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Climate Change Bill [HL]

Volume 697: debated on Monday 17 December 2007

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved accordingly, and, on Question, Motion agreed to.

House again in Committee on Clause 4.

[The LORD SPEAKER in the Chair.]

22: Clause 4, page 3, line 6, after “budget”),” insert—

“(aa) to set a target for the reduction in the net UK carbon account over a 12 month period every 12 months,”

The noble Lord said: I shall speak also to Amendments Nos. 76, 144, 150 and 154 in my name and that of my noble friend Lord Teverson. I should also like to associate myself with Amendment No. 31 in the name of the noble Lord, Lord May of Oxford.

The purpose of the amendments is quite clear: they would set annual targets. The purpose of the Bill is to reduce the level of carbon dioxide emissions into the atmosphere. The Government have talked about five-year targets and they were not persuaded of the need to support our amendments for three-year targets. Indeed, I have a sneaking suspicion that they may not support these amendments because of a few well-judged words at the end of the first Committee day. However, will the noble Lord, Lord Rooker, answer a question which is at the heart of the Bill? If we do not set annual targets, is there any point in the Bill at all? A five-year target could quite easily be missed and, if we are to follow the scientific evidence that has been so ably demonstrated by many Members of the Committee who have spoken about the science behind this issue, and 10 years’ time will be the point of no return at which irreversible climate change will have taken place, the first few targets are incredibly important.

As we all know, there will be slippage because when policies are put in place they suffer from implementation stages, planning stages and so forth. As we have seen in the past, there can be a major difference between the levels of emissions on a yearly basis depending on whether there is a cold winter or a change in the spot price of gas, which means that companies move from gas power stations to mothballed coal power stations. That would have a major impact on any budget set by the Secretary of State.

The other point is that many Secretaries of State will not last the full five years. It is my conjecture that most will not last the full year, although that is probably just on past form and shows that I am quite cynical. However, it is important that each year’s target gives each Secretary of State his own individual stamp to ensure that the policy is being adhered to.

The most important aspect of all of this is that, if we are serious about reducing the amount of carbon dioxide, we must do so as early as possible. Each year that we do not reduce carbon dioxide is adding to the greater total and therefore the carbon dioxide will be in the atmosphere for a longer period. It would be great if further along we had reduced the amount of carbon dioxide, but there would still be an interest rate of carbon dioxide in the atmosphere that had built up at this end of the curve.

The Minister will probably say that there are excellent reasons why this should not be adhered to because it would put a straitjacket on ministerial policies. However, he may have a slight difficulty with that partly because of the bravery of the Government in introducing the Bill into this House first. I am sure that an amendment carried by this House would be extremely popular in another place and in the country. We should not forget that the Government say that they listen to consultation. If decisions are taken on that basis I am surprised that this provision is not in the Bill already, because 16,292 of the respondents to consultation called for annual targets. That is out of the 16,919 people and organisations who dealt with the consultation.

Added to that, it might be the will of the other House not to agree to an amendment. However, an EDM in the other place earlier in the year on this issue was signed by 412 Members. My mathematics is slightly rusty, but that does give a fairly large proportion of Members of the House of Commons who might well welcome any amendment to the Bill that deals with annual targets. If we want to stick to the five-year targets, it is incredibly important that we do not forget that the five-year targets that the Minister was arguing for were set out so that we can dovetail into the ETS system. But from next year, the ETS system will be working on a completely different timescale. I hope that the Government will come forward with positive reasons why they are rejecting this amendment and perhaps with notice of amendments of their own that they intend to bring in to introduce the milestones. I believe that introducing the Bill, which we all support, without milestones makes the Bill fundamentally flawed in its objective of achieving annual reductions—leading to the massive reduction of between 60 and 80 per cent at a later date. I beg to move.

I support the amendment moved by the noble Lord, Lord Redesdale. On the first day in Committee, the noble Baroness, Lady Morgan, gave us advance warning of what she was going to say in answer to these amendments. She said:

“It is worth recalling that each of the parliamentary committees that scrutinised the Bill agreed that binding annual targets were not suitable”.—[Official Report, 11/12/07; col. 221.]

I question that. The Environmental Audit Committee said in paragraph 118 of its report that,

“the Government should still set out an indicative target for UK emissions in each year, so as to apply continual pressure to reduce emissions”.

The Environment, Food and Rural Affairs Committee, in paragraph 51 of its report, said that,

“we recommend that clear annual ‘milestones’ are set—and published—by the Committee on Climate Change in order that it may become apparent well before the end of a budgetary period whether or not policies are working”.

