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Climate Change Bill [HL]

Volume 697: debated on Monday 17 December 2007

House again in Committee on Clause 4.

moved Amendment No. 29:

29: Clause 4, page 3, line 14, at end insert—

“( ) A carbon budget may contain amounts for particular sectors of the economy.”

The noble Lord said: It is tempting to reprise the previous debate, but it is a running theme of all our debates in this Committee that the success of the Bill will depend on the power and authority that we give to the climate change committee. We now come to another area in which we seek to empower the committee and, in turn, put some spine into the Bill.

This group of amendments offers provision for the climate change committee to set carbon budgets for particular sectors if it feels that it is an effective way in which to contribute to emissions reduction. They also stipulate that reports on carbon emissions should contain breakdowns by sector, such that we are afforded a clearer picture of from where our emissions are coming. This should be taken in two parts—to allow the climate change committee to budget for sectors, and the stipulation of reporting on emissions by sector. I shall deal first with the whole concept of sectoral budgets.

There are various arguments for and against having carbon budgets broken down by sector. We have tabled the amendment allowing the climate change committee to budget for sectors without mandating that it does so or that it does so for all sectors. The purpose of this is to ensure that it considers the potential advantages of sectoral targets and is at liberty to produce budgets containing sectoral breakdowns should they prove to be beneficial.

Budgets for sectors can be useful in targeting specific areas of the economy that are in dire need of improvement. If the net UK carbon account is considered too broadly, it risks ignoring the fact that tremendous efforts in some sectors might be mitigated by the emissions of another. They might also serve as a means of providing early incentives to the industry that emits most carbon. However, there are arguments that dictating too much from the top strips away some of the dynamism and innovation required to combat climate change effectively. The noble Lord, Lord Campbell-Savours, mentioned earlier the role of the markets in tackling climate change—and that certainly is a factor. Certain sectors might be able to reduce emissions by availing themselves of the services of others. There is a risk that it will provide too prescriptive a framework; likewise, there is a risk that a particular sector of the economy will not be as progressive about reaching targets if it feels that it has comfortably met its particular target.

Will the Minister comment on the role of sectoral targets in carbon budgets? Does he think that they are a useful weapon and would he be prepared to see them included in the Bill, in an amendment such as this? Once again—and this repeats a theme that has run through this evening’s debates—we feel that this is a decision best left to the experts on the climate change committee. I beg to move.

I shall speak to Amendment No. 32; it follows the gist of the other amendments, which we support from these Benches. This issue has been brought up before. The Secretary of State is given the responsibility for the whole of the carbon emissions. According to the figures that I have here, the energy industry is worth 37.4 per cent, road transport 21.6 per cent, other industries 17.8 per cent, residential 14.9 per cent and agriculture is at around 15 per cent. Obviously those figures change on a year-by-year basis. Of course, road transport has its own department. Energy is under DBERR and residential under DCLG. Even though there is discussion of ministerial responsibilities, the problem for any Minister is that those other industries will have different targets. I could understand if the Secretaries of State of each department were given the responsibility and a binding target to meet the obligations that are set out, but that is not how the Bill is constructed at present. That feeds back into the argument about whether the Prime Minister should have overall responsibility.

The issue with sectoral targets is that by giving sectors targets, each of those Ministers would have the same responsibility as the Secretary of State for Defra in meeting the obligations set out by the Committee on Climate Change. They are not easy targets to meet. We are talking about 21.6 per cent of road transport, but does anyone in the Committee believe that, because of carbon, there will be a massive reduction in road transport on that basis? There will have to be long-term policies, which are difficult to implement, as we have found. As the congestion charge has shown, it is difficult to bring about a reduction in traffic, keep that reduction static and reducing on a regular basis. On that basis, I hope that the Government will look favourably at the amendments.

I, too, support this entire suite of amendments, which I think are rather more important than they appear. They go to the heart of several things. On page 29 of the Joint Committee report, Professor Sir David King told us that:

“Each sector needs to know where it is expected to go and that justifies private investment funds going into these sectors”.

More interestingly, many of the witnesses we talked to were stunned that sectoral targets would not be made available. They saw it as fundamental to the whole process of accountability.

