Energy Bill [HL] - Commons Amendments

Part of the debate – in the House of Lords at 7:52 pm on 12th April 2016.

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Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Energy and Climate Change, Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Wales 7:52 pm, 12th April 2016

My Lords, Commons Amendment 9 removes a clause that was inserted on Report in this House. This aspect of carbon accounting has been debated throughout the passage of the Bill, with amendments tabled in this House and the other place. I am sure many noble Lords will recall the debates; I will briefly go through the carbon accounting technicalities.

The Climate Change Act sets a target for the United Kingdom to reduce emissions by 80% by 2050, compared to 1990 levels. It also requires the Government to set intermediate targets to reduce emissions along the way—these are the carbon budgets. Carbon budgets are a cap on the emissions allowed over successive five-year periods. For example, the first carbon budget covered the period 2008 to 2012, and we met this budget with 36 million tonnes of carbon dioxide equivalent to spare. We set these carbon budgets 12 years in advance, so by 30 June this year we will be setting the fifth carbon budget, covering the period 2028 to 2032.

As well as setting each carbon budget, we also make regulations which set carbon accounting rules for each budget period. These rules, in addition to what is set out in the Climate Change Act, tell us how to calculate those budgets and, therefore, whether we have met them. Under the current rules, we count the United Kingdom’s actual emissions for some sectors, and for other sectors we reflect how the EU emissions trading system works. For transport, buildings, agriculture, light manufacturing and some other areas we count the UK’s actual emissions. For the power sector and heavy industry, we effectively reflect how the EU ETS works, instead of counting the UK’s actual emissions.

The EU ETS is a scheme in which emissions from power and heavy industry are capped and reduced at an EU level. Emissions are reduced by issuing a declining number of emissions allowances to member states which are then traded by power stations and industrial sites across the EU. Our current carbon accounting rules tell us to count the UK share of the EU ETS emissions cap for the purpose of carbon budgets. In this way, carbon budgets reflect how the EU ETS works. Noble Lords will recall that the previous amendments tabled in both Houses would have stopped us from reflecting how the EU ETS works in our accounting from carbon budget 5 onwards. We have been clear on the reasons why we cannot accept this approach at this time.

In short, this is a very complex issue. There are arguments for and against different accounting methods, and weighing these up needs careful consideration of a number of factors, such as potential impacts on consumers, businesses and industry, and on cutting emissions at least cost. At the moment, we are focused on setting the fifth carbon budget, and doing that by 30 June this year, as required by the Climate Change Act. We are doing this on the basis that it will be permissible to adopt the current accounting framework. Including these provisions in the Bill would have risked delaying setting the fifth carbon budget. It would have therefore risked missing the statutory deadline and not complying with the Climate Change Act.

Commons Amendment 12 is a technical amendment that reflects the fact that the clause on the United Kingdom carbon account was removed in Committee in the other place. It amends the Long Title of the Bill accordingly. I beg to move.