Level of carbon budgets

I beg to move amendment No. 31, in clause 6, page 3, line 37, leave out ‘26%’ and insert ‘35%’.

Here we go again. With your strictures in mind, Mr Atkinson, we will not repeat the debate about targets, but the amendment deals with the interim figure in the Bill. There are only two principal numbers in the Bill—60 and 26—and we are suggesting that 26 be replaced by 35. Why 35 specifically? It is because we asked, if 60 per cent. became 80 per cent. what would have to happen to 26 per cent.? It was no more sophisticated than that, but there are more fundamental questions at stake.

How should we view the trajectory for 2050? 2020 matters for a number of reasons. One is that it is the end point for a number of commitments, negotiations and promises at EU level and beyond. It matters also because of political accountability. Although I do not suppose that any current Ministers will be Ministers in 2050, or in senior positions—although you never know—it is at least credible that there is some political continuity over a decade, so having a realistic target for 2020 is more realpolitik than something decades hence.

There has been some discussion of whether we have a steady progression to 2050, and the 2020 target would be an interim target. There seem to be two counter-arguments to that. One is that there is “low-hanging fruit”: in other words, the easy carbon savings will be made first, so we ought to be able to get more than halfway to the 2050 target by halfway through the time period—2020 bisects the period between 1990 and 2050. The other counter-argument says, no, it takes time to innovate and for big capital projects to come on stream, so we should be more gentle with the earlier target. We have not, in our amendment, taken a view on that or changed the Government’s judgment on that. We have simply made a pro-rata change from 26 per cent. to 35 per cent. in the way that 60 per cent. was changed to 80 per cent.. So, assuming we end up with 80 per cent., via whatever mechanism, 35 per cent. has the same relationship to 80 per cent. that 26 per cent. had to 60 per cent.. We have not altered the judgment on whether it is easy or difficult to make headway in the earlier phases—that is a separate debate.

One difficulty we had in trying to prepare for this debate is the many different targets and objectives there are for 2020, with different baselines and different coverage. The Minister knows that there are targets for everything excluding the emissions trading scheme; targets based on 2005 figures; and targets that cover all greenhouse gases and some that cover only CO2. It is rather hard to get one’s head round which targets one is talking about and how they all fit together. I hope the Minister will give us a feel for how the number we end up with in clause 6 fits together with the various obligations that the UK has entered into and those that the EU has entered into, and with the Kyoto process.

The amendment is prompted in part by the debate on Second Reading, because it was repeatedly said, by a number of hon. Members both on this Committee and in the House, that we need to get on with the process. Although the Minister hypothesises doing nothing for 49 years and then suddenly doing it all in the final year, we all know that we have to get on with it. The interim staging post then becomes important as a signal of how serious we are. Our worry about leaving 26 per cent. in the Bill—I know the phrase used is “at least 26 per cent.”, but it could be “at least zero” and one could argue that we do not need to worry about it—is that if there is to be a number there, ’twere better that ’twere the right one.

To give a feel for what 26 per cent. would mean, the Tyndall Centre for Climate Change Research has looked at the current targets and has suggested that, under present targets, the total emissions we would be talking about over the period 2000 to 2050 would be 7.5 billion tonnes of carbon—massively in excess of the carbon  budget of 4.6 billion tons that is compatible with the 2° C goal we have all been talking about.

To be frank, 35 per cent. is at the cautious end of the range. A steady reduction across the whole period, compatible with the budget we have just discussed, would need 38 per cent. by 2020. We certainly have not over-egged this—if anything, it is at the cautious end of the scale—but to accept the amendment would be an important indication of how seriously the problem is being taken.

We have been talking about the 2050 target, and there are whole sections of the Bill about how that target can be amended, but as far as I can see there is nothing specifically about how the 26 per cent. target can be amended. All the stuff about amendments and consultation and so on relates to clause 2. Yes, there will be carbon budgets, and they will imply particular levels of cut, but as far as I can see there is no provision for changing the 26 per cent. figure. [Interruption.] If I listen very carefully, I might hear where it is. Is there a danger that we will leave in statute a number we are all agreed is wrong? [Interruption.] If the Minister could get his official to hold up that number of fingers again, it would be very helpful. [Interruption.] Ah, clause 7. In principle, all the focus is clearly on the 60 per cent. or 80 per cent. figure, and it would be a worry if we left the 26 in, particularly if we thought we would end up with 80 per cent.

I am grateful to the hon. Gentleman for giving way just before he concludes. I have followed his argument with great interest and I welcome his emphasis on this target, because it is the target that will bite on today’s decision making. Will he clarify the economic consequences of moving from the 26 per cent. to 35 per cent. target? The Committee ought to get a sense of the cost attached to the Bill.