The Joint Committee on which I served, in paragraph 69 of its report, said:

“We recommend that, in setting the level of future budgets, the Government should also provide indicative annual milestones to help assess progress on an annual basis”.

I take a slightly less pessimistic view on this issue than the noble Lord, Lord Redesdale. I hope that the Government may indeed have discovered the virtue of milestones on their road to Damascus. I am going to speak in support of these amendments, which have general support from these Benches. They attempt to make targets more accountable. Although strengthening accountability and removing the politics from the efforts made to meet emissions targets are central components of our approach to this Bill, we maintain that our amendments, which will follow in a later group of amendments, are a better way of ensuring that this is the case.

Five-year budgets are robust enough in terms of science, but they are not robust enough in terms of politics. A five-year period allows Governments to blame their predecessors for failing to reach targets themselves, potentially locking us into a situation where each Government blame their predecessor for failing to reach the target and nobody actually takes responsibility for meeting reduction targets. If we want the Bill to have any teeth—I am sure the Committee is agreed that that is what we are seeking—there needs to be a mechanism to ensure that Governments do indeed take responsibility. We need annual markers to pin the project firmly to Governments’ annual agendas. Again, I emphasise that the purpose of the Bill is to drive across government departments a common agenda to achieve the Bill’s objectives.

Our amendments on annual targets, which make up the next group, propose rolling annual targets, which offer a more realistic way to achieve the desired results of increased accountability. Having rolling targets means that the targets would be set according to an annual rolling review, looking five years ahead, allowing the committee, the Secretary of State and Parliament to tilt targets according to progress made every year, while avoiding the possibility of any Government simply shunting responsibility on to their successors. The Liberal Democrat proposals do not have a rolling factor, which means that their static milestones simply have commitments within the five-year periods without any mechanism to see how that will affect whether we will meet the target, or to see what impact success or failure has had on what the budget should be for the next five years. Our rolling targets are therefore much more adaptable.

We understand that all manner of things that might not be under a Government’s control can influence one year’s carbon account, which we anticipate to be the Government’s reason for not accepting the amendments. We know that extraneous factors come into play. However, the flexibility allowed for in rolling targets ensures that measures can be drawn up to make up for years when there are colder winters or other such variable phenomena. That also ensures that, should one year be a success, the Government do not rest on their laurels. That places more of a concerted burden on the Government to address climate change every year and across all departments, and I hope that the Government do not shy away from such a responsibility—or the opportunity to make a success of this legislation. Perhaps the Minister should be comforted by the fact that we fully intend to be the Government who present the first five-year report to Parliament. Notwithstanding that, we know that we have support outside this House, from Friends of the Earth, for more flexible, rolling targets’ arrangements.

I should like to talk about the publication of targets, because that too forms part of the proposals. One of the primary virtues of annual targets is that they provide a mechanism to assess the success of a Government’s efforts at reducing carbon emissions. Thus we recognise the importance of having procedures for reporting on the success or failure of meeting the targets, and support their inclusion in the Bill. It is important not only whether the targets in question are met, but that some indication is given why they have or have not been and what is to be done about it.

I looked around earlier—this was why I did not speak immediately after the moving of the amendment—to see whether the noble Lord, Lord May, was in his place, because I rather hoped that we would have the opportunity to hear directly from him. However, having temperature correction as part of the reports on annual milestones seems to these Benches like a sound idea if their purpose is to provide the most accurate measure of our progress in meeting our commitments to stop climate change. One abiding problem for us on these Benches has been that the Bill provides moments when there is potential wiggle room for Ministers not meeting targets. It is imperative that we know where we stand in relation to the great problem that faces us. Thus any procedure that takes into account the many variables that might otherwise lead us to an incorrect conclusion or assessment is to be welcomed. That is part and parcel of our plan to have a more robust Bill and more robust mechanisms to monitor our progress, such that we have robust ways to solve the problem.

To conclude, all three parliamentary committees that have considered this proposal, having scrutinised the draft Bill, recommended annual milestones in one form or another. Why have the Government excluded those milestones, and with which aspect of them do they find it difficult to come to terms? Can an argument be made for not having something in this clause of the Bill to make it as robust as possible?

I first apologise to the Committee for not having been present on its first day as I was in Moscow with Sub-Committee C of the EU Committee. I return with an even worse cold than when I went, so I hope that the Committee will forgive me if I end up croaking for the rest of the evening.

