Motion to Approve

Climate Change Act 2008 (2020 Target, Credit Limit and Definitions) Order 2009 – in the House of Lords at 3:38 pm on 13 May 2009.

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Moved By Lord Hunt of Kings Heath

That the draft order laid before the House on 22 April be approved.

Relevant Documents: 12th Report from the Joint Committee on Statutory Instruments, 15th Report from the Merits Committee.

Photo of Lord Hunt of Kings Heath Lord Hunt of Kings Heath Minister of State (Sustainable Development, Climate Change Adaptation and Air Quality), Department for Environment, Food and Rural Affairs, Minister of State (Sustainable Development, Climate Change Adaptation and Air Quality), Department for Energy and Climate Change, Minister of State (Department of Energy and Climate Change), Minister of State (Department for Environment, Food and Rural Affairs) (Sustainable Development, Climate Change Adaptation and Air Quality) (also in the Department for Energy and Climate Change), Deputy Leader of the House of Lords 3:39, 13 May 2009

My Lords, I shall speak to all three statutory instruments on the Order Paper in my name. Noble Lords will remember the many stimulating debates we had during the passage of the Climate Change Act 2008, which was much improved by the contributions of Members of this House. All three instruments have been laid in accordance with that Act and implement elements of the system of carbon budgets established by it. I thank the Joint Committee on Statutory Instruments and the Merits Committee for carefully considering them. As noble Lords will be aware, neither committee found anything to comment on, but the Merits Committee reported the statutory instruments because it felt that they would be of interest to the House, as we are seeing today.

The challenge presented by climate change is enormous in both scale and urgency. The scientific consensus is unequivocal; namely, the global climate is warming and it is caused primarily by human activity. Without concerted world-wide action to reduce emissions, we face a best estimate increase in average temperatures of 4 degrees centigrade by the end of this century, with severe economic, social and environmental consequences. As the noble Lord, Lord Stern, set out very clearly in his review of the economics of climate change, the benefits of strong, early action outweigh the costs. The benefits include enormous economic opportunities for those companies and economies that adapt and innovate to take advantage of a low carbon future.

That is why this House passed the Climate Change Act last year. It provides a clear, credible framework for the UK's transition to a low-carbon economy and shows our commitment to playing our part in the global effort to tackle climate change. It is the core provisions in the first part of the Act that are most relevant to today's debate; first, the requirement to reduce greenhouse emissions by at least 80 per cent by 2050 and carbon dioxide emissions by 26 per cent by 2020 and, secondly, the system of five-year carbon budgets, which are set up to 15 years in advance. Carbon budgets are one of the most radical and distinctive features of the Act. They provide a strong framework for delivering and monitoring the emissions reductions required to achieve the 2020 and 2050 targets.

This framework includes a legal requirement on the Government to put in place policies that ensure we live within the carbon budgets. This means that the effects of any new policies that could increase emissions are carefully considered and corresponding reductions found elsewhere if this is necessary to meet the budget. There are of course processes already in place to help ensure that this is done systematically, in particular through the requirement for an assessment of the carbon impact of all new policies within the overall impact assessment. To ensure that the overall impact is to keep us within the budgets, we are developing strong internal mechanisms within government to ensure that every department has a clear responsibility to play its part. We expect to set out more about how this will work alongside the publication this summer of our climate and energy strategy, which will also clearly set out the details of our policies and proposed policies to meet the first three carbon budgets as required by the Act.

I will speak to the first two draft orders before the House today; namely, the Carbon Budgets Order 2009 and the Climate Change Act 2008 (2020 Target, Credit Limit and Definitions) Order 2009, which are closely linked. The 2020 target should be covered first as it dictates the minimum level of the third carbon budget. As noble Lords may recall, the 2050 target was amended from 60 per cent to 80 per cent during the final stages of the passage of the Climate Change Bill. That followed advice from the shadow Committee on Climate Change, which is the independent, expert advisory body established by the Climate Change Act and very ably chaired by the noble Lord, Lord Turner. At the same time, the default greenhouse gas coverage in the Bill was changed to include all six Kyoto greenhouse gases rather than just carbon dioxide.

However, the level of the 2020 target was not amended. It remained at a 26 per cent reduction in carbon dioxide emissions on 1990 levels. The Government made it clear at the time that, once we received the advice of the Committee on Climate Change, we would consider amending the gas coverage and the level of the 2020 target. This advice was included in the committee's first report, which was published on 1 December last year. The committee's view was that the 2020 target and our first three carbon budgets should reflect the outcome of negotiations for a global deal to reduce emissions, which is the focus of the conference in Copenhagen this December. It felt that the UK should follow the European approach of setting targets contingent upon a global deal.

On that basis, the committee recommended that an appropriate level for the target reduction in greenhouse gas emissions, before a global deal is reached, would be 34 per cent. That level is consistent with the UK's share of overall EU targets under the climate and energy package agreed last December, which set out the EU policy framework for the period 2013 to 2020. The Government accept the committee's recommendations on this point. The order therefore uses powers under Section 6 of the Climate Change Act to amend the 2020 target to 34 per cent and extend its coverage to all greenhouse gases.

I turn now to the Carbon Budgets Order 2009. This sets the first three carbon budgets; that is, the total permissible level of the net UK carbon account for the periods 2008 to 2012, 2013 to 2017 and 2018 to 2022. The net UK carbon account means the total amount of greenhouse gases emitted in the UK, adjusted for any credits or debits. I will say a little more about crediting and debiting later. The levels in the draft order are units of million tonnes of carbon dioxide equivalent, the standard for measuring greenhouse gas quantities. The reductions on 1990 emissions amount to just over 22 per cent in the first period, just over 28 per cent in the second period and just over 34 per cent in the third. The third budget complies with both the current 2020 target of a 26 per cent reduction in carbon dioxide and the amendment to a 34 per cent greenhouse gas reduction being considered today. Those levels follow the advice of the Committee on Climate Change.

In line with its approach on the 2020 target, that committee proposed two sets of carbon budgets: interim budgets to apply now, before a global deal is reached, and more challenging intended budgets to apply once a global deal has been agreed. The levels in the draft carbon budgets order are broadly at the committee's interim level, with a small adjustment to reflect the final outcome of the EU climate and energy package. That package, which came after the Committee on Climate Change reported, results in budgets that are slightly more challenging than those recommended by the committee.

Some noble Lords have called on Government to set the budgets and the 2020 target at the intended level now. We accept absolutely the need for tighter carbon budgets following a successful global deal, but we agree with the committee that we should await the deal before setting them. The committee proposed a 2020 target of 42 per cent under the intended scenario, but the precise figure will depend on the details of a global agreement; after a global deal, and once proposals for sharing out the EU target are agreed, the Government will ask the committee to review its recommendation. We will then amend the budgets to take into account its advice.

It is important that I draw noble Lords' attention to something that we announced when we laid this order before the House on 22 April. We said that we would aim to meet the budgets we propose through domestic emissions reductions alone, without use of international offset credits, outside of the EU Emissions Trading Scheme. That commitment shows how serious the Government are about decarbonising the UK economy, but we also think that it puts the UK in a good position to make the transition to tighter budgets after a global deal. That is because, given that we would expect international credit purchase to form part of the additional effort needed to meet tighter carbon budgets, we are likely to be well placed to deliver any extra domestic reductions that are needed. The committee recommended that approach and also advised that it was consistent with the path to meeting the long-term 2050 target of an 80 per cent reduction on 1990 levels.

I come to the second element of the Climate Change Act order—the credit limit. This refers to the use of carbon units to represent emission reductions, which have often taken place abroad, as credits against carbon budgets, thereby offsetting UK emissions. In line with the commitment to domestic emissions reductions I have just mentioned, the draft Climate Change Act order sets the limit for the first budget period at zero. There are two exceptions to the limit, where credits may be used, although in both cases they would not be bought by the Government, but by participants in emissions trading systems. The Government have consistently supported the principle of emissions trading and it remains our ultimate objective to achieve a global carbon market.

First, as I mentioned earlier, our commitment does not apply to the EU Emissions Trading System. Companies participating in the EU ETS may either purchase carbon units from within the scheme or from the international system, such as credits from projects under the Clean Development Mechanism, if they do not have enough carbon units to cover their emissions. If they have a surplus of carbon units, they may sell them to other EU ETS participants, whether in the UK or elsewhere in the EU. Overall, if UK participants are net purchasers of credits over a carbon budget period, by which I mean their collective emissions exceed the level of the UK's overall cap under the scheme, we propose to count this as a credit against the budget, whereas a net sale would be counted as a debit.

However, there are already limits on the use of international credits by participants in the EU ETS which guarantee that at least 50 per cent of the emissions reductions between 2008 and 2020 will take place in Europe. In its report, the committee advised that these limits were appropriate and that further restrictions for carbon budget purposes were unnecessary. For this reason, we intend that any credits resulting from the EU ETS should not be counted against the zero limit being proposed.

