Clause 25

Climate Change Bill [Lords] – in a Public Bill Committee at 7:15 pm on 1st July 2008.

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UK domestic effort

Photo of David Maclean David Maclean Chair, Statutory Instruments (Joint Committee), Chair, Statutory Instruments (Select Committee), Chair, Statutory Instruments (Joint Committee), Chair, Statutory Instruments (Select Committee)

I beg to move amendment No. 83, in clause 25, page 13, line 22, at end add—

‘(3) In this section “sinks” mean land-based carbon sinks which have been assessed by the Committee on Climate Change as being, or likely to be permanent.’.

Photo of Frank Cook Frank Cook Labour, Stockton North

With this it will be convenient to discuss the following: Clause stand part.

Government new clause 2—Duty to have regard to need for UK domestic action on climate change.

Photo of David Maclean David Maclean Chair, Statutory Instruments (Joint Committee), Chair, Statutory Instruments (Select Committee), Chair, Statutory Instruments (Joint Committee), Chair, Statutory Instruments (Select Committee)

Where I am coming from is my belief that carbon sinks have a vital role to play in the United Kingdom, and certainly internationally. This is not the point at which we should talk about the vital role that carbon sinks can play in the rain forest, but I hope that the Government will encourage companies to invest heavily in them. However, in the United Kingdom, too, there is a great role for carbon sinks in our forests, peat lands and bogs. I do not want them discredited because  of some inappropriate carbon-sink trading that might be going on, or some inappropriate or dodgy dealing that does not stack up.

As I read about carbon sinks, discovering the wonderful role that our forests and peat lands could perform, I came across more and more stuff on the internet from environmental groups that had been rubbishing carbon sinks on the basis that the schemes could be a bit dodgy or the solution was not permanent. The groups suggested that if the world warms up, our forests in this country could get warmer and that rather than our peat bogs and carbon sinks retaining carbon, they could be releasing it, so let us not touch them. Some of the criticism had a rather puritanical and misguided streak, saying, “Yes, carbon sinks may be good, but they do not cause enough pain, and what we really ought to be doing in the United Kingdom is making sure that we are closing down industry and making people and businesses suffer, so let us not pay attention to the trees and the forests and the land that we have and let us not exploit it to the full.” That is barking. If we are to be successful in meeting our climate change targets and are to do genuine good, yes, we must have targets for industry to reduce the amount of carbon emissions and for the rest of us to drive less or to have a cleaner or lower carbon lifestyle. However, for goodness’ sake, let us exploit some of the things that we have in this country and expand them.

Carbon dioxide emissions from soils totalled 13.69 million tonnes in 2005. By comparison, carbon dioxide emissions from domestic aviation were 2.47 million tonnes. There used to be an old gardener on the television years ago—was he a Yorkshire gardener?—who said, “The answer lies in the soil.” The answer in some part does lie in the soil. If we maintain it and keep it properly, we will be locking carbon in for evermore. All the peat lands in England and Wales would absorb around 41,000 tonnes of carbon a year if they were kept in a pristine condition. However, they could emit up to 381,000 tonnes of carbon a year if they were damaged by practices such as excessive burning, drainage and overgrazing. The restoration and enhancement of peat lands could save 400,000 tonnes a year, which is the equivalent to the greenhouse gas emissions from 1.1 billion car miles or 84,000 family-sized cars. In addition to that, not only do we lock in the carbon, but we would safeguard the habitats of 5,000 different species of plants and animals.

I am sure, Mr. Cook, that it will be at the forefront of your mind that Natural England held a conference headlined “Better Bogs Create Carbon Sinks”. The “better bogs” conference, which was officially entitled “Moors for the Future”, in the Peak district, said:

“We must protect and enhance our upland peat bogs—they are the UK’s most important and vulnerable carbon store.”