I was on the Joint Committee along with my noble friend Lord Caithness. There, we supported the system of five-year budgets but strongly recommended the setting of indicative annual milestones. For much the same reasons as my noble friend, I looked with some doubt at Amendment No. 22, which was moved by the noble Lord, Lord Redesdale. It is ill defined and it does not really say how it would fit into the budget system, except that the noble Lord repeated that his party does not, in any case, believe in five-year budgets. I was, therefore, pleased to read my noble friend’s amendment on my return from Moscow, as that seems greatly superior.

However, like my noble friend Lord Taylor, I was extremely interested in Amendment No. 31, in the name of the noble Lord, Lord May of Oxford. I am sorry that he is not with us because that amendment contains a number of extremely constructive propositions. It would thus be very helpful. As this debate will not lead us to a final conclusion, we will clearly have to return to it on Report when we have heard what the Government say. However, I hope that they will give careful consideration to the points made in the amendment from the noble Lord, Lord May of Oxford, along with those from my noble friend, as those points form the foundation on which we could produce a better solution than the Bill presently contains.

I make it clear at the outset that we are not afraid of being held accountable for each year of progress that we seek to make. Furthermore, the Government have absolutely no control over about 50 per cent of emissions from the UK economy, yet nobody seems to take any account of that in how we are to measure these things and to be accountable.

In reply to the noble Earl, Lord Caithness, the point that my noble friend referred to on 11 December was that references to binding annual targets were not suitable. I am not arguing about what any of the scrutiny committees have said, but none of them came forward to require such targets. However, they looked at other aspects of this important issue, and we do not seek to run away from it. We think that the Bill has strong mechanisms—we will come to them in Clauses 28 and 29—to make sure that the Government of the day are, importantly, annually held accountable to Parliament, on the basis of the expert and independent assessment of the Committee on Climate Change. The independent scrutiny that that will provide, on an annual basis, will strengthen the accountability for achieving emission reductions each year in every five-year budget. Therefore, we are not seeking to have the issue swept away for five years with no scrutiny and nothing done about it.

If the Committee on Climate Change reports that, in its expert view, the UK is not on track to meet the budget, we would expect the Government to do everything possible to get back on track so as to satisfy the committee—and, moreover, to be under intense pressure in Parliament and in the court of public opinion. That is absolutely crucial. Annual scrutiny will help raise expectations that concerted action will be taken throughout each budget and, it is hoped, increase the confidence that the budgets will be met. We remain opposed to annual milestones or targets because we do not think that they would work in practice. I want to give four reasons and some detail as to why that is the case, because it is important for the next stage.

First, there are annual natural fluctuations. Emissions go up or down by a small amount each year, depending on the weather. The noble Lord, Lord Redesdale, recognised that point in moving the amendment. During a five-year budget period, the fluctuations will, or are expected to, average out. We also have to ask ourselves whether proposals for annual milestones or targets will help the credibility of the system that we are setting up under the Bill. Would it help to have a debate each year on why the UK was, say, 0.2 per cent above or below its annual milestones and whether this was because the Government were doing well or because the weather was abnormally warm or cold that year? Such a debate would be irrelevant.

Secondly, annual milestones and the political pressure to meet them could lead to huge pressures to rush through costly policies in a year, or particularly late in a year, with the aim of achieving short-term emissions reductions to ensure that targets were met. However, those policies might not be sensible from the economic, social or environmental points of view and could prove to be a distraction from the long-term decisions that need to be taken to put us on a trajectory to the 2020 targets and beyond. For example, would the Government of the day be expected to put up the cost of heating fuel in October to help to meet our annual targets? If not, what alternative measures could be taken late in a year to try to meet the milestones? One has to look at this from the practical point of view of the sequence of when information on which to judge performance becomes available. This would be the case even if there were no obligations on the Government to meet annual targets—in other words, if the targets were merely indicative. The same argument would apply regardless of whether the targets were set milestones or were legally binding.

Thirdly, even if the Government of the day wanted to set annual milestones, they would simply not have enough information on which to base a decision. Even with the best will in the world, definitive information on emissions in a given year is not available until well after the year ends, as I think noble Lords will accept. The Government of the day would learn that they were off track for a given year only when it was already too late to do anything about it, unless it were the Government’s intention to buy credits each year. I am sure that such an issue would be controversial, bearing in mind the reference to it during our first day in Committee.