The second exemption relates to EU allowances acquired through a trading scheme under Part 3 of the Climate Change Act. In practice, this would apply to the proposed carbon reduction commitment trading scheme which will include a "safety valve" mechanism that allows participants to use EU allowances to offset emissions in excess of the scheme's cap. Because the mechanism will lead to a reduction in the number of EU allowances available to EU ETS participants, the Government consider it appropriate also to exclude these units from the zero limit. I should make it clear that safety valve allowances will be an option of last resort. We expect that the price of allowances purchased through the safety valve will be higher than the prevailing carbon reduction commitment allowance price, which will deter participants from using them. Furthermore, the exclusion does not mean that any safety valve units must be counted as credits, and the Government will aim to meet the budgets without using them, reserving their use as a fallback.

I turn now to the third and final element of the Climate Change Act order, the definitions of "international aviation" and "international shipping". Noble Lords will recall that emissions from international aviation and international shipping are not covered by the targets and budgets in the Climate Change Act at present. This is on the basis—the point was much debated during the passage of the Bill—that there is currently no globally agreed methodology for allocating emissions from international travel to individual countries. The Act gives the Government the power to define "international aviation" and "international shipping" for carbon budget purposes, which is what we are considering today. The reason we feel it is necessary to define these terms is so that they are used in a way that is consistent with how international emissions are reported in practice.

The definitions themselves therefore reflect international reporting practice and follow the approach we use in reporting to the United Nations Framework Convention on Climate Change. They put beyond doubt possible ambiguities such as how to treat flights which have interim stops. It is important to note that their purpose is only to set out which emissions are not covered by the Act. The definitions have no bearing on how international aviation and shipping emissions might be allocated to the UK or any other country.

Finally, I turn to the last of the three instruments for consideration today, the draft Carbon Accounting Regulations 2009. I have already mentioned the concept of the net UK carbon account and the possibility of crediting and debiting carbon units against it. These regulations are required by the Climate Change Act to establish a system to define what we mean by carbon units, when and how they can be credited and debited, and how we will keep track of them. The regulations make use of the existing UK registry for holding and tracking carbon units, which is used under the Kyoto Protocol and the EU Emissions Trading System. This avoids unnecessary costs and complications in setting up a separate registry.

The first thing the regulations do is define what will be counted as carbon units. Only carbon units that are internationally recognised, under United Nations and European Union Rules, will be counted. These have the benefit of being subject to significant international scrutiny and allow the system to be compatible with the existing systems under the Kyoto Protocol and the EU ETS.

Secondly, the regulations establish a new credit account in the UK registry, into which carbon units to be credited voluntarily must be placed. As I said, we are aiming not to use any such credits to meet our carbon budgets, but we felt that it was best for continuity to put in place the mechanism for crediting them at the start, which we are likely to need when we move to tighter budgets after a global deal.

Thirdly, the regulations provide a mechanism to account each year for credits and debits from the operation of the EU ETS, as I described above. This will have the result that the contribution of the EU ETS towards the carbon budget will correspond to the level of the UK's cap under the system. Fourthly, the regulations define how units will be debited from the net carbon account if the Government dispose of any of their existing holding of carbon units.

Fifthly, the regulations implement a very important provision of the Climate Change Act. Because the first carbon budget is significantly more stringent than our Kyoto target—a 22 per cent reduction rather than 12.5 per cent—we could meet our Kyoto target and still have a large number of carbon units left in the national registry. If the UK were to sell or give these to other countries, allowing them to offset their own emissions, the environmental benefits of the tighter budget would be lost. To avoid this, and to comply with the Act, the regulations set out how any such surplus carbon units will be cancelled to put them beyond use.

Finally, the regulations establish a register of transactions, to record details of the crediting, debiting and cancellation of carbon units. This was included because a number of responses to the public consultation called for transparency on carbon accounting. Together with the guidance that I have already mentioned, and the annual and end-of-budget statements required by the Act, this will ensure full transparency on how the net UK carbon account is calculated.

I apologise for speaking at length but these are the first statutory instruments to be produced in relation to carbon budgets. I beg to move the draft order.

Photo of Lord Lawson of Blaby Lord Lawson of Blaby Conservative 4:00, 13 May 2009

My Lords, I am grateful to the Government for ensuring that these statutory instruments, of which the first is particularly important, can be debated at a convenient hour. I shall not comment on the assertions made by the Minister before he got on to the instruments except to observe that they are wholly unfounded.

I suspect that many noble Lords have not yet read the Government's impact assessment for the Act that we are discussing, which was slipped out without notifying Parliament, and then not until the Bill had already received Royal Assent. It is a grubby business that rather defeats the purpose of impact assessments, which are intended to enable Parliament to judge before passing legislation whether it is likely to be cost-effective. In this case, the impact assessment states that the costs to the United Kingdom of the policy commitments in this Act are likely to be of the order of £400 billion—a massive sum—which, it notes,

"does not include the full range of costs".

In passing, it is worth noting that most energy economists, such as Professor Helm of Oxford, regard the methodology used to arrive at even this figure, large as it is, to be seriously flawed and absurdly overoptimistic. Be that as it may, those are the costs that the Government assess.

So what are the benefits? These are anyone's guess, but two things are clear. First, any measurable benefit that may accrue as a result of reduced warming would not help the United Kingdom, at least for the next 100 years, since scientists are agreed that northern Europe would actually benefit from a warmer climate over that period. Secondly, and rather more importantly, there can be no discernible benefit to anyone unless the rest of the world follows the United Kingdom's quixotic lead, which, to say the least, is highly unlikely. As the Government's impact assessment puts it, with studied understatement,

"The economic case for the UK continuing to act alone where global action cannot be achieved would be weak".

How conditional is the commitment contained in the 2020 order that we are considering today and, indeed, in the Act of which it is a part? The Minister said something about these targets being contingent on a global deal, but there is nothing at all in the Act or the order to say that anything in them is contingent on a global deal. These are just words from the Minister; they do not affect the legally binding nature of the Act, which is unconditional. What precisely does he mean by,

"contingent upon a global deal"?

If there is no global deal, will the Act be repealed? What kind of global deal? Is it any old kind of global deal or just one that says that there will be technology transfer and nothing else? What nature of global deal is required in order for this to be acceptable to the Government?

Given that the European Union has made its 2020 target conditional on the outcome of the global Copenhagen conference this December—that was the explicit conclusion of the December European summit on the subject—and will review it next year in the light of that, and given that the Obama Administration in the United States have made it clear that their own post-Kyoto commitment will depend on an adequate contribution from other major emitters, notably China, is the United Kingdom alone in making a massively expensive commitment wholly unconditional? Again I ask: is this genuinely legally contingent on a global deal and, if so, on what kind of global deal is it contingent? This is important because these targets are legally binding—that is, they are justiciable and the Government are subject to judicial review on this whole issue.

While we are on the subject of international conditionality, the Minister will be aware that the DfID-commissioned report An Institutional Architecture for Climate Change, proposes, inter alia, a new international institution with coercive powers to force countries to cut their carbon emissions and suggests that countries that do not accept this should be,

"effectively barred from all forms of international co-operation".

It is bad enough that responsibilities for climate change used to be divided between the Department for Environment, Food and Rural Affairs and the Department of Energy and Climate Change, but now DfID, too, is getting in on the act. So much for joined-up government. Do the Government accept the draconian recommendations of the report that DfID has commissioned? Will the target that we are discussing today be contingent on some such so-called new architecture being put in place?

Nor is this the only form of conditionality at issue. In his Statement last month on carbon capture and storage, the Secretary of State, Mr Miliband, said in another place:

"With a solution to the problem of coal, we greatly increase our chances of stopping dangerous climate change. Without it, we will not succeed".—[Hansard, Commons, 23/4/09; col. 382.]

He therefore announced a requirement for new coal-fired power stations, which are needed to prevent the lights from going out, to be retrofitted with CCS by 2025—incidentally, well after the date of the order before us. The date was set as late as that because the technology needed does not at present exist, but the Government hope that by then it will. Perhaps it will, perhaps not—but, even if it does, at what cost? At any cost? Is there any cost conditionality at all?

Most experts believe that even if the technology does become available, it will be prohibitively expensive, for compelling reasons that I do not have time to go into here. To be fair, the Government suggest conditionality in the department's press release accompanying the Minister's Statement to Parliament, which states that the goal is:

"Full scale retrofit of CCS within five years of the technology being independently judged as technically and commercially proven".

What precisely—and I mean "precisely"—does "commercially proven" mean?

In conclusion, I suggest to the House and to the Minister that it would be the height of irresponsibility for the United Kingdom, and the United Kingdom alone, to be required to incur the massive costs arising from the order that we are debating today, wholly unconditionally, irrespective of whether CCS, which the Government concede is absolutely essential, becomes either technologically possible or affordable, and irrespective of whether the rest of the world commits to following suit, without which even the conjectural benefits of this hugely expensive policy cannot possibly accrue.