As the hon. Gentleman knows, the final impact assessment provides those figures based on 60 per cent. and on 80 per cent., and 35 per cent. is the number consistent with 80 per cent. It is the stepping stone to 80 per cent. in the same way that 26 per cent. is the stepping stone to 60 per cent. All the analysis has been done by the Government on that basis.

The right hon. Member for Suffolk, Coastal rightly asked about the economic cost of not getting on with all of this. There is, as we have said, a huge potential benefit. To some extent, the argument for 35 per cent. is also the argument for 80 per cent., and I will not rehash all of that. There is, however, a separate set of arguments, first about the consistency of all the other 2020 goals we have entered into, secondly about the trajectory, and most of all about the importance of early progress. What matters is in the jargon “the area under the curve”, that is the cumulative emissions. If we are not quite serious that quite soon we are going to make big headway, then the goals for 2050 will not be worth having because we will already have done the damage.

Past sins are supposed to throw long shadows. One problem we face is that we have all experienced a long succession of energy Bills with no targets that could possibly relate to the ministerial experience of anybody on the Floor of the House. All  the targets were, at the very least, for times when those who set them would be taking well earned rests in retirement homes. Some have pointed out that energy Bills originally contained more targets, but they were taken out on the “better not” principle—a Minister should not promise to achieve something by a time when he might still be a Minister, because somebody might draw his attention to it.

I understand that point because as a Minister of State at the Ministry of Agriculture, Fisheries and Food, I proposed a review of a decision about fishing off the coast of north-east England to take place five years after the decision, never thinking that I would come back as the Minister of Agriculture, Fisheries and Food when the review was due to take place. I recognise the temptation to avoid such situations.

I therefore start by being relatively sympathetic to the amendment. If I had not already made it clear that I feel we must have certainty about the full length of the thing, I might well have joined the Liberal Democrats in supporting the amendment. However, I hope the Minister will reassert the truth that everything we do immediately is worth a great deal more than everything we do in 10 years’ time and that everything we do in 10 years’ time is worth a great deal more than what we do in 20 years’ time. If it were not for the ancient sins, I would be relatively happy, because it is manifestly true that getting things right now has a huge advantage over leaving them until later.

This is a matter of morality, because to leave the next generation with a worse problem than we have would be peculiarly unpleasant. I hope the Minister will reassure us by saying clearly that it is the intention of the Government to use whatever time they have to do as much as they can as soon as possible. That will make it easier to deal with these problems as we go along.

Secondly, I hope the Minister will reassure me that there will be no temptation within the five-year periods to leave that which needs to be achieved until the end. I accepted his explanation for having five-year periods and supported the idea. For the reasons that I have mentioned, it is easier and better to do things earlier. If things are allowed to pile up, there will come a stage when the problem cannot be solved, rather like the debt that some of our constituents come to our constituency surgeries to resolve. I am sure other hon. Members agree that often in one’s surgery, one thinks, “If only this person had come to me three years ago, I could have done something about it. The debt is now so vast that nothing can be done.” I am terribly keen that the Minister should commit himself to saying that this Government will do as much as they can as early as possible to meet the interim target and the five-yearly budget arrangements.

Thirdly, many of us expect the advice from the Committee on Climate Change to have a big effect on the interim target. If so, will the Minister ensure that the Government respond rapidly to give industry the opportunity to understand how the decision-making process should be affected? I do not think that we can resile from targets that are based on science on the basis that we cannot manage them, because climate change does not stop. The target is there not because we can do it, but because we know what will happen if we do not meet that target. I hope that he will undertake that,  should the target be significantly higher than the one in the Bill, he would take immediate action to spell out the Government’s view of what that would mean for personal action, governmental action and business action.

The point made by the hon. Member for Northavon about the capacity in the Bill to amend the 2020 target is an important one, and I hope that my hon. Friend the Minister will respond to that later. The basic principle that he is arguing for—that deeper cuts made earlier will be necessary and are more useful—is a sound one that all the scientific evidence supports and Lord Stern’s report endorsed.

I am deeply sceptical of our capacity to secure a cut of 35 per cent. by 2020. That is partly why, although I am instinctively sympathetic to the principle, I am nervous about suggesting that that target should be stated and supported at this stage. Of course, 2020 is conceivably the final year of the next Parliament but one. That is an important point to make, because it reminds us that this issue is about not just setting targets for the distant future, but matching targets to policies. Earlier I gently criticised the official Opposition and the disconnect between some of the ambitions for which they are arguing and the reality of their voting record. The same applies to the Liberal Democrats: there is a disconnect between their hugely ambitious efforts to support the highest targets and the reality of their support for particular policies when it comes to a vote in the House.

