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One thing that should be coming through our debate much more strongly-this is a point that I made strongly in our debates on the Climate Change Bill, when the role on the Front Bench was taken by the noble Lord, Lord Rooker-is that if there are to be painful trade-offs, which there will be, growth and employment must be at centre stage much more than they have been. I am dubious about the Stern economics, if I am allowed to call them that, because there is a low discount rate to make the arithmetic work in 2050, but we are taking a normal market discount rate for infrastructure projects in the here and now and trying to do it. There are huge contradictions that we may have to live with in how much subsidy we have to pay for carbon capture and storage. If it needs €100 a tonne to make it work, which I think is true-it is only €20 at the moment-the job is being subsidised by 80 per cent. There are many other investments that we are subsidising by 80 per cent. That is funny economics, if that is how we are going to reconcile the arithmetic.

My second point is that we are not in a two-part world-north and south-but in a three-part world. The OECD is no longer the biggest contributor to greenhouse gases. Non-OECD has already overtaken it and by 2030, non-OECD at 26 billion tonnes of greenhouse gases will be double that of the OECD. The noble Lord, Lord Krebs, asked us to imagine everyone in the world producing two tonnes. Well, dream on. Some people might call that a nice communist principle with everybody having the same, but that is not the real world. We have to have price and tax rises to choke off demand for carbon intensive forms of production; we have to subsidise these new technologies and agree a financial-

Baroness Crawley: Can my noble friend bring his remarks to a close? In the gap my noble friend has four minutes and we are over that time now.

Lord Lea of Crondall: I did not think that I was technically in the gap because my name should have been on the list. It was not my fault that it was not there. Anyway, I shall shortly draw my remarks to a close, but I want to make one more point.

The rising world population should be brought into the debate. I can say to the right reverend Prelate that I know that the Vatican is against discussion of family planning, but if the world population keeps doubling, ipso facto that doubles the amount of carbon being produced. Whether it is in a coral atoll or anywhere else in the world, we should bring the issue of population prominently and centrally into the debate.

8.05 pm

Lord Teverson: This has been an authoritative debate, and I thought that one or two speeches were particularly good. The noble Lord, Lord Turnbull, mentioned the consumption measurements that we discussed a little in the reply to the Queen's Speech. I look forward to him supporting my Private Member's Bill, which is

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exactly on that subject, if it ever reaches a Second Reading, which I hope it might. Maybe we could postpone the election beyond March, and it might make it.

The noble Lord quoted Dieter Helm, who we always seem to quote when we have a debate on energy. There should be a rule that if someone gets quoted so many times, he gets the right to become a Member of this House so he can say what he thinks himself, rather than be quoted all the time. I suspect that many of us quoted the noble Lord, Lord Stern, several thousand times before he became a Member of this House, and now that he is here we are all rather more careful of the quotes that we attribute to him. It is so much better to hear him say what he thinks himself rather than hear various interpretations around the House.

I was interested in what the noble Lord, Lord Hunt of Chesterton, had to say. I am very good-we all are-at looking at sustainability indices in the European Union and proving that Britain comes bottom. But with the pig-per-person index from Denmark, perhaps we will come to the top of the league, with Denmark, which is normally the good guy, at the bottom. Maybe that example can be a key performance indicator for the Minister in future.

I thank the Minister and the Government for making sure that this debate took place, because it is important. What better place to debate it, as one-third of the membership of the committee comes from your Lordships' House? I was particularly delighted that two members could contribute today. I was concerned about the noble Lord, Lord Turner, taking up the appointment at the Financial Services Authority so soon after his Committee on Climate Change role. I thought that that would change, but I am pleased that it is not the case. That is excellent.

All sides of the House during the passage of the Bill were concerned that the resources of the Committee on Climate Change and its authority should be increased. The reports so far have shown that. In many ways we wanted the committee to be not just a bean counter or an auditor of climate change; it could have been under the draft Bill, but it became much more a way of enforcing and ensuring that the facts came through. It was in some ways a nagging spouse to government-a nanny to the state in many ways, and certainly a friend of Parliament in bringing the Government to account on this important area. The report achieves that very well.

I looked back at one of the previous reports on the first carbon budgets, which came out almost a year ago, I think. I started to go through it, but as it is about 480 pages I gave up after about page 5. I then turned to the executive summary, which was 17 pages long, gave up on that and went on to the A5 12-page version, which listed the key messages. That listed-this returns us to the point made by the noble Lord, Lord Giddens-the things that we have to do to solve climate change for the UK. They were dead straightforward. One was to make sure that we made buildings efficient. The second was that we decarbonised transport. The third was that we decarbonised power supply. The next was that we decarbonised another area-I forget which. The last was that we decarbonised

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industry-concrete producers, and so on. If we did all that, it would cost us between 1 and 2 per cent of GDP.

