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Climate Change

Volume 451: debated on Monday 30 October 2006

With your permission, Mr. Speaker, I should like to make a statement on the independent report on the economics of climate change by Sir Nicholas Stern, commissioned by the Chancellor of the Exchequer and the Prime Minister last July. This morning Sir Nicholas published his comprehensive and compelling report. I believe it is a landmark in the debate about climate change.

The Prime Minister, the Chancellor and the Foreign Secretary have repeatedly stressed that climate change is an economic, energy, security and political issue, not just an environmental issue. The Stern report shows why this is true. The conclusions of the report are clear. First, climate change is the greatest long-term threat faced by humanity. It could cause more human and financial suffering than the two world wars and the great depression put together. All countries will be affected, but the poorest countries will be hit hardest. Secondly, the costs of inaction far outweigh the costs of action. At a minimum, a failure to tackle climate change—the continuation of what Sir Nicholas Stern calls business as usual—will cost 5 per cent. of global GDP. Costs could, however, run up to 20 per cent.of GDP.

Thirdly, the window of opportunity to reverse the rise in global emissions is narrowing. The science and the economics suggest that to avoid catastrophic climate change, or at least its likelihood, global carbon emissions must peak in the next 10 to 15 years.

Fourthly, the Stern report shows how the stock of CO2 or its equivalent has risen in the 150 years since the industrial revolution to 430 parts per million, and it continues to rise at around 2 parts per million a year. Stabilisation at between 450 and 550 parts per million would mean at least a 25 per cent. cut in global emissions, and for richer countries with higher emissions, it would mean a cut of 60 per cent. or more.

Finally, Sir Nicholas makes it clear that climate change is not an insoluble challenge. The technologies to reduce energy demand, increase energy efficiency and develop low-carbon electricity, heat and transport are within grasp. The costs are manageable at around1 per cent. of global GDP. The earlier we act across all countries and all sectors, the more we keep costs down.

Stern argues for global co-operation and domestic action, so let me set out our response in both areas. First, on emissions trading, Stern argues that we must create a price signal for carbon, in particular through the development of emissions trading schemes around the world. Emissions trading can not only ensure cost-effective reductions in emissions, but drive tens of billions of dollars each year to put developing countries on a path to low-carbon economies. The European Union is a world leader in that area, and a European solution is key to our goals. Today, we are proposing that the EU commits to new targets to reduce greenhouse gas emissions by 30 per cent. by 2020 and at least 60 per cent. by 2050.

We are setting out our commitment to strengthen the EU emissions trading scheme as the nucleus of a global carbon market. I will be discussing with business and environmental groups on Wednesday how we can develop a unified UK position for phase 3 of the EU emissions trading scheme from 2012. I am sure that we need to secure the long-term certainty of the scheme, to extend it to cover new sectors, especially aviation, and to link it to other emerging emissions trading schemes, notably those in California and other parts of north America.

Secondly, Stern argues for a stronger focus on technological co-operation, including the doubling of energy research and development support and a fivefold increase in low-carbon technologies. In March, the Chancellor announced the creation of an energy technologies institute, a new public-private partnership worth £1 billion of research and development funding into low-carbon energy technologies over the next10 years. Today, we can announce that two new companies will be joining the partnership, Scottish and Southern and Rolls-Royce, taking total contributions so far to £550 million, half of which has come from the Government and half of which has come from the private sector.

Stern also identifies a specific need to develop low-carbon transport fuels, which is why the UK has initiated a joint taskforce with Brazil, South Africa and Mozambique to promote the development of a regional sustainable biofuels strategy in southern Africa. The renewable energy and energy efficiency partnership, which the UK launched in 2003, is now working in more than 40 countries to develop policies and financing frameworks for investment in sustainable energy.

At the Gleneagles G8 summit last year, the UK was instrumental in establishing the energy investment framework to bring forward increased investment in energy efficiency and alternative energy sources. That was led by the World Bank and other regional development banks. The UK Government, with president Wolfowitz of the World Bank and the four leading regional development banks, are therefore pleased to announce today a partnership with the World Economic Forum and the World Business Council on Sustainable Development to stimulate private sector investment through that framework. President Wolfowitz and the Chancellor will co-host a conference early in February 2007 to kick off the partnership.

Thirdly, hon. Members on both sides of the House know that action to reduce deforestation, which makes up 18 per cent. of global greenhouse gas emissions each year and which is more than the whole of the transport sector, is important. Forests are of great global importance for climate change and biodiversity, but they are also the sovereign territory of the countries where they are, and only those nations can decide what happens to them. With the Governments of Brazil, Papua New Guinea, Costa Rica and the Coalition of Rainforest Nations, with Germany holding the presidency of the G8 and the EU next year, and with the World Bank and other interested parties, we will be exploring over the coming months how to mobilise global resources for sustainable forestry.

Fourthly, on adaptation, the review suggests that richer countries must provide financial support to developing countries to adapt to the changes in climate that are already in train. The UK Government are strongly committed to making climate risk reduction key to development activities. Contributions to the special climate change fund, the least developed countries fund and the Canadian international development research centre are additional to development finance and policy as part of this drive.