That was the message from Natural England. Sir Martin Doughty, the chair of Natural England, said:

“Evidence shows that the degradation of soils through over-grazing, fires, drainage and erosion is releasing five times more carbon dioxide into the atmosphere every year than from all domestic flights in the UK.”

Peat soils contain a huge amount of carbon. If it is locked in, it is okay, but if there is degradation and the peat land is not looked after properly, it becomes a major source of emissions.

I see the Minister nodding—I have rabbited on about so many different things that he was bound to have nodded at something. If the Government accept the analysis that our carbon sinks are legitimate and good, and that we ought to enhance them, I do not want anyone rubbishing them in the next few years and deterring businesses from investing in them. I am happy to have businesses in my constituency that might be emitting carbon doing a carbon-trading deal and investing in peat bogs, new forest—or woodlands—and in trees that, hopefully, will not catch fire accidentally or be cut down. We must distinguish between that sort of forestry and planting trees for 20 or 30 years that might soak up carbon while they are growing, but which are then cut down regularly. That is not what I have in mind.

The only way in which we can make the approach completely legitimate and stop some of the misguided environmental groups from attacking our carbon sinks and the planting of trees is to make sure that the Committee on Climate Change has the role of approving carbon sinks. It is no good me or anyone else coming along and saying, “I am just going to have a carbon sink there. I am investing in this and buying a bit of hillside, which has good grouse shooting and a lot of peat. I am therefore doing my bit as a carbon sink, so can I please have that accredited against me?”

If we are to have legitimate and kosher carbon sinks, the Committee on Climate Change should accredit them or have an assessment system for saying, “Yes, this is a good carbon sink and, as far as we can say, it has the possibility of remaining permanent, so Natural England and others can put conditions on it to make sure that the peat is not eroded and not dug up, drained and released.” We want a legitimate verification system that keeps our carbon sinks as a valuable resource for reducing carbon and locking it in, and that does not allow people to discredit the whole concept.

I conclude with those words because I am worried that some people want to discredit the concept of carbon sinks for their own ends. Yes, the UK should be doing a lot. Yes, our industry should be producing less carbon, but let us not rubbish carbon sinks as a natural and perfectly acceptable form of locking in carbon that should be expanded and increased, and that should not only help British industry, but contribute to the world’s reduction of carbon in the atmosphere.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Environment, Food and Rural Affairs)

I congratulate my right hon. Friend on speaking to the amendment so eloquently and with such knowledge. I wish to restrict my remarks to clause stand part and Government new clause 2. I place on record how firmly we are wedded to the wording and the principle of clause 25. In my humble view, it goes to the heart of what the Government and all of us want to achieve in support of a climate change strategy. Our aim is obviously not only to come forward with a Bill that is groundbreaking in its own way, but to create a low-carbon economy. By being one of the first movers in that regard, it is important to aim primarily at reducing pollution in this country, and not to export the problem through the use of more than 30 per cent. of credits, but to reduce emissions and, for want of a better term, to reduce pollution in this country.

There are few more important clauses than clause 25. It puts the responsibility firmly on the Secretary of State to ensure that at least 70 per cent. of the effort  undertaken to reduce emissions to meet our carbon budget is achieved domestically. The original Bill—indeed, this is the case for the Bill without the clause—would have contained no such clarity. I pay tribute to Conservative Members of the other place who eventually won the argument for including clause 25 in the Bill, with the help of Liberal Democrat peers, which was much appreciated. The Conservative party considers that the removal of the clause would seriously weaken the Bill.

We have received strong support for keeping clause 25 in the Bill in a joint statement from the WWF-UK, Scottish and Southern Energy, Christian Aid and the Royal Society for the Protection of Birds. In their briefing, they go right to the heart of the matter when they say:

“Removing clause 25 from the Bill would undermine a key objective of the Bill—that of establishing a framework which provides UK companies with the long-term certainty that they need to incentivise sustainable and low carbon investments. It would also leave unanswered the question—to what extent will the UK rely on buying credits or emission allowances from other countries to meet its targets? Without a requirement for clear and strong domestic action, the UK could in theory meet its targets under the Bill without any action to decarbonise the UK economy—an outcome that would do little to promote UK leadership in the international climate negotiations.”