That was very easy to deliver-or so it sounded. It did not mention that there would need to be any change in lifestyle. That comes back to the issue: what does the decarbonised economy look like? Can we actually get away with it for free, or for 1 or 2 per cent of GDP-a cost, but without fundamental lifestyle changes? That is one area in which we in the political classes do not like to delve too much, because at that point it becomes even more difficult in elections and trying to take public opinion with us. At the moment, we have to stay at the level of saying that we can achieve it without fundamental lifestyle changes. I am an optimist on that: I think that maybe we can deliver that, but the jury is still out. That may be part of the work that the Committee on Climate Change will have to do in future.

This is the first annual report. The committee does not even have the official carbon production footprint figures for 2008, so it cannot consider them. Its major work is looking more generally at the issues and what the lead indicators might be. We look forward to seeing those next time. It points out strongly the slow progress that has been made to date, which has already been mentioned by several noble Lords. It also mentions that not only has progress been slow, but that most of that progress has been in non-CO2 gases. It is CO2 itself where the big challenge will be from now on. That will be the difficult area, whereas the non-CO2 gases-the nitrous gases, the CFCs, et cetera-are the ones that we have already addressed.

The report states that there are two key areas. One concerns power supply and the other concerns homes and efficiency. The key messages to me from this report, which have been mentioned by many noble Lords, are about the real risk that during this recession we take our eye off the ball. It lays down two challenges to the Government on which I would be interested to hear from the Minister. The first is that the Government will not take the existing targets as given, but will stretch them and make them more difficult-I will be interested to hear whether the Government will listen to that message. The second is that any gains or savings made above budget in the first period should not be able to be banked in the second period. I would be interested to know whether the Government share that view.

This has been mentioned, but the report also says that the carbon price by 2020 will probably be only about €20, rather than the €50 that it should be-although I notice on my weekly update by e-mail that the carbon price has risen to €15 from €13 in the past week. I do not know whether that is a good sign going up from Copenhagen.

The other point is investment, which partly comes down to carbon price but also involves the credit crunch, which the Minister mentioned in his opening remarks. The report states very clearly-this is analysis that I have not seen before in any detail-that unless we change the way that pricing structures work, business risk requires that the investment will go towards conventional, understood, low-risk carbon technologies, not renewables or even, probably, nuclear means. There

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has to be a way in which we give greater certainty, through tax, feed-in tariffs or carbon price, to ensure that those investment decisions are right.

On transport, the thing that perhaps took me aback most in the report's statistics was that it was expecting a quarter of a million electric vehicles by 2015-five years away-when we do not even have an electric car infrastructure that I could use if I purchased one such car now, although I do not think that many are available. By 2020, that is supposed to rise to 1.7 million. I do not understand how that is going to be delivered. It is a major lifestyle change in our motoring habits, and I do not understand how it will work.

On neighbourhoods, the report makes it very clear that what we are doing at the moment on energy-saving is not working. There was a lovely phrase, damning by a certain amount of praise, about the CERT programme being particularly successful in distributing low-energy light bulbs-it pretty well said that that was all that it had achieved. Whether or not that is true, if there is anything on which we need a step change, it is the message of street-by-street, neighbourhood-by-neighbourhood investment in replacing the 12 million non-condensing boilers, and insulating the 10 million roof spaces and 7.5 million cavity-wall dwellings. That is one of the big challenges that the report lays down. I am not saying that the finances or the accounting of that is easy, but that must be one area where a major change takes place.

The other message-and the last one that I want to mention from the report-concerns carbon capture and storage. Again, from these Benches, I strongly recommend that the Government move into energy performance rules for power stations. Although we are heavily committed to the CCS programme, it is extremely slow in moving forward and in companies willing to come forward to take the financial risks. Yet our coal-based economy, which will still be an important feature of energy generation, is an issue that we need to address.

The climate change committee has today also brought out the air traffic report which my noble friend Lord Redesdale mentioned. It is staggering. It is really just a matter of arithmetic and the Government's own targets that if aviation emission levels remain the same in 2050 as they were in 2005, they will comprise 25 per cent of the total. I wonder whether that is the right balance for the economy, but perhaps that debate is for another time.