In all those four areas, the UK is determined to continue to show international leadership. That drive is strengthened by our domestic leadership. To be the most convincing persuaders abroad, we must be effective contributors at home. Between 1997 and 2005, when the economy grew by 25 per cent., the Government led the way to ensure that greenhouse gas emissions were cut by 7 per cent. We are exceeding our Kyoto targets and are the only country on track to double them. The ambitious commitments in the energy review to take a further 19 to 25 million tonnes of carbon out of the economy will add further impetus to reduce emissions.

We have now also decided to put in place a legislative timetable to become a leading low-carbon economy. Our climate change legislation will provide a clear, credible, long-term framework for the UK to achieve its long-term goals of reducing carbon dioxide emissions. The Bill will be based on four pillars. For each, we will give details at the time of the Bill’s publication. In addition, we are determined to promote the widest possible debate in the House and across the country about the contents of the Bill.

First, the Bill will put into statute the Government’s long-term goal to reduce carbon dioxide emissions by 60 per cent. by 2050 from 1990 levels. We will also consider appropriate interim targets. We are determined to enhance Britain’s competitive position and believe that business in particular will benefit from the long- term framework that is so important for effective investment decisions.

Secondly, the new legislation will establish an independent body—a carbon committee—that will work with Government to reduce emissions over time and across the economy. We will ensure that the committee’s advice is transparent, equitable and mindful of sectoral and competitiveness impacts, including the need to secure energy supplies at competitive prices.

Thirdly, we believe that targets need to be accompanied by substantive measures if they are to have credibility. Therefore, the legislation will create enabling powers to put in place new emissions reduction measures to achieve our goals.

The final pillar of the legislation will be to assess what additional reporting and monitoring arrangements are necessary to support our aims of a transparent framework for emissions reduction, including reports to the House.

The House and the country owe a huge debt to Sir Nicholas Stern and his staff for their outstanding work. His report should be a cause for alarm but also for action. The whole Government are determined to deliver that action, at home and abroad.

I thank the Secretary of State for his statement and for advance notice of it.

The Opposition strongly welcome the findings of the Stern report. I cannot pretend to have read all700 pages, and I only hope that it has been printedon recycled paper. As the key findings were comprehensively leaked over the weekend, however, it has been possible to get the gist. Sir Nicholas Stern and his team deserve to be congratulated on their forensic and thorough analysis of both the dangers and the opportunities presented by climate change. The report is an important and profoundly serious piece of work.

In its overall message, Stern’s analysis reveals little that was not already known, but it puts beyond doubt the arguments that the Opposition have been advancing for some time, and that the Environmental Audit Committee has been advancing for even longer: first, that the activities of mankind and climate change are inextricably related; secondly, that we do not have much time, although we do have just enough time to take action to head off irreversible and catastrophic changes to the earth’s climate; thirdly, that we must decouple economic growth from carbon emissions and move quickly towards a low-carbon global economy; and, fourthly, that the costs of not tackling climate change will be infinitely greater than the costs of taking action now.

The Chancellor has rightly emphasised the need to put in place an effective, international, market-based system for reducing global emissions. I note that he proposes a new commission to take that forward, for which we have already called. It is good to see him accepting our advice. We have also called for a tougher and wider application of the EU emissions trading scheme as one means of creating a price signal for carbon. Again, it is pleasing to note that the Chancellor has caught up.

The Secretary of State has finally stopped playing hard to get over our calls for a climate change Bill, and announced that we will have one. I hope that he will confirm that that will form part of the next Queen’s Speech, which he omitted to mention in his statement. We look forward to debating the details of the Bill.

It is good that the Government have accepted the need for a new independent body, which will work with the Government to reduce emissions, but does the Secretary of State expect the carbon committee to set targets based on scientific evidence, as we do, or will the targets be set by Government on the basis of a wing and prayer? I remind the Secretary of State that his party has a very poor record on meeting its own environmental targets.

I note that the 60 per cent. reduction target is to be put into statute. What about the “interim targets” that the Secretary of State is “considering”? Unless they are statutory as well, they will be in danger of being about as meaningless as all the other targets that have been missed. I see no reference at all to the annual rolling carbon reduction targets for which we, and climate change campaigners, have been asking. Have the Government rejected that proposal?

The Secretary of State says that the final pillar of the legislation will be

“to assess what additional reporting and monitoring arrangements are necessary”.

An assessment does not sound much like a pillar. Will the Secretary of State commit himself to an annual carbon budget report in Parliament? That would give him and his successors an opportunity to report on progress, and to set out any new measures that are thought necessary to ensure that carbon dioxide emissions are reduced before putting them to the vote.

What has the Secretary of State in mind when he talks of “enabling measures”? Will he assure the House that when he introduces any new measures he will do so in an upfront, transparent and open manner, and that the measures will be subject to parliamentary scrutiny and approval?

There is a real danger that the Government are intending to produce a watered-down climate change Bill, which will do little to impose the externally applied rigour that is needed to change the mindset of Ministers and civil servants. We do not want a watered-down climate change Bill, or a Bill based on four wobbly pillars. We want a Bill that will create a green revolution throughout government.

