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Another example lies within communities. I touched on this briefly in yesterday's debate, but it is worth saying a little more. On Wednesday this week, the residents of the small Hebridean island of Eigg won part of a £1 million green energy prize after building their own renewable electricity grid and slashing their carbon emissions by a third in a year. An article in the Guardian goes on to explain exactly what they were dealing with several years ago and how they succeeded in tackling that crisis. Another small community energy and transport project in the Brecon Beacons cut CO2

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emissions in 155 homes and four community buildings by 20 per cent in a year, while an energy efficiency project run by volunteers in Shropshire cut CO2 outputs from 460 homes by 10 per cent. These schemes may be tiny, but they are tiny triumphs. Unless, as quickly as possible, we find our way to a measurement system that celebrates and allows individual communities and individuals effectively to compete to see who can do the best in this extraordinarily vexed and difficult area, we will not make the savings or the progress that we need and deserve.

The Bill introduced by the noble Lord, Lord Teverson, makes two things possible. It makes the figures for emissions reduction more honest, thus helping to frustrate the disinformation campaign of the climate denial industry. It also creates a far greater sense of connectivity for communities and individuals in assessing their success and failure in meeting tangible and verifiable reductions. For those reasons and others, I commend the intentions of the Bill.

12.42 pm

Lord Redesdale: My Lords, I, too, welcome the Bill put forward by my noble friend. Obviously, and unfortunately, given the parliamentary timetable, it probably will not go forward to the statute book, but it is a welcome addition to the ongoing debate that the 2008 Act did not finish- I would say that it was the beginning of the beginning.

There is an interesting point of debate in the Bill, because from talking to a large number of people involved in this area, I know that there is an enormous amount of difference of opinion as to how, what and from where you should measure. The Carbon Trust deals with "whole of life". Other people think that the "polluter pays" principle should be that you measure only the carbon that you actually use. That is a real problem. It stems from the fact that when we talk about the fact that we live in a carbon economy, we make a fundamental assumption that we are talking about cost. Of course, cost and carbon are two completely separate things.

We have a trading scheme that is based on cost, but in a carbon economy, all we are saying is that for any action within the carbon economy, a certain amount of CO2 is released into the atmosphere. That is the basis of the Bill. If we take, say, the cost of T-shirts in a supermarket in this country, it can be very low indeed. However, if you take into account the carbon costs of their being made inefficiently in a foreign country and transported half way around the world, the real cost of the cheaper T-shirts might be far higher than the cost indication.

We will have to move forward on measuring carbon. We cannot do it on a cost basis; we will have to come up with a baseline that works out how much carbon is associated with every product that we buy. That is an important issue, and one that I have been banging on about for several years.

I have a scheme, which I hope to bring to fruition, based on carbon units, which means that services and products would have a carbon label that would indicate how much carbon went into that product. Firms could

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easily use that system, because all that they would be doing would be measuring the amount of carbon dioxide that they are responsible for and adding it to whoever provided the good to them. That would get around some of the problems of carbon value from overseas. If a good was produced in China, in exactly the same way as the international labour laws work, you would track back and ask the producing company to give you a carbon value for that product before you bought it. It would be an interesting system, because it would indicate to companies that they would have to buy not just on cost but on carbon value, because there would be a risk to their product having a very high carbon value.

A classic example of that is cement. Cement can have dramatically different carbon values. A lot of people say that one way that we could measure carbon is by a traffic light system, as we do for food. However, in the same way that the traffic light system for fat does not work for cheese because, unfortunately, cheese is coagulated fat, so it will always be red, it does not matter what type of cheese you use, so cement has a very high carbon value, so it would always be red. However, the difference in the carbon content between two brands of cement can be enormous. That is important, especially if you are using a large amount of cement in the construction of a building. That would deal with one of the real issues that we are trying to address in all our discussions: a change of behaviour.

The Bill has set the target of 60 per cent but then-the noble Lord, Lord Puttnam, must be given credit for this, because he gave away the mechanism in the 2008 Act-the climate change committee set the target at 80 per cent. We will never meet that 80 per cent target until people start to realise that that is 80 per cent of the carbon that they as individuals, not just we as a country, use. That is a real problem. We cannot do that until we can start to understand how much carbon is associated with all the products and services that we use. Until we have a way to deal with that, it is very difficult for individuals to work out the amount of carbon that they are using.