Photo of Lord Lea of Crondall Lord Lea of Crondall Labour

My Lords, I hope that at some point in the future the noble Lords, Lord Lawson, Lord Stern and Lord Turner of Ecchinswell, can be locked in a room and the key thrown away until such time as they can agree on anything. I followed the analysis of the noble Lord, Lord Lawson, with great care, I read his book, and there are many things a brain the size of mine cannot challenge, so I am inclined to give him the benefit of the doubt. However, the other half of my brain, having been involved in this business for 30 years—I was a government delegate to Rio in 1992, before Kyoto and all the rest of it—sees that there is a problem of sustainability.

There is an issue about the OECD taking the lead, if there is a case to be answered whereby China and India have to come on board. It was always a difficulty that we could not be sure that China and India would come on board. We are keeping our fingers crossed about Copenhagen and so on. I think I am right in saying that we are getting closer to a position where the whole world is around the table, rather than just the industrial countries, which arguably have ten times more CO2 consumption per head than sub-Saharan Africa. That is the framework in which the debate takes place.

There is a different debate about whether there is some long-term cycle in the planet temperature or whether it is very much down to recent human activity that we are going to go over 2 degrees centigrade growth in the lifetime of some people alive today. That will have problems particularly for low-lying areas, with desertification increasing in Africa. However, if I were playing devil's advocate, I could say that if population is growing in sub-Saharan Africa at 3 per cent per annum, which doubles every 20 years, the whole world is going to have a much bigger crisis than anything we have seen. If we are talking about slash and burn from Madagascar through to Senegal—religion comes into it and so on—all these different factors are very hard to make a coherent speech about because they go on too long.

Before I get on to the particular points that I want to make, let me say something about those people who are interested in why the Stern model is flawed, as I believe it is. The noble Lord has been very reluctant to answer questions about my pet topic, which is income distribution and the effect on jobs around the world slowing down by x percent, which he waves aside as very minor relative to the wealth of the world. Leaving aside the inter-generational aspects, we want to know about jobs and so on. If we did not represent people by asking those questions, I do not know who would.

It is very important now that the biggest intellects of public policy on this question do not carry on like ships passing in the night, never conceding any point to each other. I hope that the noble Lord, Lord Lawson, will nod to indicate that he would be up for that.

The noble Lord, Lord Stern, could be encouraged a little. Since he was appointed, he has made only his maiden speech, which was on a totally different subject. We could all strongly encourage all these well informed, two-brained Members to help us out.

I note that the orders will come into effect on 31 May 2009. When I saw that, I thought that rang a bell; it is quite soon. Then I realised that it is very soon indeed—it is in two weeks' time. We have been cutting things a little fine, and so I will be supporting the Government today because if we do not, I do not know what will happen to this whole business. I will give the Government five out of 10.

Noble Lords:


Photo of Lord Lea of Crondall Lord Lea of Crondall Labour

My Lords, no, no—everyone knows that that is a good mark for some of us to give to the Government. Both my noble friends on the Front Bench will be highly gratified by what I have just said. Let me mention one or two areas in which they could go further.

When I contributed to the debate answered by my noble friend Lord Rooker on 18 March last year, and I said that there ought to be a fiscal impact statement, side by side with the Budget, my noble friend said that he would take that suggestion away. That is one reason—I am sure not the main reason—why these orders appear in this form. Certainly, there is the linking with the Budget. It is the first time that we have £ million, or £ billion, numbers to look at. The noble Lord, Lord Lawson, pointed out that we have a total of £800 billion on the second page of Chapter 7 on building a low-carbon economy. We have a figure for investment of £50 billion:

"Tackling climate change requires substantial levels of investment across all sectors of the economy. The Government's policy framework is enabling £50 billion of investment over the period of the Comprehensive Spending Review (2008-11)".

That is quite a large figure—there are a few peanuts there, even these days. Other big numbers there are for energy efficiency, renewables support and so on. The biggest number of all is public transport and low-carbon and electric vehicles. That may have a bearing on the next main remark I want to make.

In the first set of announcements in Chapter 7, we see that the fuel duty is going up by 2p a litre from 1 September this year, and another penny on top of that in each of the next three years—that is 2010, 2011, 2012 to 2013. Two and three make five these days, but there it goes. I guess that that will have some income-distributional effects. Of course, the great danger of the macro-Stern approach is to say, "There's no problem, we're all wealthy, but who's wealthy and who's at the bottom of the receiving end?" If it was a poll-tax-on-wheels, or a poll-tax principle, within a nation in the OECD, and north/south in the world, one would be shouting from the housetops that this is not way to get public support for a consensus policy. Therefore, I request my noble friend to commit to track the income-distributional consequences of the measure.

I said on 18 March last year that I thought this was a shadow hypothecation. I know that that word is like a red rag to a bull to anyone with a Treasury background. However, the world has moved on and we are in a quasi-hypothecating relationship as regards these figures. They are not normal budget figures but are linked inexorably to a set of targets, which means that we can track them for a good period. If you are going to hypothecate, you can implicitly look at the impact of fuel duty, or installing solar panels on roofs, but as regards the £50 billion and, indeed, the £800 billion, it is very necessary to be wise before the event as there could be a public revolt against all this, even if its merits are confirmed beyond peradventure, if "it's the poor what gets the blame". That means no more cheap holidays on the Costa Brava or bangers on the road, but if the people with money—I am drawing on caricatures—can pay for more expensive holidays and cars, that is fine. But if we are going to have to cut emissions by 40 per cent or 60 per cent, guess who will be doing the cutting? I think this is the biggest strategic political question we have to face over the next 40 years but we have heard not a word about it—not a word. As far as I am concerned, this is the intellectual hole in the doughnut.

This situation arises partly because there is a tug of war between the Treasury and all the other interested Whitehall departments, certainly the Department of Energy and Climate Change. My noble friend Lord Rooker told us not to ask the Treasury to do something about the studies that I was advocating as it is a matter for the Department of Energy and Climate Change. However, when you approach the Department of Energy and Climate Change, it says that it is a matter for the Treasury. Which is it? Frankly, this is a much longer term question than anything to do with party politics. Therefore, I hope that no one will make short-term political points about it.

Who are the winners and who are the losers? What is the macro and micro fiscal impact? The Stern report ought to be revisited. The analysis is variable but, apart from some first-class chapters, a lot of it is perfunctory and has not been debated adequately in this House. Stern's hypothesis is implicitly as plain as a pikestaff—I should like to know whether the noble Lord would challenge it if he were present—which is that we have to choke off carbon demand largely through the price mechanism, unless we are going to shut down for periods due to the collapse of the capitalist system. Minus 4 per cent growth—in other words, 4 per cent negative—will reduce the growth of carbon dioxide. That is a jolly good thing but who will be unemployed and live in poverty as a result?

The Green Party and Friends of the Earth explicitly demand that we slow down the rate of economic growth. However, given our productive potential and underlying rate of growth and productivity and all other nostrums of macroeconomics that encourage us to increase our productivity—that does not mean a cut in working hours but work as hard as you can, improve technology and increase GDP so that we keep as far ahead of the Chinese as we are doing—that does not sound to me like accepting a rise in unemployment or a slowdown in economic growth. Again, we could get a lot closer to agreeing with each other if the Government were to say that they will not only track income distribution but agree a separate annual statistical series on this whole financial framework, to see how emissions trading fits into it, and so on. Although there are some very clever people around, I do not know anybody who can intellectually grasp all the double counting or interactions between all these arrangements.

Finally, we have to help to demonstrate that, if all this happens, there will be financial transfers, in particular to sub-Saharan Africa, out of the many trillions that we are talking about over the period. It will be many, many trillions. However, we cannot just hand the money over via the public Exchequers to wind up in Swiss bank accounts. This, among other reasons, is why the conditionality principle—even if it is not called that—has to come back to our relations with sub-Saharan Africa, Latin America and many other parts of the world, or there will be a collapse of political support in the OECD. We need some numbers to demonstrate what will be the next financial transfer from the OECD to the G77, and then work out its distribution, both vertically and horizontally.

We are at a moment of radical change in lifestyles, although not, I think, the radical change of lifestyles that people called for, somewhat rhetorically. We recognise that there will be qualitative changes in the economy, but they will not happen with confidence until we have a statistical framework, so that practical people have some bedrock of data and analysis, on which we can all agree, to explain the position around the country.

Photo of Lord Leach of Fairford Lord Leach of Fairford Conservative 4:15, 13 May 2009

My Lords, the noble Lord, Lord Lea, referred to ships passing in the night, and rightly so on the economic front. I hope that I shall find myself on HMS "Lawson", rather than HMS "Stern". The same goes for ships passing in the night in science, which has now devolved largely into a shouting match between extreme alarmists and sceptics, with not nearly enough moderate dialogue between them. Perhaps I could help to gain a little perspective on this by referring to what my noble friend Lord Lawson referred to as the unsubstantiated assertions of the Government, to see where common sense stands on those.