The Secretary of State can hardly have failed to notice that his own thoughts on measures to tackle climate change were leaked at the weekend. They included a range of new taxes. It was an interesting wish list, and if the Chancellor accepts any of the Secretary of State’s proposals we will of course examine them with care. We have been calling for a rebalancing of taxation to reward activities that do not contribute to climate change, and to bear down on those that do. The fact is that, since 1997, the proportion of tax revenues generated by environmental taxes has fallen from 7.7 per cent. to6.2 per cent. That trend needs to be reversed, but will the Secretary of State assure us that the Chancellor will not see it as a chance simply to hike up the tax burden yet again? We need replacement taxes, not extra taxes. Does the Secretary of State accept that the Chancellor’s record on introducing stealth taxes has seriously undermined public confidence, led to widespread and understandable cynicism, and made the job of persuading people of the need for green taxation very much harder?

We welcome the Stern report, but we are doubtful about the Government’s willingness or ability to follow through with effective action. Under Labour, carbon emissions have risen in five of the last eight years, and they are higher now than they were in 1997. According to Stern, the costs of dealing with climate change are increasing with every passing year. Has the Secretary of State calculated how much less expensive it would have been if the Government had acted sooner?

Is not the main reason for the Government’s failure to date that the Chancellor simply has not taken the issue seriously enough? Incidentally, where is the Chancellor? Given that Stern himself said this morning that the issue was far too important to be left to energy and environment Ministers, it is extraordinary that the Chancellor has done exactly that this afternoon.

The speeches surrounding the publication of the Stern report suggest that, at last, the Government have started to become more ambitious about climate change. If that is true, and if it is followed up with effective action, I shall be delighted. However, we have heard too many grandiose speeches from the Government before to be wholly convinced.

The Government have dithered for too long. We now need decisions and action: we need to get on with the job.

I am sure that the hon. Gentleman would expect me to associate myself with his remarks about the Stern review and the excellent way in which it was done. Listening to him, you would have thought that the Conservatives had been the most enthusiastic supporters of the Government’s green measures over the past 10 years. You would have thought that the Tories had been champing at the bit for the climate change levy that was introduced—

I am sorry, Mr. Speaker.

I wonder whether hon. Members noticed that the hon. Gentleman failed to apologise for the fact that the Conservatives opposed the measures that we took, including the climate change levy and the aggregates levy. He asked where the Chancellor’s decisions had led over the past 10 years. They have led to the United Kingdom being the only country in the world that has more than doubled its Kyoto commitment.

The hon. Gentleman asked about the work on annual targets that we have announced. I am glad that he did so. On Friday, the Leader of the Opposition said that we should have

“binding year on year targets”.

The hon. Gentleman was quickly sent out to explain what the Leader of the Opposition meant—namely, that those would not be “rigid annual targets” but a “rolling programme of targets”. He also said—this is very helpful—

“Well, it’s over 3 years until the general election. It doesn’t matter until then does it?”

It does matter what the Opposition’s policies are. They are either a serious party of government or they are a shower; at the moment they are a shower, no matter how many windmills they put on their roofs.

I, too, thank the Secretary of State for the courtesy of letting us have an advance copy of his statement.

I associate Liberal Democrat Members with the welcome for Sir Nick Stern’s excellent report. Sir Nick is one of the few British economists with a genuinely global reputation by virtue of his role as chief economist at the World Bank for many years. The report will have a serious impact not only in the business and economics community in this country but more widely—particularly, I hope, in the United States. It is significant because it turns on its head the old notion that we could delay action on climate change because the costs and benefits were out of line. It is clear from Sir Nick’s work that we must not delay in taking action.

I welcome the Secretary of State’s letter to the Chancellor—or was it the letter to The Mail on Sunday?—in which he set out a range of green taxes that bore more than a passing resemblance to a package that the Liberal Democrats voted on at Brighton. One could almost say that it was a carbon copy of our policies. I, for one, believe that imitation is the sincerest form of flattery, so I thank the Secretary of State for that.

We welcome the Secretary of State’s announcement of a legislative framework and an independent review body—the carbon committee. However, it is important that he tells us whether it will be able to take its evidence openly, whether its minutes will be published, like those of the Monetary Policy Committee of the Bank of England, and whether it will produce annual reports to this House assessing progress towards the targets on which all major parties in the House now agree, however belatedly in some cases. The problem is that the statement makes no mention of annual targets—indeed, in other places the Secretary of State has dismissed them—but merely mentions “appropriate interim targets”. What would we think of the Treasury if it did not set annual targets for its expenditure? On the other hand, the Secretary of State might think that not a bad idea, given the damage that he is inflicting on his own budget at present.

Is not this an entirely untenable position? Is not the Treasury, or any reputable economic forecasting organisation, fully capable of taking into account the effect of the weather on energy demand, carbon emissions and growth in gross domestic product? Is the Treasury really saying that all the work that the MPC, or any self-respecting economic group, can do on smoothed averages, cyclically adjusted figures and even weather-adjusted figures is completely irrelevant to the carbon framework? I urge the Secretary of State to look again at the possibility of setting more realistic targets that would allow this House to assess the trajectory in meeting those targets in 2030 or 2050. How on earth can anyone hold to account a Government who are up for election in 2009 or 2010 when the targets are being set for 2030 or 2050?