If one accepts that the point of the Bill is, as has been said, to provide the market and companies operating within it with the long-term clarity and certainty that they need to compete and be the best in the world, the clause should be retained.

The clause says that the Secretary of State must ensure that at least 70 per cent. of the efforts undertaken are achieved by

“domestic emissions reductions and domestic removal by sinks.”

It goes on to define “effort” as

“the difference between the present UK carbon budget and the verified emissions for the previous budgetary period.”

Having compared the clause with new clause 2, I humbly submit—I hope that the Minister will respond positively to this plea—that the wording completely misses the point of seeking to obtain the highest reduction. Clause 25 writes into the Bill a provision in relation to 70 per cent. of domestic action and will thereby reduce pollution at home; it will not just export the problem. That will still leave a 30 per cent. allowance for international credits and will fit and be compatible with the EU ETS.

I commend clause 25 to the Committee and make a plea to the Minister to keep it in the Bill. Perhaps he will also withdraw new clause 2.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Environment, Food and Rural Affairs 7:30 pm, 1st July 2008

I agree with the hon. Lady that the clause is fundamental, and I would like to address the clause stand part issue. In my short contribution, I shall address some misunderstandings or myths that have surrounded the debate, which we heard on Second Reading.

The first such myth, which is often quoted, is that a tonne of carbon is a tonne of carbon, and that it is of no great consequence, as far as the planet is concerned, where it is saved, as it will have the same adverse effect wherever it goes up. It is interesting that the person whom the Government have asked to supervise the process, Lord Turner, does not take that view. In discussions in another place he has said that

“it is not absolutely the case that a tonne of carbon saved in every country of the world is precisely the same. There is a value in hard emission reductions targets in developed countries because they will drive the changes in behaviour, energy efficiency and technology which will then be required across the whole world.”—[Official Report, House of Lords, 11 March 2008; Vol. 699, c. 1412.]

So the argument that it is all the same whether we do it ourselves or buy it in is not accepted by Lord Turner. Given that he has been charged with advising the Government, it seems a shame to pre-empt what he will say by taking out some sort of assumption about the importance of domestic effort.

There are two conflicting arguments, one of which is that we just want to save the stuff. The other says that there is a leadership role both from the point of view of British industry, as Conservative Members have said, and—I hesitate to use the “M” word at this point—from a moral dimension. That moral dimension says that because, to a greater or lesser extent, we caused the problem, we have a responsibility to make the first moves in clearing it up. That means that we should play our part and make the adjustments sooner.

If we accept the long-term goal, whether that is described as a zero-carbon Britain or a low-carbon economy, the sooner we get on with it the better. Clause 25 allows us to put off the evil day—or it might be a good day, depending on how we look at it—by getting savings elsewhere. Our argument for retaining clause 25 is that there is a strong case on moral, practical and even self-interested grounds for doing far more of this ourselves than might otherwise be the case.

The second principal argument used against any restriction of the sort contained in clause 25 is that it messes up emissions trading. The point about emissions trading is that it is an elegant, market-based solution and people will get the cheapest savings possible. People who find it hard to make emissions savings do not have to spend huge amounts of money as they can pay somebody who finds it easy to make those savings and the aggregate costs are minimised.

As an economist, I can see the attraction of that, but the working of the European emissions trading scheme means that there is no conflict between having some sort of cap on the extent to which we can opt out of domestic effort and the ETS. That is because the ETS is operated at an individual business location level. In other words, Governments agree a national allocation and that is subdivided between individual operators in the market. Once that has been done, businesses either meet their carbon emissions cap or they under-emit and sell their credits or over-emit and buy them in. That is true whatever we do in Committee this afternoon. It does not matter whether it involves 100, 0, 30 or 70 credits and so on. Whatever it is, businesses still have their caps and permits and they still buy and sell credits.