I also had the good fortune to talk to a previous Cabinet Secretary who made it clear that the machinery of government itself would require that such sectoral targets existed within government. I would have thought that we had now reached a stage of maturity in our democracy where, if such sectoral targets exist within government, they have no reason whatever not to be made available, certainly to the Committee on Climate Change and through that committee on an annual basis to Parliament. On that basis alone, I support this suite of amendments.

I regard this amendment as particularly important because it helps concentrate the minds—in the way that I suggested on an earlier amendment—of officials and Ministers on what is actually required. While the Bill speaks in generalities about the ultimate objectives of the legislation in the long term, I wanted to find something in the Bill that was more concrete and which would be a spur to industry to respond. Setting targets against sectoral backgrounds would indicate to industry precisely where we want the changes. With the makeup of the Committee on Climate Change including, if I remember rightly, one person who specialises in innovation and technological developments, one would hope that the team that surrounds that person would also be part of generating the debate. That would be a spur to industry to follow that route.

The target for the energy industries, for example, is 37.4 per cent—I have the same briefing as the noble Lord, Lord Redesdale. I would have thought that setting such a target would concentrate the mind on the need to go down the nuclear route as soon as possible—some of us passionately believe that—as indeed, it will send us down renewable routes and other routes that are perhaps not being fully exploited at this stage.

I want to tell a little story. Every individual and community can make a contribution if they know that their sector has been identified. I offer as an example the block of flats where I live in London. There are 170 flats and we were arguing with Peverel, the managing agents, about how we could introduce changes in compliance with the objectives of Parliament to reduce energy. Peverel was not introducing any great changes. Last week, in desperation, I took a representative of the managing agents round all the floors of all the blocks in our development and said, “Take out that light and that light”—every other light throughout the whole development. If we deliver on the number of lights we intend to take out, the result will be to cut our energy bill from £90,000 per annum to about £45,000. That is a 50 per cent cut in a substantial energy bill in one development, which could be replicated nationally in offices, shops, residential accommodation, blocks of flats and community homes throughout the United Kingdom, and certainly in local authorities, where huge amounts of energy are being consumed.

If you have a target area—in this case, energy combined with residential accommodation—then people will know what the expectation is in that area, and industry and communities will respond to that objective. I have taken just one area—I could speak at length on road transport and the way in which economies might be produced there—but it is only by identifying these sectoral areas as targets for change and for the reduction of energy consumption that we can realise the ambitions of the Bill.

I entirely agree with those remarks and declare an interest as a farmer. My particular interest is to get the land management sector to understand what a pivotal role it can and should play, not only in reducing carbon emissions, but in improving carbon sequestration. I am in the middle of conducting an exercise to determine how, in the next five years, we can reposition ourselves as a carbon-neutral producer of apples. It is a complicated concept, because so much carbon is used in refrigeration, as well as transport and marketing. It is possible, and it is an exercise that we are in the middle of exploring, but it will be possible only if we can do it as part of a sectoral target. No doubt there will have to be market incentives, and perhaps others, to encourage farmers and land managers to adopt practices for which they have not seen a need before.

I like this amendment because it allows the climate change committee to set challenging targets. It allows policy makers to determine how best these can be delivered. They will not all be delivered by altruism—we are clear about that. There have to be incentives, and a market force. I have to say, as a fruit grower and dairy farmer, that much of the pressure is coming from our customers, the multiple retail outlets, which are extremely keen to be associated with an apple grower such as myself, who is seen to be taking the trouble to try to produce carbon-neutral apples. If this modest amendment helps everyone to get their act together, it should be commended.

I support my noble friend’s amendment. It is extremely important. Often when you talk to people outside this House about what influence they can have, and what changes they can make, they say, “We’re helpless, because there is so little we can do”. In following the example of the noble Lord, Lord Campbell-Savours, the churches instituted an eco-congregation award about five years ago. It has made an enormous difference, and people identify with it. It is a question of trying to have legislation which makes people feel, “Yes, I can buy into that and make a difference”.

The churches have done an inventory of where their money goes. One figure that came out of some congregations was that a 1 per cent reduction in the use of heating fuel equates to a 10 per cent reduction in the heating bill, which is remarkable. I follow my noble friend Lord Selborne in his comments, too. I hope the Government will take this on board.

I have been reflecting, since Defra was invented, on the addition of rural affairs to what used to be the MAFF brief. The rural affairs side is quite difficult because it overlaps so many departments, and in doing so, it gets lost. That is why I am particularly attracted to the amendment. If people within that sector feel that they are being recognised for good work or for trying to reduce their responsibilities in that way, they will buy into this.