Since the end of the little ice age in the late 19th century, the world has been re-warming at a rate of about 0.6 degrees centigrade per century. There have been fluctuations in that. There was a period of rapid warming from 1920 to 1940, much as there was more recently. There was no explanation for that. There was a period of cooling until 1975, when emissions rose quite rapidly. There was no explanation for that. There was a period of rapid warming from 1975 until the end of the century, much as there was from the 1920s to the 1940s. This has been seized on by alarmists as evidence of really frightening growth in temperatures. However, it has been succeeded in the 21st century by nine years of static and, more recently, falling temperatures. Again, that is completely against all the prognostications of the alarmists and the IPCC and wholly unexplained.

When you look more deeply into this at where all these measurements are coming from, you find a large number of them are extremely unreliable or, in the case of the Antarctic and the Arctic, almost non-existent. By far the most reliable database, which is not all that reliable, of any large land mass is in the United States of America, where there is a huge number of recording stations. We now know that temperatures in the United States in the 1930s were the same as, maybe even very marginally warmer than, they were in the 1990s. That is probably the best approximation there is for what has really been happening in temperatures—that is, a growth of about 0.5 to 0.6 of a degree per century, a figure that fluctuates for a whole variety of reasons that I shall not go into here.

A lot of what you read in the media or hear on the BBC is highly anecdotal, and there is a widespread impression that the polar ice caps are melting. It is worth spending a minute or two on that. The Arctic ice cap is, at the moment, bang on normal in the winter. In the summer, it has been melting a little bit. The Antarctic is considerably above normal. If you add together the Arctic and the Antarctic ice, they have measured about 700 square kilometres above normal in all the time that they have been accurately recorded. So the idea of great warming and melting in the polar ice caps is a complete figment of the imagination. I have, for Members who may be interested, a picture of the US nuclear submarine "Skate" at the North Pole in the winter of 1958, before the summer melt—14 March, to be accurate.

Photo of Lord Lea of Crondall Lord Lea of Crondall Labour

My Lords, I am most grateful to the noble Lord for giving way, but as regards ships passing in the night, can he just come in on one ship, passing through the north-west passage? Is the growth of industry going through the north-west passage and the scampering between Canada, Denmark, Russia, the United States and everyone just a figment of my imagination?

Photo of Lord Leach of Fairford Lord Leach of Fairford Conservative

My Lords, if the noble Lord would let me finish the sentence that I was in the middle of, I can say that this photograph of the US nuclear ship "Skate" was taken at the North Pole during the winter in March 1958. It was completely ice-free. If you put that together with the ice records I mentioned, there is a great deal of myth that passes about the North Pole and the South Pole. The North Pole is subject to currents, which probably explains the fact that it is sometimes completely ice-free. It is not a great static block of ice that is melting. Those are the facts about the Antarctic ice.

Laboratory science theory states that doubling the concentration of carbon dioxide in the atmosphere would increase temperatures by 1 degree. A doubling of carbon dioxide takes place approximately every 200 years at the current rate of emissions, perhaps a bit more. Therefore, the whole argument hangs by a thread. Do other factors such as currents, sun and clouds accentuate that warming or do they decrease it? The IPCC's theory is that they increase that warming. That is why the Government have, as my noble friend Lord Lawson, said, made the completely unsubstantiated assertion that temperatures will rise by 4 degrees this century.

Probably the best climatologist in the world is Professor Lindzen and another good one is Professor Singer. Professor Lindzen calculates that the effect of all these other feedbacks, as they are known in the jargon, is to reduce temperatures not increase them. He calculates that a doubling of carbon dioxide in the atmosphere would increase temperatures by about 0.3 of a degree. You can argue about the science and I am not a good enough climate physicist to make any direct contribution on that. What you cannot argue about are the facts. The facts are that there has been no acceleration whatever in global warming since emissions took off after World War 2 and that temperatures today, after the past nine years of static or cooling temperatures, are bang on that consistent recovery of 0.6 degrees from the little ice age and are well below even the lowest estimates of the IPCC range. So observation suggests that Professor Lindzen may be right and the IPCC completely wrong.

Photo of Lord Teverson Lord Teverson Spokesperson and team leader for Climate Change and Energy 4:30, 13 May 2009

My Lords, we are talking about facts and observations. I am a simple person in this area, but one fact that seems indisputable is that sea levels are rising, and rising faster. There can be only two reasons for this: either the land is sinking or the sea is rising. Why would the sea rise? The only reasons for ocean levels to go up are either that the oceans are getting warmer and expanding, or that the ice sheets are melting and therefore the amount of water is increasing. There can be no other reason; therefore that simple fact says that global warming is happening. It is a problem and a fact.

Photo of Lord Leach of Fairford Lord Leach of Fairford Conservative

My Lords, if I may say so, that is a perfect example of unsubstantiated assertion and anecdote. The world's leading expert by far on sea levels is Professor Axel Morner, the IPCC's lead author on sea levels. He says that sea levels have been increasing at six and a half inches per century since the little ice age, that they have over the past 100 years modestly declined, and that they are now rising at about six inches per century. The assertion of one and a half metres, and Al Gore's absurd assertion of many metres, are pure speculation and wholly unsubstantiated by observation, or by the best single expert on sea levels in the universe—the IPCC's lead author, who resigned from the IPCC, if I am not mistaken, because he refused to substitute fanciful numbers for the right ones.

I turn back to the science. It is widely believed that there is a universal consensus. If that is so, why have 33,000 scientists—the number grows so fast that I may be out of date, and it may be 35,000 or 40,000—signed a protest against the climate extremism expressed in the Kyoto Protocol? There is no scientific consensus. There is an official, political consensus. There are dangers to people's careers and funding, and to the esteem in which they are held in official circles, if they express the views that I am expressing now. I can express them because I am not a scientist, so my career is not at risk. There is absolutely no consensus.

I once wrote a letter to the Times, saying roughly what I am saying now. I received a flood of letters, and those supporting me outnumbered those against me by six or seven to one. Many of them came from professors and fellows of the Royal Society who said that they did not care to speak out. That is just anecdote—I will not give their names—but it is typical. If you immerse yourself in the blogosphere, which is as good a place as any to study the science—and where sceptics are much more courteous and open to dissent than believers—you will find that scientific opinion is very divided, and that there are at least as many sceptics as believers.

The concern of anybody who is open-minded, and who recognises that ships must not pass in the night and that we must try to come to some agreement, is that the Government are not open-minded. They have signed up to the most expensive possible version of climate extremism. Professor Carter, a distinguished economist specialising in climate economics in Australia, recently testified before the authorities there that emissions trading schemes would cost every Australian family 3,500 Australian dollars per year for a theoretical IPCC-modelled reduction of one-1,000th of a degree centigrade. Let us suppose—although he is a very distinguished witness—that he is wrong by a factor of 100. It would still be true that the theoretical saving in climate warming would be one-10th of 1 degree—a wholly trivial amount for a vast expenditure. I agree with my noble friend Lord Lawson that there has not been a proper cost-benefit analysis of this, and that what cost-benefit analysis there has been has gone wholly against the government programme.

Has the Minister studied Professor Carter's figures? If so, does he agree with them; do the Government agree with them? If they do not, do they have better-founded estimates and what are they? As I say, the professor is a very serious witness, and if he is even remotely right, the cost of government emission reduction schemes is frankly grotesque. He particularly applied it to emissions trading schemes, but the same goes for carbon offset, wind farms and various other forms of government-sponsored intervention.

Sometimes people talk about those vast expenses as though they were free, as though they fell out of the air. They do not; they come out of the vast shortfall in resources that are needed for huge projects, whether for economic well-being, reafforestation, ocean pollution or disease control—to go rather closer to home than the climate change arena. The trillions that we intend to spend on those grotesque schemes have to be taken from somewhere, and that is where they will be taken from—from adaptation, flood defences, reafforestation and disease control projects. Or, if the money comes straight out of the economy, it will come out of the wealth creation that is essential to survive properly in the 21st century.

It is not too late for the Government to reconsider. In my opinion, the only redeeming feature of the order is that there is not the slightest prospect that it will be taken seriously or actually implemented. Even if every other country signed up, it would not be implemented. I just ask the Government to reconsider this unsatisfactory proposal.

Photo of Lord Marlesford Lord Marlesford Conservative

My Lords, we are very grateful to my noble friend Lord Lawson for challenging the Government on the orders. All too often, statutory instruments—orders—slip through even though they have big implications. This one has mega-implications. I do not want to make many points, but I start off with one fact. It is staggering—as anyone who begins to understand how the system should work would agree—that the impact assessment for what is probably the most expensive piece of legislation ever passed, the Climate Change Act 2008, was produced only after the Bill had become an Act. Yet the idea of an impact assessment has always been that it helps good governance because you can see the cost and the consequences of legislating. What sort of government is that? Bad government, bad government, bad government.

