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Finally, I hope that most of the points raised by the noble Lord, Lord Howell, have been covered in my responses to other noble Lords. I value his support for the Bill and very much hope that we can continue to work together to see ratification fulfilled. I think that I addressed the point about indirect financing.

When I opened the debate, I wanted to communicate that the Bill has a very simple and clear humanitarian objective, which many noble Lords have eloquently identified: to ban the use, production, stockpiling and transfer of cluster munitions. It will pave the way for the UK to ratify the Convention on Cluster Munitions. This will, we hope, allow the UK to play its full part at the first meeting of the states parties expected to take place in Laos in November 2010, and we will continue to play a leading role in the area of arms control. In conclusion, I ask the House to give the Bill a Second Reading.

Bill read a second time and committed to a Grand Committee.

Climate Change: Carbon Budgets

Motion to Take Note

5.22 pm

Moved By Lord Hunt of Kings Heath

The Minister of State, Department of Energy and Climate Change (Lord Hunt of Kings Heath): My Lords, the Government recognise that the challenge presented by climate change is enormous in both scale and urgency, as I know the vast majority of your Lordships are keenly aware.

The scientific consensus is unequivocal: the global climate is warming and this is caused primarily by human activity. The impacts of climate change are already being felt. That is why the House passed the Climate Change Act last year. As noble Lords will be aware, the Act establishes the world's first long-term legally binding national framework to reduce emissions and support the UK's transition to a low-carbon economy. It shows our commitment to playing our part in global efforts to tackle climate change. One of its core provisions puts in place a system of five-year carbon budgets to set the trajectory towards our long-term targets-to reduce greenhouse gas emissions by at least 80 per cent by 2050 below 1990 levels, and to reduce them by at least 34 per cent in the period 2018-22.

The Act also established the independent Committee on Climate Change, whose primary role is to advise government on the level of carbon budgets and monitor progress through annual reports to Parliament. This cycle of reporting plays a fundamental part in holding the Government to account in relation to their budgets and targets and providing a challenge to the action taken by the Government to meet them.



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The Government very warmly welcome the committee's first progress report entitled Meeting Carbon Budgets-The Need for a Step Change. This report makes an important contribution to the debate on how successfully we can make the transition to a low-carbon economy in the UK. The Government are considering the report in detail and we will lay a response before Parliament in January, but I hope this evening to give a broad outline of the Government's position, and I welcome the opportunity to listen to the debate and to respond to the points made.

We agree with the committee that a step change is needed in the pace of emissions reductions. In calling for a step change, the report recognises the importance of the Government's UK Low Carbon Transition Plan, published in July, in setting out how we will meet our budgets, through emissions reduction policies in each sector of the economy. Indeed, the committee's report describes the transition plan as "ambitious" and "very comprehensive".

The committee identified a number of areas, including in the power sector, buildings and industry, and transport, where it considers that further policy detail is needed to meet the ambition of the transition plan. We broadly agree with its assessment, and much of the work that it recommends is in hand. For example, the six draft national policy statements were published for consultation in November. These clearly set out how we will ensure that low-carbon and renewable power can be brought to the level necessary to make the right contribution towards our carbon budgets. Our framework for the development of clean coal announced on the same day establishes the most environmentally ambitious set of coal conditions of any country in the world.

These commitments clearly fulfil the action on coal recommended in the committee's report. It also identified the potential impact of the recession in our performance towards meeting the first carbon budget. I agree with the committee that the recession will lead to lower emissions than would otherwise have been the case. But emissions reductions in the recession are no substitute for the permanent reductions that we need to decarbonise our economy and meet our 2050 targets. So, I can say categorically that there will be no let-up in our policy efforts because of the recession. We have the right framework in place-through the transition plan-and it is important to note that the plan will not be put off-track by the recession.

As well as the impact of the recession on emissions, the report recognises that the credit crunch has limited the finances available for renewable energy. I do not underestimate the impact of the credit crunch on lending to low-carbon energy projects, and the Government have acted to protect investment during the downturn. The Budget 2009 announced more than £1.4 billion in additional targeted support for the low-carbon sector, and last month a new lending scheme was launched by the European Investment Bank and partners that will facilitate investment of up to £1.4 billion in onshore wind projects over the next few years. Of course, we will continue to monitor the support required by the sector to see whether additional instruments may be needed.



