Section 7A — Achievement of annual targets: domestic effort target

Climate Change (Scotland) Bill: Stage 3 – in the Scottish Parliament at 10:30 am on 24th June 2009.

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Photo of Alasdair Morgan Alasdair Morgan Scottish National Party 10:30 am, 24th June 2009

Group 6 is on the achievement of annual targets. Amendment 22, in the name of the minister, is grouped with amendments 23 to 27 and 90.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

I will move amendment 22, but I intend later to seek permission to withdraw it, because we do not intend to proceed with it. I will move it only to allow the debate to proceed.

Amendments 22 to 24 and 90 relate to the domestic effort target that was added to the bill at stage 2 in section 7A. Ministers have gone on record many times to state that our preference is to reduce emissions from sources in Scotland rather than to purchase offset credits. Money that is spent on international credits is money that is not spent on investing in Scotland. However, as Sir Nicholas Stern emphasised in his report "The Economics of Climate Change", global carbon markets are a key component of attempts to curb rising global emissions. Members will appreciate that the use of carbon units to offset excess emissions will be necessary, within statutory restrictions, at certain points up to 2050.

In response to a recommendation in the Transport, Infrastructure and Climate Change Committee's stage 1 report, the Government introduced amendments to the bill that set limits on the total amount of carbon units that ministers may credit to the net Scottish emissions account. However, those limits do not apply to carbon units that are derived from the European Union emission trading scheme, for good reasons, concerning how that scheme works. More than 40 per cent, or perhaps as much as half, of Scotland's emissions fall within the traded sector and therefore are affected by carbon markets such as that created by the EU scheme. The fundamental problem with the domestic effort target in section 7A is that it makes no distinction between carbon units that the Scottish ministers use and the units that Scottish companies use in the scheme.

Amendments 22 and 23 offer alternative ways of addressing the problem. The important point is that the 2050, interim and annual targets are achieved in the first place. Placing disproportionate emphasis on a flawed domestic effort target could risk those targets being missed.

The Government's preference is for amendment 23, which is the best way of fixing the issue. The carbon units that are surrendered by Scottish installations within the EU emission trading scheme would fall within the 20 per cent allowance that the domestic effort target gives the Scottish ministers for using carbon units. The challenge is that we do not use those units—individual installations such as power stations throughout Scotland do so. The Scottish ministers will simply carry out the accounting in relation to the EU ETS, ensuring that its operation in Scotland is not ignored when calculating progress towards the targets that are set in the bill. If Scottish installations bought a large number of units in one year—which is understandable practice, as there is a finite number of credits within the scheme as a whole—the domestic effort target would almost certainly be breached and the Scottish ministers simply could not do anything about it. It is therefore vital that the power companies ensure that they make a strong contribution to delivering on their obligations.

The importance of carbon reduction not interfering with the EU ETS is also recognised by the expert Committee on Climate Change. In its advice to the UK Government that was published last December, the committee recommended that any restriction on the use of carbon units should not extend to units generated within the EU.

We have already voted to raise the 2020 target to 42 per cent. In lobbying for that, WWF Scotland indicated that the purchasing of carbon units could cover any shortfall. As it stands, the domestic effort provision in section 7A means that it would be impossible for the Scottish Government to buy sufficient credits to cover the shortfall between the expected reduction and the interim target.

There will be times when buying carbon units is the most cost-effective way of ensuring that Scotland's climate change targets are achieved, but forcing ministers to take unnecessarily expensive measures to tackle emissions would, in effect, be a new tax on the people of Scotland.

Amendment 23 will avoid that problem by removing EU ETS credits from the restriction on the use of carbon units inherent within the domestic effort target. The domestic effort target is intended to encourage ministers to focus on reducing emissions in Scotland. It would be perverse if it acted to prevent all the other targets in the bill from being met.

I should also highlight that section 7A contains a flaw, as it refers to the Scottish ministers "making an order". The power is subject to the affirmative procedure, so advice should be sought before ministers lay a draft, rather than make an order. Amendment 24 will correct that drafting flaw by referring instead to the Scottish ministers

"laying a draft of a statutory instrument containing an order".

As regards domestic effort, amendment 90 simply adds the term "domestic effort target" to those listed in section 65, "Interpretation".

Amendments 25 and 26 are tidying-up amendments, which move section 18A(A1) into section 12A. Essentially, the distinction is that section 18A as a whole is about all limits on carbon units for multiyear periods, while section 18A(A1) is about capping at 20 per cent the amount of carbon units that may comprise the reductions in individual years. Section 12A, which was introduced by one of Des McNulty's amendments at stage 2, does essentially the same thing as section 18A(A1), so it makes sense to move section 18A(A1) into section 12A.

When section 18A was amended at stage 2 to insert subsection (A1), Des McNulty also deleted section 18A(2)(b), which would have required the Scottish ministers to set a limit on the net amount of carbon units that may be credited to the net emissions account during the period 2013 to 2017. Mr McNulty might have thought that section 18A(2)(b) was unnecessary on the basis that new section 18A(A1) would define the total amount of carbon units permitted for that period anyway. However, in practice, that might not be true. For example, if the annual target in 2013 were missed, the amount of emissions reduction required to meet the annual target for 2014 would be greater than if the 2013 target had been met.

Under section 18A(A1), 20 per cent of the reduction required to meet the net Scottish emissions account for the target year may be achieved by crediting carbon units to that account. However, there is no absolute limit on the quantity of carbon units that may be used, as would be the case if section 18A(2)(b) had not been deleted.

That weakens the bill, which we do not think is what Mr McNulty intended.

