asked Her Majesty’s Government:

What steps are taken to ensure that carbon offsets purchased on the open market provide the purchaser with real reductions in carbon dioxide emissions.

My Lords, offsetting only balances carbon dioxide emissions rather than reduces them. The Government acknowledge that carbon offsetting is not a cure for climate change, but it can help raise awareness and reduce the impact of our actions. In other words, it is a good thing after other measures have been exhausted. We are developing a code of best practice for carbon offsetting, which should be in place by the end of the year. A quality mark will also be created to provide consumers with clarity and certainty when offsetting.

My Lords, I am grateful to the Minister for his response, particularly the information about a code of practice. At present, this part of the carbon trading market is effectively unregulated and some of the schemes promoted are of very dubious environmental value. Do the Government agree that it is right that a British business should be able to purchase certificates in this market to the point where it can claim carbon neutrality when it might not have reduced its carbon dioxide emissions at all?

My Lords, the noble Lord is justified to be sceptical, as have others in recent questions, particularly the noble Lord, Lord Lawson, to whom I apologise in his absence for being too dismissive of his last question to me about this. A degree of scepticism is justified on the current experience of this quite new operation. A lot of work is being done to ensure that the offsetting is additional—in other words, it would not have happened if it had not been for offsetting—to look at what is happening in the countries where it is taking place, and to look at the integrity of the schemes for offsetting. It is an unregulated market. Nevertheless, it is a growing market in which London is the centre.

My Lords, while there is a degree of scepticism about the use of trees in offsetting, most people who offset do so on a voluntary basis and their efforts are to be applauded. Is the Minister’s department looking at reflooding drained upland peat bogs and using them in a carbon sink which could be certified by the Government? That would reduce the amount of carbon being given off by dried-up bogs in this country and would incentivise farmers environmentally to manage the landscape.

My Lords, I am not sure whether we are planning to be as systematic as the noble Lord described. I have heard the practice discussed in Defra and in relation to other countries. Obviously, I will make it my business to find out, but I am not sure whether it is that precise. Nevertheless, it is an effective and sustainable way of offsetting.

My Lords, it has been suggested rather facetiously, I suspect, that carbon trading is a bit like the medieval practice of selling indulgences, the purpose of which was to release souls from purgatory. Can the minister assure us that selling our carbon assets will bring salvation?

My Lords, as from tomorrow, the right reverend Prelate and other noble Lords will be able to calculate their own CO₂ footprint because the CO₂ calculator will be launched. You will be able to check your household appliances and means of transport, whether heavenly or earthly, to measure your carbon footprint.

My Lords, the Minister may be aware that about three weeks ago the Financial Times said that international carbon offset trading was a scam. As the forthcoming climate change Bill is currently in draft, can the Minister assure us that it will give some persons or bodies the authority to check the authenticity of carbon exchange activities?

My Lords, the point of the noble Lord’s question is right and the broad answer is yes. There has to be clarity and transparency. The fact that people now raise questions about carbon trading and offsetting shows that there is a degree of transparency in the system. This is a booming business. In 2005, the voluntary market accounted for less than 10 million tonnes of carbon dioxide equivalent. The estimate is that it will be 400 million tonnes by 2010. Huge amounts of money and transfers will take place. It is right that people know they are getting value for money. The issues raised in the Financial Times and the Guardian in the past few days have to be addressed so that people can trade with confidence.

My Lords, I speak as a Euro-sceptic, but could not Europe, reasonably and rapidly, produce guidelines on what is or is not worth exchanging? Some of these schemes do not work; some do. Accurate information on whether they do or do not work should be publicly and widely available.

My Lords, the noble Earl is right: it ought to be clear. The reason behind the Question of the noble Lord, Lord Dixon-Smith, is that we want people to change their behaviour to start with. It is a hierarchy. Only when everything else has failed do you go for offsetting and purchasing offsets in this way; we want people to produce less carbon in the first place.

This goes beyond Europe—Europe is only a part of the planet—and the clean development mechanism, a UN arrangement arising out of Kyoto, has registered just fewer than 2,000 projects, of which 20 have been dismissed. So it has sorted through some that have not done what they claimed to have done. It is important that we should have some rigour in this matter.