I hope that, even if the Minister does not like the wording, he will take on board the comments made round the Committee tonight. It is a great encouragement to people outside the Chamber to realise that the Bill is not just for Parliament—it is for each and every one of us to make a difference.

I shall also speak in favour of the thrust of the amendment, but will offer one or two cautionary words. Some sectors are self-evident, such as energy. Transport is not just one sector but a variety of sub-sectors. The climate change committee, as much as the Government or more, will have to build up an overall target based on what it thinks is possible in particular sectors and sub-sectors. Overall targets mean nothing unless they are based on an assumption and estimate of what is achievable at the level of sub-sectors and, in some large cases, individual businesses.

Over 40 or 50 years, the climate change committee will have to be able, in giving us advice, to acknowledge changing imperatives and technological opportunities over time. The idea that we can look 15 or 20 years in advance and be pretty clear about what will happen in each sub-sector throws me back to my early days as a young economist at university looking at Russian and Indian planning, five-year plans and so on. It is a fine line between targets and sectoral planning. George Brown comes to mind—national plans and so on. The history of national planning is not a great success.

This is one of the most important debates of the evening. Once you start thinking that the basis of overall targets is what can be achieved at the level of sectors, sub-sectors and businesses, one starts to see the dangers as well as the opportunities. Three five-year rolling programmes in advance can quickly turn out to be an illusion of planning, and you then get policies to achieve those plans over 15 years. The first conference that I went to as a young university economist was on planning coal production in the UK. All kinds of people told us how much coal had to be produced and how. It was a lot of coal. Eventually, we had to find a way of not producing a lot of coal, because people did not want that amount—certainly not of British coal. I was a Yorkshireman saddened by that.

I simply give a word of caution. You can easily enthuse about what policies have to achieve in particular sectors. The challenge for the climate change committee will be enormous, given complex questions such as what is economically possible, what is technologically possible, and how to allow the marketplace to respond over time.

Not as many people have quoted the CBI’s work as they have Greenpeace, Friends of the Earth and so on, but I thought that the work by McKinsey in Climate Change: Everyone’s Business showed what could be done at a strategic level. It also showed the gap between strategic thinking about sectors and what we are telling the climate change committee that it has to produce in two years’ time. We are expecting it then to produce some pretty important forecasts, on which government policies over 15 years will have to be laid out. When those come before the Government and Parliament there will have to be careful examination of our enthusiasm for what can be achieved and how to achieve it.

We will come in later amendments to the role of the Committee on Climate Change. There will always have to be a political judgment about what can be done and how best to guide it into taking us there. I think that the committee can only give guidance, because we could get into real difficulties if it becomes a planning agency for 15-year plans. The thrust of the proposal is enormously to be supported, but addressing the nuances and subtleties of converting it into action that Parliament, the public and industry can support and deliver will be a real challenge.

I return to the debate on the theme that the noble Lord, Lord Woolmer, brought up and which was raised also in contributions from other noble Lords. It brings to mind a particular element that we have not talked about: the degree to which there is genuine enthusiasm—a wish to co-operate and to see this working—outside political circles and among industry and the community at large. It is important to bear that in mind.

The second notion that I would like to introduce to our deliberations is the idea that this does not need to be all top-down; it can be bottom-up. In fact, any sector that one can think of or that has been mentioned today has a capacity to produce of its own account a way in which to will the means to achieve the end. That is an important way of making this work, with a dialogue between the Committee on Climate Change and the sectors that it identifies. The sectors that volunteer because they recognise their own role do not want a decision imposed on them; they want to be part of the decision-making process. They need to be at its heart.

I was reading something last week with my wife, a county councillor who was at the Local Government Association conference held last week. Confusingly, the association has a climate change commission that is looking at this matter. Its commission has come forward to volunteer the local government sector for climate change targets. It has recognised that local government is an area that can effect policies that will influence climate change.

I introduced these amendments fairly briefly because they are simple. They would simply introduce sectoral budgets onto the playing field in order to give the Committee on Climate Change and the Government a mechanism to implement the Bill more successfully. A lot of good could come out of including and working with these ideas.

