[John Bercow in the Chair] — Personal Carbon Trading

– in Westminster Hall at 12:00 am on 18th June 2009.

Alert me about debates like this

[Relevant documents: Fifth Report from the Environmental Audit Committee, Session 2007-08, HC 565, and the Government's response, Session 2007-08, HC 1125.]

Motion made, and Question proposed, That the sitting be now adjourned.—(Joan Ruddock.)

Photo of Tim Yeo Tim Yeo Chair, Environmental Audit Committee 2:30 pm, 18th June 2009

I welcome you, Mr. Bercow, to the Chair this afternoon. This is possibly the last time that you will chair a debate in Westminster Hall if you are called to higher things on Monday. As I have informed you, my vote in the first round is pledged to another hon. Member. However, your performance in the Chair this afternoon might sway a few floating voters to switch in your direction, so this could be a sort of hustings for the Chair.

I also welcome the Minister and the shadow Minister. We look forward to hearing from both of them. I particularly want to thank my three colleagues from the Committee for their participation and support this afternoon. They are three of the most conscientious and hard-working members of the Committee. Between the four of us, we carry quite a heavy load, as a number of Committee members have not been seen for some years. Unfortunately, my request for the Committee to be reduced in size was rejected by the Leader of House last year.

I am delighted to have secured this debate. It is a very important subject and one that needs to be more widely debated. It is a year since we published the report under discussion, and it is seven months since the Government published their response. During that year—even during those seven months—the scientific evidence has shown that the challenge that the world faces from climate change is bigger and more urgent than we previously understood. Despite many commendable initiatives, no country—not even Britain—can claim to be anywhere near being on track for the scale of greenhouse gas emission reductions that are needed. It is a chilling reflection that no country has ever achieved a sustained fall in greenhouse gas emissions except at a time of severe recession or de-industrialisation on the scale seen in the former Soviet Union in the early 1990s.

It is equally clear that in the next decade, every developed country in the world must start doing what no country has ever done, which proves just what a dramatic change of pace and scale in our response to climate change is needed. If global emissions do not peak by 2020, the scale of the cuts needed thereafter to keep the rise in average global temperatures anywhere near 2° C would involve a cost and a disruption that would be painful and expensive for every section of the community.

So, whatever we are doing now by way of generating low-carbon electricity, constructing more energy-efficient buildings, developing low-emission vehicles and so on, it is nowhere near enough. Investment in renewable energy, tax breaks for greener cars, and building zero-carbon homes are all needed and, to a greater or lesser extent, are being encouraged through policy and regulation. However, much more still needs to be done by Government, and by business, which has shown itself to be increasingly forward looking in its response to the challenge and in its ability to see the opportunities and threats for its business models. That is particularly true in the United States where business until very recently has been well ahead of policy makers. However, this is not just a matter for Government and business. Every single citizen as a consumer needs to be directly engaged in the battle against climate change. That is why personal carbon trading deserves far more attention than it is getting, either from the Government or from other people.

Personal carbon trading offers three unique advantages compared with carbon taxes. First, it can guarantee that a specific level of emissions is achieved in a way that carbon taxes cannot. No one can be sure of the elasticity of the response of consumers to carbon taxes. We have seen in many areas remarkably inelastic responses to carbon taxes. Secondly, personal carbon trading can, and should, be progressive and not regressive in its impact on low-income individuals and households—unlike carbon taxes, which are nearly all somewhat regressive. Thirdly, personal carbon trading allows individual discretion about how much effort people make to cut their carbon footprint and in which direction they make that effort. That is a further attractive characteristic that is not possessed so directly by carbon taxes. Of course, there are some downsides to personal carbon trading, and I am sure that we will hear more about those from the Minister. The Government's response is peppered with them, and I shall deal with them presently.

The scheme is potentially very complicated, which makes it hard to understand, particularly for people who are not used to the concept of financial trading. There is a danger that unless the scheme is very sensitively introduced and formulated, it could be somewhat arbitrary and even unfair in its impact.

The Committee's report sets out why we believe that personal carbon trading is both an excellent way to raise the profile of climate change and related issues and a powerful incentive for individuals to make low-carbon choices in their daily lives. Against the background of an increasingly urgent and grave threat from climate change, our report concluded that more radical measures are needed if individuals and households are to contribute meaningfully to the meeting of UK emission reduction targets. Without their contribution, Britain will struggle to reach those targets.

The Committee judged that personal carbon trading has the potential to be more engaging, effective and progressive than most green taxes. I mentioned the point about the impact being progressive rather than regressive, but personal carbon trading also offers a real benefit to individuals and families who earn modest incomes, live in average-size homes, do not have air conditioning or heated swimming pools, and who are prepared to wear a sweater in the winter rather than just turning up the heating. Such people could receive a cash benefit if the system was properly designed.

Personal carbon trading can make a big contribution by helping Britain to cut its emissions. However, I accept that the system is complex and difficult to understand. For that reason, the mere existence of a wider public debate is in itself quite useful, enabling people to talk and think about it more, so that gradually they may come to understand it more clearly and easily. I assume that the principles of carbon trading are understood by everyone present and I think that they will be understood by most people who take the trouble to read the report of this debate, so, I will not weary hon. Members with a great detailed account of how personal carbon trading works. We explored that in the evidence we took and in the report itself.

What I want to do instead is depart slightly from the recommendations of the Committee by making a plea for a pilot scheme. We were somewhat cautious in our assessment of the merits of such a scheme. In the year since we published the report, I have concluded that we will never win the argument just on some abstract, intellectual basis. We have to have some practical evidence of how a scheme will work if we are to win more support for it. My proposal is for a pilot that is quite limited in scope. Its results could be analysed and tested for the fairness and effectiveness criteria, which are very important. That is the only way we will overcome the objections that are raised when personal carbon trading is advocated. I have to say that, regrettably, the opponents appear to include the authors of the Government's response.

To minimise resistance and objections further, the pilot could be carried out on a virtual basis. It does not even require any cash to change hands—cash trading or transactions do not have to be involved at all. A virtual pilot would have nearly all the merits of an actual pilot. Let us suppose that the scope of the pilot was confined solely to the emissions from the energy consumed in individual households for heating, lighting, cooking, cooling and so on. That would be quite simple to measure, because such energy is almost entirely derived from electricity, gas, oil and coal supplied directly to houses.

Let us further propose that the pilot took place in a very limited geographical area. I would like to volunteer for this purpose the Babergh district council area in my constituency. There are 83,000 residents in the district, just under 70,000 of whom are voters. I am glad to say that at each of the last six elections, they have returned a Conservative—me. There are just under 35,000 households, so the area is large enough to offer a meaningful reflection of what might happen if the scheme were introduced nationally, but small enough to operate an experiment very cheaply. The results of an experiment of that size could be analysed accurately, and we could gain very important data as a result.

Such an experiment would establish much more clearly than any theoretical argument whether the objections to personal carbon trading are valid. It would also establish whether the advantages are what supporters of personal carbon trading like me claim. I am quite willing to be judged on the evidence. Even in their response, the Government acknowledged that they would welcome more research—they did not show much enthusiasm for commissioning or even encouraging it, but they said that they would welcome the results. I believe that the concept would stand the test and that the experiment would show that the benefits that we claim would be borne out in practice. If we go down that route, it would be possible to overcome some of the more alarmist objections.

To get the pilot scheme going, I suggest that we measure the actual emissions in the households that form the experimental area. That would give us valuable base data, and total emissions in the area could then be averaged out. Individual allowances would be broadly equal, but some would have to be adjusted: there would be weightings for age, and disability, and perhaps weightings based on the kind of home in which those individuals live. We could experiment with the details. If the pilot was for a limited period—say three years—year one could have a cap at the existing level of emissions, so there would be no attempt to impose an immediate cut in emissions, and years two and three could have progressive, tapering cuts, so we could achieve a guaranteed reduction in the emissions from the households in the Babergh district.

If the scheme were sponsored by a private sector sponsor—I am sure it is possible to find one—we might find that there is no cost to the central or local taxpayer. The cost of establishing an electronic trading exchange for such a limited number of people would be quite modest, given the low cost of most IT schemes now. Every individual participating in the scheme would know the amount of their allocation before the start of the experiment, and the total for the district would also be known. Each individual, however, even if the district had an allocation that was the equivalent of existing emissions, would have an incentive to start reducing their own footprint straight away to make the cash gain or virtual cash gain that would be available to them. It would therefore engage the interest and attention of a great many people, particularly younger people and those who are keen on using the internet. There could be rewards for people who take part in the experiment. It might be difficult to entice some people into the scheme, but others could be given an incentive, whether financial or otherwise.

Such a pilot scheme would be fair—it would not be threatening to people who found it hard to understand—and interesting for people who want to take part. A further advantage would be that the operation of the scheme could be monitored externally as we go along. The awareness of climate change among the participants—even the reluctant ones—could be measured and there could be data on advances during the scheme and afterwards. In the same way, the extent to which the scheme achieves behavioural change could be measured. We could establish whether and how the participants began to cut their own emissions in the period.

Similarly, the financial impact of the scheme could be measured. Would the scheme be progressive in the way that I claim? I believe that it would, but we could monitor that and show whether and how people made money; who made money; and why they did the things that made them money. It would also, of course, show who were the losers. We could monitor the understanding of the scheme. We could test in advance how hard people found it to understand and whether its progressive introduction gave people a better understanding —we could learn whether people comprehended what was happening more clearly as the pilot progressed. As the cap tightened, it would bepossible to show whether the emissions from the district were being reduced. No form or level of carbon tax can guarantee that outcome, as I said.

The merits of such a pilot are considerable. We set out in our report three criteria for overcoming opposition to personal carbon trading. We judged that to overcome that opposition, the public must first be convinced that emissions have to be reduced. I hope the scientific evidence is gradually helping to achieve that aim, but we may be able to do other things to convince people. Secondly, the public must be convinced that individuals must take some responsibility for cutting their emissions. A pilot scheme of the sort that I advocate would remind everyone that they have the opportunity to take that responsibility if they wish to do so, and many people respond well when they are given such an opportunity. Thirdly, we judged that the public have to be convinced that personal carbon trading is fairer and more effective than raising taxes. I believe that the effectiveness of personal carbon trading is clear, because specific emissions cuts could be guaranteed, but its fairness needs to be proved, which is the purpose of the pilot.