I am delighted that a Member of this House, the noble Lord, Lord Stern, will be at the centre of the Copenhagen negotiations alongside President Barroso and others. It is a very good thing to hear. However, we should not underestimate what needs to happen at Copenhagen. Some 119 nations are there, whereas Kyoto involved only 47. At Kyoto they were looking for reductions in the developing world of 5 to 7 per cent, whereas we are now looking for reductions of 50 per cent globally in a period which is not much longer and with global emissions peaking in 2020. That is a huge agenda.

Britain has its part to play in this, and with Europe it is part of the integrated European climate change negotiations. That is difficult to deliver. Unlike some of my colleagues, I think that it is right to approach

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this by negotiating on 20 or 30 per cent. I think that negotiations are the right way forward. However, it is a tremendous challenge. The climate change committee should be thanked for this report, which lays out the issues well. I particularly look forward to next year's report when we have a few more data. The challenge is there. Exactly as has been said, Copenhagen is probably the most important international conference since Bretton Woods and Yalta at the end of the Second World War.

8.20 pm

Lord Marland: My Lords, I crave your indulgence as this is my first speech from our Front Bench. I feel slightly like a student giving a dissertation; will I or will I not pass under such scrutiny from the eminent gentlemen in this room? It has been a privilege to listen to the debate and to the contribution of the noble Lord, Lord Stern, which was of course brilliant, and to witness again the noble Lord, Lord Giddens, whose tennis I have already witnessed. In the past three weeks, I have heard two very illuminating speeches on this subject. I also congratulate the noble Lords, Lord Krebs and Lord May, who, as authors of this report, have produced a fine document which we value on these Benches. I also thank my noble friends on this side of the House for their contributions. I look forward to hearing the Minister, whom I have admired for his great skill, with which he has dodged bullets and sometimes defended the indefensible. He will have to do so again now. However, I thank him for allowing us to debate this.

My own modest interest is that, as a fellow of the Royal Society of Arts, I have sponsored a carbon footprint research programme, and I am chairman of the Harnham Water Meadows Trust, which is on the doorstep of the right reverend Prelate the Bishop of Salisbury. However, I shall confine myself to the report.

With the backdrop of Copenhagen, this report is an indictment of the Government's claim to be a global leader. It states unambiguously:

"Emissions reductions in recent years have been very modest".

The Government have for 13 years wasted many opportunities, and the Committee on Climate Change is still trying to persuade them to act on matters of importance on which there should be no disagreement. Yet the Government seem to be doing very little about it.

The noble Lord, Lord Krebs, says that the Government are better on process than on action. Under Labour, we have seen an 11 per cent increase in emissions from transport and a 12 per cent increase in coal generation over the past year alone. Indeed, under Labour our reliance on fossil fuels has actually grown. As the noble Lord, Lord Stern, said, from next year, if Copenhagen is successful, our emissions must be cut by 3 per cent per annum. The Government have come nowhere near that figure so far. We are currently languishing, as the report tells us, at 1.74 per cent, below the 2 per cent target. As the noble Lord, Lord May, said, the Government have fallen behind the run rate.

It is therefore no surprise that the Government cannot keep their own house in order. Government buildings became 18 per cent less efficient between 2006-07 and 2007-08. What steps are the Government

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taking to improve the embarrassing performance of their departments? The Government have also failed to meet their manifesto emissions target, and their renewable energy target and have failed to set a microgeneration target. What radical change of policy are the Government planning to set them on course to attain those targets?

I fully endorse the committee's warnings that the Government must not take any cuts in emissions that result from the recession as a sign of success in their policies. I hope that the Minister will agree with the committee's conclusion that the rosy figures for last year indicate a cyclical trend rather than underlying improvements and that the Government will not try to claim credit for reductions that are entirely down to the recession.

This is an excellent report. My right honourable friend David Cameron has led the way in forming concrete policies to address climate change and cut emissions; many of those policies are endorsed in the report. In answer to the noble Lord, Lord Giddens, our role is leadership, which, as the report states, has not been forthcoming from this Government. That is a pledge from our party. The report highlights just how damaging to the long-term outlook of this country this dependence on carbon-heavy energy resources is. The Government have taken a long time in implementing even pilot studies around carbon capture and storage. The necessary legislation is only just now before Parliament. The report also makes it clear that we cannot rely on the price of carbon remaining high enough to drive CCS development. Our policy of ensuring that every new power station meets a carbon emissions performance standard is critical if we are to avoid short-term fluctuations in pricing mechanisms, setting back our long-term drive to cut emissions.

We also find it difficult to understand why the Liberal Democrats walk out of tune with this report and continue to oppose any nuclear power stations, despite their low-carbon advantages. It has taken a very long time to extract the necessary planning, which we quite understand, but it has now arrived and I hope that the Government will move forward rapidly in this area.