The report contains nothing about joined-up government, which is a key element of dealing with climate change, following on from the Stern review. When will the Government set up a Cabinet committee, headed by the Prime Minister or the Chancellor, with the clout to get the team of Ministers working as a team? If climate change is the No. 1 problem, as we have heard so often, why are flood defence budgets being cut? Why has the Treasury simply bottled out of taking on the fuel duty protesters year after year so that carbon emissions from transport have increased sharply? Why is the Department of Trade and Industry cutting the centres for ecology and hydrology, which help us understand the impact of climate changeon biodiversity? Why does the Department for Communities and Local Government sanction more than 100,000 new homes on flood plains, contrary to the advice of the Environment Agency? Again, that point was raised in the Stern review.

Why do not we get straight answers in plain English about those contradictions? On climate change policy, should not the Government play like a well-rehearsed orchestra? Instead, the players pay no attention to the conductor, and the orchestra is out of tune, off key and not playing to time. It is no wonder that climate change policy is a shambles. When will the Secretary of State start pulling the Government’s efforts together in a co-ordinated manner?

My hon. Friend the Financial Secretary said that the hon. Member for Eastleigh (Chris Huhne) sounded like an old record when he pressed his musical metaphor.

If climate change could be tackled by setting up a committee, successive Governments would have solved the problem long ago. As my hon. Friend the Financial Secretary again pointed out, many of us who are currently sitting on the Front Bench last week attended a Cabinet committee on energy and the environment, chaired by the Prime Minister, on our international climate change strategy. I assure the hon. Gentleman that it is not the be all and end all, although I am grateful for his support for that Government initiative.

Let me tackle the hon. Gentleman’s serious point about annual targets. I know of no economic model that makes allowances for the weather. I have not seen Treasury expenditure plans that make such allowances. That is why annual targets do not make sense and why the Kyoto protocol specifically rejected them in favour of its five-year targets. Furthermore, the hon. Gentleman says much about reductions at home—as does the Conservative party—but it is vital to realise that a tonne of carbon dioxide emitted in Bangalore is as dangerous as a tonne of carbon dioxide emitted in Birmingham. That is why buying our emissions reductions abroad is a perfectly ethical and important way forward, which is not captured in a debate about targets in the UK.

However, monitoring annually—reporting on, to use the hon. Gentleman’s words—our progress towards those targets is a completely different matter. The Government have been committed to that for at least nine months—possibly longer—and it was put into statute last year under the Bill that my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) promoted. I therefore assure the hon. Gentleman that there will be plenty of chances to debate the matter, more often than annually, but that is not an argument for annual targets.

The hon. Gentleman also asked about the carbon committee. I said that I would set out the details when the climate change Bill is introduced. As he intimated, there are difficult issues to get right, including the balance between an independent committee and its responsibilities and Government responsibilities. We will present proposals to ensure the transparency and clarity that he seeks.

I greatly welcome my right hon. Friend’s statement. In the light of the Stern report, does he accept that the Government have four key responsibilities: first, to ratchet up the contribution of renewables to electricity generation in this country from the current pathetic4 per cent. to at least 25 per cent. in 10 to 15 years; secondly, to require industry to report on its environmental impact year after year; thirdly, to provide for a carbon budget for individual households to assist them in reducing emissions year by year; and, fourthly, to require an overall aggregate reduction throughout the country of3 per cent. a year as the only way to achieve the target of a 60 per cent. reduction by 2050? Does he also accept that the Government should report—every year, I hope, but at least every five years—on success, and, if we have not been successful, on what needs to be done to get back on track?

My right hon. Friend has raised four points. On renewables, I am not sure that he will be satisfied, but we are committed to generating 20 per cent. of our electricity supply from renewables by 2020. I know that my right hon. Friend would like that figure to be 25 per cent. by 2025, but we propose to increase that contribution from 4 per cent. to 20 per cent. within 14 years. In respect of the Companies Bill, I hope that my right hon. Friend will forgive me if I do not venture into an already crowded terrain. On individual accounts, he emphasised the importance of offering clarity to people about the consequences of their household decisions. When energy prices are high, there is not only an environmental but an economic win as people improve their energy efficiency. I am certainly committed to that. Finally, as I said to the Liberal Democrat spokesman, the hon. Member for Eastleigh (Chris Huhne), measures to deal with reporting arrangements are now in statute as a result of the Bill proposed by my hon. Friend the Member for Edinburgh, North and Leith. I look forward to successive debates on those issues.

In welcoming Sir Nicholas’s report and conclusions, may I tell the Secretary of State that it might have been more helpful if the documents to which he referred had been available in the Vote Office ahead of his statement? That would have been better than having them relayed to us by the BBC, which reported that its correspondents had read all 38 pages of the summary while Members were simply referred to a website.

The Secretary of State will be aware that the Environment, Food and Rural Affairs Select Committee recommended more work on the development of green aviation fuel through bio-energy work. In his statement, he referred to the creation of a group in southern Africa to deal with that issue, but given that South Africa already produces half of its aviation fuel by a process that can produce green aviation fuel, will the group take that work on? Secondly, at the domestic level, what measures will the right hon. Gentleman take to encourage individuals to invest more in energy-saving methods? Many of them, like windmills and photovoltaics, currently have a poor rate of return, so what can he do to improve that?