The pilot scheme would also allow us to observe movements in price. There have been concerns that the price might spike or slump, which would make the scheme harder to operate and upset the participants. The pilot would allow us to judge whether that would happen. A pilot that involves 83,000 people is big enough to provide convincing data in that regard. There could be other problems. Would the cap need to be increased in the event of an extremely cold winter? There could be a pre-determined formula for that. If the temperatures were substantially below the norm for a certain time of year, additional allowances could be fed into the market. That may sound complex, but with modern technology, it does not need to be. In any case, the purpose of the experiment is to try to iron out such difficulties.

We acknowledge in our report that smart metering is very important and that it can play a big part in helping people to understand how such a scheme would work, and enable individuals and households to track their performance. The pilot would also tell us whether it is possible to engage the interest, understanding and participation of those people in the community who are normally financially excluded—households who do not participate in normal financial mechanisms. I believe that anyone who uses a supermarket loyalty card would have no difficulty grasping how to engage in personal carbon trading, but the proposed experiment would enable us to judge that. I am not suggesting that this is the only way forward. It is one way, but other forms of experiment could be conducted, perhaps even simultaneously in different parts of the country. However, I am certain that simply arguing in the abstract about personal carbon trading is not going to take us very much further.

Let me turn to the Government's response to our report. I am normally very generous in my comments on Government responses, never more so than when we are coming up to an election, because I am a passionate believer in a bipartisan approach to dealing with climate change. However, I was disappointed with this document. It suggested that the minds of the authors—I am sure that the Minister had nothing to do with writing it—and the minds of some of the civil servants, with whom the Committee had some private exchanges later in the year, are not as open as they should be. That was particularly disappointing, because the former Environment, Food and Rural Affairs Secretary, David Miliband, who had responsibility for such things before the Department of Energy and Climate Change was created, was quite enthusiastic, at least in his intellectual engagement with the subject. Now caution seems to prevail—caution to the point of hostility and even defeatism—in the face of the arguments.

The Government's response acknowledges that home energy use accounts for a substantial part of Britain's carbon emissions. It is apparent that despite some commendable initiatives, the scope for more energy efficiency, behavioural change and so on to cut emissions remains considerable and largely untapped. It seems likely to me that the potential for big step changes in the energy efficiency that households want to achieve will be realised only if we introduce much more radical measures to incentivise it.

The Government's response also claims that public support for personal carbon trading is "limited", but that has been the case with all sorts of desirable changes that have taken place. Ten years ago, public support for banning smoking in public houses would have been limited. That does not mean that it was the wrong thing to do; it was an opportunity for leadership. Going back further, before seat belts in cars were compulsory—I am probably the only person present who is old enough to remember that—support for that measure was decidedly limited in the 1950s, just as support was fairly limited for the breathalyser. All those changes needed leadership from the Government. To run away from an idea because support for it is limited seems an unsatisfactory justification.

The response says that there is

"little evidence that people would be likely to trade".

That is hardly surprising, as they have absolutely no opportunity to trade at the moment. How could there be evidence of large numbers of people wanting to trade, as there is no chance to do so and understanding of the issue is limited in the absence of any scheme under way?

The response says that

"an effective carbon trading system relies on participants actually taking part in trading allowances".

I am confident that an experiment with only 83,000 people—they would participate and trade—would be large enough to make an active market. The response also mutters about foreign visitors, but that would not be an issue for a pilot scheme along the lines that I have proposed.

The response alleges that personal carbon trading

"would effectively be an expensive and complicated form of tax".

I invite the Minister to agree that that statement is simply ridiculous. It is not a tax, because there is no compulsion to pay it. It can be avoided totally, it raises no revenue and it offers the prospect of a cash reward. None of those things could be described as the characteristics of an expensive or complicated form of tax.

The response states:

"There is very little evidence to suggest that it could indeed encourage energy saving behaviours."

Again, that is a pretty silly allegation. Unlike a tax, it could guarantee energy-saving behaviours. It would remind everyone of the advantages of energy-saving behaviour every time they switched on a light in their home. The response goes on to say that:

"until further evidence exists, it is not possible to determine the extent to which a measure such as personal carbon trading could drive energy saving behaviours."

A pilot scheme along the lines that I have proposed would gather exactly that evidence.

The response refers to the "significant costs" of a scheme, suggesting that it would cost £2 billion to set up and £2 billion a year to run. Those are figures plucked out of the air, without any reference to the type of scheme that might be introduced. It is a frankly nonsensical objection that does the Government little credit.

The response refers to recommendation 4 of the report and seems to assume that individuals would have a nil allocation of allowances. It is not clear, but that appears to be the assumption at the top of page 6. I have argued strongly for the EU emissions trading scheme to move as fast as possible to 100 per cent. auctioning, but I do not envisage at all a system of personal carbon trading involving any kind of auctioning. Free allocations would be given, just as people receive a free income tax allowance. It would be quite possible for people to live within the scheme without having to buy allowances at all. If they stayed at or below their free allowances, they would not be involved in buying allowances. They would, of course, have something that they could sell if they wanted to, but they would not be forced to go out and make purchases.

The response says:

"A substantial minority of adults in the UK...do not possess any form of bank account".

That is scraping the bottom of the barrel in terms of objections. The fact that 2 million adults do not have bank accounts did not inhibit the Government from trying to prevent pensioners from continuing to draw their pensions in cash at local post offices. If that vulnerable group of people can be treated in such a way, it seems a pretty poor argument for not introducing personal carbon trading.

The Government's arguments against a pilot scheme are also particularly weak. The response says at the bottom of page 21:

"Even then, there are risks to testing in public as pilot systems are inevitably unrefined and likely to have faults, which could lead to failure and subsequent public distrust and ridicule."

That is precisely the purpose of having pilot schemes: to understand how to avoid public distrust and ridicule. It continues:

"Furthermore, a pilot would not be able to test the mandatory and national nature of a scheme, therefore making it unrepresentative of the real world".

A scheme involving a whole local authority area would be reasonably representative, although nothing can be perfectly representative. It could be mandatory within the area, even on a virtual basis. It is not difficult to get around that particular objection.

I look forward to the Minister's response. I do not expect that we will hear all the answers this afternoon, but I would like her to show willingness to become more engaged in the debate about personal carbon trading than last year's written response suggests. Instead of raising objections at every turn, many of which are rather weak, as I have pointed out, the Government should try a touch of the "Yes we can" approach. Let us look for a constructive aspect to the proposals.

I have accepted that personal carbon trading is complex and poorly understood. It might even be slightly scary for some people. I also accept that achieving the aims of fairness, effectiveness and simplicity may be much harder than I have hitherto believed, but surely there can be no reason not to work towards an experiment and to try out one more weapon in the fight to cut emissions. There can be no reason to oppose a modest little pilot scheme of the sort that I have outlined.

Climate change is a bigger and more urgent threat than we understood even a year or two ago. Even in Britain, where the issues are better understood and accepted than in most other countries, we are not yet doing enough to cut our emissions. It would be a tragedy if closed bureaucratic minds ruled out an innovative and possibly highly effective idea that could raise awareness of climate change, reward poorer people with cash and incentivise every citizen every day to make a low-carbon rather than high-carbon choice, and which could guarantee cuts in greenhouse gas emissions. The effectiveness of the idea in reaching all those goals could be accurately and easily monitored. For that reason, I commend the Committee's report to the House.

Photo of Joan Walley Joan Walley Labour, Stoke-on-Trent North 2:58 pm, 18th June 2009

I echo the comments of my friend Mr. Yeo. I say "my friend" because the Environmental Audit Committee—at least, the four of us members who are here—worked closely together on the issues and ensured that we secured the debate. I congratulate him on the detail in which he has covered our Committee's recommendations.

It is good to see you in the Chair, Mr. Bercow. Having attended previous debates in Westminster Hall where a large number of people have wanted to speak, I am always impressed by how you ensure that every hon. Member who wants to contribute does so in a way that takes the debate forward.

As we consider how our Parliament will develop in future—it is a key time for Parliament, as we are in the process of choosing a new Speaker—many of us want the whole concept of Parliament to be expanded further. Select Committees of the House of Commons, in this case the Environmental Audit Committee, exist to scrutinise the work of different Departments in a cross-cutting way. It is incumbent on the Government, if they are to listen to the work of Select Committees, to take seriously the detailed work that we do and give proper regard to our recommendations.

I ask my good friend the Minister to look in detail at the work we have done on personal carbon trading. As we are considering the new role that Parliament should have, she should think about the time that we have spent analysing the issue, week in, week out, in far more detail than any Minister could. In the new spirit of openness, will she consider how she can work with us to take forward our recommendations, which, if not rejected in the Government's written response, were certainly not given the priority that we think they deserve?

In characteristic style, the Select Committee Chairman has covered the details of the report. This is one of many reports that we have produced, in which we have concentrated on the challenges of global warming and climate change. We have looked at the detailed negotiations in the run-up to the Copenhagen summit and beyond. We are about to produce a report on the international work that must be done on the deforestation of the rain forests. We have also looked in great detail at the European emissions trading scheme and at carbon budgets. We understand that this agenda must be taken forward within the wider context of joined-up policy making, and our reports reflect that. I hope that because of the integrity with which we present this report to the House, the Government will accept our recommendations as part of the larger framework.

This detailed report deals with just the one aspect of personal carbon allowances. We do not see it as the be all and end all in tackling the increase in carbon emissions internationally and globally. However, we do think that it is part of the picture. It is a matter of great dismay that our recommendations have been rejected to the extent that they have. We see them not as the exclusive answer, but as part of the solution. I expected our Government to take our recommendations in the spirit in which they were made and not to dismiss them almost wholly.

The timing for this debate could not have been better. There has just been a statement in the House on the Government's five-point carbon action plan and the Met Office's UK climate projections for 2009 have been announced. If ever we have had a sense of the priorities for this country, it is now. Apart from MPs and Parliament and the economic recovery from the recession, the one issue that we should all focus on now—as I know the Minister does—is how to deal with climate change.