I touched on the point that there is nothing magic about 2020. Arguably, it would be more effective if we had not only a more stringent target for 2020, which I hope we will have, but an earlier target. The beauty of a target for 2015 is that it could well be the final year of the next Parliament, and therefore all parties would have to match up their support for a target with a set of principles, policies and mechanisms in their election manifesto. The argument for changing the target date from 2020 to 2015 is stronger than the argument for changing, at this stage, the current 2020 target of 26 per cent. to a higher target. Having a 2015 target, which nobody has yet suggested and there is no amendment on the order paper to that effect, would force each and every one of us and our parties, the leadership and the membership, to concentrate their minds on the kinds of policies necessary to deliver that target.

Finally, it seems that the argument I made in support of my proposal to move the 2050 target earlier may be the way forward. My argument was that there is a consensual way forward by reconsidering the date for the Report Stage of the Bill, together with the date that has been given to the Committee on Climate Change to produce its first report. We can find a way forward that everybody can agree upon if we bring forward the release of the Climate Change Committee’s advice to before the Report stage of the Bill.

The argument made by the hon. Member for Northavon has considerable merit. The substance of his argument, that early action is more effective and more cost-effective than delayed action is absolutely correct. That is the accepted wisdom—a point made crystal clear by Lord Stern and many others, and reinforced by my right hon. Friend the Member for Suffolk, Coastal.

However, I also have considerable sympathy with the point made by the hon. Member for Bury, North that there is nothing magic about 2020. That is why in the past the Conservative party has expressed considerable support for the notion of rolling annual targets, because it is vital that each Parliament and every year we have a clear trajectory to follow. We should audit our progress regularly, so that we do not—for reasons of political expediency, bad luck or a change in economic circumstance, or for reasons entirely beyond the control of the Government of the day—find ourselves suddenly towards the end of the accounting period engaged in a desperate game of catch-up, when really there is no hope at all. Therefore, there is a risk that we do not meet that target, whether the 2020 target is a reduction of 26 per cent., or higher. To me, as a layman, there is considerable merit in having a higher target. I appreciate the arguments in favour of 35 per cent. Equally, I agree with the hon. Member for Bury, North that that is going to be a stretching target. However, it is one that we have to show real courage and vision in supporting, not only to do our part in the war against climate change, but to ensure that we are able to reap the opportunities that will come from the new low-carbon age.

We must ensure that UK plc is a real first mover and that we pioneer the new low-carbon economy. Our industry and commerce will be the first truly low-carbon economy in the world only if we move ambitiously on those markets. If we do that and seize the opportunities, we can turn this around. For all the problems that will necessarily arise as we try to wean ourselves off old-fashioned fossil fuels, there will be opportunities that will give rise to economic growth, new industries and new jobs. Look at the jobs created in Germany, which has a far more ambitious and effective policy of pursuing renewable energy. More than 200,000 new jobs have been created in the renewables industry there, and within the next couple of years that industry is set to overtake the German car manufacturing industry, which was one of the largest employers. It is important that we balance the opportunities and difficulties of meeting those stretching targets.

Although the Conservatives will support a yet more stretching target, and we will do everything we can to implement a more ambitious and dynamic policy to push forward industrial change to meet those near-term targets, we come back to our belief that those targets should be set by the Committee on Climate Change and that they should be testing. We should not underestimate the difficulty and complexity of working out the targets. It is therefore right that they should not be set on the say-so of politicians or as part of a bidding war between the parties about who is the greenest of them all. If we are going to carry the population with us, we have to show that the targets are based on sound scientific evidence. We have to show the working.

Although I would like the Climate Change Committee to be able to give its view on the targets before the Bill completes its passage through Parliament, I think it most important that the committee is the body that has the say-so on raising the figure. It is clear from clauses 7(1) and 6(1)(a) that there is a mechanism within the Bill to amend the 2020 figure, so that need not concern our Committee. Therefore, while not doubting for a moment that we need to be ambitious and to move  early, I would oppose the amendment, as we believe that it should be the Climate Change Committee that informs any necessary move upwards.

I am grateful to the hon. Member for Northavon for tabling the amendment. When I saw the amendments, I thought that the debate on this one would be the most important, and as he rightly said, we have already debated its principles in Committee—thankfully.

I shall address the specific first and then the general. The specific point is contained in clause 7(1), and it is amplified in clause 8 in respect of the proposed duties on the Secretary of State and his relationship with the committee. This debate parallels the debate on the 60 per cent. and 80 per cent. long-term target, and the three points that the right hon. Member for Suffolk, Coastal made give us the reasons why. Greenhouse gases accumulate in the air, and some of them last for 100 years—CO2 being a case in point. Therefore, the second budgetary period must take into account the accumulated emissions of the previous period.

That situation is not like opening a window to let the gas drift away when the stove has been turned on but not lit; it does not work like that. It is more like a car engine running in a sealed garage: one has to turn the engine off quickly to have any hope of staying alive. That accumulation of gases is the point.