Nothing in the Bill will change the duties of businesses to comply with their emissions caps, so the existence of a cap and an emissions trading scheme has no bearing on that—it is totally unaffected by clause 25. On Second Reading, at least one Minister said that we should not do this as it would interfere with emissions trading, but it has no bearing on that whatever.

If we delete clause 25, there could be wholesale import, export and crediting schemes and so on. However, we would get a perverse result. Half our national emissions are covered by the emissions trading scheme. That means that the total of emissions from that source is  given. Therefore, if every credit that we buy in is a saving on the national account and anything that we sell is a debit, there is no benefit from Government policies that incentivise industries within the scope of the ETS to cut their emissions, as that has no impact on the national carbon account.

For example, within the scope of the ETS, the Government have a policy that might get a particular industry to reduce its carbon emissions, which is great, but the cap has already been fixed, so it comes in under the total, the business sells its surplus credits abroad and that comes through on the national carbon account. We already know what the figure will be for that half of the economy.

A worse problem is that the half of the economy with the cap and trade will probably reduce its carbon emissions more slowly than we want to be consistent with the rest of the Bill. Because that section of the economy is fixed because 100 per cent. trading is allowed, the other half of the economy potentially has to do a lot more of the legwork, and that is inefficient. It is the opposite of the flexibility that the Minister talked about—it creates artificial divisions between the half of the economy that is in the ETS and the other half that is not. Government activity to incentivise business within the ETS to do better on carbon is a waste of time from the point of view of targets. If the Government want to hit their targets, they must do far more with the other half of the economy, and that is profoundly distorting.

Cutting the story short, there is no incompatibility between clause 25 and emissions trading, which does not undermine or affect it in any way. Deleting clause 25 would mean that everything that that half the economy did was already predetermined in terms of the national carbon account, so the other half would have to make most of the effort, which seems wrong.

Fundamentally, there is a strong, self-interested case for national leadership, as well as a strong moral one, of the sort embodied in clause 25. If the Minister wants to return with a different number, we would be happy to debate it—he could say that our 30 per cent. is as arbitrary as his 1 per cent. It is a case of more so than not: 70 per cent. represents more domestic effort than not, but we could have a sensible debate about the figures.

Although new clause 2 is a token nod in the right direction, just “having regard to” the merits of domestic effort does not really do the job, so I hope that the Committee will resist new clause 2 and retain clause 25.

Photo of Nick Hurd Nick Hurd Opposition Whip (Commons)

We on the Joint Committee on the Draft Climate Change Bill spent much time on this issue, because as previous speakers have said it is incredibly important. Our conclusions will have significant economic consequences for British taxpayers and shareholders in British companies.

I know that the Minister understands all the arguments involved, and new clause 2 is wholly inadequate—it does not mean anything and sends a dangerous signal to British businesses that we want now to commit to the long-term investment decisions that will make the difference. In that context, they would need to receive a strong signal about the commitment to reduce domestic emissions. We must not just buy our way out of the problem in international markets.

We do not only want British companies to reduce carbon emissions—this is not just a carbon issue—but, as my hon. Friend the Member for Vale of York said from the Front Bench, we want British companies and institutes to get ahead in the journey towards a low-carbon economy, because that is in our long-term economic interests.

The Minister has spoken about striking a balance, and he knows, as does everybody who has considered the issue, that important relevant tensions and currents run against each other: on the one hand, the responsibility of any Government and Parliament to ensure that our route to reducing carbon emissions is as cost-effective as possible—the same goes for anyone running a British company in terms of their responsibilities to shareholders —and, on the other, our moral responsibility to take a lead as a developed nation in reducing emissions and our long-term economic interests in being at the vanguard of a low-carbon economy. Those tensions must be reconciled.