If citizens across the UK, with whom we need to engage far more, were all familiar with the climate projections, they would expect Parliament to take action now. For our children and grandchildren, those will be not just abstract projections, but something with which they and future generations have to live. Our recommendations that the Government have rejected might not be the whole answer, but they could be part of it. We must get across to the people of this country the urgency of this issue. We cannot wait for academic answers, but must take action now.

Our recommendations on personal carbon trading for individuals and households tick all the boxes. If we could get that scheme going, it might make the other areas in which the Government want to take action more politically acceptable. For example, they might be able to get greater support for the urgent decisions that must be taken in the Copenhagen negotiations, for home insulation and for changing the behaviour of businesses and others. It is all very well having academic arguments, but we must have arguments that apply to people's lives and to how they go about their daily business. Personal carbon trading is an idea whose time has come.

I listened carefully to the Select Committee Chairman's remarks about the pilot project. We should consider how the Government introduced pilots for education maintenance allowances. There was a sense that something had to be done about keeping 16 to 18-year-olds in college to get their qualifications. There was not just one pilot in one area with certain guidelines, but many pilots were held in different parts of the country where different ideas could be experimented with and developed. There could be four pilot projects for our recommendations. We have representatives present from Scotland, Yorkshire, East Anglia and, of course, Stoke-on-Trent. We could devise an experimental method to see whether these ideas work over a limited period so that we can move the debate on.

I know that many hon. Members wish to speak. I was going to go through the details of our report, but as time is pressing that might not be the best use of my time. However, I hope that our constituents who are following this debate in detail feel encouraged to read the report and the Government response in full.

Finally, I wish to return to the issue of time. There have been various reports from Government. The Commission on Environmental Markets and Economic Performance report, which looked at how economic performance could be linked to environmental markets and green technologies, was introduced as a solution. It was presented in 2007 with great fanfare and the support of the commissioners who were involved in writing it. The commission was led by the then Secretaries of State for Trade and Industry and for Environment, Food and Rural Affairs and the report was very detailed. However, in the two years since, there has been little direct action on the ground, although there is an initiative to look at how green technologies can be developed more quickly.

I am afraid that in two years' time the Select Committee report will be gathering dust and will not have produced the impetus that is needed to meet the global challenges of climate change. I know that the Minister works in a committed team, including the Secretary of State and the newly appointed Under-Secretary. I hope that in the midst of the five-point carbon plan and the run-up to Copenhagen, the Government do not just dismiss this report out of hand. Although this is only one of many reports produced by our influential Select Committee, the Government should work with us to establish a scheme slowly that could later be expanded.

Photo of Colin Challen Colin Challen Labour, Morley and Rothwell 3:09 pm, 18th June 2009

Like others, I want to express my best wishes to you for Monday, Mr. Bercow. I certainly hope—I will be quite blunt—that you are successful.

I congratulate our Chairman, Mr. Yeo, on his comprehensive analysis of our report and the Government's response. I will do my best not to repeat any of the points that he made, although they are eminently repeatable. I look forward to 3 June 2010, which is the last possible date for a general election, because his constituents will have had the chance by then to analyse the consequences of his pilot programme. I will be waiting to see whether he wins a seventh endorsement for his stance.

Today is important because we have seen the publication of the climate change projections report, which I have here. It is also 20 days short of the fifth anniversary of the publication of my Domestic Tradable Quotas (Carbon Emissions) Bill, which dealt with personal carbon allowances and tradable energy quotas. I am pleased to be able to acknowledge the presence in the Public Gallery of David Fleming, who had a great hand in developing those ideas. It has been a long process. When I launched my ten-minute Bill, I thought that it might take the Government five years to take the idea seriously, but here we are, 20 days short of five years, and they are still not taking it seriously. They did for a while, but then the enthusiasm slipped away in a sea of timidity and out of a fear of the possible electoral consequences. The pilot project would therefore be welcome.

I will refer to this later, but I have just put in a Presentation Bill to put climate change health warnings on car advertising, in the same way that we put health warnings on tobacco. The aim is to influence people's behaviour and to promote a better understanding of carbon in people's lives and consumption. Why can advertisers use six or eight-point type to bury details about the amount of carbon that their products emit? Many of them—unless they are particularly proud of their cars' green credentials—provide no explanation. We must start educating people, and that is where the Government need to do a lot more work.

We should look at the projections in today's report to remind ourselves how precarious the situation is. One of the tables, which is taken from the intergovernmental panel on climate change's fourth assessment report of 2008, shows that, on a high-emissions scenario, we will be heading for a 5.5 or 6° C increase. On a medium scenario, it will be 4° C. On a low scenario, it will be just under 3° C. Of course, we want to get to no more than 2° C, which, according to the IPCC, will require far more effort than will be needed to achieve the lowest of its emissions scenarios. That is a tremendous amount of effort, and the evidence from the negotiations, which took place in Bonn a few days ago, and which will continue up to Copenhagen, is that we will not get there—we will not reach the black line on the graph in today's report.

The evidence that the Committee gathered in Washington a few weeks ago suggests that the American targets will be weakened to get a Bill through Congress. In fact, the target for emissions cuts by 2020—the all-important interim target—has come down from 20 to 17 per cent. A lot of people may not realise that that target is based on a 2005 baseline, not the 1990 baseline that our targets are based on. The American targets will include different sectors from ours, but ambition of even the most ambitious Bill that has a chance of success in Congress is well below current European objectives.

The signals from Bonn over the past few days are that the developing world is extremely unhappy about the extra commitment that we say we will make. We must make greater commitments, and they should go well beyond even what our carbon budgets say should happen. We need a successful and sufficient agreement, and the word "sufficient" is more important than the word "successful", which can be a political minefield. If the agreement is sufficient, the EU and the UK will increase their targets according to the Climate Change Committee's recommendations, but that is still a long way off. The science is saying that things are serious, but the political situation is even more dire.

We also have to look at the UK contribution. Most people say—Ministers often say this—that the UK is responsible for 2 per cent. of global emissions, which is true. Last year, however, the pocket environment guide produced by the Department for Environment, Food and Rural Affairs—I would recommend it as holiday reading to anybody going on their holidays, although not, of course, by air—showed that emissions related to UK consumption accounted for well above 15 per cent. of the global total. If we think about it, how could we claim to be the fifth or sixth biggest economy in the world with only 2 per cent. of greenhouse gas emissions? That simply does not stack up.

That raises an important question about responsibility. We have to put it to people that their consumption is at the root of the problem—the problem does not start somewhere else. A Chinese coal-fired power station is part of a supply chain. I was thinking about this problem on the way back from last year's climate change camp at Kingsnorth, which I visited with one or two other hon. Members. E.ON wants to build a new power station—originally, it wanted to build it without carbon capture and storage—so it becomes the enemy and the target of a great deal of campaigning. As I went back through the suburbs of east London on the train, however, I thought, "Here's the real target. It's all those kettles that get switched on. It's those big flat-screen TVs." When we campaign against climate change, our focus is on the big power producers, and there is a lot of credit in that approach, but the simple fact is that we tend to forget that it is individuals who demand electricity and the other forms of energy that they need for a comfortable lifestyle.

We have to address those people. If we do not, the power stations will still be built, including many of those in China, which produce the energy needed to make our cheap goods. Those Chinese power stations will continue to be built without CCS and will continue to create a problem. The Chinese are now using this issue as an argument. They say, "Why should we have to take the whole bitter pill when you lot created the problem and your consumption feeds our growth?" That is a powerful argument, and one which we would begin to address if we introduced personal carbon trading.

It has been said that such a scheme is very complex, but I simply do not believe that. If the people who invented supermarket reward cards had had somebody whispering in their ears, "It's a complex scheme. Don't do it," we would not have Nectar cards at Sainsbury or Clubcards at Tesco. The carbon allowances scheme would be relatively simple, and it would be extremely condescending to say that a lot of people could not understand it. Indeed, it would be extremely simple; in some cases, people would not even be terribly conscious of it, because much of the hard work would be done by the utilities' computers.

Let us compare the scheme with what we have now. I hope that nobody would argue that what we have now is simple and something that the public can understand. I would like to do a straw poll in Parliament square to see whether people understand the emissions trading scheme or know how much it saved last year in terms of carbon emissions. I would like to ask them what the renewables obligation and carbon emissions reduction targets are. The Government are creating more and more measures to deal with climate change, and I welcome them in so far as they go, but they are not sufficient and they do not address the real problem of our consumer society and our pursuit of greater gross domestic product per capita, which is, of course, expressed in terms of growth. There is a serious question to ask about whether the scheme would be more or less complex than all our upstream schemes, which are opaque, remote and mean nothing to the public.

If people knew what these things were—if they read the Committee's reports more often, they probably would—they would know that the National Audit Office has suggested that the third phase of the EU ETS, including carbon trading, may deliver a domestic effort resulting in only a 7 per cent. reduction in carbon emissions. If people thought that they were paying all that extra in their bills just to get 7 per cent., they might be quite nonplussed. We have to be careful when we say that the scheme would be so complex that we could not possibly introduce it.

I have also sat for the past two and a half years on the Green Fiscal Commission, which looks at taxation issues. After two and half years I do not think that we are any closer to a simple way of addressing environmental taxation. That is a problem with taxation approaches: every time someone mentions the environment to a constituent, the next thought to pop into their head is "How much is that going to cost me?" The environment gets a bad name when everything that happens in connection to it is a new tax or a new cost.

We must go to the public and engage with them. We require a scheme that, as the Select Committee Chairman has said, is very progressive—the opposite of income tax and many other taxes. That would simplify our approach enormously. We now need to rest, permanently, the approach that has dominated the Government's thinking when they have gone directly to the public—the voluntary approach. We have a number of quite good educational tools, the most of important of which is the Act On CO2 website. Last June the Minister was pleased to announce that there had been more than 1 million hits on the site since it was launched in the previous year. I do not know whether that number has doubled. Perhaps the Minister will tell us, on the first anniversary of that announcement, that there have now been 2 million hits. Deeper analysis, however, suggests that only half the people who went to the website did the calculation of their footprint, and only half of those did anything about it. The voluntary approach that leads to 1.2 million hits in a year has led, according to the Government's analysis, to only 250,000 people doing something about it.

Photo of Gregory Barker Gregory Barker Shadow Minister (Energy and Climate Change)

In defence of the Government I would say that although 1.2 million hits is not nearly enough to transform the country's attitude to carbon footprints, the translation of that figure to 250,000 personal actions and decisions is actually rather good.