On the parallel with the level of debt, when a constituent is heavily in debt, it is in one sense easier than when they are less in debt. As the old adage goes, a £100 overdraft is my problem; a £1 million overdraft is the bank manager’s problem. Unfortunately, as the right hon. Gentleman said, there is no bankruptcy with greenhouse gas, so his point about rapidity and the point in the amendment tabled by the hon. Member for Northavon are absolutely right. The rapidity of the measures will build on the existing European trading scheme and climate change agreements. There is also the carbon emissions reduction target scheme, as well as the carbon reduction commitment, which starts in 2010 and will have a profound effect on attitudes.

Those schemes herald the way for the Budget, and as the Chancellor has said, following the committee’s advice, the carbon budgets will be announced in spring next year. I am grateful to the hon. Gentleman, but I shall not go into the detail about why the Government do not like the 35 per cent. target at this stage. It was debated significantly during pre-legislative consultation and in the other place. Indeed, to try to satisfy that figure, the Government amended the clause in response to similar points made in the other place.

The hon. Gentleman, however, asked an important question about how the figure fits into the European and international contexts. We have picked the range before us to fit the European context. At least 26 per cent. is itself a stretching target for the country, but it is consistent with the European Union’s greenhouse gas target for 2020—whether the current 20 per cent. reduction, or a 30 per cent. reduction should the EU be able to offer it as an incentive to the rest of the world for an international agreement.

We have examined the trajectory to ensure that it works in both European scenarios, and indeed it will do  so consistent with the long-term target. The hon. Gentleman will now ask me about the 80 per cent. figure, and he will have a fair point.

I would be grateful if the Minister answered a question that I have not yet asked, but this is the question I was going to ask: if the EU goes to 30 per cent. because there is global co-operation and the UK contribution is 26 per cent., will we not underperform relative to the rest of the EU, or is he saying that we would then bump up our 26 per cent. target to 32 per cent. or whatever? Is that implicit in what he says?

We would then have to look at the trajectory. I hope that that does not sound like wriggling. That is why we thought the point made in the other place was valid. The bigger consideration is that if we change from CO2 only to greenhouse gases it would affect current projections. A 26 per cent. reduction in CO2 emissions could reduce the UK’s emissions of the basket of greenhouse gases, including CO2, to around 32 per cent. below 1990 levels by 2020. That is a potential change that I believe would be beneficial.

To answer the question, we believe that that is consistent, but it would have to take into account three factors: the long-term goal, tightening the target by including all gases and the trajectory we would take in the first budget period. That in turn would have a consequence for the second budget. In short, we do not think that 35 per cent. is realistic, so we have said “at least 26 per cent.”, but we want the independent Climate Change Committee to look at it and advise us.

My hon. Friend the Member for Bury, North made the point about the practicality of 35 per cent. He also made an important point about the length of the targets period. We are talking about 2020; that is one option we have committed to. The crucial decision to be taken, however, is on the period covered by the post-Kyoto agreement. In my view, there is a danger that that period is too long, and to get the early action that we have talked about we may need to look at a different trajectory. The point of all this is that the area under the curve, as the Americans describe it, is what matters.

The hon. Member for Bexhill and Battle made a point about annual targets. We are coming on to that. In practice, once the five-year period is set, it would not take a journalist too much trouble—even our journalists can operate a calculator—to divide by five and work out what the annual measurement of progress would be. He said “measurement” as well as “progress”.

I appreciate the Minister’s style and conciliatory approach. I was concerned when, towards the end of his comments, he said he thought 35 per cent. unrealistic. Given that he said this morning that 80 per cent. is the Department’s internal working assumption, it worries me that 35 per cent. is deemed unrealistic, as 35 per cent. is to 80 per cent. what 26 per cent. is to 60 per cent. Is he therefore end-loading it, as the right hon. Member for Suffolk, Coastal suggested?

Is it the position of the Government that although we are not going to get to 35 per cent. by 2020, we are working under the assumption that we will need 80 per cent. by 2050? A huge amount of late effort would then be needed. How well does that sit with what we have all agreed is the need for early effort? That troubles me somewhat. There is no great point in repeating the same  issues we have already discussed. Suffice it to say that it is good to get on the record the considered opinion around the Committee of the importance of early action.

I was interested in the suggestion made by the hon. Member for Bury, North that we also need to look at targets before then. I suppose they are implicit in the carbon budget process. Whether 26 per cent. or 35 per cent. bites any more than any other carbon budget number does—it is not obvious to me that it does—there is a duty to hit the carbon budget all the time once it is in place.

I am slightly troubled by what the Minister says, but I am not sure that a Division would achieve anything at this point. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 6 ordered to stand part of the Bill.