With your indulgence, Mr. Cook, I wish to make a simple point about transparency. As has been said, the 70:30 figure is arbitrary. There is no science to it—to some degree, it has been plucked out of the air to generate debate and to make an important point, which is that we need to reach an agreement on where to strike this balance.

Up until now, the Government have not been transparent on that issue. In the Environmental Audit Committee, we tracked the progress of the 2010 carbon target. When that target was published, there was no mention of buying international credits. It was understood that it would be all about UK domestic emission reductions. It was only when the revised climate change programme was published in 2006 that the Government began to count the use of carbon credits purchased from abroad.

The Environmental Audit Committee was quite shocked by a review of the European emissions trading scheme. Our report states that

“without the expected contribution of Phase II of the EU ETS, UK carbon emissions in 2010 are projected to be only just over halfway to the 20% target, a very significant shortfall.”

There has been no transparency up until now about the degree to which we meet our international agreements through the purchase of international credits. That issue needs to be brought out of the darkness and into the light.

I do not know whether 70:30 is the right balance—I do not know whether the Minister even knows what the right balance is—but we need a transparent number, a limit and a threshold around which we can build a consensus. New clause 2 is too vague and will not do.

Photo of Tony Baldry Tony Baldry Conservative, Banbury

I think that every member of the Committee will have received a copy of the joint statement by the World Wide Fund for Nature, Scottish and Southern Energy, Christian Aid and the Royal Society for the Protection of Birds—an unusual combination bringing together development non-governmental organisations, wildlife NGOs and business. Two paragraphs from that statement are worth putting on the record:

“These organisations support the amendment as a necessary requirement to ensure that the UK becomes a low carbon economy and does not rely too heavily on carbon credits. A major benefit of the amendment is that it would bolster the UK’s leadership on climate change by ensuring significant reduction efforts are made  at home. Financial flows to developing countries should come on top of these actions and not instead. Finally, the amendment would not conflict with the UK’s participation in the EU Emissions Trading Scheme.

The Government’s proposed replacement amendment (New Clause 2) that ‘the Secretary of State must have regard to the need for UK domestic action on climate change’ would provide next to no clarity or certainty on this issue. Indeed, in WWF’s opinion the amendment is almost meaningless in addressing the key issue of whether the UK sets itself on the path to becoming a low carbon economy and avoids locking itself into new high carbon and long-lived infrastructure.”

The Minister can ignore the Committee and he can ignore the House of Lords, but I caution him that it is not necessarily sensible to ignore the combined postcard-writing power of the WWF and the RSPB.

Photo of Phil Woolas Phil Woolas Minister of State (Environment), Department for Environment, Food and Rural Affairs 7:45 pm, 1st July 2008

I ignore those organisations at my peril, and spend many late nights signing letters to hon. Members who have forwarded those postcards. I am grateful to people who write in.

May I deal with amendment No. 83 first? The debate has been important and perhaps the important points made by the right hon. Member for Penrith and The Border have been forgotten. He asked for an assurance that we take account of the carbon sinks in the United Kingdom. As the Member for Oldham, East and Saddleworth, I understand the point, because much of the measurement of moorland peat is done in my constituency, and I have been following that for some 10 years.

I can assure the right hon. Gentleman that the carbon sinks are included in the targets. The Bill relates to net UK emissions—emissions less removals by UK carbon sinks. That provides an important incentive to promote carbon sinks in the United Kingdom. Indeed, the Forestry Commission is one of the most successful organisations in the world at increasing forestation in percentage terms, but not in total acreage, and has responded to that very point. It relates to the subsequent debate about the balance between overseas and domestic emissions. The net emissions are there.