Photo of Colin Challen Colin Challen Labour, Morley and Rothwell

When the hon. Gentleman makes statements like that I can see that he is preparing for government. Yes, it is good if one person does something that they would not have done before, but those 250,000 might well have been people who were already prepared to do something. Preaching to the converted is not the answer; going well beyond that is the answer. The adult population is 60 million. If 250,000 people do something, out of 60 million, well—doing the maths myself it comes out at something like a quarter of 1.6 per cent. I may be wrong about that; I am not terribly good on that sort of thing, but the figure is still extraordinarily low.

That is borne out by polling evidence. The most recent Ipsos MORI monthly tracker of public opinion was probably sent to all MPs electronically a few weeks ago. People were asked:

"What would you say is the most important issue facing Britain today?"

I had to look well down the list to find anything to do with climate change, which was chosen by about 4 per cent. I can understand why 39 per cent. said it was the economic situation. The next biggest block, at 12 per cent., was race relations and immigration. The people who were interested in environment or pollution and mentioned it as their first concern were 3 per cent. of the public. Even when people were asked another question about what they saw as "other important issues", which gave them a bit of extra choice, the figure citing pollution and environment went up to only 8 per cent. Despite other polls showing that perhaps 70 or 80 per cent. of the public are aware of and concerned about climate change, usually when people are asked whether they will do something about it themselves only 6 or 7 per cent. respond.

At that rate of progress we shall fail to achieve our objectives. We must get the public more on board if all the other things are to happen. I do not think anyone has yet quite understood the full impact that carbon budgets would have; they would go well beyond any of the things we have tried before, many of which have not been successful. It is a significant issue for us to grapple with. We must present personal carbon allowances as a positive step. They could be described as a free-market measure—a neo-liberal approach. They could also be called a socialist approach. We can make all sorts of things out of them.

The way forward, apart from the pilot project, which is a courageous thing to offer, is to think about other ways to engage people with the carbon story. One suggestion is in a Bill in Congress at the moment. Obama himself has given the idea a sort of endorsement. The idea is 100 per cent. auctioning of carbon allowances for industry; the whole lot is then given to the taxpaying public in carbon rebates. One can imagine that eventually people will be in the pub asking "How much is the carbon cheque going to be this year?" That is quite an innovative approach. We must engage people in the carbon story, not just with a calculator on the web, which is purely voluntary, but by giving them something back. That is what personal carbon allowances would do for people who used all the programmes that we could bring on to maximise renewable energy and energy efficiency. People could easily get below their budget.

From my experience in trying to do that, a bit more planning is needed. If people want to travel, they do not always have to get in the car; they can use public transport. We would have a campaign for better public transport. They could reduce their mileage or the size of their car. Those things make significant differences. People can go on green electricity tariffs. Even without making a great difference to lifestyles it is possible to make huge savings. Personal carbon allowances would encourage such behaviour.

I endorse the calls that have been made for the Government to look again at their response to the report and to take a far more positive attitude. It is time, recognising that the general election will be a watershed of one kind or another, to be really bold and radical, because we have nothing to lose.

Photo of Mark Lazarowicz Mark Lazarowicz Labour, Edinburgh North and Leith 3:26 pm, 18th June 2009

It is a pleasure to serve under your chairmanship, Mr. Bercow, as it will be in future, whatever form that chairmanship may manifest itself in after Monday. It is also a pleasure to follow my colleagues on the Select Committee, my hon. Friends the Members for Stoke-on-Trent, North (Joan Walley) and for Morley and Rothwell (Colin Challen), and the Chairman, Mr. Yeo, who made an excellent opening contribution. I pay tribute to him for his work on the report, as well as for his non-partisan leadership of the Committee over a number of years and his help and leadership in producing several reports—challenging political orthodoxy across the parties and being unafraid to highlight difficult issues. I am sure that my hon. Friend the Minister will recall that the Committee has been very willing to support and to back the Government at times when they have had few friends in connection with moving the climate change agenda and other issues forward.

Most of the detailed comments that I could make on the report have, not surprisingly, been made in earlier speeches, so I restrict myself to a few general points. First, although as most hon. Members will know I am not backward in coming forward to support radical measures to tackle climate change, I started with some reservations about whether personal carbon trading was practical. I could see the theoretical arguments for it, but wondered whether the practical issues that would need to be dealt with outweighed any advantages to be gained. I understand and accept that practical issues would arise, for example, if an attempt were made to develop a scheme that applied to the entire economy, logical though that might be. I also accept that political acceptability is an issue to be dealt with. We must recognise the syndrome in which, if people are asked in general terms whether they favour a measure to tackle climate change, there is overwhelming support, but when it comes to the nitty-gritty and how the policies will apply, support becomes more tenuous. I can see, even now, a slight tension between trying to get an inclusive scheme for a genuine system that cannot be undermined by weaknesses within it, and a public who are understandably cynical and cautious about measures that restrict their freedom in various ways. There is a balance to be struck and we have to accept that.

As I have highlighted, I had reservations about personal carbon trading when I first approached this debate, but I have now very much come around to the idea. Like the Chairman of the Select Committee, I think that we have to take this issue seriously and to try to work through it and take it forward. A pilot scheme is one way that the Government could take it forward, and would win a great deal of public support. I say that for several reasons. First, having seen the schemes that have been developed—mainly in theory, but with some practical examples—I believe that a scheme that concentrates on particular areas of high energy demand, where individuals are very conscious of their choices about energy demand and the types of energy they use with personal travel and so on, could be effective in getting public support and making changes in personal behaviour.

My second reason for coming around to the idea that we need to do more work on personal carbon trading and on setting up pilot schemes is the overall picture on climate change, to which all my colleagues have referred. As every Member present is aware, we now have more evidence of how climate change is accelerating. We are aware of how serious the problem is and of how little time we have to start turning around policy and personal behaviour. Personal carbon trading has the attraction of making individuals face up to the consequences of their actions when deciding whether to do something that will help to reduce climate change, or something that will exacerbate it.

For those reasons, any measure that can extend public and personal awareness, and bring about measures that will reduce greenhouse gas emissions from individuals as well as organisations and society, should be examined. That is why the Government should take forward the proposals for a pilot scheme.

My hon. Friend the Member for Stoke-on-Trent, North suggested that we could have pilot schemes in different parts of the country, which would make a lot of sense. Clearly, we could not have lots of pilots, as they would no longer then be pilots, but different communities in rural and urban areas have different characteristics, and schemes could concentrate on different types of energy use in different areas. This issue should certainly be examined and taken forward, and I hope that the Government will recognise the strength of the arguments that Committee members have put forward today and in the report. I hope also that the Government will reconsider their position and move in the direction that the report suggests.

Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change 3:33 pm, 18th June 2009

I, too, wish you all the best in the next few interesting days, Mr. Bercow. Yesterday, at an event in my constituency for one of the major secondary schools, I enquired whether the four senior prefects would be interested in coming to see the election of a Speaker, and they were positively excited about the idea, so it is of interest outside too. I hope that it will be the beginning of a good and positive new phase for Parliament.

May I join others in paying tribute to Mr. Yeo, both for his work in producing the report and more generally? I have not had the opportunity to say that to him formally since I took back responsibility for these matters. Like him, I go back a long way in this place, so I can pay tribute to his interest in these matters over many years. He rightly reflected on the rather long gestation period that these debates have, and that it is 30 months since his Committee came to its view on this matter in its very full report. I join his colleagues from the Committee, particularly Joan Walley, in commending the report to the interested public, because it has set out the arguments and a good amount of evidence, thereby launching the debate.

Before the Government produced their response in the autumn, the idea of personal carbon budgets got a bit of traction in the press. This is always a risky route to go down, but I noticed that there was a positive endorsement from Polly Toynbee in her column in The Guardian, which was entitled "Carbon credits tick all the boxes", on 16 August 2008. That piece was written against the backdrop of an awful August climatologically, as we remember. The following month, there was an equally robust response from Richard Starkey of the Tyndall centre entitled, "Personal carbon trading is not as simple as swiping an Oyster card", in which he argued the DEFRA case. So the intellectual public debate got going, and the Government responded, before the Minister's stewardship, in October.

I do not know who the individual author of the Government response was, or whether a collection of authors did the drafting on behalf of the civil service, but the document was robust in rejecting the proposition. Colleagues will remember that when the matter came before the Environmental Audit Committee for discussion last spring, my hon. Friend Martin Horwood was the one member of the Committee who did not go along with the recommendations. Indeed, at the beginning of the proceedings he moved an amendment to the formal minutes stating that

"this Committee declines to read the draft report a second time because it unfairly criticises the concept of green taxation and does not adequately address the problems that would be faced by those who already struggle to manage the competing demands of low incomes and high living costs and limited options for changing their lifestyles and circumstances".

He came to the debate minded to support personal carbon budgets, but as he listened to the evidence and engaged in the debate, he became increasingly dissuaded about the fairness of the idea and, hence, put down his marker in the debate at the end of the report.

That is enough history. I want to say a word about the context today. Like colleagues such as Colin Challen, I have just come from the Chamber, where I heard the statement by the Secretary of State for Environment, Food and Rural Affairs introducing the Met Office report and its stark predictions of the effect of climate change on this country. I hope that people who read the report of this debate will also read that statement and the responses to it. Whatever our differences, whether politically or on some of the responses, there is no doubt that we need an effective, robust and comprehensive set of personal and collective responses in the UK and worldwide to what the scientists are increasingly showing to be a crisis of unparalleled proportions in our environment, given the speed at which changes are developing.

I shall not rehearse our earlier exchanges, except to summarise that the Met Office predicts a minimum increase in temperature of 2°, but it could be higher. If that happens, large changes are projected not only for the south of England, but across the country. There will be an impact not only on the climate but on ecology and biodiversity, as well as on social and other policies. We need to see our response to the issue of what we do about our carbon use against that backdrop.

I absolutely agree with the hon. Member for Morley and Rothwell and with the Chairman of the Committee, the hon. Member for South Suffolk: institutional change alone is not sufficient. There has to be personal responsibility and, to put it simply, we each have to understand the score. As the Minister said in response to a debate we recently had in this Chamber on the energy industry, that is not yet easy to do. We live in a country where it is extremely difficult for people to understand the impact of what they buy and what they do. There is a huge set of items on the agenda if we wish to make it easier for people to understand the impact of their life choices.