When I look back on this Committee stage I will probably say that this debate was one of the shortest and yet one of the most interesting. I have a speech that would more or less squash it all but I am still of the view that I should take it away from the Committee in order to tie it in with what was said last week. I will essentially be negative, and I will explain some of the reasons for that, but on the other hand we have just had contributions that have shown the practicalities. We have had the example of apples, though I doubt that the noble Earl was on about the apple sector. It might be the fruit-growing sector, or the farming sector as a whole. My noble friend Lord Campbell-Savours then gave the residential sector as an example. But then we had a local government issue, with residential issues mixed up with land. It is a question of looking at sectors. But then my noble friend Lord Woolmer referred to the national plan of the 1960s and George Brown. I said to my ministerial colleague on the Front Bench that, as I have now discovered, “Not all members of the Government have heard of George Brown, so mentioning him is probably not a good idea”. I also expected my noble friend Lord Woolmer to mention the No. 7 tractor plant and the problem of picking winners.

The noble Lord, Lord Taylor, in his second contribution, then made the distinction that, contrary to the point about the demise of the national plan, here we have almost a consensus in principle for industry, government and business actually to do something to make it work, but not to have it imposed top-down by telling individual companies and sectors what to do. That is the important point coming out of the debate. Obviously, we want to make sure that each budget and the 2050 target are met. We can agree that it does not matter where in the economy the reductions come from. We must be flexible about this. Flexibility is the key, along with the principle of making sure that we achieve the targets.

There is a number of problems with the idea of sectoral targets, but it depends on how you look at the sectors. There is no doubt that this is where the national plan of the 1960s would have led, and did lead, to inefficient policy making. If you are rigid with your plan and your target, you get a problem. I was given an example in my notes. Evidence might come forward—and it is highly likely to come forward today—of a new technology that turns out to be the most cost-effective means of reducing emissions, but we might be tied to meeting the targets through other sectors. That way you would ossify the technology and the chances of putting it into practice. I am not knocking sectoral targets, but we must be flexible about this. As I said on Second Reading, operation of this kind of legislation will unquestionably lead to the creation of new businesses, but not all of them will succeed. We have to give them the flexibility to work out what is best.

The emissions trading scheme is a good example of a policy that covers multiple sectors. One can broadly divide the economy into no more than five or six sectors, but we are looking at something below that. In a way, this comes down to letting the climate change committee take this principle, and maybe we will find a different way on Report of looking at the need for some kind of way forward. It should not be prescriptive, stop technology or wreck the putting into practice of new and good ideas, but it should assist those in different sectors who feel that they want to make a contribution.

The noble Earl made a good point. I am not saying that he gave this example, but he identified the fact that the large retailers dominate our food economy. We have asked them on a range of issues concerning the food chain to ensure through their suppliers, as part of their job, that workers are not exploited, that the gangmasters legislation is operated fairly and that the minimum wage is paid. It is the retailers’ job to make sure that the provenance of their products is okay—for example, by preventing the restamping of non free-range eggs as free-range. They can ensure that through each supplier in the chain. It is no different in the case of those who want to be associated with cutting emissions; the same can be done with suppliers, but you would not want to be prescriptive by ordering the sector to cut emissions. The work goes across many sectors.

I shall take some advice on this. If there are any targets knocking around Whitehall—I suspect that we will have some figures in the department or in the Treasury, although I do not know—they are not being operated and they would not be prescriptive in that sense. We must be flexible, but we need people to be assured that the legislation has clarity and that we can take it forward.

I have already agreed to look at other parts of the Bill so that we can find ways to demonstrate that the Government as a whole are committed to the issue. We do not think that setting emission reduction targets for each government department—to pick on Amendment No. 32—is the way but we will certainly consider that alongside the proposals we discussed last week. I do not think that anybody has used the word rigid about sectoral targets, but by implication they need to be flexible. We need to look at what we mean by a sector because that is not adequately explained. We need to make sure that the Committee on Climate Change has maximum flexibility in this with the good will and willingness of industry and competition and new technologies so that a door is not closed because some sector has been given a target that ends up knocking out an opportunity for new technology so that someone will not take the risk of investment. We would not want that to happen. If we can find a solution along those lines, we will have served the scrutiny of this Bill extremely well in exactly 30 minutes.

I am very reassured by the Minister’s contribution and response to our amendment. I feel that we have taken the debate quite a long way. I hope it is a path for future discussions. I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 30 to 32 not moved.]