I apologise to the House as I should have explained the problem about the documentation earlier. It was not an environmental matter, but there was an administrative problem with the printing of the 711-page report. The right hon. Gentleman is right about the 38-page summary and I am sure that the Stern team would want me to explain to the House that no offence was intended. I have checked and I know that it is trying to remedy the problem as soon as possible.

In respect of what the right hon. Gentleman called green aviation, I see that my right hon. Friend the Secretary of State for Transport is in his place. Not only in southern Africa, but in Europe and north America, it is important to pursue energy efficiency and technological innovation in respect of aviation as well as surface transport. I know that that is on the right hon. Gentleman’s agenda. As to energy saving, I referred earlier to the importance of information when I answered my right hon. Friend the Member for Oldham, West and Royton (Mr. Meacher). The Government are investing significant sums of public money in all our constituencies on insulation and other energy-efficiency measures. They are important because they enable families, especially poorer families, to benefit from energy efficiency. I look forward to the right hon. Gentleman’s support for those efforts.

I am sure that my right hon. Friend will convince the House that the ensuing Bill will contain some imaginative measures on personal transport—a difficult issue for the whole world to deal with. Can he assure me that some vision will be applied to that issue so that as we move forward on the route towards a possible hydrogen-based economy in the long run, people are carried with us and buy cars such as a British-made Vauxhall Astra, which is considerably cleaner than even a hybrid Lexus?

I admire my hon. Friend's support and tenacity on behalf of his constituents. I am not sure that the climate change Bill is the obvious place to pursue the matters to which he refers, but I know that those issues are being considered at both European and domestic level. I assure him that we recognise the need to tackle transport issues as part of the wider approach to the issue.

To ensure that the climate change Bill is as effective as possible, will the Secretary of State have urgent discussions with the Leader of the House, so that the Bill has exhaustive pre-legislative scrutiny and careful post-legislative scrutiny and monitoring?

The hon. Gentleman will be pleased to know that I have already spoken to the Leader of the House about the statement that I made earlier today and about the need for extensive discussion of the Bill in the House and outside. Quite what procedure we use is still to be determined, but I assure the hon. Gentleman that we want the Bill to be as widely debated and scrutinised as possible.

May I welcome the statement by my right hon. Friend? Nick Stern’s work will have international significance in taking forward the debate on climate change, and it underlines the lead that this country has given on the issue. Does my right hon. Friend agree that the logic behind Nick Stern’s report is that we need a fundamental cultural shift towards a carbon-accounting economy? Some of those measures—fiscal measures and regulation—could be introduced quite quickly, but others may require more detailed analysis. We should not have any boundaries, but rather look at the whole concept of carbon accounting, including personal carbon accounting. We need some good-quality analysis and work to be done on that, so will he press his friends in the Treasury for that?

My hon. Friend, as well as my right hon. Friend the Member for Oldham, West and Royton (Mr. Meacher), is a distinguished former environment Minister. There is a fundamental challenge in the Stern report and it can be simply expressed. For 150 years, we have pumped carbon and carbon dioxide into the atmosphere as if it had no environmental or economic cost. We have known for some time that it has an environmental cost, but today, the economic cost has been dramatised. Simply put, we need to ensure that, as we move forward, that cost is incorporated into the economic and social decisions that we take. The accounting issues that my hon. Friend raises are important. A range of groups, including the Royal Society of Arts, are looking at personal carbon allowances. That can only be a good thing as we think about how Government, business and individuals play their part in this global challenge.

Even before the report was published, spokesmen were claiming that it would require more green taxes. Will the Secretary of State comment on the claim that the report will be used as an excuse for increasing the tax burden on an already over-taxed public? Will he comment on claims that that will result in more expensive consumer goods, less access to foreign travel and a greater imposition for people living in rural areas?

I am sure of one thing: failure to act will lead to the sort of tax increases and costs to individuals that the hon. Gentleman fears. The Government's position in respect of green taxes was first set out in 1997, when we came to office, and it was developed in a 2002 Treasury paper that I commend to him. At every stage, we have pursued the principle of fairness at the heart of our taxation and spending policy and I assure him that that will continue.

While looking at personal accountability for individual carbon cost, can my right hon. Friend look at the two sides of the equation? As well as people being taxed for carbon-rich behaviour, can he encourage people to reduce carbon in the atmosphere by rewarding good behaviour and by giving grants, for example, to firms such as the one in my constituency that produces heat exchange systems, which are extremely effective in reducing carbon emissions and the heating costs of poorer families? That could be a win-win for everyone.

My hon. Friend makes an important point. The greatest win for an individual is that they will have a lower energy bill as a result of the energy-efficiency measures that she describes. That prospect seems to offer incentives in exactly the right place. If we can support companies such as those in her constituency, all the better.

I know that people in my constituency will want to play their part in any common-sense measures that will come forward, but I hope that, in the Secretary of State’s rush to tax 4x4s, he remembers that, while they may be a fashion accessory in Chelsea and Westminster, they are working farming vehicles in rural areas. Can he say something about what he will do to bring China, the United States, Russia and India on board? China has a new power plant opening every week and in India growth is such that 200,000 mobile phones are sold every day.