Again, it is appropriate that I pay tribute to the hon. Member for Morley and Rothwell for presenting a Bill today, as it makes another good consumer-orientated proposal: when members of the public make a choice—in this case in relation to vehicles for their own use—it is important that they know what the impact of that vehicle is. We have argued, and the Minister has agreed, that it is important that when, for example, people go shopping on a Saturday to B&Q, Asda and other places near where she and I live down the Old Kent road, they should be able to see what the impact is on the climate of buying a bit of kitchen equipment, a fridge or a television.

This morning, I was in a discussion with my noble Friend Lord Redesdale, who has been talking to people in the construction industry about the need for people to understand the impact that home boilers have on housing carbon emissions. The boiler is probably the most significant single item in someone's home and is something that most people desperately hope they will never need to replace because they see it as a big issue with big budget implications. People need information in relation to that. We have had formal exchanges with Gregory Barker and his colleagues in the Conservative party and elsewhere about how to get the energy companies to tell people in their bills exactly what their choice means and its implications for their carbon footprint and the costs.

A general point is that we need to do far better to make sure that people understand the implications—not just people like us who may have the time and ability to do that, but people who may have much more stressed lives and who may be less academic than the policy makers. People may have illnesses or be subject to other pressures that mean they do not have the time to look through the 4,000 different tariffs that the Consumers Association has told us exist.

Where does that leave us on personal carbon emission limits and where should that take us in the debate? I shall make one further general point, then say a few things about the response of me and my party to the proposal. A general point is that we are all now beginning to understand the collective targets that we need to achieve if we are to respond to the crisis. Those targets are becoming more demanding, but they are only the beginning. They provide the framework, but the delivery is the issue. Yes, the delivery can happen in the workplace and companies have a big role to play, but meeting those targets is absolutely dependent on the energy sector. There is a debate to be had about making sure we have the renewable and other energy alternatives and that we deal with carbon capture and storage and all the issues that we have discussed elsewhere. There are also other responsibilities to do with Government legislation and Europe-wide legislation. Of course, the frameworks are important, but that still does not mean there is no question whether we should have personal legal responsibilities and legal limits.

When my hon. Friend the Member for Cheltenham expressed his concerns last year, he did so—I shall use just one example—because, put simply, he believed that there would be difficult and unfair outcomes, as certain choices would lead the relatively poor and disadvantaged into more difficulty. To provide an analogy, it is a bit like somebody who is given a credit card not being able to manage their finances very well and discovering that, at crucial moments when they need it, there is no credit left—in other words, it is possible that someone might run out of capacity and reach their limit when they most need something. That is particularly a risk to people who are less well off and less equipped to deal with such things. The report recognises that and understands that there are all sorts of social issues, which is why the hon. Member for South Suffolk picked up on the idea in the report that we should proceed with a pilot scheme to test whether such difficult organisational and mechanistic issues can be ironed out.

An addition to the debate on the subject was made in the interval between the publication of the report last May and the period after the Government's response. Having done some pilot work on the subject, the Royal Society for the Encouragement of Arts, Manufactures and Commerce published a report in, I think, February this year that was supportive of the proposal. I have not seen that report and I am unsure of its nature. It appears to be very limited and based on the activities of about 112 individuals who had been working through how such a scheme would work in relation to them. On that basis, they said the scheme was to be commended and that it was worth doing.

If there is to be consensus building, there needs to be a pilot approach. It would not be sufficient for a pilot to be held in one local authority, even if it were a very willing one in a beautiful part of the country. It is necessary to have pilots in several places, and it would be logical to choose places from the four countries of the United Kingdom. We should choose places that are urban as well as rural and that have a mixture of communities. I support that approach.

Having picked up the brief, I have made some inquiries among my colleagues about what they think about the issue. Some are strongly opposed to the idea because of the obvious conflict with liberal principles—for example, it would lead to too much of a Big Brother state and be too much of an intrusion. The scheme would require people to have, as it were, another set of organisational accountabilities. There is also a danger that those administering the system would be able to track much more carefully what people do with their lives—where people spend their money, what they use it on and so on. There is a big bureaucratic and organisational overlay, which could be a big risk. I understand that issue clearly. Some of my colleagues put it very robustly and say that they are in favour of making sure that there are sticks and carrots, but that they think that should be done through the tax system.

Our party had a big debate on the matter at our conference two years ago and produced a report, which those who are interested can read. It is called "Zero Carbon Britain—Taking a Global Lead." One of our proposals is to switch from the climate change levy to a carbon tax, which would apply to

"primary fuels as they enter the economy, once our energy efficiency measures have become effective in tackling fuel poverty, using revenues to cut other taxes."

We have argued—including my colleagues who are against this mechanism—that carbon taxes are a better mechanism and that they are more obvious, visible and transparent. Putting it simply, we could tax the bad things and reduce tax on the good things. We could also do things that the Government have already started to do, such as imposing an incremental vehicle excise duty. For example, there should be either no tax at all or very low tax on cars that are non-polluting and a high tax on cars that are much more polluting.

Some colleagues are robustly opposed to the scheme and some think that it is certainly worth pursuing and we should not let it drop off the agenda. I accept the proposition that the next Parliament is effectively the last parliamentary opportunity we have as a country for getting our house in order on this range of issues. The crisis is so great that, as many of the well-informed advisory groups have said, if we do not get a deal in Copenhagen that is robust enough, and if the Americans, the Chinese, the Indians and others do not put policies in place that will allow us to turn the corner some time during the next decade—people have dates such as 2016 in mind—it will be too late and we will be accused of failing in our obligations. Therefore, I have to decide what is the responsible thing to do, and how to respond. I shall give an uncomplicated summary of my position.

My party has in place policies that I believe will contribute to a reduction in carbon emissions and in the use of fuel, and to an increased chance of combating climate change. We have schemes for making all homes energy-efficient and so on. We have other policies in place that relate to what kind of transport we use, moving from the more harmful to the less harmful. We have made it clear that we must not have coal-burning power stations that do not have full carbon capture and storage, and that we absolutely must expand the renewables sector. All those policies are in place.

I have decided that my party has an obligation to respond formally to the proposition in the report, and that we need to do so quickly, so I have decided that we will have a short period of formal but open consultation, picking up on what has come from the Committee's report and from the Government response, which makes arguments against it. We will complete that process by September, by the time of our conference. We will then be able to formulate a party view in good time for the general election, which we expect afterwards. The plan will allow us to have an internal debate and look at the pilot scheme option. My sense of the way forward is that the pilot scheme option is likely to command the most confidence, as it will allow people to see whether the proposal works.

I am nervous about an over-authoritarian response, and anything that is illiberal in how it intrudes on people's privacy. I do not have a problem with having a tough set of laws and regulations to deal with the global crisis, because sometimes one has to regulate and legislate to change behaviour. I do not believe that everyone will wake up in time and come to understand their obligations. However, we need to respond positively. My response to the hon. Member for South Suffolk and his colleagues is to say that the public are clearly divided on the issue. It is controversial, and it would involve people living their life in an entirely different way and being environmentally accountable. We should go down this road only if the preconditions that the Committee set out on public understanding are met.

I believe that public understanding of the crisis is growing quickly. They understand increasingly clearly that we all have personal obligations to do things about it, but we must ensure that the public do not think that there will be unfair penalties, or that the rich and well looked-after will be able to manage far better than the poor and disadvantaged. That would not be a good, fair or equitable social outcome. My proposal seems to be a reasonable way forward. I hope that it commends itself to members of the Committee, the Government and the public. I will, of course, ensure that we make public our response later this year.

Photo of Gregory Barker Gregory Barker Shadow Minister (Energy and Climate Change) 3:53 pm, 18th June 2009

I am a Front-Bench spokesman and therefore precluded from nailing my colours to the mast of any candidate for Speaker; nevertheless, I wish you well on Monday, Mr. Bercow.

The speech by Simon Hughes was thoughtful and covered all the points, but I find it eye-wateringly extraordinary that, more than a year after the report was published on 26 May 2008, his party still needs another six months or so to come to any sort of balanced conclusion. That is extraordinary, given that we are in the fifth year of a Parliament, but I leave that to one side.

I congratulate my hon. Friend Mr. Yeo on his excellent speech and on a thorough report. The Government response was long overdue. There is a great deal of detail in the report that informs this important debate, but I may disappoint him by saying that we on the Conservative Benches will find more in common with the Government response than we do with the Environmental Audit Committee's report. However, it is an excellent example of the EAC leading the debate.

I am entirely party-free on this matter, as I am an alumnus of the EAC, having for five years served with great pleasure alongside at least three hon. Members in the Chamber—in fact, for the whole of my first Parliament. I have the greatest respect for the Committee's work. It tests opinion in Parliament and in the country more widely. The EAC is second to none in the role of leading and helping to shape the debate on the challenges of climate change as well as the wider environmental debate. It is absolutely right and welcome that it has done so much important work on the issue.

Of course, the idea was run up the flagpole by David Miliband before he went on to become Foreign Secretary. Unfortunately, his utterances on, and enthusiasm for, personal carbon trading proved to be another banana skin on which he slipped, and he rapidly retreated to the Government's much more measured approach to the subject.

I wish to be precise in giving my party's response to the debate. There are several good reasons for thinking that personal carbon trading could contribute to a solution to the problem of dangerous man-made climate change. We all know that there are no easy solutions, and that the solutions are many and complex. There are certainly no silver bullets, so everything that looks like a potential solution has to be looked at clearly.

I agree with the Committee's statement that

"if the Government is to stand the slightest chance of meeting its 2050 target it cannot afford to neglect the domestic and personal sector."

That is absolutely right—it is a given. The Committee then stated:

"Reductions in carbon emissions from business and industry will be meaningless unless accompanied by significant and equal reductions from households and individuals", and was spot on about that.

Likewise, the Committee stated that

"existing initiatives are unlikely to bring about behavioural change on the scale required".

I think that that principle could be extended across the range of Government policies. We are simply not seeing transformation on the scale required. Even if individually many of the Government's schemes and policies are themselves not bad, they simply do not have the reach and breadth that we need, given the urgency of action required during the next decade.