Clause 4 agreed to.

Clause 5 [Level of carbon budgets]:

[Amendment No. 33 not moved.]

34: Clause 5, page 3, line 18, leave out “26%, but not more than 32%,” and insert “40%”

The noble Lord said: At the beginning of our debate on the first day in Committee we talked about an 80 per cent, or 60 per cent—whatever that percentage should be—overall reduction by 2050. At Second Reading, I felt there was particular feeling from all sides of the House for this very strange mid-point target that the Government had inserted into the Bill which—I do not know whether it was meant to but it clearly does—put in not only a minimum target range but also a maximum. It suggested that if the UK economy by 2020 reduced carbon emissions by more than 32 per cent, then somehow the Secretary of State would be equally culpable if he had missed the lower target. That seemed an extremely perverse and almost masochistic form of legislation.

Our amendment does two things. It takes away the ceiling for reductions, which does not seem to make any sense, and it replaces the single target with a figure of 40 per cent. Perhaps we will get back into the previous argument about whether it is up to Parliament to decide what the target should be. Our view—and the Government’s view, we have heard—is that there needs to be a figure in the Bill. That is the case for the final target and we believe that it should also be the case for the approximate mid point in 2020, and that the right figure for an 80 per cent overall reduction is a best estimate of 40 per cent. Where does this figure come from? It is half of 80 per cent—rather easier mathematics than we heard earlier.

However, in terms of how quickly one can achieve the targets, there are clearly two forces working one against the other. There is the school of thought that there are easy areas to meet. The low-hanging fruit argument says that we should be able to save obvious carbon emissions quickly but that it will get more difficult as time goes on. On the other hand, we hope that technical innovation will be stimulated very strongly by the imperative of climate change. New technologies will come on stream some years ahead to allow the extra efficiencies to be met to a greater extent later. If we take the view that the two roughly cancel each other out, then the figure of 40 per cent is more or less correct and is suitable for the Bill at this stage.

Over the past week at Bali, it was the EU’s specific view that the target for developed nations should be between 25 and 40 per cent by 2020. That was for greenhouse gases generally but, as we know, carbon dioxide is the most important of those. I presume that the British Government fully supported the EU stance on targets to be met by developed nations and I would certainly expect them to have done so. If as a nation we are saying that we should be at the forefront of those targets and leading not just globally but within Europe, then, within that context, 40 per cent again seems to be the right figure. However, most importantly, we should remove the upper target. I beg to move.

Perhaps I should not have paid as much attention as I did to the last debate, as I had not intended to speak in it. However, I am taking the opportunity to refresh my memory of the evidence given to the Joint Committee by the Bill team and the then Secretary of State, David Miliband, who was cross-examined in detail on this point, but, first, I shall take up the point that has just been made from the Liberal Democrat Front Bench about European targets.

It is worth remembering—the evidence was given to us by Mr Mortimer of the Bill team—that the UK’s target of 26 to 32 per cent for CO2 translates into 32 to 37 per cent of all greenhouse gases. Therefore, the suggestion that we should lift the CO2 target to 40 per cent has some fairly substantial implications. However, I draw attention to the evidence given by the then Secretary of State, who has since been transferred to other responsibilities. I think that we should at least understand the case that he advanced under cross-examination, as it may help us to decide whether it was a strong argument.

The Joint Committee finally concluded that it was not a very strong argument and said that it was not convinced by it. Basically, the Secretary of State’s case was that this range of targets would be extremely tough to achieve. He said that, considering all the policies that the Government were putting in place, we had just about reached the limit. However, he also said that,

“what has come through to us from the business community very, very strongly is that the debate about 2050, which has been significant, and the debate about so-called annual targets … ‘We are making investment decisions not on the basis of where we are going to be in 2050 and not on the basis of where we are going to be in one year, but where we are going to be over a five, ten, 15-year horizon’”.

He went on to say that he regarded it as extremely important to give a clear indication to business of exactly where the Government wished it to go. He said:

“From a business point of view, the range actually provides a degree of confidence and certainty”.

He was then challenged by Helen Goodman from the other place who said:

“So you are not saying that you would be concerned if we did better than 32 per cent?”.

Mr Miliband said no. Helen Goodman then said:

“You could read the Bill like that, as it is drafted at the moment”.

Mr Miliband replied:

“I would be more concerned if we were below 26 than if we were above 32, if that is what you are asking”.