What is the size of the impact assessment? It is £400 billion. As my noble friend pointed out, that estimate does not necessarily include everything. Have the Government really lost all sense of proportion of money? That £400 billion is 27 per cent of GDP. It is 50 per cent of the public sector net debt. Public sector net debt has already reached £792 billion, so £400 billion is half of that. It is 60 per cent of total government spending for this year, yet gaily they produce a £400 billion impact assessment as though it was all perfectly natural.

The Act is thoroughly pernicious. I particularly criticise the fact that with gay abandon the Government produce this sort of legislation when they have not been doing the things that they could have. We all agree that it is much better to reduce the use of oil and reduce carbon emissions. However, they have taken 10 years even to decide to go ahead with nuclear power. They have only now produced the list of places where they might have nuclear power stations. They have taken 10 years to do that.

The Government are not even clear whether nuclear power is a renewable. I believe that it is, to all intents and purposes. The noble Lord, Lord Sainsbury, speaking ex cathedra from the Front Bench as Science Minister, said that it was a renewable. He said that; it is all in Hansard, so the Minister need not shake his head. He was of course made to renege, because the green lobby does not like nuclear power. Recently, the noble Lord, Lord Mandelson, who now occupies an exalted post in the Government—and he is a splendid fellow to have there—referred to,

"nuclear power and other renewables".—[Hansard, 8/12/08; col. 160.]

I happened to speak in that debate and drew attention to those felicitous words, which have not been denied. However, I suspect that the noble Lord, Lord Hunt, will get up and say that the Government do not regard nuclear power as a renewable.

The sad thing is that this Government are going into something alone, probably alone in Europe, as President Obama is most unlikely to be prepared to commit the United States to anything like the scale of what we are attempting to commit this country to, unless the world does so. However, the chances of the world doing so are remote in the extreme. I am delighted that we are challenging this sloppy thinking by this sloppy Government.

Photo of Lord Dixon-Smith Lord Dixon-Smith Conservative

My Lords, there is an issue of the Government against the real world and I certainly would not wish to get up and defend the Government on this or any other issue in broad principle, given their incompetence in action. However, the world is not standing still. We keep hearing about this enormous sum of money that may have to be spent, but that seems to be said without any regard to the huge sums of money that are being spent by every country in the world at present to maintain their energy supplies.

A few years ahead is something that is constantly referred to as peak oil. What we are really talking about—whether or not we are ever going to get agreement on global warming—is the security of future energy supplies. I say to my noble friend Lord Marlesford that I tend not to be too concerned about whether nuclear energy is renewable or not, as it is emissions free. That is the energy distinction that we need to make.

We will have to spend increasing sums of money even if we do not change the technology, in order to supply this country with energy. There is a net amount to come off the huge sums that are talked about in respect of the costs mentioned by the noble Lord, Lord Stern.

I say to my noble friend Lord Fairhead—I beg his pardon, as I should have said Lord Leach of Fairford; I am getting muddled up with some relatives of mine—that there is a distinction between the scientists whom he mentions, who are all apparently not prepared to come out in public, and the scientists who have been doing all the work on global warming and who are all well known and out in public. That may or may not be an argument but, if I understood my noble friend Lord Leach, he said that many people disagree with what is going on but are not prepared to come out in public about it.

Photo of Lord Leach of Fairford Lord Leach of Fairford Conservative

My Lords, I said that more than 30,000 had signed a petition coming out in public. I referred to a few people who still have not come out. Among those 30,000 are many of the most distinguished scientists in the world. I can happily supply my noble friend with a list of 20 very distinguished scientists, including IPCC lead authors.

Photo of Lord Dixon-Smith Lord Dixon-Smith Conservative 4:45, 13 May 2009

My Lords, I stand corrected and I withdraw that remark, but the fact is that there is, whether one likes it or not, and despite the great inconvenience, virtually an international consensus on this and I do not think that we will ever reach agreement between those who believe that this is happening and those who do not. There is evidence in the changes in the oceans and in the Arctic and Antarctic ice caps and the ice caps in Europe and the Himalayas. They are all diminishing. That is inconvenient, but it is happening.

My noble friend Lord Lawson raised an important issue; it was the one really significant thing that he got into before he tried to carry us all into the upper reaches of this Chamber with a blast of hot air. The Minister made it quite plain that the success of these orders depends on international agreement, which is due to be reached, we hope, this autumn. I do not go with the pessimists—I hope that there will be agreement—but it is legitimate to ask the Minister what happens if there is no such agreement. He made a great deal of the fact that there would have to be agreement, but we need to think about what will happen if there is no agreement. Will he come up with an answer to that point? Although I do not expect us to reach agreement in this Chamber today over the principles of the thing, we must try to ensure that what we agree to at the end of the day will be practicable and will work. The Minister must address that in his reply.

Photo of The Earl of Onslow The Earl of Onslow Conservative

My Lords, the Government are introducing legislation now that is due to have effect in 2050. I just ask noble Lords to put their minds back to 1910 or 1911—the year of Lloyd George's Budget. Would it have been possible to have foreseen in any way whatever what was going to happen around the time of the death of George VI? It strikes me as very dangerous to legislate or even to attempt to have any idea of what will happen in 40 or 50 years' time. It is impossible to know what will happen the day after tomorrow, let alone in 50 years' time.

I completely agree with the noble Lord, Lord Lea, that it is a great pity that the noble Lord, Lord Stern, does not come here more often to defend his views on occasions such as this. My noble friend Lord Dixon-Smith made a very good point about the security of oil and other energy supplies, but that is a distraction from the debate on global warming. The talk of global warming is preventing us from thinking logically about the replacement of oil supplies, because perfectly reasonably, with the decline in the North Sea supply, we are not inclined to trust either Arab sheikhs or Russian oligarchs, who are the main source of supply.

Just recently, there was an announcement that 90 square miles or kilometres—I am sorry; I cannot quite remember which, but it is quite a large area—of the Thames estuary will be covered in wind farms. I am sure that that is absolutely excellent. The announcement said that those will provide the fuel for 500,000 houses, but it did not say that that is only under perfect wind-blowing conditions. I do not know whether your Lordships are aware of this, but we had a very cold snap this February. The wind stopped because there was a great blodge of immovable high pressure over the United Kingdom, so all those windmills just stood there not moving at all and producing no energy. What an immensely useful investment that is; you invest in 90 square miles or kilometres of windmills to produce no energy when it is very cold.

There was an intervention from the Liberal Front Bench about how sea levels were rising by 1.5 metres per whatever it is. The noble Lord is obviously unaware that Flinders University did a test on Tuvalu and found that there was absolutely no movement in sea levels whatever. The instruments that were used were the most modern and sensitive that there have been.

I used to think that it was completely logical to believe that, if we chucked buckets of gunge up into the sky, that would have some effect. I thought that people were right about this and that it made sense. Then I read the book written by my noble friend Lord Lawson—I hope that I am not giving it too much of a boost, but there it is—and found the intellectual argument behind it extremely interesting. It has converted me from thinking that one should not do all this damage to asking what harm is being done.

We know that CO2 levels have gone up between 1997 and 2007. However, temperatures have not. We know that the other day a test was done on the depth of the Antarctic ice cap and it was found to be rather thicker than everybody thought. We know that in the 1860s one of the Norwegian explorers, Nansen or Amundsen, tried to get through the North-West Passage and found clear water further north in the summer than it was last year. We know that there has been extremely heavy snow in the Himalayas, the Alps and all the big mountain ranges this year and we know that the Arctic ice cap is actually larger this May than it should be.

Those are facts. These are not things invented by people; these are documented facts. So have they got it right? I have become, because of the books of my noble friend Lord Lawson and several others, a serious doubter, not because I have any emotional attraction to an idea but because I am presented with a series of facts that make me now think slightly differently.

The concept of budgeting to spend £400 billion—at that number, one begins to lose all sense of reality—by 2050 because of facts that look to me jolly dodgy does not seem a very sensible thing to do. I know that the Minister will say that it is received scientific knowledge that global warming is happening, but my noble friend has shown that it is not. We ought to be very careful before we go on a spending spree of this magnitude because of something that might happen in the equivalent of the difference between the Parliament Act 1911 and the coronation of our present sovereign.

Photo of Lord Freeman Lord Freeman Conservative

My Lords, I am not going to follow the arguments from my much more experienced colleagues, although I found the debate this afternoon extremely interesting and very educational. The Minister recently gave evidence to the European Union Select Committee on the Emissions Trading Scheme and the renewable energy targets. The Select Committee is grateful for that. We intend to publish that evidence for the benefit of the House in due course. My questions are brief. First, can the Minister give your Lordships an assurance that he will use all efforts to ensure that there is a further Statement on energy policy to this House before it rises on 21 July rather than waiting until late October? Secondly, will that Statement include an explanation by Her Majesty's Government on how we will reach these very challenging renewable energy targets? My noble friend has already referred to the London Array wind farm in the Thames estuary, which I warmly welcome, but there is still a mountain to climb. Finally, the Minister referred to not relying on buying credits under the Emissions Trading Scheme, which I also warmly welcome, but will he say something about certificates of origin and the scheme to purchase some of our obligations on renewable energy from abroad?