A classic case in point is going through the exercise of carbon footprinting. It is very difficult to take a carbon footprint accurately because there are so many unknowns. That is true even for food, on which I did quite a lot of work. You have to try to work out the carbon value of all the inputs, such as fertiliser. Until last year, there was no company that would give you an accurate reading for the amount of carbon involved in fertiliser, and fertiliser accounts for, we think, 15 per cent of the carbon involved in agriculture. Even if you do a carbon footprint, it is based on assumptions. I believe it will be possible, quite soon, to introduce systems throughout the economy in which companies are asked to produce carbon figures and, when they sell a product or service, to give the carbon value for the next person to add, exactly like VAT, until it goes to the consumer. That will allow anyone making a purchasing agreement to work out the carbon value of the product or service they are buying. It will create a massive change in behaviour.

This Bill is useful because it highlights one of the areas about which we have no knowledge. My problem, which the Government will also face, is that we do not,

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as yet, have the evidence base to achieve some of the reductions we are trying to undertake. Until we put that in place, many of the assumptions that we are making could be wildly inaccurate.

12.49 pm

Earl Cathcart: My Lords, I congratulate the noble Lord, Lord Teverson, on introducing this Bill and thank him for explaining it. In this parliamentary Session, we are having a flurry of Bills and debates around targets in all sorts of areas and this Bill simply adds to them. While we on these Benches fully agree that reducing carbon emissions is a critical element of meeting our 2050 target, we do not agree that drawing this Government's focus any further away from the policies that will make that possible is helpful.

The UK has signed up to many targets around climate change, most of which this Labour Government have singularly failed to meet. It is clear that yet another target will not lead to the step change that the Committee on Climate Change identified was needed in Labour's commitment to reduce carbon emissions. Instead, we need meaningful policies. We need proper incentives for consumers to improve the energy efficiency of their homes, such as our plan for a green deal for householders. We need proper information to be made available to consumers about energy-efficient appliances so that they can make the right choices and, as we have been calling for for years, we need to get smart meters rolled out to domestic households as soon as possible.

There is another aspect of the Bill with which we simply cannot agree. The requirement for the Government to take responsibility for carbon emissions produced outside this country would be extremely difficult to measure, let alone influence. Climate change figures are already hotly debated, so let us imagine the disagreements over which of the dozens of measurements to use when costing the total carbon footprint of a television built in Japan with parts made in China.

Such a measure would also be counterproductive in relation to the reduction of global emissions. Yesterday, the noble Lord participated in a long and interesting debate about the successes and failures of Copenhagen. The deepest disappointment came from our failure to persuade some developing countries of the opportunities that a move to a low-carbon economy will offer. Quite understandably, many countries are worried that they, the countries least able to afford such measures, are being expected to restrain their growth at huge cost to compensate for the extravagance of richer, more developed countries. We should be encouraging greater industry links with those countries in order to drive investment forward in their infrastructure and working practices. We need to work with those nations to build mutually beneficial agreements that allow for economic growth while simultaneously reducing carbon emissions.

I have not been very encouraging about the Bill, so I end on a more positive note. The noble Lord, Lord Teverson, is quite right in the fundamental principle behind the Bill, which is that the answer to carbon emissions lies with the consumer. The role of government must be to free companies to respond to the growing demand for low-carbon goods and services. Unfortunately,

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the Bill does not do that and I am afraid that we cannot support it. However, this has been a useful debate.

12.53 pm

Lord Faulkner of Worcester: My Lords, I thank the noble Lord, Lord Teverson, for bringing forward this Bill, which has generated an interesting and stimulating debate in your Lordships' House. I also thank all noble Lords who have taken part. The noble Lord, Lord Teverson, will know that, in accordance with normal practice, the Government do not normally support or oppose Private Members' Bills in this place. We make no exception in this case. I think that he will be able to tell from what I have to say that the Government have some reservations. He will have some indication of how we feel about the Bill, which may not be that far removed from the position of the Official Opposition.

We recognise the importance of the impact on emissions of the whole life cycle of the products that we consume. There is great value in working to understand better and to address consumption emissions, as that enables people and companies to recognise where and how greenhouse gases are emitted in the supply chain and thus where and how best to take action to mitigate them. The increasingly global nature of supply chains means that there is a more and more complex picture of where in the life history of a product the emissions actually arise. Some of these life-cycle stages are more accessible to government-led interventions to reduce emissions. Others are very much closer to the way in which individual businesses work within their supply chains. This issue is clearly highly relevant for businesses, which need to identify the impacts of their whole supply chain in whichever part of the world they operate.