I certainly agree with the Committee's conclusion that

"more radical measures must be introduced if emissions reductions from the individual and household sector are ever to make a meaningful contribution to UK targets."

However, I am less sure that its conclusion that personal carbon trading

"might be the kind of measure needed to bring about behavioural change" is something that we need to embrace now.

In point 6, the Committee acknowledges

"the many difficulties that will have to be overcome in the development and implementation of personal carbon trading, not least work to bring about the public and political acceptance of such a concept; considerable further research is required on many aspects of personal carbon trading."

The fundamental difference is that the Committee believes that by

"designing and implementing a sensitive and moderate scheme, these obstacles could be overcome."

That is where I beg to differ.

There is a danger that such a scheme would ultimately appear to the public to be complicated, intrusive and potentially another arm of the Big Brother state. I could easily rehearse all the familiar arguments about identity cards, but, even greater than that, we would have a huge public debate about process. The debate would not be about the threat from climate change or the urgent need for action. It would be drawn down into a pointless discussion about process, cards, funding, formulae and something that, in itself, is not a solution but just a mechanism for getting to a solution. That could do huge damage to the growing public acceptance of the need for radical action on climate change.

Ultimately, it boils down to this: there is a serious problem. We need much more radical action and we must be much more ambitious in our response to dangerous man-made climate change, but there is a hierarchy of response and action. A number of other measures cannot be put in place until the infrastructure to decarbonise our economy is in place, and until the public feel that the Government are showing real leadership and have implemented the measures needed to make it easier, and possible, for people to live a more low-carbon lifestyle and easily to facilitate the changes that they need to make in their lives to live a more low-carbon and sustainable existence. To bring in such a measure now would risk alienating the public opinion that is essential if we are to beat the challenge of dangerous man-made climate change.

Although I believe in political leadership, not followership, on this issue there is a possibility of our alienating the people whom we need onside if we are to be effective in adopting the manifold solutions that we need to bring to bear on global warming. Only when those other measures are in place and we have retrofitted the vast majority of the housing stock with the energy efficiency measures that it is crying out for can we start to put pressure on people to change their lifestyles. Only when we have a much more equitable system of taxation, with green taxation taking on a more important role in the overall balance of taxation policy, and only when the Government are making real steps to ensure that the investment flows into the energy supply to ensure that renewables are playing a full part, and that the carbon from the fossil fuels that we do deploy is captured and sequestered, will it be fair to start putting more pressure to the British public—the consumer.

Ultimately, it is not that we are against the principle of personal carbon trading, but in the face of a real threat—let us be clear that, as we heard today, climate change is posing a growing threat to our nation and to the well-being of the population—we have to do a lot of things first, before we get to the unpalatable measure of the intrusive, Big Brother approach of personal carbon trading. Because of all the detail on our personal and private lives that would have to be assembled centrally and held in a database, worrying and complex questions arise that go way beyond simply dealing with effective solutions to climate change. The hon. Member for North Southwark and Bermondsey rightly mentioned the liberal principles that are at stake. We cannot discard those lightly.

Until we see a far more robust implementation of policies to transform the basis of our economy and to make it easier for people to live low-carbon lives, simply introducing personal carbon trading would be regarded by the electorate—the public—as an abdication of responsibility by the Government, who should be leading on this issue, and it would be seen as a substitute for real Government action on this agenda. There is still so much that we should be doing, at Government, local government and community levels, before trying to pick our way through such a complex and potentially unpopular policy such as personal carbon trading.

The Government response to the report, rightly, does not pooh-pooh the whole scheme. It draws attention to the support that the Government have given to external research—to academia and think-tanks—and says that they are

"committed to keeping in touch with their progress."

I think that we could be a bit more robust in that regard and a bit more supportive of external research, because we cannot totally dismiss it, despite our reservations. Perhaps, when all the other things are in place, if we are not successful in decarbonising the economy to the extent that we think possible, ultimately we will have to go down the route of personal carbon trading, but it is not acceptable at the moment. We are not yet in a position where we have the right to impose it on the British public, but we should keep it under review, consider carefully the recommendations of the EAC, and look with interest at the continuing debate in academia and at the research studies.

My view of pilot schemes is slightly less clear. There could be merits in a pilot scheme, and we could learn more for potential future action. However, the danger is that Government pilots would spark a national debate, which could deflect the focus away from the strong action that we need in other areas, including our infrastructure, energy efficiency, developing renewables and decarbonising our economy. My party published a wider range of measures earlier this year in a paper called "Low Carbon Economy". That is where the focus has to be. We have still to get the public to focus on the potential of, and opportunities in, decarbonising our economy and on the considerable benefits that would flow to both their quality of life and our economic life if we did that.

I agreed with many things that Colin Challen said. I appreciate that he is a long-term advocate of personal carbon trading. He is right to say that the Government have a slew of different initiatives that are complex and often opaque. That criticism is valid. Individually, a lot of the schemes are perfectly sensible, but the whole creates a rather confusing blizzard of schemes and counter-schemes. However, I do not agree that the answer to climate change is to inhibit economic growth and simply to put a brake on progress. On the contrary, the economic development of clean energy and deploying capital from the private sector to get the billions of pounds of investment that we need from it into sustainable solutions will be a key factor.

Earlier today, I was with the shadow Chancellor of the Exchequer at the London stock exchange for the launch of the new index, the green initiative and opportunities index, which we hope will make the UK the global hub for green financing and investment. There are the things on the opportunity, innovation and enterprise agendas that we should be focusing on and trying to capture the imagination of the British public with, rather than going down the route of hair-shirt restrictions, which are part of the older agenda of environmentalism.

Photo of Colin Challen Colin Challen Labour, Morley and Rothwell

I am a little perturbed by the hon. Gentleman's interpretation of my words, some of which I never actually said. I did say that it was possible for people to plan their life better so that they can still maintain their quality of life by having a smaller carbon footprint. It is not about wearing a hair shirt.

Photo of Gregory Barker Gregory Barker Shadow Minister (Energy and Climate Change)

I am happy to stand corrected, if I misinterpreted what the hon. Gentleman said. I totally agree that, of course, it is possible to have a smaller carbon footprint and still enjoy a high quality of life. On that we are united.

There is a hierarchy of response. We cannot rule it out that, one day, we will need personal carbon rationing—trading—but there is still a huge amount for the Government to do. We need far more leadership and ambition. Running pilots would be an unwelcome distraction from the great task, which the next Government will have, of leading on the solutions to dangerous man-made climate change.

Photo of Joan Ruddock Joan Ruddock Minister of State (Department of Energy and Climate Change) 4:09 pm, 18th June 2009

I join all other hon. Members who have expressed their very best wishes to you, Mr. Bercow, and wish you well in the current contest.

I congratulate Mr. Yeo on his thorough, enthusiastic presentation of the Committee's report. I also congratulate the other Committee members on their contributions to this debate. The hon. Gentleman began by stressing the enormity of the challenge. He knows that I agree with him totally on that point. As other hon. Members have said, we have today launched our latest climate change projections, which show the reality of the changing climate in the UK and emphasise that we must both reduce our emissions and adapt to the inevitable changes.

Since the Committee's report was published a year ago, we have in the Climate Change Act 2008 increased our 2050 target to an 80 per cent. reduction in greenhouse gas emissions against 1990 levels. We have also set out our proposed carbon budgets, which will take us to a 34 per cent. reduction over the five years from 2018 to 2022, putting us firmly on the trajectory towards 2050. We are also playing a leading role internationally in the preparations for the Copenhagen climate change meeting where we will press for an ambitious global deal. After such a deal, we will further tighten our carbon budgets in line with the new international position.

My hon. Friend Colin Challen said that he believes that we are not doing enough, but we believe that we are doing enough, although it is always possible to do much more. We are on the path to make the emissions reductions required of developed countries such as ours. The independent Committee on Climate Change is satisfied with current progress. We all know the sort of measures that must be put in place, or that are in place but need to be increased in some instances. We will publish detailed policies later this summer following our setting of the carbon budgets.

My hon. Friend said that he believes that the UK is responsible not for 2 per cent. of global emissions, but for 15 per cent. That was not the conclusion of the work undertaken by the Department for Environment, Food and Rural Affairs. I had that checked because I know the thoroughness with which he reads about these matters. Essentially, our imports produce one third of the increase in our actual emissions, but that does not take us to 15 per cent. of global emissions. It simply increases our 2 per cent. by one third. However, that remains a small proportion of the world's global emissions.

More than 40 per cent. of the emissions from the UK are attributable to individuals through energy use at home, through transport and in other ways. We recognise that policies to tackle such emissions must play a role alongside industry, business and the public sector. As has been said, in 2007 the Government commissioned a series of studies on personal carbon trading, which considered four broad issues: the technical feasibility of a personal carbon trading scheme and its likely costs; the potential equity and distribution impacts; public acceptability of personal carbon trading; and the efficiency and effectiveness of personal carbon trading compared with other ways of achieving the same emissions reductions. Those studies were published in May last year, and I will recap the main findings.

First, there are no insurmountable technical barriers to the introduction of personal carbon trading, which could use established technologies drawn from current banking systems. Secondly, a personal carbon trading scheme based on banking technology would be likely to be expensive. The hon. Member for South Suffolk said that there would be no compulsion to pay, but everyone enrolled in the scheme—the whole population would have to be involved for the scheme to be fair—would have to pay the costs. Working out the costs is essential to any judgment on whether such a scheme would be affordable. We did not do that ourselves, but engaged consultants, who found that the costs would be between £700 million and £2 billion just to establish the necessary systems, and that there would be annual costs of between £1 billion and £2 billion.

My hon. Friend Mark Lazarowicz said that he was initially a sceptic but had become a convert. My journey has been exactly the opposite. I was enthusiastic, with the previous Secretary of State, and I hoped that the scheme was a straightforward and direct way of making the necessary carbon reductions. One of the great attractions for me and for all hon. Members who have worked on the Committee is that everyone would receive the same allocation of emissions rights, so fairness would be apparent, but we must consider how many allowances people would need to meet their basic requirements.