In addition—I am coming to a conclusion, Presiding Officer—given that the years 2010 to 2012 are covered in section 18A, as are all the years from 2018 to 2050, it could be inconsistent and confusing for ministers not to set a limit on the total amount of carbon units that they may use in respect of the period 2013 to 2017. Amendment 27 seeks to correct that anomaly.

We will listen carefully to the debate on this complex and technical group of amendments and we will see where we get to.

I move amendment 22.

Photo of Des McNulty Des McNulty Labour 10:45 am, 24th June 2009

As Mr Stevenson said, we introduced section 7A into the bill at stage 2. It is a significant section, because it sets out the framework within which the domestic effort target is established. We established clear parameters around what can and cannot be done through buying international credits. That was very much at the forefront of Stop Climate Chaos's consideration and the consideration of groups that are particularly interested in international development issues, in which I have a long-standing involvement and interest.

It seems strangely paradoxical that in order to boost the targets here, we could end up boosting emissions in other countries, which is not where we want to be. I want to focus Scotland's attention on reducing emissions here. We will have to use some international credits, but we should set clear limits on how and parameters within which that can be done.

I am content to accept the minister's amendments 24 to 27 and 90, which are tidying-up amendments. I heard the minister say that he did not want to pursue amendment 22. Seeking to introduce the words "endeavour to" into section 7A(1) seems an obvious attempt to dilute what that section is trying to do. I hope that the minister accepts that the use of the word "must" is the right mechanism.

There is a debate to be had about how we deal with European carbon units, but we are not at the stage where we have to accept amendment 23. Stop Climate Chaos's view is that amendment 23 would dilute significantly the intention and purpose of section 7A. I therefore ask members to reject amendment 23, but to accept the other amendments in the group that are going to be pursued.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

We have to be careful about the use of the word "must", because it limits the ability to do things on occasion. However, that is a drafting issue.

Amendment 23 remains vital. The power companies have engaged significantly in the debate, so we know that they are very much up for it. However, we have to be careful not to allow ourselves to be hostages to the traded sector, which in Scotland—and for that matter the UK—accounts for 40 to 50 per cent of total emissions. Amendment 23 is necessary at this stage. We cannot postpone the discussion, although we will have a discussion in the autumn on a legislative consent motion. That is the proper time to visit the matter in the context of what we know is happening. If we do not pass amendment 23, we will be unable to make amendments, except by primary legislation, in the light of what happens at UK level. This is one policy area where we can barely put a cigarette paper between UK and Scottish ambitions, although there is difference in the detail. Therefore, we will work closely with the UK Administration on this subject.

I have said all that I have to say. I seek Parliament's leave to withdraw amendment 22.

Amendment 22, by agreement, withdrawn.

[Amendment 23 moved—[Stewart Stevenson].]

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

The question is, that amendment 23 be agreed to. Are we agreed?

Members:

No.

Division number 8

For: Adam, Brian, Aitken, Bill, Allan, Alasdair, Brocklebank, Ted, Brown, Gavin, Brown, Keith, Brownlee, Derek, Campbell, Aileen, Carlaw, Jackson, Coffey, Willie, Constance, Angela, Crawford, Bruce, Cunningham, Roseanna, Don, Nigel, Doris, Bob, Ewing, Fergus, Fabiani, Linda, FitzPatrick, Joe, Fraser, Murdo, Gibson, Kenneth, Gibson, Rob, Goldie, Annabel, Grahame, Christine, Harvie, Christopher, Hepburn, Jamie, Hyslop, Fiona, Ingram, Adam, Johnstone, Alex, Kidd, Bill, Lamont, John, Lochhead, Richard, MacAskill, Kenny, Marwick, Tricia, Mather, Jim, Matheson, Michael, Maxwell, Stewart, McGrigor, Jamie, McKee, Ian, McKelvie, Christina, McLaughlin, Anne, McLetchie, David, McMillan, Stuart, Milne, Nanette, Mitchell, Margaret, Neil, Alex, Paterson, Gil, Robison, Shona, Salmond, Alex, Scanlon, Mary, Scott, John, Smith, Elizabeth, Somerville, Shirley-Anne, Stevenson, Stewart, Swinney, John, Thompson, Dave, Watt, Maureen, Welsh, Andrew, White, Sandra, Wilson, Bill, Wilson, John
Against: Alexander, Ms Wendy, Baillie, Jackie, Baker, Claire, Baker, Richard, Boyack, Sarah, Brankin, Rhona, Brown, Robert, Butler, Bill, Chisholm, Malcolm, Craigie, Cathie, Curran, Margaret, Eadie, Helen, Ferguson, Patricia, Finnie, Ross, Foulkes, George, Gillon, Karen, Glen, Marlyn, Gordon, Charlie, Gray, Iain, Harper, Robin, Harvie, Patrick, Henry, Hugh, Hume, Jim, Kelly, James, Kerr, Andy, Lamont, Johann, Livingstone, Marilyn, Macdonald, Lewis, Macintosh, Ken, Martin, Paul, McArthur, Liam, McAveety, Mr Frank, McConnell, Jack, McInnes, Alison, McMahon, Michael, McNeil, Duncan, McNeill, Pauline, McNulty, Des, Mulligan, Mary, Munro, John Farquhar, O'Donnell, Hugh, Oldfather, Irene, Park, John, Peacock, Peter, Peattie, Cathy, Pringle, Mike, Purvis, Jeremy, Rumbles, Mike, Scott, Tavish, Simpson, Dr Richard, Smith, Elaine, Smith, Iain, Smith, Margaret, Stephen, Nicol, Stewart, David, Stone, Jamie, Tolson, Jim, Whitefield, Karen, Whitton, David

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

The result of the division is: For 60, Against 59, Abstentions 0.

Amendment 23 agreed to.

[Amendment 24 moved—[Stewart Stevenson]—and agreed to.]