that my noble friend Lord Donoughue does not like the word "denier", but I would be happy to share the evidence with him.

It is to be hoped that science and common sense will see off this pernicious fifth column. However, if we are successfully to tackle climate change, we must assiduously promote the opportunities that a low-carbon economy will create and enable people to see the tangible benefits of changing their behaviour, not just for themselves but for successive generations. Only by

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supporting a bottom-up approach to climate change mitigation as well as a top-down one will we in this country unleash the type of powerful entrepreneurial community spirit that is capable of delivering financial and environmental returns to the benefit of our own people and of the planet in general.

The National Endowment for Science, Technology and the Arts, of which I had the privilege of being founding chair, has done exactly that through its Big Green Challenge, a competition to encourage local communities to reduce carbon emissions by offering a £1 million prize. The initiative triggered a response from more than 350 community-led organisations, 10 of which over the past year have received specialist support and start-up funding as finalists. Yesterday three joint winners were announced: the Green Valleys, based in the Brecon Beacons in Wales; the Household Energy Service, based in Ludlow, Shropshire; and the Isle of Eigg in Scotland, along with an admirable runner-up, Low Carbon West Oxford. During the past year alone, these community groups have cumulatively cut CO2 emissions by an impressive 15 per cent-a figure that is set to treble within the next three years, representing a significant step towards achieving the Government's 2020 target.

As I see it, the success of the competition provides all the evidence that you could need for a new, or at least additional, approach by policymakers, one in which small, cost-effective and scalable initiatives are able to demonstrate the vital role communities can play in tackling climate change. In Europe, similar community-based schemes have been reducing emissions for years, most notably in Denmark and Germany where favourable tax and regulatory incentives encourage people to invest in local renewable energy schemes. As a result, hundreds of thousands of Germans have invested in citizens' wind farms, a sector that now employs 90,000 people and generates 8 per cent of that country's electricity.

Copenhagen has shown that to achieve a consensus among the world's nations can be as tortuous as it is time-consuming; time that the world simply does not have. While politicians squabble over targets, serious and sensible communities everywhere are beginning to roll up their sleeves and take responsibility for the crucial business of reducing emissions on their own patch. But they need support, and that support has to be both financial and regulatory. Following the disappointment of Copenhagen, surely this is the very least that we can do in our attempt to secure the future of generations as yet unborn.

2.25 pm

Lord Kerr of Kinlochard: My Lords, I had not expected to be able to speak in this debate, and I apologise to the five speakers whose contributions I did not hear. I declare an interest as a director of energy companies.

What prompts me to intervene is what was said by the noble Lord, Lord Browne of Madingley, who has rather greater experience of the energy sector than I have. He stressed the importance of thinking now about the structure of carbon markets and financing

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mechanisms. I agree that this is a priority task now, for three reasons. First, if we are to have a global market in carbon permits and offsets, there will need to be a global regulator verifying them. Secondly, more controversially, if we are to have monitoring of national commitments to emissions reductions, there will have to be an international monitor verifying that the reductions happen. Thirdly, if there is to be substantial investment in developing countries, as I hope there will be, the donors will insist on some verification mechanism to ensure that the investments paid for actually happen.

The United Nations is not ideally suited either to drawing up blueprints for any of those three tasks or to carrying them out. The IMF and IBRD precedents are much more relevant, with their qualified majority voting and constituency arrangements as well as the experience of the SDR.

I am struck by the fact that the noble Lord, Lord Hannay, whose expertise on the United Nations is well known, is clearly of the same view; he calls for the Government to ask the EU, well before Mexico City, to draw up a proposed blueprint for the global monitoring and verification mechanisms. That is an extremely good suggestion, and I will be interested to hear how the Minister responds to it.

I have one other point. We do not need to waste too much time in gloom about the absence of so-called legally binding commitments, or a treaty, coming out of Copenhagen. What is the meaning of a legally binding commitment if there is no law, no verification and no enforcement authority? It does not mean anything; it is like passing a law that says we will reduce the deficit by so much by a particular time. It is what you do, not what you say, that matters. All our Governments across the EU are not yet doing nearly enough on carbon capture and storage, on clean coal, on hydro and, perhaps most of all, on nuclear, to deliver the reality that would match the rhetoric. It is not terribly important whether we commit ourselves to 20 per cent or 30 per cent rhetorically; what matters is whether we have any underlying intention to deliver the reality.