The hon. Gentleman raises an important point. As the Chancellor and the Prime Minister made clear this morning, there must be international action as well as domestic action. I have tried to refer to that in my statement. China, India, the United States and Australia all need to be part of a global agreement, but I hope that, in his discussions with legislators in the countries he mentioned, the hon. Gentleman will pursue the fact that every one of those countries is a signatory to the 1992 UN convention on climate change. That convention committed those countries to seek to avoid dangerous climate change. It is important that we say to legislators in those countries that their Governments and Executives need to live up to those commitments.

Premier Wen from China and Prime Minister Singh from India have been in this country over the past four or five weeks and my right hon. Friend the Prime Minister and I met them. I think that we have the opportunity, if the industrialised world sets itself hard targets—as we have done and as the European Union has done—to bring China and India on board, but we also need to ensure that important steps forward at state and city level in the United States, and by American businesses, are translated into action by the US Government.

As someone who has worked on these issues for more than a decade, I congratulate my right hon. Friends on the commissioning of the report and their responses to it. If we embrace everything that Nicholas Stern has said, history will see that today was a turning point in the global treatment of climate change. In setting an example at home, will my right hon. Friend take a look at the grants for householders to install low-carbon equipment? I understand that the grants have been so popular that they have almost run out. I hope that he will address that issue very soon.

My hon. Friend has a long and distinguished record in this area. I am happy to inform her and the House that the Government have brought forward some spending that was previously planned for next year to help the low-carbon buildings fund, which I agree has proved to be a tremendous success.

There can be no more important subject debated by this House in this Parliament than the one addressed by Sir Nicholas Stern and I hope that hon. Members will have a chance to debate his report once they have had a chance to read it. I warmly welcome the message that early action to tackle climate change will be more effective and less painful than delayed action. In that context, does the Secretary of State agree that there could be no more timely moment for his intervention to recommend tax changes to increase the incentives for greener choices by businesses and consumers; that Britain’s influence abroad would be enhanced if we were willing to take bold and perhaps unpopular action at home; and that an early litmus test of how seriously the Government continue to take the issue of climate change will be seen in the pre-Budget report?

I am sure that the hon. Gentleman is right that domestic and international action must be linked. I am sure that he is also right that there are a range of opportunities to take the debate forward. The Opposition spokesman, the hon. Member for East Surrey (Mr. Ainsworth) and I were smiling at each other across the Dispatch Box because we had a debate in the Chamber two weeks ago about climate change issues, but I am happy to debate it as often as possible.

May I congratulate my right hon. Friends the Secretary of State and the Chancellor on the report? I note that it was commissioned before the present Leader of the Opposition was elected to his post. I urge my right hon. Friend to inject some realism into the debate. There will be no pain-free choices, for individuals and their future lifestyle or for the Government and their policies. The issue is too important to leave to party politics, so will my right hon. Friend ensure a national debate between politicians and in every community and school so that we may leave a safe planet for our children and their children?

My right hon. Friend makes an important point. I tried to refer in my statement to the need for the climate change Bill to be something that can be taken out to businesses, schools and communities around the country, because he is right about the need for action by Government and businesses, and also individual action. In respect of his first point, some people always find change painful, but when the failure to change would be even more painful, the case for action is proven. That is the case in this area and I will be seeking to prosecute it.

I am sure that the Secretary of State will agree that action on climate change is vital at the international and national level, and also at the local level. Will he join me in congratulating Richmond council on introducing a parking charge scheme based on emissions, despite vociferous opposition from all the local Tory councillors—

Yes, indeed. Will the Secretary of State use the opportunity of the climate change Bill to give local councils greater flexibility to switch from council tax to green taxes at that level of government?

In an interview yesterday, I was asked about the Richmond council decision and I could almost feel the interviewer fall off his chair when I said that although it was a Lib Dem council and a Lib Dem idea, it seemed like a good one to me. I am happy to say that.

May I draw my right hon. Friend’s attention to a geothermal heating project in Midlothian, which has been on the go for some time and would reintroduce an old industry that can contribute to the future of the country? The project is 3,000 ft down in old mine workings at Monktonhall, and if it works, with 1 million gallons of hot water produced every minute, it could be replicated 200 times in Scotland alone and thousands of times throughout the United Kingdom.

My hon. Friend makes an important point. We are certainly committed to ensuring not just that renewable energy sources that have been developed and are close to the market are increasingly available but that we pursue sources further away from the market, through the research and development to which he referred. There is often discussion of carbon capture and storage, in which I know that my hon. Friend is interested, given his background, but we are interested in all ways of pursuing low-carbon energy sources.

I welcome the announcement that there will be a climate change Bill in the Queen’s Speech. Indeed, by pure coincidence, after the statement I shall be presenting my fourth climate change Bill—the texts of all my Bills are freely available if my right hon. Friend wants to incorporate them in his Bill in a couple of weeks’ time. May I draw his attention to the statement in Sir Nick Stern’s executive summary in the second paragraph on page 23 and ask him to comment about equity? In a world where there has been such long delay in delivering the 0.7 per cent. United Nations aid targets and the millennium development goals will be so long delayed, according to the Chancellor, what hope do we have of reaching the 1 per cent. of gross domestic product expenditure that Sir Nick talks about, and that it will be equitably spent?