I can provide further reassurance. There are already well-established mechanisms in place to ensure that removals from sinks are properly assessed. Information must be compiled in accordance with the same systems and international methods as for the annual emissions inventory which the UK is already required to submit to the United Nations framework convention on climate change. The UK emissions inventory follows such guidance from the intergovernmental panel on climate change which is reviewed every year by the United Nations—that is, by international experts—to ensure that such practice is followed. We intend to follow exactly the same guidance in compiling the emissions statement, including information on removal by sinks under clause 15. In fact, clause 29(2) requires that the amount of UK emissions and UK removal of greenhouse gases must be determined consistently with international carbon reporting practice, which is defined subsequently in clause 86.

For those reasons, the right hon. Gentleman’s amendment is unnecessary, but I entirely agree that it backs up the point about basing our net emissions measurements on science and not on a political fix. It also, conveniently, helps me with my argument against subsequent speakers, and I shall explain why.

This is the heart of the debate and hon. Members on both sides made their arguments strongly and passionately. Let me try to explain the Government’s argument. We have discussed Government amendments to clause 14 on the balance between UK emissions, action within the EU, and international action. That was a key issue, as has been said, when the Bill was debated in the other place, and the Government have given it significant consideration since then. In the debates on the Bill there has sometimes seemed to be a mistaken idea that this Government, or a future Government, will do anything they can to buy their way out of reducing UK emissions, by purchasing international credits instead. However, we all recognise that the world as a whole will only tackle climate change if developed countries such as ours reduce their emissions significantly. That is why we have tabled new clause 2. If accepted, it will place into legislation for the first time the need for UK domestic action on climate change. The new clause is intended to set out plainly the belief of Government and, we hope, Parliament that we need to reduce our domestic emissions if we are going to meet our targets and encourage others to reduce their emissions as well.

However, we also must not lose sight of the reality that climate change is a global challenge. We need global emissions to halve by 2050, based on the 2 deg C increase that we talked about at clause 1. The international carbon market will be the key to achieving the scale of investment flows necessary to achieve that, which are estimated to be in the hundreds of billions of dollars, over and above the additional public money—additional to official development assistance—that is required. We need action at European Union and international level, as well as at domestic level, if the world is to tackle climate change. We do not believe that the policy outlined in clause 25 is the right one. Apart from the point that clause 25 is inflexible—I do not want to debate that as it is helpful to specify a figure—the 70:30 limit is arbitrary.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Environment, Food and Rural Affairs)

The Minister will be familiar with the conclusions of the Environment, Food and Rural Affairs Committee. It positively recommended that the provision to allow for international credits should be strictly limited to a quantifiable amount, to be advised by the Committee on Climate Change for each budgetary period. What is absent from the new clause is the recognition that although we want to contribute, as my hon. Friend the Member for Ruislip-Northwood said, in the original budget for 2010 there was no mention of any part being allocated to international credits.

Photo of Phil Woolas Phil Woolas Minister of State (Environment), Department for Environment, Food and Rural Affairs

Indeed, we looked at the Select Committee report and other recommendations when considering the new clause and I hope that the hon. Lady expects an honest disagreement. Let me explain why there are problems with the idea of setting a fixed limit in the way in which clause 25 suggests. The UK’s policy in this regard is firmly rooted within a joint-European Union effort. That is one of the most successful, if not the most successful, area of European Union solidarity in terms of world leadership. As it stands, clause 25 fails to recognise the crucial role of action at the European Union level.

The hon. Member for Northavon made some important points about the construct of the ETS. If one looks at clause 25 in the context of the ETS, it creates an  artificial distinction between domestic action and other action in the European context. That would create a significant risk of cutting across the ability of the United Kingdom’s companies to participate freely in the EU ETS. The EU ETS is a stepping stone to the ultimate prize—a global carbon market that sets an absolute cap on emissions. The rest of the world is not only watching the EU very carefully, but in some cases, including within the United States, is now following it. Under the EU ETS rules, it does not matter if UK companies reduce their own emissions or buy allowances from another EU country, where the same emissions reductions might be made more cheaply. However, under clause 25, emissions credits bought under ETS, even from another developed country such as Germany or France, would count as being overseas action and would be counted against the 30 per cent. limit or any other limit that we would set. That would create huge uncertainty and would risk increasing costs as well, as the Government have little or no control over the commercial decisions in the ETS.