The Government's sustainable consumption and production programme is working to identify and to help to reduce life-cycle carbon and other environmental impacts that are associated with UK consumption, wherever in the world those impacts occur. As well as evidence gathering, the programme looks at tackling embedded emissions through product supply chains-for example, through collaborative road mapping with a small number of industry supply chains. This is complicated work, which means engaging with the principal players in a number of sectors to develop new approaches for reducing environmental impacts at the crucial life-cycle stages. Some of the pilot work has been very encouraging-for example, in building up new forms of collaboration across the supply chain for clothing. This sectoral approach is in its early stages, but it offers a potential model for future collaborations along many other global supply chains.

Another contribution made by our sustainable consumption and production programme is in helping businesses to develop the technical tools to identify where they need to focus effort. A key example of this is the technique of carbon footprinting, through which a business can measure the greenhouse gas emissions of its products across their whole life cycle. This enables it to address the hot spots of its supply chain, wherever in the world they are identified. The UK has

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played a leading part in developing these tools. The Government and the Carbon Trust worked with the British Standards Institution to pioneer a methodology for carbon footprinting-PAS 2050-which has attracted international interest. It is now likely that a global standard will be agreed, which will enable the major global supply chains to target greenhouse gas reductions across their operations.

Similarly, our work on behaviour change is helping to improve consumers' understanding of the whole life-cycle impacts of the products and services that they demand and to encourage more sustainable purchasing practices. Examples include DECC's Low Carbon Communities Challenge, which was announced in the low-carbon transition plan and launched in September 2009, and Defra's greener living fund and action-based research pilots.

In spite of the work that we are already doing to understand better and to address the emissions that are embedded in the products that we consume in the UK, we have a number of fundamental concerns with the approach proposed in the Bill. Indeed, we share many of these concerns with the noble Earl, Lord Cathcart, and I will expand on them further.

First, the approach in the Bill of setting a target for emissions on a consumption basis is not consistent with the methodology for measuring and allocating the responsibility for emissions to individual countries that is enshrined in both the international architecture and the Climate Change Act. Under the UN Framework Convention on Climate Change, the Kyoto Protocol and European emissions reduction targets, countries measure and report their emissions on a production basis. All greenhouse gases emitted on the country's territory are covered, regardless of where the goods and services to which they relate are consumed. UK emissions are published annually on this basis as national statistics and in accordance with international practice. Indeed, a real strength of the Act is that the targets and carbon budgets that it contains operate in a way that is consistent with European and international climate change policy.

Our second concern is that measuring and reporting emissions on a consumption basis would require that we take into account emissions embedded in the goods and services that we import into the UK but exclude emissions resulting from the production of goods and services that the UK exports. This would be an extremely complex thing to do and has scope for major inaccuracies. Estimates have been made in the past of UK emissions on a consumption basis-the noble Lord, Lord Teverson, referred to these-including in a government-sponsored study by the Stockholm Environment Institute, which was published in 2008, but we do not currently report our emissions regularly on a consumption basis. It would be extremely difficult to agree internationally a mechanism for allocating consumption emissions to different countries.

We accept that the Stockholm Environment Institute's estimates give an indication of a trend in carbon dioxide emissions relating to UK consumption, as they are in line with other similar studies, are based on accredited national and international sources and have

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been subject to a range of sensitivity tests. However, they can be viewed only as indicative, as the emission factors used are disaggregated to just four broad world regions and a limited number of product categories.

The Stockholm Environment Institute has separately made estimates of the UK's total carbon footprint, including estimates of other greenhouse gas emissions besides carbon dioxide, such as methane and nitrous oxide, which are the main types of other greenhouse gases. These estimates are generally regarded as being much less reliable and they need to be treated with caution. In addition, the Stockholm Environment Institute's calculations give only a very broad indication of the UK's consumption share of a region's production emissions. Efforts made by individual trading partners to improve the emissions intensity in a particular supply chain of importance to the UK will not show in the estimates, unless they are significant enough to affect the average for the region as a whole. In this sense, we do not consider that the estimates are sufficiently reliable for use in monitoring performance or setting targets, as proposed in the Bill.