Photo of Lord Berkeley Lord Berkeley Labour

My Lords, I have listened with great interest to the debate, which has been a bit like a Second Reading debate on climate change. I am beginning to think that I have been rehearing some of the stories one heard in the eight years of George Bush's presidency of the United States. There was a kind of unholy alliance between him and the oil companies to fund an enormous number of scientists to produce evidence, which was clearly in their view fact, that there was no such thing as global warming, the sea was not rising and it was all a big mistake. I do not know which is true. From what I have read, just as many scientists have said that there is a serious problem with global warming.

The noble Lord, Lord Leach, quoted a large number of scientists, but in his response to the noble Lord, Lord Teverson, he did not explain whether the sea level is rising. The noble Lord, Lord Marlesford, said that it is not. The noble Lord, Lord Leach, did not deny that it is rising, but he did not explain how it is rising or whether it is due to warmer water and/or the ice cap melting. Perhaps he can do that. I sort of visualise King Canute sitting by the beach waiting for it to happen and when it happens saying, "It is not happening. My feet are not getting wet". I believe the scientists who say that there is a serious problem with global warming and I welcome what the Government are trying to do about it. They are setting an example with the European Union and, to an extent, other parts of the world. I give my noble friend seven or eight out of 10, which is even more than my noble friend Lord Lea gave him.

I have a couple of questions about world aviation and shipping, on which I urge the Minister to go a little further. It is good to know that there will be ways to measure them, but I hope that very soon we can go even further than that. I think that the noble Lord, Lord Lawson, congratulated the Government on joined-up government with DfID. If he did not, he should have done. I suggest that the same approach is taken in respect of BERR. On what the Government can do to put into practice the policies now being developed, I welcome the 2p on the fuel duty. But I am surprised that we are still going ahead with the £1,000 payment to anyone who wants to scrap an old car to buy a new one, especially when cars are mostly made abroad and there is no particular job benefit in this country. That investment could go into better cycling and walking—it would be very cheap and healthy, which sitting in a car is not—and public transport.

Investing in infrastructure in this country creates jobs in this country, so there would be a win-win situation. I hope my noble friend will say that the subsidy to buy a new car and scrap an old one is just an aberration, and that the real policy will emerge in the coming months through investing in projects and policies which will improve the rather lamentable performance of the transport sector in going green. In the mean time, I support my noble friend's introduction to these regulations.

Photo of Lord Leach of Fairford Lord Leach of Fairford Conservative

My Lords, perhaps I may quickly answer those pertinent points. The big ice melting was about 12,000 years ago at the end of the last glaciation, which greatly increased sea levels. The more recent increases of about seven inches since the little ice age are thought by the experts to be due to thermal expansion, at which I think the noble Lord hinted. As the seas get a little warmer, they expand. At the moment, that is regarded to be the cause and not ice melting, because it has not melted.

Photo of Lord Berkeley Lord Berkeley Labour

My Lords, I am very grateful to the noble Lord. Will he explain what is causing the sea to expand? Presumably, it is getting warmer.

Photo of Lord Leach of Fairford Lord Leach of Fairford Conservative

Yes, my Lords, with the recovery from the little ice age that I referred to earlier, that is at about 0.6 degrees per century since about 1370.

Photo of Lord Teverson Lord Teverson Spokesperson and team leader for Climate Change and Energy 5:00, 13 May 2009

My Lords, perhaps I may interrupt this fireside chat and move on to the order. From these Benches, we could get to at least six; that might be between the two noble Lords opposite. A more general point is that the work of the Committee on Climate Change has been excellent; it has been highly respected by those on all sides of the House. I thank it for its work and for the work that it will have to do in the future. Of course, a number of noble Lords from this House are involved there.

Before I go on to the order, I shall pick up on one point made by the noble Lord, Lord Lawson. It particularly concerned me when he said that here in the northern hemisphere, anyway, or here in Britain, we are not going to be affected for at least another couple of decades, or a hundred years, or whatever. To me, that is to misunderstand utterly the problem of global warming, in that whether or not it is man-made, if it is happening then there is no way that northern communities will be isolated from migration flows from the inundation in developing nations, or from the changes in ecology and biodiversity that happen with rapid climate change, or from interruptions to trade routes and energy and food security. All of those areas will disrupt global systems and flows which, whether they are of capital, commodities or people, will very quickly be affected. We will not be able to put up a wall and say, "We're safe; sorry about the rest of you, but we're enjoying global warming for the next 200 years and we'll worry about it after that". That is not an option; it is a very dangerous thought.

I welcome the fact that the order encompasses all of the greenhouse gases, not just carbon dioxide, which much broadens it out. I know that that came from the Committee on Climate Change; it is a major step forward. I welcome the fact that there are budgets and that they stick pretty well to targets that are, at least, challenging—although on these Benches we believe that we would need quickly to achieve and move toward the larger, intended targets.

A particular area that has interested me, and which was a topic of great debate on the Climate Change Bill, is that of international credits and how they are treated. While I again welcome the fact that the limit on those credits is to be zero, I regret that it is only for the first period—which now goes up only to 2012—and that, even now, we cannot extend that to the next two periods, as it is such an important area. Will the Minister clarify—I did not understand this from the order and it may be that I have not read or understood its meaning properly—whether he specifically said that the Government themselves would not purchase EU ETS units in order to offset?

The order says that it outlaws clean development mechanism units, but that since the EU ETS operates, those units should be counted. I disagree with that to some degree, but I shall come on to that in a minute. Will the Minister confirm that the Government themselves will not buy EU ETS units—or EUAs, as they are called—so as to close that carbon gap in terms of targets? First, it would be an abuse of how that system works and, secondly, it would be a way in which members of the EU ETS in other parts of Europe might purchase clean development mechanism units that enabled them to sell EUAs to us in Britain. That would effectively make it a carbon-credit laundering system, if one was not careful. I am sure that is not the Government's intention, but I should be pleased to receive an assurance that the Government will not be counting EU ETS credits toward their own carbon budget.

As the Minister said, it will be interesting to see the Government's report setting out exactly how these targets are to be met. I agree entirely with the noble Lord that we should include air travel and shipping as soon as possible. It is great to have a definition and I should like to hear from the Minister when he now believes these areas will be brought in. One of the main concerns about shipping was that of international definitions. Has progress been made on those, and similarly in terms of airlines? We know that aviation is going to be included in the EU Emissions Trading Scheme in 2011, but surely there is still scope to include it in our target now.

We welcome the order generally, although we would like to see the credits brought down to zero for all three periods. But the core of the argument in terms of targets and action towards combating climate change is that in themselves targets are fine, but what is needed is action to ensure that we have the sort of effect on carbon emissions that we require. At a time when the European trading scheme is to some extent floundering again in that we have a slow uptake of renewables and are very dependent on wind, that energy saving has not yet moved forward significantly, that there has been little practical progress on carbon capture and storage and a perhaps understandable hesitation about biofuels, the challenge lies not this order but in the Government's programme and the programme across Europe to make sure that changes in energy use and how we conserve energy enable us to meet these targets.

Photo of Baroness Wilcox Baroness Wilcox Shadow Minister, Energy and Climate Change

My Lords, I thank the noble Lord, Lord Filkin, and the Merits of Statutory Instruments Committee for drawing our attention to these important orders and regulations, and I thank the Minister for laying them out before us in such detail. I should like to ask a brief question on each of them and I will try not to turn my remarks into a Second Reading speech. We have heard some marvellous contributions to the debate, and no doubt the Minister will want to answer the questions put to him by my noble friends Lord Lawson, Lord Leach, Lord Marlesford, Lord Dixon-Smith, Lord Onslow and Lord Freeman, and those put by the noble Lords, Lord Lea and Lord Berkeley, before he gets around to responding to anything that I might contribute at this point.

The Climate Change Act 2008 (2020 Target, Credit Limit and Definitions) Order 2009 complies with the provisions of the 2008 Act in setting out the mechanisms for establishing the 2020 emissions target limiting the net amount of carbon units that may be attributed to the UK carbon account and further defines the terms set out in the Act. We cannot but agree with it, and my only question is this. The Conservatives have argued consistently that the expert opinion of the Committee on Climate Change should be the primary driver of climate change policy. Does the Minister support our belief that the majority of carbon reduction activity should be undertaken at home in the United Kingdom so as to offer the maximum competitive advantage to UK businesses rather than simply paying other countries to develop clean technology through the Clean Development Mechanism?

I turn now to the Carbon Budgets Order 2009. This order complies with the provisions of the 2008 Act in setting the next three budgetary periods: 2008-12, 2013-17 and 2018-20 before the deadline specified by the Act. The carbon budgets set a cap on the maximum level of the net UK carbon account for each five-year period.