Let me quote what Lord Turner of Ecchinswell said on this issue when he appeared before the Select Committee on Environment, Food and Rural Affairs, which the hon. Member for Vale of York mentioned:

“Of course, it is important within the European Emissions Trading Scheme to realise that we cannot actually in advance define the maximum amount of buy-in which will occur from the rest of Europe to the UK. That is not a policy variable which the UK Government or any other government” within the EU—actually, he did not say “within the EU”, but that was the context—

“can pre-fix within the scheme. The amount of buy-in will be whatever the market determines and will only become clear as we move towards the end of a budget period.”

Yet clause 25 invites us to do the exact opposite, defining now, in 2008, what the maximum amount of credits will be, as bought in from within Europe and from the rest of the world, all the way to 2050 and beyond.

Let me further back up my argument by mentioning what Lord Taylor of Holbeach, the Opposition spokesman, said in the other place, when discussing the amendment:

“A fixed percentage in the Bill may not be the best way of going about that. that is, addressing decarbonisation—

“We understand the difficulties in placing such a precise figure in the Bill, which range from the constraints of the international negotiation tables to the fact that the carbon market will look a lot different in 42 years.”—[Official Report, House of Lords11 March 2008; Vol. 699, c. 1407.]

There is a difficulty, first, in the context of the ETS.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Environment, Food and Rural Affairs

The Minister is answering the point thoughtfully and seriously, but he is saying essentially that the UK Government are indifferent about domestic emission cuts and that those bought in from, say, Germany—a country like ours—or Poland, or a much poorer country. However, our argument is that it is not a matter of indifference. Surely, there are strong arguments why the UK would want, as a positive policy goal, to favour domestic cuts, as even new clause 2 says. His argument that we should just be neutral within the ETS is inconsistent with his own new clause 2.

Photo of Phil Woolas Phil Woolas Minister of State (Environment), Department for Environment, Food and Rural Affairs

I have so far advanced the argument about the ETS. I have another argument that I wish to develop, which encompasses the hon. Gentleman’s point.

Of course, we recognise how important it is that the Bill demonstrates the need for domestic action to reduce UK emissions and—to address the point that the hon. Member for Ruislip-Northwood made—to ensure the maximum possible transparency about our plans for meeting targets and moving the UK to a low-carbon economy. That is why we have tabled Government amendment No. 8, which we have already discussed, and new clause 2, which we are debating now.

New clause 2 would place the Secretary of State under a legal duty to consider the need to reduce UK emissions of greenhouse gases when considering how to meet the targets and budgets. That important step forward represents a constructive response to the concerns expressed in Parliament. It will, if agreed to, set out unequivocally Parliament’s desire that the UK should move to a low-carbon economy. New clause 2 will mean that, when developing policies to meet carbon budgets, the Secretary of State must keep in mind the need to reduce UK emissions and the positive benefits in doing so, including improved energy efficiency, which will of course reduce energy bills; demonstrating our commitment to take action on climate change to international partners; helping to meet our international obligations; helping to meet other policy objectives, such as improving air quality; and addressing the advantages to UK competitiveness of developing the technologies and industries that can achieve low carbon. We agree that there needs to be a balance. It is up to developed countries to show the way.

The global low-carbon energy market is already worth $38 billion and employs 1.7 million people. Within the UK, the environmental goods and services market is likely to grow from £25 billion in 2005 to nearly double that by 2015. We believe that, taken together, the Government amendments will ensure that decisions on the appropriate balance between action at domestic, EU and international level are first, based on independent and expert advice from the Committee on Climate Change, secondly, transparent, thirdly, sufficiently flexible to take account of changes to the international context between now and 2050, and fourthly, guided by the need for UK domestic action on climate change.