Finally, as I pointed out, proposals for annual milestones do not recognise that the Government have no control of the annual emissions from 50 per cent of the UK economy. The European Union Emissions Trading Scheme covers half the UK’s CO2 emissions, including sectors that are more responsive to price signals. However, within the European trading system, companies are completely free to phase their emissions however they like during the five-year period. It is simply not possible for the Government to influence this and decisions will be based more on the carbon price across Europe. Again, how would that be taken into account in assessing our progress against the milestones?

These are not intellectually stunning arguments against the principle; each one is a practical concern if we are to legislate for scrutiny. Those who are scrutinising the Government, here or elsewhere, will want something that they can genuinely measure the Government’s performance against. These are practical issues that I bring to the Committee.

Perhaps I may make a couple of points about other amendments in the group. Amendment No. 76 would require the Government to “have regard to” their annual statement of emissions, provided for in Clause 12, when setting the indicative annual targets. There would be a serious practical difficulty with that. Final emissions figures are available on 15 January—one year and 15 days after the end of the year in question. Final detailed figures are available on 15 March. The information required would simply not be available in time. I realise that that is not an argument for doing nothing or for not having annual scrutiny, but I am making a practical point about how you change what has happened in one year and how you account for it.

I have a couple of paragraphs on the amendment tabled by the noble Lord, Lord May, which I think are worth using, even though the noble Lord is not here. Obviously colleagues will take this away and have a look at it for Report. Amendment No. 31 would help by providing additional information on the causes of any fluctuations in annual emissions. We sympathise with the noble Lord in his efforts to address a problem that is not addressed in the Liberal Democrat proposals or in the group of Conservative ones to which we shall come shortly. However, we are not convinced that the proposals of the noble Lord, Lord May, would entirely address the problems. They would help but they would not entirely address them. There might simply be a new debate about the accuracy of the methodology used in adjusting emissions to take account of temperature fluctuations. The amendment would also not address the other, practical problems of the annual milestones that I have set out.

As I said, we are not at all afraid of being held accountable for each year of progress, but that has to be done in a practical way. Those who are checking on the Government need a target or a figure or a means of scrutinising, so that it is not just a case of them saying each year, “We wish you had done better”, and the Government saying, “Haven’t we done really well?”. They have to be measured against something. That cannot be done in the way proposed by this group of amendments.

Perhaps I may come back to the argument. I know that I am going to have an opportunity to talk again on the annual milestones, but there is an inconsistency in the Minister’s arguments. He talked about a last-minute flap to put up heating costs in order to reduce emissions for the forthcoming winter and later he said that he thought that these annual milestones would not be much use because it would be too late to do anything about it by the time it was found out that they were being strayed from. The key is that we are looking at an arrangement that is designed to be indicative; any annual report is bound to centre around the degree to which the Government feel that they are on track for achieving their five-year target. We really need an annual progress report based on some sort of annual milestone target.

I understand that much of economic and emissions activity is outside the direct control of the Government. That is why this Bill is such a challenge. The Bill is not just about what Governments do directly; it is about what they manage to persuade the rest of the economy—the rest of our nation—to do. I find it difficult to understand why the Minister is shying away from something that would help the Government and strengthen the Bill. We are going to need every weapon that we have to keep people focused on the issue in hand. There will be all sorts of sidetracking. Mild winters, cold summers or volcanic eruptions can all throw these predictions off track. None the less, I would have thought that to have something that you can refer to and use in the annual report would be greatly to the advantage of the Government and I am surprised that the Minister is not taking a more positive approach to this idea.

If we do not have indicative targets—let us be clear, none of us is asking for statutory targets—the world at large, the scientific community and the political world will simply take the gap between the beginning of the budget period and the end and divide it by five, and the Government will be judged on that. It will be far more intelligent, far more practical and far better if the Committee on Climate Change, or whatever mechanism is finally put in place, makes evidence-based decisions beforehand. Simple mathematics will probably not work and will probably do the Government of the day more harm. It will be much better to do things in a planned way.

I was struck by the Minister’s response because it seemed to be a very good argument for not having any budgets at all. If the Government have control of less than 50 per cent of the carbon account, what will they do at the end of year 4¾? The Secretary of State will have to put up the price of oil or whatever, and it will not matter whether it is in year 4, year 3 or year 1. What came out of the discussion was that there must be some form of stepping stone so that we can see how the trend is going. There is no doubt that the evidence that we had in the committee was strongly in favour of that. Can the Minister confirm that the emissions results currently published by the Government already take account of hot and cold years so that it is possible to make a comparison? Given the trend and provided that there is transparency in all the figures, the variation between a warm year and a cool year is not so relevant now.