Analysis of consumer-based emissions shows the importance of agreeing an effective international treaty that includes the main developing countries. This stands the best chance of achieving the reductions of greenhouse gases needed to limit the global temperature increase to 2 degrees Celsius. As my noble friend Lord Hunt of Kings Heath explained in his Statement to this House last week on the Copenhagen conference, and as he repeated in our excellent debate yesterday, the Government consider that the outcome of Copenhagen was disappointing in a number of respects. We share the view of my noble friend Lord Puttnam in that regard. However, it is also our view that the accord agreed at Copenhagen represents significant progress on which we can build.

In response to the question about the Government's position on consumer emissions in the international context, we consider that it would almost certainly be impossible to agree internationally on a mechanism for allocating consumption emissions to different countries, and there might well be challenges under the international trade regime. Offers of mitigation targets currently announced are all on a production basis.

To give the impression of moving to a consumption basis could be very damaging while we are working with developed and developing countries to encourage them to table high-ambition mitigation offers by the end of January, and while we are continuing to work through 2010 to turn the Copenhagen accord into a legally binding treaty. Establishing an international consumer-based mechanism would be impossible because of the lack of a political agreement, on this approach and the lack of agreed methodologies to make the necessary estimates. No countries or trading blocs currently measure and report along those lines. The additional uncertainty introduced in the negotiations would be very damaging to the prospects for achieving a legally binding agreement, and there might well be challenges under the international trade regime.

In our view, the best way to provide an accurate account of all greenhouse gases, globally, is to reach a broad international agreement on a production basis

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with commitments for developing as well as developed countries to reduce emissions, according to their capabilities. For the first time, the Copenhagen accord will see developing as well as developed countries subject to measurement, reporting and verification of their mitigation actions through submission of their national communications every two years.

A further concern is that our ability to introduce policy measures to address consumer emissions-emissions from the production of goods outside the UK-is limited when compared to our ability to develop policy responses for reducing the emissions that occur within the UK. Perhaps that is why the Bill introduced by the noble Lord, Lord Teverson, does not include a duty to report on progress towards meeting the target, in contrast to the duty in the Climate Change Act for the Government to produce a report setting out the proposals and policies that will be used to meet the carbon budgets. It is also why our sustainable consumption and production programme is focused on changing patterns of consumer behaviour and on collaborative working with industry supply chains, rather than on setting what could be seen as potentially inaccurate and misleading targets.

The noble Lord, Lord Teverson, raised the question of whether it would be possible to ask the Committee on Climate Change to look at the issue of embedded emissions. Our view is that the committee has more than enough work to do in the next year to keep it busy. This includes the next annual progress report, which is due in June, and its advice by the end of the year on the level of the fourth carbon budget, as well as a report on low-carbon research and development and advice to the devolved Administrations. As I have explained, measuring and reporting emissions on a consumption basis would clearly be an extremely complex, time-consuming thing to do, with scope for major inaccuracies.

I hope that this has clearly established why we are concerned about proposals for legally binding consumer emissions targets. None the less, I thank all noble Lords for their speeches and I thank the noble Lord, Lord Teverson, for introducing his Bill. No doubt we shall be hearing more on this subject in the future.

1.05 pm

Lord Teverson: My Lords, I thank the Minister for his response and I am grateful for the general acclaim for my Bill around the Chamber, although perhaps my hearing is not so good these days and I did not quite hear it accurately. This has been an important debate and I thank all the Benches for participating.

To summarise, I take the point made by the noble Earl, Lord Cathcart, absolutely. Any climate change policy has to be built around achieving action. I agree with him that that is where the emphasis needs to be placed. However, what I would say is this. One of the easiest ways for the United Kingdom to meet its carbon reduction targets is to send offshore even more of its manufacturing and high-carbon-based industry. It could then meet the targets but not have an iota of an effect on total carbon emissions and thus on global warming. That is the nub of the issue and lies at the heart of this approach. I was not suggesting for a

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minute that the whole of the Kyoto process should change overnight; I was suggesting that this is something that we could lead on.

I am disappointed that the Government will not follow up on their excellent work through the Defra/Stockholm Environment Institute report and measure carbon consumption figures in the future on a trend basis. That would at the least have been useful, but I hear what has been said. I ask that the Bill be read a second time.

Bill read a second time and committed to a Committee of the Whole House.

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