2.28 pm

Lord Teverson: My Lords, I thank the noble Lord, Lord Stone, for this debate. I apologise that I was not here for the first 30 seconds of his address to us.

I am afraid that I belong to the Lord Whitty school that believes Copenhagen was a failure. The quotes from the President of the United States, from the Prime Minister of India and from South Africa show that many of the participants who brought the accord together are probably of the same view. Having said that, I agree with the noble Lord, Lord Stone, that out of that failure come more opportunities for the change that is needed to make future agreements more robust than they might otherwise have been. We should remember that Kyoto, which we look back to as the first model, has hardly been a great success in delivering climate change action since it was agreed in 1997.

In Copenhagen we saw a major shift in geopolitical power which perhaps points the way to the future. The agreement was brought together primarily by the United States and China, with South Africa, India and Brazil there as well, and the European Union very much on

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the sidelines. The European Union had been unified and set the pace on climate negotiations but it was left outside during that crucial period. I think that that will have consequences. Huge improvement is also needed in the United Kingdom's future performance. Its leadership is undoubted, but Europe will need to look at this carefully.

One of the main things to come out of this debate were the contributions by the noble Lords, Lord Ryder and Lord Browne, on business. Copenhagen undermines business and industry's investment and forward thinking about whether this agenda will last. The decisions that they make in the world's corporate boardrooms will reflect this agenda into the future.

I should like to ask the Government some specific questions although I realise that they will not have exact answers after a conference which was held less than a month ago. In terms of signatories, the accord has two blank pages at the end. It also simply notes the agreement. Do the Government know who will be signing the agreement by the end of this month, which is the deadline?

Verification is one of the most positive moves in the accord. I recently read a history of the Reagan Administration. Although he is not one of my role models, one of his watchwords during the negotiations with the Soviet Union on mid-range missiles was "trust but verify". I think that that very much reflects the current view not only of the United States but of the European Union. China may have agreed the principle of that, but it does not like it. There is no way forward for a robust agreement without that working. I would be interested to hear the Government's views on it.

One of the sectors which has not been mentioned at all is international aviation and shipping. Where will that go from here? It was left out of Kyoto and we need it as part of the future agreement. Will it be included as a separate sector and will it be part of national targets? Do the Government believe that it will be included, and will they press for its inclusion?

One of the other more positive areas was the great progress made on deforestation. How do the Government think practical action on the momentum built up in Copenhagen-in what was in many ways a separate track-will develop in the short term so that the momentum is not lost? As for the developed world's commitment to developing nations, on which there were numbers in the accord, I would be interested to hear the Government's view on whether there will be new money or whether it will come out of the Environmental Transformation Fund announced, I think, in 2009. It is important that there is a new money element.

The biggest question has to be whether there is a real chance that there will be what we call a legally binding agreement where people actually make written commitments to deliver. That is of great importance. But will China and some of the developing world ever agree with that? Pragmatically, we need to take action on climate change as a global community. The United States, China, Japan, the European Union and India create two-thirds of the world's emissions and contain more than half of the world's population. If nothing

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else, let us take action there, through the G20 or wherever. One of the things that worries me most is that the parties process will become a Doha process-the Dohaisation of Copenhagen. That would be its death. It might not matter to the world community whether we have a free trade agreement in the next two or three years but it is vital that we have a climate change agreement.

2.34 pm

Baroness Wilcox: I thank the noble Lord, Lord Stone, for calling this debate, which has allowed the House the opportunity to discuss the outcome of the Copenhagen conference. I declare an interest in that I am governor of Imperial College, one of the world's leading universities in the study of climate change. Climate change is without a doubt the biggest global challenge to mankind. At present we are on track for at least a 2 per cent or 3 per cent rise in global temperatures which, if ignored, would have a disastrous outcome for all. After the many great speeches we have heard today, no one could argue how important it is that we protect the environment and make real efforts to reverse the damage that has already been caused.

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