My hon. Friend is a tireless campaigner on the issue. In respect of sharing out global burdens, the 1992 UN convention to which I referred earlier includes the principle of common but differentiated responsibilities: common responsibilities in which every country must play a part but differentiated because countries with better capacity, greater wealth and greater ability to contribute to tackling the climate change challenge must do so. That means that the industrialised countries must take on an equitable burden that reflects their development. I shall certainly look at the Bill that my hon. Friend introduces, but the principle of burden-sharing as enunciated by the UN is the right one.

I think that we are all agreed on the seriousness of the problem, and the debate is shifting to some difficult questions about what one does about it. The Secretary of State has acknowledged that the problem is global, which means that nothing we do in this country—although it may make us feel good—will actually solve the problem if others do not act. That leads to many conclusions, but two of them are, first, that it is important to develop technologies that help solve the problem, as he said, and to make them available in the developing world on terms that it can afford; and, secondly, that whatever we do domestically it makes no sense to impose costs on British business that make it uncompetitive internationally if other countries do not do the same thing.

I have a lot of respect for the hon. Gentleman so I hope that, on reflection, he will see that his statement that nothing we do will make a blind bit of difference is too strong. There are two tangible ways in which our action can make a difference. The first is that unless we show willingness to act, as sure as night follows day, the Chinas, the Indias and the other developing countries certainly will not want to follow suit. That is the first reason why it is important for us to take action. Secondly, every business organisation to which I have talked has said, “We want long-term certainty and stability so that we know the rules of the game—the carbon price game. Once we know those rules, we will compete and win in those markets.” That is a second reason why there is strong self-interest in this country, as well as social interest, in taking the sort of action that I think the hon. Gentleman, on reflection, will not want to dismiss so lightly.

Forty-five pages of Sir Nicholas Stern’s report are devoted to adaptation, out of 711 pages. I note that my right hon. Friend referred to adaptation in his statement, whereas both the Opposition Front-Bench spokespersons completely overlooked it. My right hon. Friend referred to his Bill with four pillars. Can I suggest a fifth pillar for the Bill—if not a fifth column—to deal with adaptation, which is pressing? Climate change has already started, and we need to adapt to it now, in terms of flood defences and many other things.

The adaptation challenge that my hon. Friend refers to is important in this country, as well as abroad. I think that it is less a matter of legislation than it is one of expenditure.

To answer him and my hon. Friend the Member for Morley and Rothwell (Colin Challen), who asked the previous question, there will be global flows into energy over the next 30 years. The International Energy Agency estimates that there will be $17 trillion of investment over the next 30 years. The question is: does that investment incorporate assumptions about the carbon price, or not? If it does incorporate those assumptions, it will support low-carbon sources of energy. If it does not, I am afraid that we shall be in very serious trouble indeed. It is not only public spending that is important; directing private expenditure is critical, not just in this country, but around the world.

In seeking to win the hearts and minds of our electors on the economic logic of the Stern report, will the Secretary of State confirm to those who argue that there is really no point in us in the United Kingdom doing anything because it will not make any difference if China and others are not doing it, that the average African consumes one sixth of the energy that we in this country consume? Also, as we approach the annual Christmas electronic binge, will he suggest that we look at ourselves for an example, before we say that there is nothing that we can do?

I think that I might be able to arrange to use certain offices for a meeting between the hon. Gentleman and the hon. Member for Stratford-on-Avon (Mr. Maples), so that they can try to persuade each other. The hon. Member for Salisbury (Robert Key) is absolutely right that we have a responsibility to take action. But, in an age of $60 and $70 dollar oil prices, it is also in our economic interests to take action. Energy efficiency is the most obvious win-win that I have ever seen.

The Stern report is most welcome, and it is an excellent example of this Government’s substantive approach to the problem under discussion. My constituents in Bishop Auckland find it absolutely incomprehensible that a rail ticket to London is three times more expensive than a plane ticket to Rome. Will the Secretary of State say a little more about when he thinks that aviation will come into the EU trading system?

My hon. Friend raises an important point. My right hon. Friend the Secretary of State for Transport and I were in Berlin the week before last, talking to our German counterparts in anticipation of their presidency of the EU next year. Our position is that aviation needs to come into the EU emissions trading scheme as soon as possible, and we are looking forward to the Commission producing its proposals on when that should happen, and we shall certainly be pushing for as early entry as possible.

May I welcome the publication of the Stern review and the Secretary of State’s statement, in particular his comments on domestic action, and can I share with him my sense of urgency? When he introduces the enabling legislation that he discussed, can he also produce detailed proposals, which are thus far missing, to do many things, not least to reduce the cost of connectivity to the grid, so that we can finally harness the carbon-free offshore wind power in the north and west of Scotland, which will thereby lead to the carbon reductions that we all wish to see?

The hon. Gentleman raises an important point. In the energy review that was published in July, there was extensive discussion both of planning issues and of some of the other barriers to micro-generation and selling into the grid. I can assure him that there is a study going on with Ofgem, the regulator—and, my hon. Friend the Minister for Energy assures me, with the Department of Trade and Industry as well—to address those barriers to that sort of renewable energy, which is so important.