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The committee also concludes that the recession will result in a significantly lower carbon price in 2020 than previously projected, and recommends considering measures to strengthen incentives for low-carbon investments. The current carbon price is relatively low as a consequence of the downturn, but there are some risks that should not be ignored in attempting to manage the carbon price. Our view remains that the best approach is to set the right long-term regulatory framework. Under the revised EU Emissions Trading Scheme directive, the EU ETS cap will fall by a fixed percentage every year after 2013. That gives the long-term signal that investors look for, and EU leaders are committed to reviewing and tightening the cap further as part of a new global climate agreement at Copenhagen.

I agree with the committee that the EU Emissions Trading Scheme is not enough on its own to support all the investment in low-carbon electricity generation that is needed. We are taking action now to support or facilitate the low-carbon trinity of renewables, nuclear power and clean coal. I have already described our clean coal framework and the importance of the energy national policy statements in speeding up planning decisions on low-carbon energy developments. We are also working to ensure that access to the electricity grid is not a barrier to new low-carbon generation, particularly for offshore projects. By June of next year, we will introduce enduring new grid access arrangements.

Improving the energy efficiency of homes and communities is a crucial part of our strategy for tackling climate change. It already brings benefits by reducing fuel bills and reducing our reliance on imported energy. We have already delivered large volumes of low-cost measures such as loft and cavity-wall insulation through our carbon emissions reduction target-an obligation on energy suppliers-but we will need to ramp up delivery to meet our carbon budgets. I note that the Committee on Climate Change has acknowledged that, and the significant delivery challenge that we face.

Transport, too, has a major role to play in meeting carbon budgets. That was underlined in the committee's report. Alongside the transition plan, we published Low Carbon Transport: A Greener Future, which sets out our strategy for reducing emissions from transport. We reckon that it will reduce domestic emissions by about 14 per cent by 2020, compared to 2008, in the period 2018-22.

Another important issue in the committee's report was the establishment of a suite of indicators in key sectors of the economy, which the committee will use to monitor progress. Those indicators will be very important in ensuring that we understand what extra effort may be required to keep on track, to meet the budgets, and where in the economy it is needed. We welcome that approach, and will be following a similar approach in our own progress monitoring as we develop our plans for managing carbon budgets within the Government.

As set out in the transition plan, the Government are putting in place a strong internal mechanism to manage carbon budgets across Whitehall, so that all parts of the Government do their bit. A point made strongly to me by energy companies and others is that

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decisions made now on energy and other infrastructure are likely to affect our emissions for the next 30 or 40 years. That is why we are already looking beyond 2020 to our 2050 target, and in spring next year we will publish a 2050 vision setting out the path to a low-carbon economy by the middle of the century, which will complement the transition plan to which I referred. That will include looking at where we need to accelerate development of particular technologies.

My comments so far have focused on what the UK has to do to reduce its own emissions. But of course, this always has to be considered in the context of the global challenge. That is why the conference currently taking place in Copenhagen, which formally started yesterday, is so important.

All the developments since July 2009 show that publication of the UK Low Carbon Transition Plan was not the end, but the beginning of a process of implementation of new policies which deliver greenhouse gas emission reductions. The Government are fully committed to making the comprehensive strategy set out in the transition plan a reality. In doing so, we look forward to working with the Committee on Climate Change. In introducing this debate, I pay tribute to the committee and its members for the outstanding piece of work that they have undertaken. As I said, we will respond formally to the report in the new year. In the mean time, I beg to move.

5.33 pm

The Earl of Selborne: My Lords, the whole House will be grateful to the Minister for the way in which he has introduced this very timely debate and given us some foresight on the Government's response to the progress report from the climate change committee. I also paid tribute to the members of the committee. I am very pleased that during the course of the debate we will be hearing from two of its members, and from the noble Lord, Lord Stern, who in many ways set the agenda.

I should perhaps declare one interest, which is that I chair the partners' board of the Living with Environmental Change Programme. This brings together the public funders of research into how we might respond to environmental change-not just climate change, but environmental change in its widest sense-for example, the impacts of population pressure on natural resources and ecosystems.