He was then asked whether it was not rather odd to put an upper cap of 32 per cent on the provision, and then there was a diversion into the arrangements for changing the legislation and removing the cap if the circumstances should change.

There we have it from the Secretary of State that the whole reason for this cap is to give confidence to business and industry. I entirely and completely understand why we have to tell business and industry exactly where they need to get to if we are to achieve the results we want, but I find it difficult to believe that the confidence of business and industry is going to be shaken by the possibility that they might beat the target. It is not a situation I have ever discovered in business. Indeed, the Secretary of State—or it may have been one of his officials—pointed out in evidence that it would be possible to bank the surplus and use it in future. Most businessmen would be quite pleased to know that if they exceeded the target they would have a cushion for any subsequent setbacks. So while I understand the desirability of giving confidence to business and wholly support the need to let business know exactly where the Government want to go, after rereading the Secretary of State’s evidence under cross-examination, I remain as unconvinced as the committee was at the time. It is now up to the Minister, who is always compelling and convincing, to provide us with the certainty and the assurance that the now Foreign Secretary was unable to give us when he gave evidence to the committee.

In one respect, these two amendments say the same thing: that the upper limit should be removed. We support that. In the unlikely event that the UK’s emissions reductions are 50 per cent by 2020, it would be admirable and we would be patting ourselves on the back, but as things stand, with the upper limit at 32 per cent, a higher achievement would be against the law, which would be absurd. We believe that setting the upper limit by 2020 would fly in the face of the thrust of the Bill, but that is where the similarities end.

The amendment tabled by the Liberal Democrats and the noble Lord, Lord Campbell-Savours, is for the reduction to be at least 40 per cent. That is consistent with what they previously said about target setting. We on these Benches do not support putting 40 per cent in the Bill. When Clause 1 was being discussed last week, my noble friend Lord Taylor of Holbeach argued that the committee not politicians should set the targets. His arguments apply equally to these amendments to Clause 5. Nearly all noble Lords who have contributed to debates on the Bill have said that the 2020 and 2050 targets are too low. Who knows? It might be that 40 per cent is the right answer, but we are saying that the committee should look at it and once it has looked at all the evidence and the science, the 2020 target can be set, but without an upper limit.

Is the noble Earl saying that he does not think the Bill should set targets at all or just not in this particular instance? Would he be kind enough to clarify that?

The Committee on Climate Change ought to be setting this target in the same way that we are recommending that it should set the 2050 target.

There is a difference between the 2020 target and the 2050 target: the 2020 target is a staging post along the way. It might be thought that the Committee on Climate Change needs some guidance on the absolute minimum acceptable target and the maximum that it ought to think about. Why is that? At the maximum point, there is inevitably a trade-off between what it might be possible to force through and what the consequences would be. One of the many issues the committee has to consider is the economic consequences of trying to achieve different things. If we say, “We will not give the committee any guidance. It should get the highest level of carbon reduction it can”, and the committee does that, the Government may then have to say, “We cannot face the consequences of that target”. Other amendments in the Marshalled List would ensure that the committee will effectively determine what happens and the Government will simply have to put before Parliament what it recommends.

There is an argument for providing guidance to the committee at staging posts along the way, but for my part the important question to ask the Minister in Committee is why the minimum target the Government regard as acceptable and the maximum they have in mind are reasonable guidelines to provide for the committee. If no guidelines are given, it is very difficult, but if a specific figure is given, it jolly well has to be justified. With respect to the noble Lord, Lord Teverson, I cannot see the argument that because 40 per cent is half of 80 per cent, that is a good reason why it should be the figure the Committee on Climate Change has to draw up plans for in 2020. It is not a sound argument. The idea of a range for an intermediate position is not at all ridiculous; in fact it is entirely sensible.

I am sorry to refer again to the McKinsey analysis, but I do so because what industry says is likely to have consequences. According to the report, far from the early years yielding low-hanging fruits, up to 2020 the price of carbon could reach 60 to 90 euros per tonne carbon equivalent. However, by 2030 it could fall to 40 euros. In other words, depending on how fast we try to go, the period to 2020 could be the tougher rather than the easier one, depending on what we are trying to achieve. So if you are trying to achieve 26 per cent as one target and 40 per cent as another, that is backed up sector by sector by the kind of policies required. I am sure the Liberal Democrats will be delighted to know that if they are going to achieve a 40 per cent target, they will have to build at least one nuclear power station a year for several years.