If we have a modest disagreement with the report-and it is modest-it is that it suggests that there may be scope for up-front financing. We think that there is scope for such financing, and we would immediately introduce a "green deal", giving every household up-front funding worth £6,500 for efficiency work, which would be paid back out of future savings. How do the Government intend to meet their carbon credits without up-front pricing support for work such as solid wall or loft insulation? Our green deal is a practical solution to that, and I hope that it will be embraced by the Government.

We also fully support the report's concern for energy-efficient appliances, but we ask the committee to give consideration to the fact that the average boiler lasts only 10 years, whereas the committee is talking about replacing them in the next 12 years. We hear rumours, which we find encouraging, that the Government intend to give a little support to people to upgrade their boilers. If that is true, we would be very grateful to hear from the Minister.

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The report makes very interesting reading on the steps necessary to reduce emissions from cars. For example, it identifies the need for a reliable network of public charging points, as referred to by the noble Lord, Lord Giddens. What are the Government going to do to roll out that network and keep up with their international competition? The difficulties facing the scheme are a timely reminder that everything possible must be done at an international level as well as at a more local one. We watch with interest to see whether Copenhagen makes significant progress, or whether it will just be a talking shop.

This report shows, and many here agree, just how much has yet to be done to ensure that the UK plays its proper part in developing and implementing a low-carbon economy. The Government have, I am afraid, grandstanded and spun a tale and have failed to deliver either consumer incentives or long-term strategic goals for investors. They must now show, as the noble Lord, Lord Krebs, said, some form of leadership. This report calls for a step change. What will that step change be?

8.29 pm

Lord Hunt of Kings Heath: My Lords, it is a great pleasure to respond to this very interesting debate. I should like to welcome the noble Lord, Lord Marland, on his debut at the Dispatch Box, but I do not share his rather bleak assessment of progress being made. In the light of various comments made recently on climate change by members of his party in the other place, the veneer of greenness is slipping a little from his party. It was a nice try for him to ask me to anticipate the PBR, but I shall have to resist that temptation.

Many comments have been directed at the climate change committee. It is very valuable to have this debate in anticipation of the Government's formal response in the new year. But I am sure that this might encourage the committee to think about how it can have further dialogue with parliamentarians in the months ahead. I am also sure that this has been extremely useful. I agree with the noble Lord, Lord Teverson, on lifestyle changes. I guess we all hope that this can be done without difficult changes in lifestyles, but none of us is quite convinced of that. I would welcome the committee giving further advice. All of us will have experience of public bodies proposing changes. In Birmingham, the introduction of city centre car parking charges is an interesting example of the tension between action required and public support. In the end, we will not achieve lifestyle changes without public support. Advice in that area would be gratefully received.

I should like to say to the noble Lord, Lord Turnbull, that it was right that the UEA decided on an independent review. We are all looking forward to the outcome of that. It is right to repeat what I said at Question Time today. We think that the global temperature analysis is robust. The work of UEA is supported by two separate independent analyses in the US. The evidence for climate change also comes from many other facets and observations, but it is right to see the outcome of that review.

The noble Lord, Lord Krebs, wondered whether we would live to see the outcome of our own damage to the planet. He said that if we did not, certainly our

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children and grandchildren would. The noble Lord, Lord Stern, really made the point about how can we take that chance, which was very much a call to arms. The noble Lords, Lord Krebs and Lord May, said that a step change is needed, which was the conclusion of the Committee on Climate Change. The noble Lord, Lord Krebs, posed a question as to whether the market and individual choice alone would deliver the step change. I believe that that would be so up to a point. I agree with the noble Lord, Lord Stern, that we have a responsibility to make the market work. But of course the Government have a strategic leadership role and a duty to intervene. One of the most visible signs of that is recent legislation. The Energy Act, the Climate Change Act and the Planning Act are examples of strong government intervention. The incentives that have been brought into place in relation to the development of renewable energy is another example.

In terms of driving forward the policies, it is interesting that very few noble Lords mentioned carbon budgets. They are likely to be the most powerful driver of policy change going forward, whether in relation to energy performance in government buildings or through targets. I thought that the party of the noble Lord, Lord Marland, was opposed to targets and so I would be interested to hear his comments on that. Carbon budgets are very important in forcing policy changes. I think back to my former department, Defra. The point was made earlier about the agricultural sector's contribution to greenhouse gas emissions. Essentially, carbon budgets will force the pace of Defra having to work with the agricultural sector to do all that can be done to reduce emissions. It will of course be the same for my own and other government departments as well. I believe that carbon budgets will be a powerful determinant of change.

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