My right hon. Friend is aware that one of the most effective ways of reducing carbon emissions is to convince high energy-using British companies to convert to electricity produced by combined heat and power. Can he give an assurance to the House that those companies that have already converted to CHP, thus effecting massive reductions in their carbon emissions, will not be penalised in phases 2 and 3 of the EU emissions trading scheme, as they have been in phase 1?

My hon. Friend raises an important point. I think that I am right in saying that CHP can boast a 40 per cent. energy efficiency gain. I know that he met my hon. Friend the Minister for Climate Change and the Environment to discuss that, and I know that there are particular constituency interests as well, as there are some innovative companies in his area. Certainly from the Department for Environment, Food and Rural Affairs and the Department of Trade and Industry, there is a real commitment to using the energy review and its processes to push forward the agenda on CHP.

Can the Secretary of State confirm whether the Government share the view, expressed in the Stern report, that a global stabilisation target of 450 parts per million of carbon dioxide or its equivalent is almost out of reach, and that we have to settle for a range between 500 and 550 parts per million, even though that appears to accept the probability of temperature increases of at least 2 degrees, which was previously thought to be a dangerous tipping point?

The hon. Gentleman raises a very important point. All that I want to say at this stage is that we agree with Sir Nicholas that staying below 450 parts per million looks well nigh impossible, because according to the latest data, there are already 430 parts per million of CO2 or its equivalent in the atmosphere, and according to Sir Nicholas’s estimate, that figure is rising by 2 to 2.5 parts per million per year. Equally, once we reach 550 parts per million, there is a likelihood—a better than 50:50 chance—of catastrophic climate change in the second half of this century, and every step that we take between 450 and 550 parts per million makes that likelihood greater. So I would not want to pluck a figure out of the air and suggest that it is “safe” and other figures are not. What is clear from Sir Nicholas—perhaps this point lies behind the hon. Gentleman’s question—is that we must keep the figure as low as possible and take action as early as possible.

I am sure that everyone in the House—I hope—recognises the importance of setting an example if we are to make any progress in the international forums. Will my right hon. Friend reflect on the need to argue for the establishment within the European Union of an international body with powers such as those that the International Monetary Fund possesses, so that it can monitor developments in reaching international agreements, make suggestions and conduct an international education programme?

My hon. Friend speaks as a former Europe Minister and I share his commitment to a big role for the European Union in tackling this issue. Let me reflect on his point about a new body in Europe and speak to or write to him.

I welcome the Government’s plans to reduce carbon emissions. Bearing it in mind that growing economies like ours and the emerging ones of India and China are energy hungry, what role does the Secretary of State see for nuclear power in reducing our dependency on fossil fuels?

As the energy review made clear, nuclear power constitutes just under 20 per cent. of the total electricity supply. We believe that it is right that we start by reducing demand and promoting energy efficiency, but equally, if there comes to be a choice between oil, gas and nuclear, for me, as the Secretary of State pursuing climate change objectives, it is obvious that nuclear has the lowest carbon emissions of those three sources. We have also made it clear, however, that it is not for the public purse to subsidise nuclear investment; public investment should be restricted to renewable technologies that are further from the market. We are also clear that, in a world where carbon has a price, the economics of nuclear versus other energy sources changes.

My right hon. Friend will be aware of Scottish Power’s and Scottish and Southern Energy’s plan to build a power link to carry renewables from Beauly, in the north of Scotland, to Denny, in my constituency. Does he agree that such projects are crucial to our ability to hit our targets?

I would probably be wise not to venture into commenting on individual projects, but the general point that my hon. Friend makes is a very important one. I know that he has campaigned for a long time on the importance of renewable energy and renewable electricity, and I support him 100 per cent. in that drive.

On taxation, may I echo what my hon. Friend the Member for East Surrey (Mr. Ainsworth) said earlier? While UK tax policy may well have a role to play, does the right hon. Gentleman not accept that climate change should not be used as a cover for increasing net taxation in the United Kingdom, and that the introduction of any green taxes must be balanced by a net reduction in other taxes?

The Chancellor addressed this issue this morning when he pointed out that, for example, the climate change levy has been balanced by a significant reduction in employer national insurance contributions, and the same is true of the landfill tax. As I said earlier, at every stage of our tax and spending policies the Government have pursued the principle of fairness.

My right hon. Friend referred to domestic action. Does he agree that it would simply be daft to reverse long-standing developments that are helping us to build a stable, green, environmentally sound economy, by allowing the short-term exploitation of open coal sites, as is being proposed in my constituency? That will have a drastic impact on an area that has been devastated by the coal industry and is trying to move forward.

My hon. Friend raises an important issue and, as a fellow north-east MP, I know that he has been campaigning on the subject in the region. I can tell him that my hon. Friend the Minister for Energy set up a coal forum to discuss issues of precisely that kind, and I hope that the subject will be on its agenda.

If the right hon. Gentleman intends to lead by example and practise what he preaches, how confident is he that he will return to the Dispatch Box in a year’s time to report that, right across Government, the use of ministerial cars has declined significantly, and the use of public transport has increased significantly?

I would like to claim that ministerial transport carbon emissions had been reduced, because obviously that is the most important thing. I am very happy with my Toyota Prius, and I recommend it to others.