One of the joys of Committee is that we have an opportunity to have two or three goes at a particular subject. I urge the Minister to take this matter away to see whether he can be a little more flexible. I am quite prepared to accept that he may not currently have a reporting mechanism in place that will allow him to produce the figures quickly, but it really is not good enough to say that we cannot put such a reporting system in place. It is nonsense to say that we cannot deal with this matter because we will not have the figures for another 12 months or so. We are in an age when, if I read my financial press correctly, many major companies, some of which operate on an international basis, report their results quarterly. If we can require that of major international corporations, we should be able to require it of energy suppliers in this country.

It does not particularly matter which energy system is used to supply energy to the final customers. Coal has an immediate carbon equivalent and, if coal is consumed, its carbon equivalent can readily be calculated. Oil and gas also have carbon equivalents, but of course we know that wind does not produce carbon dioxide at all. So I believe that the energy suppliers should be required to report regularly what they have supplied. It would not matter whether they were within the European trading system, although I accept that the Government could not regulate them in the same way if they were within that system. None the less, the companies supply a commodity with a carbon consequence that can be measured, and that can be reported.

We may need to think about other schemes—I think that the Minister has more resources for thinking about that sort of thing—but we should put a reporting mechanism in place. I was more prepared to intervene in relation to my noble friend’s amendments, which we will come to but which we seem to be debating with this group, but I agree with noble Lords on the two opposition Front Benches that it would be enormously helpful to have an annual record of the position and an annual target.

Of course, there are all sorts of other difficulties. For most of the first five years, the legislative and regulatory background and the financial incentives background will be those that exist at present. Current evidence suggests that energy consumption is not immediately price-related. The price of oil has gone up by a terrific amount over the past couple of years, as has the price of energy. Unsurprisingly, so far as I can see, the volume of energy has not retreated in the face of that price attack, so, in my view, the idea that price changes will have a great effect on customers, as one or two speakers implied earlier in the debate, is simply not borne out by the practical evidence.

However, we have to find mechanisms to make this scheme work. There is no doubt that annual targets within a five-year budgetary period would be enormously helpful in knowing what is going on. It would be perfectly possible to put in place a reporting system that would make this achievable. I beg the Minister to take this matter away and look at it seriously.

I was far too subtle or modest when I responded to the debate; I hid my argument. I flagged up the fact that there is an annual reporting framework in Clauses 28 and 29. We will certainly take away this issue and what has been said this afternoon to see whether we can find a mechanism to improve the reporting accountability set up in those clauses. That would be the right place to do it, but it is a question of finding a mechanism.

Frankly, I am sitting here thinking that in perhaps five years’ time I will want an annual target to screw a Minister to at this Dispatch Box and that it is much better to get it done now than to be arguing then. There is an annual reporting framework in Clauses 28 and 29—we may get to those clauses today, although that is subject to progress. We will certainly take this matter away, but I cannot give a commitment. We will come back on Clauses 28 and 29 to see whether we can build in a better reporting system for annual accountability to the House.

Before I thank the Minister for that response, I should say that the purpose of this amendment was not to hold the Minister to account for political gain. The issue on all sides of the Committee is that this is a complicated process. The Minister said that 50 per cent of carbon dioxide is outside the Government’s remit, but that is one of our major problems with the Bill. When people talk about emissions, they often mean emissions just from electricity, but there are emissions from agriculture, such as methane from sheep and land usage. There are major issues, but I dispute what the Minister said about their being completely outside the Government’s control, because, if we are looking at a 60 to 80 per cent target, certain things will not be outside the Minister’s control. That goes back to an earlier debate: if we are looking at a third runway at Heathrow, at what point does the massive amount of emissions that will come from that third runway feed in to this debate and who makes the decision? If it is just the Secretary of State at Defra, that will be a real issue.

We have not moved this amendment on a political basis, although I have been lobbied by vast numbers of people who have written wonderful letters to me, saying, “Dear Lord Redesdale, You’re taking part in the Climate Change Bill. Can you make it stronger? Thank you very much”. That is a fine form of lobbying. It seems that we are moving forward. We are not wedded to the wording in the amendments that we have tabled; there is value in the amendments tabled by the noble Lord, Lord Taylor, and it is unfortunate that the noble Lord, Lord May, is not here to debate his amendment, which I hope he will bring back another time. However, the Minister said that he might well look at this again and that some form of compromise can be reached and introduced into the Bill before the next stage. That is a very welcome position. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.