As we would expect at this early stage, the second year of the first budget report, the progress report is inevitably more about setting out a framework for emission reductions and policy options, rather than reporting on progress to date. As the Minister reminded us, and as the foreword to the progress report states, the economic recession could produce an over-rosy impression of progress against budgets. We must be careful to ensure that we have long-term targets in mind.

I must declare immediately that I am a fully paid-up supporter of the need to limit atmospheric concentrations of CO2 and equivalents to about 450 parts per million, the level believed to be consistent with a global average temperature increase of about two per cent. To those

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who say that the science is uncertain, I say that I agree, but given the risks, we have to be quite sure that the science is wrong before following the sceptics. To those who say that the costs of reducing emissions exceed the benefits, I would say that at least we can agree that the win-wins, the low-hanging fruit that the noble Lord, Lord Stern, identified in his review, should be harvested as soon as possible.

It is some of those win-wins that I want to refer to today. In later budget periods, we will be relying on innovation, highly speculative at this stage, such as carbon capture and storage, the development of long-life batteries and second-generation biofuels, to name just three. All will require massive international funding to develop those technologies. However, as the progress report reminds us, there are some less speculative, far less research-dependent measures that we can adopt immediately-and that we should adopt as soon as possible. I refer in particular to Chapter 5, which refers to the major opportunities for reducing emissions in buildings and industry through energy efficiency improvement. To you and me, that means lagging the attic and cavity-wall insulation. If we could just start with those two, we would make a pretty dramatic improvement on the present emissions from buildings.

The present framework policy for delivering residential emissions reduction is simply not appropriate. We rely on the energy suppliers to promote to their customers energy-saving measures-there is a contradiction. As the report states, it will take a long time-2022 is mentioned-before less than half the emissions reduction potential will be achieved. That is through using the procedure known as CERT.

The Government's new policy framework sets out in the heat and energy-saving strategy three pillars for a new approach: a whole house approach; a neighbourhood approach; and new funding mechanisms. A retrofit programme aimed at improving all properties in England to EPC bands B and C, which, currently, only 6 per cent of properties achieve, would cost an average of about £7,000 a house, according to the progress report. Fuel bills per household would be reduced by an average of 46 per cent. To my mind, that is a win-win. You do not muck around. If you can achieve those sort of savings in emissions and in the cost of running a household, you get on with it.

The problem is that that is the average house. The report notes that a housing association based in Petersfield, the Drum Housing Association, was asked to do a pilot study on the less efficient houses, and found that that could work out at up to £38,000 a house. Of course, that is with all the bells and whistles. That is adding solar heating, PV and the like. I would simply say: stick to what will give you the quickest return and get on with it. Do the whole house audits, which will not cost a lot. Find the houses in which insulation will show the greatest return, and get on with it. At the moment, 40 per cent of the input is restricted to priority households: those on benefit or aged over 70. There is an economic case for widening that rapidly.

Heat is an important part of the equation. After all, heat accounts for nearly 50 per cent of final energy consumed and nearly 50 per cent of CO2 emissions. We must do something about the present, lamentable

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level of renewable heat-1 per cent. The progress report suggests that that figure might be improved, but not dramatically.

Again, I would look very quickly at where there is the most opportunity to provide renewable heat at competitive prices. So I think that you would have to look at houses that are not on the gas main, because they clearly will be far less inclined to change. We are looking, therefore, at rural properties where biomass heating plants could well be attractive. In other words, you have to develop a wood-chip, wood-pellet supply chain. This is not rocket science-it is already being done. A number of houses and neighbourhood developments have made it work, and work efficiently. Of course, if oil prices go up, it will be all the more easy to demonstrate the economic viability. But the real advantage-I hope the noble Lord, Lord Clark of Windermere, who chairs the Forestry Commission, might be able to add to this-is that, at the moment, about 70 per cent of our privately owned woodlands are either under-managed or derelict. That is because, since the war, there has never been a viable market for the by-products-the thinnings, the lop-and-top-coming out of these woodlands. Perhaps I should declare an interest here as a woodland owner myself in the south-east. This is true throughout the country. There are an awful lot of by-products coming out even from the commercial woodlands, such as the Forestry Commission's woodlands, for which there is currently not an adequate market.