The accusation is made or the implication is drawn that the United Kingdom Government want the policy to pay off our conscience—so we can pay someone else to reduce emissions. That is the proposition that is made; I will not use the word allegation. That allegation misses two fundamental points. [Interruption.] Sorry, I meant to say proposition. The hour is late, Mr. Cook and I, like you, am bored with my voice. The proposition misses two fundamental points. First, the United Kingdom’s CO2 emissions within our borders are 2 per cent., but the emissions from United Kingdom’s world economic activity are around 15 per cent. Our carbon footprint goes way beyond our shores. The mechanisms that we believe that we must have to address global emissions must take that point on board. The 15 per cent. carbon footprint is our goal, not just the 2 per cent. Of course the credibility of the clean development mechanism and  the other mechanisms is crucial, but one should not confuse problems with the CDM with arguments against the need for offsetting.

Secondly, on the whole, developing countries in the G77 welcome and support this approach, because it provides them with a flow of finance in addition to overseas development aid that can help to ensure that their prosperity can grow through low-carbon technology. When one debates in the international forums on 30:70 or another figure, one hears a plea from the developing to the developed countries to allow maximum flexibility, so that the carbon markets can provide a flow of finance to develop economic prosperity in those countries. I ask colleagues to consider those two points when they make their decision.

Photo of Nick Hurd Nick Hurd Opposition Whip (Commons) 8:00 pm, 1st July 2008

No one disputes the value of the international capital flows that the Minister has described, but the debate is about finding a balance. I have listened to him carefully and I think that the record will show that in the previous debate he talked about the Government’s desire to have the flexibility to go up to 100 per cent. of international credits. Where is the reassurance about the transparency that I was seeking? Where in this process do the Government imagine we will have a transparent threshold for the deployment of international credits, or are they trying to avoid that completely?

Photo of Phil Woolas Phil Woolas Minister of State (Environment), Department for Environment, Food and Rural Affairs

I am grateful to the hon. Gentleman. He asks questions and follows the debates closely. The reassurance that he seeks is in the amendments that we have already tabled. Clause 35(2) requires the Committee on Climate Change to comment on action, and new clause 2, which the hon. Gentleman said was inadequate and not tough enough for him, places a new legal duty upon us, as I have described. I hope that the combination of those two factors, which the Government have considered since the debate in the other place, will be enough. We are in danger of throwing the baby out with the bathwater by not grasping the profound importance of placing our statutory, legally binding commitment within the international context of the EU and wider international agreements.

Photo of David Maclean David Maclean Chair, Statutory Instruments (Joint Committee), Chair, Statutory Instruments (Select Committee), Chair, Statutory Instruments (Joint Committee), Chair, Statutory Instruments (Select Committee)

I shall be brief, as I anticipate that we may be voting shortly and we may all wish to have a little lull in proceedings. I am delighted that the Minister says that carbon sinks are included and that the UK believes passionately in maintaining and enhancing them. He explained that clause 29(2) states that our carbon policy must be determined

“with international carbon reporting practice” in mind, and that clause 89 provides further definitions. I have checked them out and he is absolutely right. I did not read far enough ahead before I bashed down my amendment to clause 25.

I am content that my amendment is not necessary. Therefore, irrespective of what other colleagues may wish to do with their amendments, or of other votes that may or may not take place, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question put, That the clause stand part of the Bill:—

The Committee divided: Ayes 8, Noes 12.

Division number 6 Nimrod Review — Statement — Clause 25

Aye: 8 MPs

No: 12 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

Clause 25 disagreed to.

Clauses26to 29 ordered to stand part of the Bill.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Environment, Food and Rural Affairs

On a point of order, Mr. Cook. I may be mistaken about the procedure, but we would like to amend Government amendment No. 7 with amendment (a), if that is possible.

Photo of Frank Cook Frank Cook Labour, Stockton North

I am grateful for the interest of the hon. Member, but the skills of chairmanship will become very clear if he waits and has patience.