New Clause 8
Climate Change Bill [Lords]
7:30 pm
Nick Hurd (Whip, Whips; Ruislip - Northwood, Conservative)
I beg to move, That the clause be read a Second time.
I shall be brief, both because I know that the Committee is keen to get on and because events have unfolded in respect of the Government’s response to the new clause since it was tabled. The new clause, which was tabled in my name, has distinguished cross-party support, including from an ex-Labour climate change Minister. Our short debate will take us back to the issue of disclosure.
We spoke at length about the need, or otherwise, for large British companies to disclose their emissions. The new clause would extend that principle to the public sector, which should be a beacon of best practice. The new clause focuses on one particular Government agency: the Export Credits Guarantee Department.
Most of us recognise that the ECGD plays an extremely important economic role in facilitating UK exports. Over the past five years, it has supported more than £12.5 billion of UK exports. No one would underestimate the importance of its role to the economy in underwriting risks that others are not prepared to underwrite. However, a growing number of people in this House and outside, most notably the WWF, are concerned that the process that the agency works to has inadequate transparency and accountability.
The ECGD has been allowed to operate in a way that is semi-detached from the Government, and it is not entirely in tune with the priorities that the Government attach to the environment and the battle against climate change. For some months, we have been campaigning to reform this important agency and to drag it out of the shadows so that it more effectively considers its impact on the environment.
The agency is not particularly big, when measured in terms of the number of people who work for it, but it has tremendous clout, particularly when it is connected to other export credit agencies around the world. The annual value of capital goods that are exported with finance from the club of OECD-based ECAs is estimated to be between £30 billion and £40 billion. The 2003 report on the agency by the Environmental Audit Committee, which first expressed concerns about the degree to which the agency supports and is seen to support the Government’s agenda on the environment, noted that some 10 per cent. of exports from large industrialised economies are facilitated by ECAs.
A non-governmental organisation called—believe it or not—ECA Watch has estimated that, worldwide, ECAs support twice the number of oil, gas and mining projects as all the multilateral development banks combined, and half of all new greenhouse gas emitting industrial projects in developing countries have some form of ECA support. The point that I am trying to make is that we should not think of the issue in terms of one relatively small Government agency. The agency has real power to drive change, especially if it is seen to take a lead on the way in which ECAs around the world work.
The underlying issue is that to date the ECGD business book, if we can call it that, has been focused on carbon-intensive industries. To give that some context, defence and carbon-intensive industries, including aerospace and fossil fuel developments, typically make up more than 75 per cent. of ECGD’s customers.
The problem is that the evidence accumulated by WWF and others suggests that there are inadequate processes within the ECGD regarding the rules for assessing projects for their impact on the environment. When rules exist, their application appears to be discretionary, and more than half the business is focused on defence and aerospace, for which no such rules exist. Surely it is time, given the context of a Government who take great pride in their leadership on climate change and the importance that they attach to the climate change agenda, that the agency is brought up to date and seen to be consistent with the Government’s priorities elsewhere.
We are pressing for reform of the agency. In parallel with this Committee’s deliberations, the Environmental Audit Committee has launched a second inquiry into the agency to explore some of the concerns that have been expressed. We have campaigned for amending the Export and Investment Guarantees Act 1991 so that governance of this agency is reviewed and reformed, and to give it the requirement to have a more explicit regard for climate change in how it does business and in the processes by which it makes decisions.
The ECGD should have its own targets, as other agencies do, and it should be leading the shift towards low-carbon finance, rather than continuing to be so heavily weighted towards financing carbon-intensive industries. Frankly, I am sure that the Minister will share my surprise that a £50 million fund that is ring-fenced within the ECGD to facilitate investment in the export of low-carbon technologies has not been deployed at all. As far as I understand it, only about 2 per cent. of the business book of the ECGD is focused on what we might call new technologies. That seems to be a wasted opportunity in the context of a British Government who are seeking to position the British economy as a leader in the low-carbon future. We need everyone to pull in the same direction.
Finally, and this point is most relevant to the new clause, the agency should be transparent and should disclose the emissions that result from the decisions that it makes. There seems to be little practical argument against that because the agency has confirmed to me that it collects the data from what it calls the high-impact projects that it facilitates, and there appears to be no practical difficulty in collecting the data from the medium-impact projects.
What we are asking for goes with the grain of what seems to be happening in the international market, with OPEC and ECOSIM, which I know are slightly different from the ECGD, apparently disclosing the details of emissions that result from their decisions. There really seems to be no practical argument against disclosure.
I am delighted to hear, although I have yet to see the hard proof, that we are pushing on an open door in this context, because I understand that the Government accept the principle of the new clause, but they prefer not to action its intention through amendments to the Bill. Instead, they would prefer to make the change in a different way. I am thus being asked to take things on trust, pending what I understand to be an imminent announcement from a Minister, perhaps next week. I will listen to the Minister’s response very carefully.