I welcome the budgets. During the passage of the Climate Change Bill, we pushed hard to strengthen the Committee on Climate Change, and we urge the Government to heed its advice as far as possible. These carbon budgets provide a major opportunity to United Kingdom business owing to the long-term certainty that they offer. What steps are the Government taking to spur business on to take that leap towards investing in a low carbon future? The third statutory instrument—the Carbon Accounting Regulations 2009— makes provision on carbon units and carbon accounting for the purposes of Part 1 of the Climate Change Act 2008. We are in general agreement with that as well.

I am certain that the Minister will agree that transparency and accountability will be vital to the smooth running of these budgets. Under the Climate Change Act the Secretary of State must ensure that carbon units are kept track of for establishing and maintaining accounts in which carbon units may be held. Provisions are in place to enable the Secretary of State to appoint a body to do this. Can the Minister outline today what progress has been made in appointing such a body? I look forward enormously to hearing him answer all the questions that were put to him by eight noble Lords, let alone from the Front Benches.

Photo of Lord Hunt of Kings Heath Lord Hunt of Kings Heath Minister of State (Sustainable Development, Climate Change Adaptation and Air Quality), Department for Environment, Food and Rural Affairs, Minister of State (Sustainable Development, Climate Change Adaptation and Air Quality), Department for Energy and Climate Change, Minister of State (Department of Energy and Climate Change), Minister of State (Department for Environment, Food and Rural Affairs) (Sustainable Development, Climate Change Adaptation and Air Quality) (also in the Department for Energy and Climate Change), Deputy Leader of the House of Lords

My Lords, it has been an absolutely splendid debate, and how grateful I am to the business managers for ensuring that these statutory instruments were debated in prime time rather than in the dinner break when the debate was originally scheduled. I sense that it was a little like a Second Reading debate, and I suspect that some of the arguments this afternoon were deployed during the passage of the Climate Change Act. I was a very late entrant—I dealt with Commons amendments—and I realise that I missed a great deal of splendid debate, a flavour of which we had this afternoon.

These statutory instruments are important but they are consistent in the context of the Climate Change Act. I was intrigued by the intervention of the noble Earl, Lord Onslow, who said that the decisions that the House is being asked to make by approving the orders and regulations are committing the Government and the country to action a long time ahead. He referred to Lloyd George's Budget of 1911, and I was struck by the thought that one of the by-products of that Budget was the first stage of reform of your Lordships' House. I wonder whether they thought then that we would still be debating matters to do with reform.

I agree with the noble Lord, Lord Teverson. If noble Lords do not accept the consensus, scientific position on climate change, what we are doing would seem to be unnecessary and expensive. If you accept the general consensus and believe that climate change is very likely and that unless we mitigate and adapt there will be catastrophic impacts on the world, the measures before us this afternoon are entirely reasonable. I suspect that we will not agree on that substantive point.

Photo of Lord Lawson of Blaby Lord Lawson of Blaby Conservative

My Lords, the Minister does not want to mislead the House. The consensus to which he refers is not a consensus but a majority. There is a wide range of opinions among climate scientists. The majority view, as encapsulated in the IPCC's report, is that it is very likely that most—not all—of the warming in the last quarter of the 20th century was due to the increase in carbon dioxide emissions. However, there is absolutely no agreement among climate scientists about this being catastrophic. There is nothing in the IPCC's report about it being catastrophic. Mr Mike Hulme, who founded the Tyndall Centre for Climate Change Research, has consistently said that people who talk about catastrophic climate change are going far beyond the evidence. I hope that the Minister will wholeheartedly withdraw that part of his statement.

Photo of Lord Stoddart of Swindon Lord Stoddart of Swindon Independent Labour

My Lords, does the Minister recall that exactly 40 years ago—after all, we are projecting ahead 40 years to 2050—the very same sort of scientists who are now predicting global warming and climate change were predicting that there would be a new ice age in the ensuing 40 years? That has not actually happened. The Government should take that into account and perhaps make contingency plans in case, instead of global warming, we have global cooling.

Photo of Lord Hunt of Kings Heath Lord Hunt of Kings Heath Minister of State (Sustainable Development, Climate Change Adaptation and Air Quality), Department for Environment, Food and Rural Affairs, Minister of State (Sustainable Development, Climate Change Adaptation and Air Quality), Department for Energy and Climate Change, Minister of State (Department of Energy and Climate Change), Minister of State (Department for Environment, Food and Rural Affairs) (Sustainable Development, Climate Change Adaptation and Air Quality) (also in the Department for Energy and Climate Change), Deputy Leader of the House of Lords

My Lords, I do not think I can be held responsible for those events. All I can say is that the IPCC's recent report was written by 690 named scientists and reviewed by another 622. In total, the IPCC's latest assessment was written by more than 1,250 authors from more than 130 countries and reviewed by an additional 2,500 experts over six years. Objectivity is ensured by the broad and open review process.

Photo of The Earl of Onslow The Earl of Onslow Conservative

My Lords, the Minister said something very important there: the word "objectivity". If—this is just as big an "if" as his "ifs"—the world temperature does not increase for another five, 10 or 15 years, when do people start looking at it again? After three years? Five? Ten? Fifteen? How many years have to go by of global non-warming for people to look at whether they were right or wrong?

Photo of Lord Hunt of Kings Heath Lord Hunt of Kings Heath Minister of State (Sustainable Development, Climate Change Adaptation and Air Quality), Department for Environment, Food and Rural Affairs, Minister of State (Sustainable Development, Climate Change Adaptation and Air Quality), Department for Energy and Climate Change, Minister of State (Department of Energy and Climate Change), Minister of State (Department for Environment, Food and Rural Affairs) (Sustainable Development, Climate Change Adaptation and Air Quality) (also in the Department for Energy and Climate Change), Deputy Leader of the House of Lords

My Lords, I am not going to walk into that one. The research and analysis continue, we think that the IPCC process is robust. and we will be guided by the best available science. In the mean time, we believe that we should prepare on the basis of the science available to us now.

I enjoyed the contribution of the noble Lord, Lord Leach, although I do not necessarily agree with it. He asked me if we had studied Professor Carter's evidence. My understanding is that we have closely analysed and estimated the cost of emission trading, and we see that as set out in the impact assessment that was published alongside the carbon budget levels announcement on 22 April, to which noble Lords have referred.

The second point made by the noble Lord, Lord Lawson, was also made by the noble Lord, Lord Leach: the cost of dealing with climate change, introducing carbon budgets and some of the other changes that have to be made as a result. Of course these figures look very high. A number of noble Lords referred to the noble Lord, Lord Stern, and wished that he were present in our debate—I certainly do—but your Lordships might observe that he has an Oral Question tomorrow on the whole issue of climate change to which I have the privilege of responding, which will give us all an opportunity to understand where he is coming from. We believe that the noble Lord has done extremely valuable work. He, in his review of the economics of climate change, said that the benefits of strong, early action on climate change outweigh the cost. Also, the noble Lord, Lord Dixon-Smith, was absolutely right to say, of course, that a lot of the costs and investment—if we think of energy policy in particular, given the rundown of many of our existing power stations—would have to take place in any case.

The noble Baroness, Lady Wilcox, first asked me whether we will continue to listen very closely to the advice of the Committee on Climate Change. Yes, the orders reflect that we have taken the advice very seriously. She then made the important point that we want to ensure that the majority of carbon reduction takes place in the UK, rather than the UK having to buy in credits abroad. Also, is UK business in a good place to take advantage of a low-carbon economy? That is a very important point indeed.

I will come in a moment to the lead-up to the negotiations in Copenhagen but, unlike some noble Lords who have spoken, I am optimistic about the outcome of those discussions. I believe it is absolutely clear that the world is on a path towards a low-carbon economy. The question for this country is: are we going to take advantage of that? Are we going to be a country that is at the forefront of technology innovation? Is it going to be British companies which take advantage of that technology lead that we have in many sectors? In the past, we have had the technological lead but have then lost the advantage to other countries; can we ensure that that does not happen again? The noble Baroness has asked one of the most important questions that ought to be before us this afternoon. Clearly, the Budget announcements, and some of the stimulus that has been given towards agreeing a low-carbon economy, are very important in helping British business ensure that we are at the forefront of leading towards a low-carbon economy.

The noble Lord, Lord Lawson, asked me about negotiations, and he is rather more pessimistic than I am about the possibility of a deal. To clear up any confusion, I should say that in the orders we are debating interim budgets. Those are being set before a global deal is reached. If we are successful with a global deal, we will then ask the advice of the Committee on Climate Change about tightening the targets—the budgets—that have been set. Clearly, we very much hope that there will be a deal, that the advice of the Committee on Climate Change is indeed to tighten the budgets, and that I will have the honour of bringing further orders before your Lordships' House to put that into practice. How confident are we about a deal in Copenhagen? Well, progress is being made. It is clear that the US Administration have signalled positive moves in helping towards a deal. My right honourable friend the Secretary of State was recently in China in discussion with the Chinese Government, and it would be fair to say that he feels a sense of confidence about our ability to come to international agreement. Of course, a lot of water has to flow under the bridge before we come to Copenhagen, but the preparatory work gives us optimism about successful conclusions.