The improvement gained by going back to the sort of coppicing practices which we had between the wars, when there was a market for charcoal and the secondary crops, is that we will improve biodiversity and rural employment and much else besides. There are many win-wins here. It is very easy to set up: you really only need a hard hat and a chainsaw with instructions on how to use it. You will quickly find that you have on your hands a biomass resource that can serve competitively an awful lot of households, particularly in rural areas. But of course to get this going you need a champion and someone who will ensure that there is a guaranteed market for the chips, and this is happening very slowly at the moment. I would urge government procurement to play an important role in this. Whenever anyone is building a hospital, laboratory or any other development, they should think of the opportunities, particularly in rural areas, for putting in a biomass boiler and thereby securing all these win-wins.

Page 177 of the progress report refers to the uncertainty of the availability of sustainable biomass and, for that matter, biogas. Again, this is simply where we will need policies. Biogas can be provided from anaerobic digesters. There is a lot of biodegradable waste coming out of farms and the infrastructure can and should be put in place to feed into the gas main or to put the gas into generating electricity. There are waste materials that are underutilised and there for the asking.

While talking of waste, I would simply make the point that there has always been a great concern in this country to abide by what is called the waste hierarchy: you must always ensure that waste is used for the most conservationally acceptable purpose. That makes it very difficult to use waste for energy, but that is often

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the sensible thing to do. It saves using fossil fuels, it saves landfill, and it saves the littering that is a feature of so much of our countryside.

When we look at the policies that will deliver some of these win-wins and some of these easy benefits, we will probably have to upset some of these sacred cows. Another sacred cow, talking about land use, is that we have always seemed to have in this country the attitude that extensive farming will always be the most desirable in terms of conservation. But that is almost certainly not going to be the case when it comes to carbon footprint. I shall quote the English Beef and Sheep Production Roadmap produced by the levy board of the English beef and sheep sector. So the farmers themselves are saying:

"The fundamental differences between more extensive and intensive production systems are particularly clear in this context. The poorer quality nutrition and longer production times of hill sheep mean very much higher GHG emissions per kilogram of lamb produced".

So in other words, when we get these policies, we will have to think very carefully. That is not to say that we should not be supporting hill farming, the biodiversity benefits or the ecosystem services that will arise from sustaining these extensive systems, but be under no illusion: if it is carbon footprint that you want, that is not necessarily going to be the answer. When the Government roll out the policies to meet the targets that have been set so appropriately by the climate change committee, there are going to be many hard calls, and I have referred to just one or two of them.

5.45 pm

Lord Redesdale:My Lords, I, too, congratulate the committee on this extremely readable report. It is a great asset to be able to debate a report that I sat down and read from start to finish only this morning, which is no mean feat considering how difficult the issue can be. I must also declare an interest as one of those involved in passing the Climate Change Bill. It is gratifying indeed to see this report come forward.

I start by saying that I am a sceptic, not of climate change-I think that that would be idiotic, a word which I use advisedly-but of the EU carbon trading scheme. I have set that out before. I therefore have a problem with the report. If you believe that the EU ETS will fundamentally not work because of the financials on which it is based, you will have a problem with how we are looking at carbon in the next few years. One of the interesting things raised by the e-mails, and the reason why the press jumped on them, is the fact that everyone is looking for a get-out by establishing that climate change is not happening and proving that the scientists are lying to us. The size of what we have to undertake is quite staggering. The report clearly sets out how little impact the measures we have taken over the past few years have had on our energy consumption. Calling it a step change is a slight understatement because we have to leap over a huge chasm.

I, too, take massive issue with one part of the report-the part about aviation. It is interesting that we are talking about the aviation figures for 2050. It is interesting not because of the science on how much energy will be used-although I take on board the fact that a massive expansion in aviation will require a

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reduction in somebody else's budget, an issue which I will move on to later-but because we are hitting peak oil, a fact which most people seem to ignore. Although the price of oil might fall during a recession, the price will rise massively as oil becomes scarcer and more industries want to use it. I believe that cheap air fares will not survive the next decade and that budget airlines will be seen as a blip. I do not see air travel in the same way as others. So, according to that view, there is no need for a third runway at Heathrow.

The report raises a real issue which I hope the climate change committee will take on board. It seems to be skewed towards electricity. When we talk about the energy needs of this country, many people talk as though electricity is the sole energy source. Gas, in the form of heating for homes, also is a major provider of energy. Of course, 50 per cent of our emissions come from homes and buildings. We should therefore not underestimate the problems with gas.


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