In general, those with higher incomes use more energy and travel more, so they have higher carbon emissions. Not surprisingly, our study found personal carbon trading to be generally progressive in its distributional impact, and that is what we expected. However, a significant number of low-income households would lose out, and we cannot ignore that. More than 2 million low-income households could be doubly disadvantaged. Not only would they pay the cost of the scheme, which could be around £40 to £80 per household per year, but if they lived in a rural area and had to use their car regularly, for example, they would exceed their free allocation and incur the cost of buying additional allowances. We cannot find a way of overcoming that.

My hon. Friend also said that it would be possible to guarantee the outcome from a personal carbon trading scheme. The only way to guarantee an outcome from such a scheme would be to allow the carbon price to rise without constraint. Clearly, any market mechanism without constraint would be a huge disadvantage to those who are less able to pay.

Photo of Tim Yeo Tim Yeo Chair, Environmental Audit Committee

I fully recognise that applying personal carbon trading to transport is vastly more complicated and vastly less attractive than applying it to the domestic energy sector, which is substantial, so it is worth making reductions in it. Transport can be dealt with more effectively in other ways. I acknowledge that trying to apply it to people who are driving around is almost certainly unworkable.

The Minister knows that we dispute the costs of the scheme. I do not know what brief was given to the consultants who said that it would cost up to £2 billion to set up and another £2 billion a year, but I bet that they did not talk to Tesco about how it runs its card scheme, which involves tens of millions of people.

If the personal free allowance were set at a sufficient level, it should be possible for a substantial proportion of households—this would include a high proportion of low-income households—to come in well below their allowance. Even if there were an annual £40 admin cost, which I dispute, the value of the surplus allowances would in many cases well exceed that.

Photo of John Bercow John Bercow Conservative, Buckingham

Order. May I tell the hon. Gentleman carefully and diplomatically that his intervention is learned but lengthy? I am sure that it is coming to an end.

Photo of Tim Yeo Tim Yeo Chair, Environmental Audit Committee

I am grateful to you, Mr. Bercow. Being corrected will not prejudice my decision on Monday.

Some of the objections that the Minister is raising to such a scheme could be dealt with.

Photo of Joan Ruddock Joan Ruddock Minister of State (Department of Energy and Climate Change)

The hon. Gentleman tries to second-guess a serious group of studies that the Department undertook. We undertook that work because we genuinely wanted to find out what was possible. He must accept that those are the findings, and that they led us to certain conclusions. I do not believe that his Committee was able to produce other modelling that would suggest otherwise. I will respond later in my speech to the suggestions that he makes: for example, that the scheme should be very much restricted—perhaps restricted to domestic energy use.

Before dealing with public acceptability, perhaps I should acknowledge the comments about Martin Horwood that were made by Simon Hughes and the concerns that were expressed by him about those who are less able to pay. Even if the less able to pay are a relatively small group of people, the system, if it is to work, depends on trading, and apart from the least able to pay, there are people in one sector of society—I think that he will acknowledge this, as I do—in constituencies such as ours that not only do not have bank accounts, but have the greatest difficulty because their lives are very complicated and stressed. It would be very difficult for many people to take on that burden in addition to everything else that they are dealing with. That needs to be understood.

We found that public acceptance of personal carbon trading would be a major hurdle. Although the majority of individuals in our study recognised the need to take personal action, people easily perceive personal carbon trading as a form of rationing. Furthermore, they had concerns about imposing what were seen to be limits on activities. There were concerns about the complexity of trading and the extent to which people would engage with that aspect of the scheme, and there was strong reluctance about the use of price signals to influence individuals' behaviour.

Gregory Barker advanced strong arguments, along those lines, about the terrific controversy that would arise about the process itself. We take that very seriously. That does not equate to the Government being unprepared to meet the public, head-on if necessary, on issues on which persuasion and behaviour change are required to meet our carbon limits. We are more than prepared to do that, but to do it in the face of concerns that we think would lead to real and major difficulties would be somewhat foolish.

We see the need to question how personal carbon trading might deliver savings beyond those that we are establishing from alternative policies. That is the opposite of what hon. Members have argued. They have argued that, through this method, we could do things that we will not be able to do, or do enough of, through other methods. That is the central question that I now want to address.

Because personal carbon trading schemes target energy users directly, we describe them as downstream trading schemes, as opposed to upstream trading of emissions through fuel suppliers, for example. At the moment, all emissions from electricity usage are already capped through the EU emissions trading scheme, which covers all the major power generators. Therefore, some of the emissions—the electricity emissions—that would be covered by a limited personal carbon trading scheme such as the hon. Member for South Suffolk has proposed are already accounted for further upstream. Any actions to reduce electricity demand do not, therefore, create additional emissions reductions. That sounds counterintuitive, but it is a fact, because if we reduce within the UK, within the EU emissions trading scheme, we allow more scope for more emissions elsewhere.

Photo of Colin Challen Colin Challen Labour, Morley and Rothwell

I wonder whether my hon. Friend has a fix on the extra amount that everybody has to pay on their energy bills to cover the cost of the ETS and the raft of other upstream schemes. There is a cost to poor people there. How are we addressing that?

Photo of Joan Ruddock Joan Ruddock Minister of State (Department of Energy and Climate Change)

My hon. Friend is right. There is a cost, and it is fair to say that as we develop more policies directed at producing more renewable energy, we will have to put more cost on to bills. We have acknowledged that. The fact is, however, that if we do that through upstream schemes, we will do the overall scheme at much lower cost than we believe we could do through personal carbon allowances. That is the case that I make. It is not that personal carbon allowances could not be made to work. I believe that they could. The question is whether that is the more effective way of dealing with carbon limits in the UK and in the EU, or whether the current schemes and the development of the current schemes that we plan for the future are more effective. I believe that the latter is the way forward.

I say clearly for the record that any actions to reduce electricity demand do not therefore create additional emissions reductions, but that is not to say that they are not valuable for other reasons, such as reducing overall abatement costs for the UK and enhancing our security of supply. There is value there, but it does not achieve what my hon. Friend argued it did.

From 2013, aviation will join the EU ETS, so another element of personal carbon emissions will be tackled upstream. It would be feasible to cap heating fuel and road transport fuel upstream as well, at which point all the main sources of carbon emissions from individuals would be subject to upstream caps. Because upstream trading schemes involve relatively few parties, their implementation costs would be relatively small.

Earlier, I gave the costs of the personal carbon trading schemes. With regard to the upstream schemes, we estimate that it would cost about £50 million to cover a few dozen fuel companies, compared with the £1 billion to £2 billion to introduce a trading scheme that would have to involve 50 million participants. So what additional benefit could be gained by the downstream approach? This is important and, I hope, illustrates to hon. Members that we have taken the issue very seriously. My hon. Friend the Member for Morley and Rothwell has already argued the case, but essentially the downstream scheme offers greater visibility. People become more conscious of what they are doing and, if they are more conscious and more involved, they are more likely to be willing to adjust. Each person would have an awareness of their annual allocation and would relate that to the carbon content of their heating fuel, a flight or a tank of petrol when they filled up the car. Obviously, that is an important element, but the central question remains: how can most be achieved?

The hypothesis that we tested is that that higher visibility could drive changes in behaviour of sufficient scale to justify the additional complexity and cost. However, based on our assumed costs, we found that personal carbon trading was very unlikely to be a cost-effective way of reducing emissions compared to alternatives. In the central case scenario, the costs outweighed the benefits by a factor of 15. A scheme would need to deliver personal carbon reductions of about 40 per cent. to be cost-effective at a carbon price of £30 per tonne of carbon dioxide.

Let me offer a comparison with one of the new schemes that we are introducing—the carbon reduction commitment, which is coming in next year. That is a cap- and-trade scheme targeting major organisations in the commercial and public sectors. When we first proposed it, we considered an entry threshold for electricity bills of about £15,000 per annum. That would have covered most organisations other than the smallest SMEs. However, our analysis showed that, for many of the smaller participants, the costs would exceed the benefits. As a consequence, the scheme now has a much higher threshold; it is probably about £500,000 a year in the cost of electricity, but that is necessary to ensure that the scheme is cost-effective.

If a trading scheme is not expected to be cost-effective even for small or medium-sized businesses, that reinforces our conclusion that a similar approach is unlikely to be cost-effective if applied to individuals. I say that with regret, because I set out wanting it to work and for the Government to be able to say that it is the road down which we should go, and I could have supported everything proposed by the Committee. However, I stand by everything that we have said in our response to the Committee's findings. We concluded that although personal carbon trading remains a promising concept, and one to which we may return, we could not justify further work at this stage. Even though my Department is not actively carrying out further research on personal carbon trading, we follow developments elsewhere with interest.

The hon. Member for North Southwark and Bermondsey referred to the RSA report. I must disabuse him of his belief that the report was positive. The RSA set out to be positive, and it expected a good outcome, but its findings mirrored many of our own. It concluded that personal carbon trading posed too many problems to be introduced immediately as a mandatory national programme. However, I believe, as does the RSA, that the main elements of personal carbon trading are relevant in respect of voluntary action, and that we should consider them.

Calculating one's own carbon footprint, trying to reduce it and being rewarded for making emissions reductions can make a valuable contribution to voluntary efforts to reduce carbon. That is particularly true if adopted at community level. I applaud the efforts of members of carbon reduction action groups to monitor and reduce their carbon emissions. The strength of the growing Transition Towns movement and the success of schemes such as the British Gas green streets competition demonstrate the power of collective action. Although we are not actively pursuing personal carbon trading at this stage, we are far from being complacent about the challenge of reducing emissions from individuals.

One of the Committee's recommendations, which was repeated today, was that the Government should press forward with the introduction of smart meters. We announced last year that we would mandate the roll-out of smart meters to all households, and we are consulting on the details. The roll-out will happen over the next 10 years. That may seem a long time, but it is a major infrastructure operation. However, by 2020, every household will have a smart meter. Over that period, we will have raised people's awareness, and people will more actively understand their electricity use and how they use their appliances. Things will all be coming together, which will allow people to reduce their energy because they understand it—and they will have a smart meter to prove it.

Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change

Strategy in that direction is welcome. Will the Minister be good enough to look at what has happened in other countries? Another argument suggests that it might be possible to have such a scheme in a shorter time scale—but not necessarily as short as Italy, which I gather did it in three years. However, we could combine a shorter and more effective scheme with the right labour being trained up to deliver it and not being made redundant at the end. I gather it can be done more quickly.