The international architecture is an important issue. I do not know the details of the DfID report, but I will certainly ensure that I study it closely. The noble Lord would expect me to say that we work closely across government, and of course we do. I can tell him that the international architecture is vital; it is important to ensure the integrity of any dealings in relation to international credits. Part of the agreement in Copenhagen will be about the actions that developed countries have to take, but it will also be about the actions that emerging countries have to take. However, we hope also that the vulnerable, poorer countries will commit to a low-carbon world. The international architecture that follows from that to ensure the integrity of the system as a whole will be vital.

The noble Lord, Lord Marlesford, asked me about the definition of nuclear energy. In his not uncritical speech about the Government's record, I detected at least some acknowledgement of the Government's go-ahead for new nuclear energy in this country. He knows that the definition is quite straightforward. It is not defined as renewable in international definition terms, but the carbon emissions surrounding nuclear development are very low indeed. I agree with the noble Lord, Lord Dixon-Smith, on that point. It seems to me to be a rather theological issue, but there is no doubt that nuclear energy will have a very important role to play in the future.

The noble Earl, Lord Onslow, referred to the announcement made only yesterday about major investment in wind farms in the London Array wind park, and he implied criticism. In any number of questions I have answered about renewable energy, noble Lords have complained that companies were not prepared to invest in renewables. We should rejoice that the announcement from E.ON came yesterday. Of course, it is an energy that is intermittent, and that is why you need back-up from other sources of energy. But in any case, noble Lords have consistently argued that we need a diversity of supply alongside—I was going to say "the dash for renewables"; it certainly will be a dash if we are to meet the 2020 targets. That is why we are glad to see the development of new nuclear energy and are delighted about the package of announcements around coal and CCS.

I well understand the point raised by the noble Lord, Lord Freeman, in saying that as regards the announcement to be made in the summer, he hopes that "summer" will be defined as being before the Summer Recess and that a Statement will be made in your Lordships' House. He will know that I cannot absolutely commit myself to that, but as I hope I implied in committee, I take his point—although perhaps I did not imply that as I was rather cautious about defining the Department of Energy and Climate Change's "summer". I certainly hope we achieve that.

As regards coal and CCS, I am not ducking the questions that the noble Lord asked me but we are working on many of those matters. We will make further detailed announcements in the summer on how we are to take CCS forward. Given that coal is responsible for some 40 per cent of electricity generation globally, those of us who believe that we have to take climate change seriously consider that carbon capture and storage is absolutely essential to achieve the targets that we have set. It also offers huge possibilities for the UK. With the announcement of up to four pilot programmes, we have a wonderful opportunity to develop UK technology and export it to many parts of the world. I am delighted that we made the relevant announcement two weeks ago.

Of course, this comes with a cost; there is no point in running away from that. I well understand the concerns expressed by my noble friend Lord Lea that these measures might have an undue impact on poorer people. I agree with him that it is absolutely essential that we consider the impacts of different measures to help meet carbon budgets, including their distribution across society. Of course, we wish to build social equity into all our policy-making. The impact assessment of the proposed budget levels assessed the impact of fuel bills on individuals and businesses. When we publish details of our proposals and policies for meeting the budget in the summer, we will consider these impacts in greater detail, including their effects on different groups in society. I believe that the creation of the new Department of Energy and Climate Change has allowed us to think carefully about needs in terms of creating a fairer society. This very much comes to the fore in relation to energy and climate change policy.

I think that the noble Lord, Lord Teverson, referred to my next point. Energy saving constitutes a great part of moving towards a low-carbon economy. The challenge for us is to ensure that energy-saving proposals are more successful. This can have a very good impact on many poorer people if we ensure that measures are properly targeted.

Photo of Lord Lea of Crondall Lord Lea of Crondall Labour

My Lords, I am most grateful to my noble friend for his clarification and assurance on tracking the income distribution or social equity consequences. However, it is widely understood that, in supporting the noble Lord, Lord Stern, the Government agree that the economy will continue to grow but at a slightly lower rate—in the order of 1 per cent slower—than if there had been no other constraint, including climate change. Will my noble friend note that that is a separate but important consideration? We are seeing how a 1 per cent change in GDP affects employment. An undertaking needs to be given that that, too, will be subject to further analysis and tracking. Although it sounds like a small figure, it is not inconsiderable if we all agree that the general rate of economic growth in terms of productive potential is adrift by 1 per cent.

Photo of Lord Stoddart of Swindon Lord Stoddart of Swindon Independent Labour

My Lords, I thought I heard the noble Lord, Lord Marlesford

Photo of Lord Davies of Oldham Lord Davies of Oldham Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, the Minister has been winding up for more than 20 minutes and, other than contributions from noble Lords who have spoken in the debate, he should be allowed to conclude his speech.

Photo of Lord Stoddart of Swindon Lord Stoddart of Swindon Independent Labour

My Lords, the Minister gave way. This is an important question because it involves cost to ordinary people, a point raised by the noble Lord, Lord Lea. I estimate and calculate that it means £10 billion per year, which is roughly £1,650 per person per annum that has to be found by ordinary people through their taxes and higher prices. People should be informed of exactly how the Government's policy will hit them.

Photo of Lord Hunt of Kings Heath Lord Hunt of Kings Heath Minister of State (Sustainable Development, Climate Change Adaptation and Air Quality), Department for Environment, Food and Rural Affairs, Minister of State (Sustainable Development, Climate Change Adaptation and Air Quality), Department for Energy and Climate Change, Minister of State (Department of Energy and Climate Change), Minister of State (Department for Environment, Food and Rural Affairs) (Sustainable Development, Climate Change Adaptation and Air Quality) (also in the Department for Energy and Climate Change), Deputy Leader of the House of Lords

My Lords, I agree with the noble Lord about transparency. Clearly, some of the measures that have to be taken will have an impact on the cost for individual householders, which also has to be taken into account. Equally, development of a low-carbon economy, where Britain is in the lead, can also bring huge advantage for our economy. The substantive point is that, clearly, these matters have to be kept under constant review.

Photo of Lord Lawson of Blaby Lord Lawson of Blaby Conservative

My Lords, I would not intervene in the Minister's lengthy speech—as we were reminded not to do by his noble friend—if he had answered my questions. May I briefly give him the opportunity to answer them before he sits down?

First, when the right honourable Mr Miliband said that carbon capture and storage would not be insisted on unless it were commercially proven, what precisely did he mean by "commercially proven"? It has nothing to do with technology. Did he make the statement without the faintest idea of what it meant? Secondly, and more importantly, of course the Minister hopes that there will be a satisfactory—from his point of view—agreement in Copenhagen, but even he must accept that there may not be. A satisfactory agreement in Copenhagen would see all other countries in the developed world pursuing the reduction targets, and the developing world pursuing maybe slightly lesser targets. If there is no agreement of that kind, will we still plough on, at vast cost and to no effect on our own, or will the Minister repeal the order before us, which sets the 2020 target?

Photo of Lord Hunt of Kings Heath Lord Hunt of Kings Heath Minister of State (Sustainable Development, Climate Change Adaptation and Air Quality), Department for Environment, Food and Rural Affairs, Minister of State (Sustainable Development, Climate Change Adaptation and Air Quality), Department for Energy and Climate Change, Minister of State (Department of Energy and Climate Change), Minister of State (Department for Environment, Food and Rural Affairs) (Sustainable Development, Climate Change Adaptation and Air Quality) (also in the Department for Energy and Climate Change), Deputy Leader of the House of Lords

My Lords, the order that we are debating is entirely consistent with the Climate Change Act, which has been passed by both Houses. Of course, our policies will be developed consistent with the Act. I will not contemplate failure in Copenhagen; the signs are as positive as they could be. I have answered the noble Lord's question on CCS. We made a statement on the broad principles. We are now doing intensive work on further publications, which will be made available in the summer, setting out the details of what we mean by the assessment and how it will be undertaken. I answered that point.

I confirm for the noble Lord, Lord Teverson, that the Government do not intend to buy EU allowances to help meet carbon budgets. I say to the noble Lord, Lord Freeman, that we have committed to aiming to meet all three budgets without international credits. I note the comments of the noble Lord, Lord Berkeley, and the noble Lord, Lord Teverson, on aviation and shipping. We hope to make progress on them in the international negotiations ahead of the start of the second budget period. We remain in the lead in the EU in our efforts to include international aviation and shipping emissions within that global framework.

Of course, there is much more work that needs to be done. We will develop carbon budgets in relation to what it means for government and the impact on policies. I say to the noble Baroness, Lady Wilcox, that we will continue to take the advice of the Committee on Climate Change. As she suggested, alongside the mitigation policies, there is a huge challenge on adaptation. The names of the members of the adaptation sub-committee will be announced very soon. We very much look forward to the advice that they will be able to give to the Government directly and to the committee.

In conclusion, this has been a very good debate. I did not detect entire consensus on all matters, but the statutory instruments have had a thorough airing and I commend them to the House.

Motion agreed.