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I shall make my contribution as brief as possible. I want to speak about the costs to business of environmental regulations. That is an especially important matter in the context of this debate.
Sir Digby Jones gave evidence to the Environmental Audit Committee. What he said was very revealing. It is clear that he accepts that climate change is taking place. He supports contraction and convergence, even though the Confederation of British Industry is restless in the face of the costs that appear to be imposed on it by the Government. That complaint is reflected in the rather fallacious arguments of the Copenhagen consensus, whose members say that other problems should be dealt with first, as climate change is too expensive to deal with.
The report entitled "Cry Wolf" has been referred to already this afternoon. Prepared by the International Chemical Secretariat on behalf of WWF, it shows how business lobby groups consistently have predicted excessive costs in relation to environmental regulation. For example, the directive from the former EEC on vehicle emission standards introduced the catalytic converter in the early 1990s, and industry experts said that fitting that equipment would cost an extra £600 per car. As it turned out, the extra cost was more in the region of £60.
The report states:
"It led to smaller, cheaper cars being equipped with more sophisticated engines and fuel management technologies which in turn led to improved fuel efficiency in spite of the supposed fuel consumption penalty of the catalyst."
It goes on to detail the new technology's indirect benefits. Some 12 years on from the introduction of catalytic converters, researchers this year calculated that the health benefits alone amounted to some £2 billion.
Another example of the predictions made by business can be found in the introduction to amendments made to the US Clean Air Act 1990. The industry predicted that "unbearable" costs would be attached to those amendments. The maximum figure for those costs was $91 billion, although the real extra costs amounted to $26 billion. I admit that that is still a lot of money, but a White House study found that the changes had produced benefits worth $192 billion.
There are so many other examples of the sort of predictions that business can come up with that I am very concerned at the impact that industrial lobby groups can have in getting regulations watered down. It is regrettable that our national allocation plan—part of the EU's emissions trading scheme—seems to have fallen victim to that process and as a result has become a bit more generous. Once again, industry seems to have been rewarded for crying wolf. It is time for those of us who take climate change seriously to cry foul.
Under the UK's emissions trading scheme, industry received a windfall of around £200 million of taxpayers' money. I recommend that everyone read the slim Public Accounts Committee report on its inquiry into how the UK scheme operated, because it provides an insight into how the Government handled that innovation. There were teething problems and, as expected, money was thrown at it to get it going. Business benefited to the tune of £200 million, but it still cried foul when we tried to introduce more regulations and the climate change levy, which is business-neutral and should be kept and improved, if possible.
Another issue that concerns me is grandfathering. Grandfathers are known as kindly, old gentlemen—there may be one or two in the Chamber—who are blessed with wisdom, authority and far-sightedness. However, in the world of pollution controls and environmental regulation, grandfathering means that industry can claim that its old plant should be exempt from many controls. That is how George W. Bush approached the problem of oil industry pollution when he was governor of Texas: he gutted the Clean Air Act 1990, which had been amended by his father. Now, we want to grandfather future emissions based on industry growth expectations or predictions so that emissions from the growth can be accommodated without breaking the rules. Even if we have an effective emissions, trading scheme, it may allow for growth and emissions and I am sure that many people will find that odd. We should be looking for absolute reductions in emissions and I hope that we will strengthen the European scheme, include aviation, and introduce lower baselines than industry expects. We need to take a much tougher line.
I welcome the report of the international climate change task force which was co-chaired by my right hon. Friend, Mr. Byers. Interestingly, the other co-chair was a Republican Senator, Olympia Snowe, which shows that some members of Mr. Bush's party are concerned enough to engage with the science, even if he is not. The report calls for immediate action, such as a twofold increase in research, development and demonstration of renewable energy technologies. It also calls for removal of barriers to the development of such industries and for the abolition of fossil fuel subsidies. I forget how many sisters we have left among the oil companies, but it is amazing that they are reporting such massive profits and still sharing in the $80 billion of subsidy.
Another recommendation in the report is to build on the global climate change framework of both the United Nations framework convention on climate change and Kyoto. It refers to a new basis of equity and common, but differentiated, responsibilities. As someone who supports contraction and convergence, that is the meaning that I want to read into it, but I understand why its authors would not want to say that explicitly. However, the notion of equity is not ambivalent in the report. There is no equitable distribution of carbon emissions at present. The earth's capacity to absorb carbon is put at 3 billion tonnes, but our current emissions amount to around 6 billion tonnes, or 1 tonne for every member of the human race. In this country, we emit around 24 tonnes per household per annum and the figure is higher in the United States.
Those statistics demonstrate the inequitable distribution of carbon emissions and pollution more generally. We need environmental equity as well as carbon emissions trading and so on. We need a cap and trade programme, and contraction and convergence is the name that we must give to it. We must link that battle with the battle against poverty. I hope to hear about that link more often in the speeches of my right hon. Friend the Chancellor, because we are making the poor poorer with policies that do not tackle carbon emissions. Marginal agricultural land will become unusable, and drought, the failure of the Indian monsoon and so on will make the task of tackling poverty much more difficult. We must make that link.