Photo of Joan Ruddock Joan Ruddock Minister of State (Department of Energy and Climate Change)

The hon. Gentleman has made that point before. I am an enthusiast; with everything that the Department considers, I say that we should go further and faster. I acknowledge the need to train people, and the fact that there are skills and capacity issues, but that needs a great deal of consultation with the energy companies. Starting next year and moving forward at the best pace we can, we believe that it will be complete by 2020. Clearly, if we can do more and do it more quickly, we will, but we want to get the design right. The technology has been evolving very fast, and smart meters can do much more than they could one or two years ago. We want to get the optimum out of this; to do so, we need to do it in the fastest time consistent with doing it well.

In our heat and energy-saving strategy consultation, we announced the great British Refurb—a programme to complete all basic household insulation measures by 2015, which is six years away. We also proposed offering whole-house refurbishments to 7 million homes by 2020. We will say more about how we intend to deliver all that in a White Paper later this summer and in the final document of our heat and energy saving strategy later this year. As hon. Members know, we are committed to introducing a feed-in tariff for renewable electricity next year, and a renewable heat incentive the following year, both of which will help householders to install low and zero-carbon energy technologies in their homes.

A number of hon. Members referred to our Act on CO2 calculator. For the record, I shall give the up-to-date figure. Unfortunately, it is not 2 million; I wish it was. Since we started, 1.6 million unique users have generated more than 608,000 footprint profiles. Many of those who did, as well as Ministers and officials, gave feedback on how to develop it further. Those ideas have come to fruition, and version 2 of the calculator will be launched at the end of this month. It will provide a personalised action plan for the steps needed to reduce our carbon footprint. Other new features will include point-to-point flights, public transport and a comparison tool to help consumers understand how their carbon footprints compare with those of others.

My hon. Friend the Member for Morley and Rothwell argued that the results, although welcome, were rather small. In some ways, however, he went against his own argument on how easy it would be to get the population engaged in carbon trading. We know that there is not yet enough real awareness, understanding and participation, so it is difficult to believe that personal carbon trading, starting from where we are, could just take off. However, it is happening with small communities of self-selecting enthusiasts, as has happened with the carbon calculator. However, as with the carbon calculator, we intend to back it up with advertising, particularly on television during popular programmes when it can be afforded. In that way, we hope to keep drawing new audiences and new segments of the population towards the calculator, leading them to a greater awareness of how they can contribute, saving both energy and money.

The hon. Member for North Southwark and Bermondsey spoke of the need for people to understand much more about their energy use and their appliances. I agree with him absolutely. Again, the Government will be working through sustainable products, particularly energy-using products. We are doing a great deal of work in Europe—that is where it needs to be done—to ensure that people can obtain the most energy-efficient products, and that when they buy they can be more confident that those products will be appropriately labelled.

The Government have further plans for advertising on national television, in the press and on radio and online for our Act on CO2 campaign. That advertising will be supported by brand partnerships and other public relations activity. It goes across Government, and is not just restricted to DECC. We required the Energy Saving Trust to open a network of advice centres, and through them, and its other campaigns, it reached 1.3 million households in England, Wales and Northern Ireland last year.

My hon. Friend Joan Walley challenged me in a number of ways. She spoke about the need to take seriously the work of the Environmental Audit Committee. She might recall that I was a shadow Environment Minister at the time of the road to the manifesto for the 1997 election. When I was asked what were the three things that we should have in the manifesto, I said that one of them was the EAC, so she should not doubt in any way my commitment in government to ensuring that we take the EAC's work very seriously indeed. We value it and look very carefully and soberly at all its recommendations. I am only sorry to have to disappoint the people who have shown enthusiasm for this topic, but that is not because we do not take the Committee's work very seriously. She asked me to show more willingness—the willingness is there; I just need to be convinced.

My hon. Friend the Member for Morley and Rothwell asked me to be bold and radical because we have nothing to lose. Again, I share those sentiments, but, as good as all our ideas are, we must work through them systematically to translate them into policies that can be implemented. This is a difficult business. I say to the Front-Bench spokesmen that I am glad that we have had such a meaningful exchange. I appreciate the support of the Conservative Front-Bench spokesman, Gregory Barker, who agreed with much that we have said, and I look forward to the Liberal Democrats' report at the end of the consultation, to which the hon. Member for North Southwark and Bermondsey referred.

We remain open-minded about the possibility of future action and shall follow very carefully the work being done elsewhere. We believe that some of the elements of the report are entirely applicable to voluntary and community action. We are addressing the situation at the highest level, through the EU emissions trading scheme, the new carbon reduction commitment, our climate change levies and agreements, and other upstream ways of tackling carbon emissions and meeting limits.

We are also looking at the problem from the perspective of ordinary people through our Act on CO2 campaign. We are trying to increase public awareness and encourage a sense of a national mission. Nothing less than that—this was reflected in the sentiments expressed today—will enable us to make the emissions reductions necessary to make the UK more secure and less likely to contribute to global warming. We have to take that commitment to Copenhagen. If we do not get a global deal, the worst consequences of climate change, as revealed in today's report, will come about. I am very grateful for the work done by the Committee. It has not been wasted. It triggered this debate and will keep us on our toes and thinking and listening. I welcome hon. Members' contributions and congratulate the hon. Member for South Suffolk and his Committee on their work.

Photo of Tim Yeo Tim Yeo Chair, Environmental Audit Committee 4:43 pm, 18th June 2009

With the leave of the House, I should like to respond. I join Colin Challen in paying tribute to David Fleming's work on this subject. It is enormous and inspirational.

I am grateful to my Committee colleagues for their contributions, support and warm words. I welcome the comments of my hon. Friend Gregory Barker and Simon Hughes. I would have welcomed them a bit more warmly had they been more supportive of what the Committee is advocating, but nevertheless their contributions were constructive and thoughtful, and I look forward to seeing the Liberal Democrat's conclusions after they have mulled this over for another few weeks.

I acknowledge the Minister's personal interest in, and commitment to, this subject. It goes back many years. That is welcomed by the Committee. However, I cannot help regretting the journey that she has made on this particular topic—she has gone in the wrong direction. I have a sneaking suspicion that it was encouraged, if not led, by officials. I am sure that she will not admit that, but it is very difficult for me to believe that anyone could have made such a long journey in the wrong direction without coercion by the civil service.

Photo of Joan Ruddock Joan Ruddock Minister of State (Department of Energy and Climate Change)

I am sorry, but the hon. Gentleman must allow me to intervene. I value our civil service—it does a huge amount of work—but my job as a Minister is clear: to examine what it tells me and come to my own conclusions, and I am a scientist, so I have a discipline that allows me to do that. I assure him that I would not have come to the conclusion that I set out if I did not believe absolutely the case presented to me on a factual basis.

Photo of Tim Yeo Tim Yeo Chair, Environmental Audit Committee

I accept what the Minister says.

I do not share the Minister's confidence—I am sure that it was not complacency—that Britain is doing enough. Time will tell. The Committee on Climate Change will take a view on that before long. I am simply anxious that, if we say, "We're on track", we shall soon be in for an unpleasant shock. I am also not sure that all her arguments against personal carbon trading apply to the much more limited ambitions harboured by the Committee members who spoke today. We are not in favour of immediately rolling out some nationwide, all-embracing scheme. We are suggesting that the concept is worth doing more on than the Minister indicated she is willing to do. I sensed a degree of incompatibility on a couple of occasions. She said that a fixed cap, necessary to achieve a guaranteed reduction, ran the risk of price spikes, but, as I understand it, we have a fixed cap in the EU emissions trading scheme, which has the Government's support. In theory at least, there is the risk of a price spike, although perhaps not a very big risk, in view of the global recession.

The Minister also advanced the now rather familiar argument that because emissions from electricity generation, as a whole, are capped, under the EU ETS it is pointless to incentivise households to make reductions, given that they have been swept up in the overall cap. I seem to remember that argument being used, somewhat disreputably, I thought, to justify allowing the construction of coal-fired power station at Kingsnorth without a fixed date for the application of carbon capture and storage. It is a poor argument, because it ignores the enormous advantage to every household in the country of investing in energy saving sooner, rather than later. It also ignores the possibility that, in the longer term—post 2020, perhaps—we might face a much more dangerous situation in which carbon prices are vastly higher. Requiring households now, by regulations, to have much lower emissions, and to incentivise them to invest in the necessary equipment, would reap a substantial advantage.

Photo of Joan Ruddock Joan Ruddock Minister of State (Department of Energy and Climate Change)

Perhaps I did not make it clear enough that we agree with those advantages. I was simply stressing that the claim that personal carbon trading would achieve more was not correct, because electricity is covered by the EU ETS. I should have made myself clearer. If the hon. Gentleman can run a pilot scheme of the kind that he suggested, funded by the private sector, I would of course look at it.

Photo of Tim Yeo Tim Yeo Chair, Environmental Audit Committee

I welcome that last suggestion, and I shall continue to try to interest a private sector sponsor. I have only just embarked on that process.

In conclusion, we are disappointed at the Government's reluctance to undertake more work immediately. We applaud, as the Committee did several times in public, some even quite unpopular measures being taken to encourage individuals to cut emissions. For example, we have argued consistently for the restoration of the fuel duty escalator and that certain types of very polluting activity should be taxed much more highly.

My fear is that in three or five years' time, the other steps that are rightly being taken—with all party-support in some cases—will need to be greatly strengthened because the science will show that the situation is still not being adequately addressed. The danger is that if Britain is to remain a leader in the world's response to climate change, many of the additional measures that will then be needed will have to be put in place very hurriedly and they are likely to place a heavier burden on the low-income households, which have, quite rightly, been the subject of so much concern in today's debate. I am genuinely anxious that by putting on one side a possible solution—it may not be the right one, but at least let us find out—we may find that we introduce other things that penalise low-income households, which are likely to suffer more than others from the physical effect of climate change.

I am grateful to the Committee for its work, and I am grateful to you, Mr. Bercow, for your indulgence this afternoon. I shall certainly bear it in mind in the later stages of Monday evening, and I wish you a very happy weekend in the meantime.

Question put and agreed to.

Sitting adjourned.