When the figures are converted into actual policies, which somebody has to do, being firm on a figure of 40 per cent and telling the Committee on Climate Change to get on with it—and that any recommendation has to go before Parliament because the Government cannot say yea or nay—does not make sense. If the Liberal Democrats are anywhere close to power—they might be in a coalition government, but heaven forbid if they were—they would have something to say about it. They would soon find out whether judicial reviews and binding commitments hold water.

My general point is this. A range is not a silly idea for an intermediate position. It provides flexibility and manoeuvrability depending on the circumstances, and it is achievable. It is not the same thing as specifying what is to be achieved 40 or 45 years hence.

We have had a useful debate. I am not seeking to cut corners, but in the interests of making a little more progress before we finish, I shall give a brief response and hope that the implications will be clear. We have already discussed the fact that the Committee on Climate Change will review the 2050 target to see whether it needs to be tightened. That is a firm commitment. As part of the review, the Committee on Climate Change will also need to consider the implications for the 2020 target—you cannot do one without the other. The brief, as I said to the noble Lord, Lord Crickhowell, is probably the same and prepared by the same person as prepared David Miliband’s briefs—one has to be serious about continuity in Government here.

Amendment No. 35 sets the upper limit on the 2020 target. It is designed to provide greater short-term certainty to business and should help to facilitate investment decisions necessary for paving the way to a low-carbon economy. We have conducted little analysis to date on the impact on the economy of reducing emissions beyond the 32 per cent, as that was felt already to be a challenging level. It is important that the analysis is carried out before any change is considered. That said, the Bill does not rule out reducing emissions by more than 32 per cent in 2020. That said also, I am prepared to take Amendment No. 35 away and to give it further consideration.

I thank the Minister for his response, but I will just come back on a couple of things. On the points of the noble Lord, Lord Woolmer, we should not forget what I should have said earlier but am sure all noble Lords are well aware of, that the 40 per cent reduction is on 1990 levels. As a nation, we have already achieved some 12 per cent—in terms of carbon dioxide, I think—although we know that since 1997 it has fairly flatlined. Those targets are rather difficult, because we are talking about figures relating to a baseline some 17 years ago—a bit like the rates or the council tax, which we never get around to rebasing. However, that is how it is internationally and that is how it should be in the Bill. Forty per cent is, I agree, a big target, but it is not as big as it seems for the first period.

On the low-hanging fruit argument, as I said myself, there are arguments both ways. The huge potential from the unexciting and unsexy area of energy saving is well accepted—particularly in the domestic sector, let alone from energy saving in industry. That is a whole area where, with the right government policies and—let us not forget—public and personal motivation, we could achieve much. Having said that, I agree that there is more sense in the medium-term target going back to the climate change committee—more perhaps than the final one, although we have all accepted around the Chamber that the final target, at 60 per cent, is wrong. We are not absolutely saying that it is wrong, but we all believe that it is wrong. Therefore, what I am saying is that, if you have a mid-term target in the Bill, then it is going to have to be something of the 40 per cent order. That is a fact in order to meet the types of target that are going to be set for us—through Government, but suggested by the climate change committee. I misunderstand the Bill the way that I read it at the moment. To me, the statutory targets have to be between those two numbers—that is how it reads. If I read that wrong, then fair enough. Even then, it certainly needs amendments to point out that that is a target range above the statutory figure or however we move forward. That, to me, is not clear in the Bill at all—in fact, to me it seems clear the other way around.

I thank the Minister for his reply. I think that the approach is starting to move in the right way. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 35 not moved.]

36: Clause 5, page 3, line 23, at end insert—

“( ) for the budgetary periods including the years 2015, 2020, 2030 and 2040, must be such that the annual equivalent of the carbon budget for the period is lower than the 1990 baseline by at least any percentage that may be recommended by the Committee on Climate Change and approved by a resolution of both Houses of Parliament;”

The noble Earl said: The amendment is directed at the part of the Bill relating to interim carbon budgets. It is part of our general strategy to ensure that it is the committee’s recommendation, approved by Parliament, that is setting the targets. The amendment seeks to further the committee’s role in target setting by placing the responsibility of setting the general framework and progress within the committee.

The process of setting targets for carbon reductions requires a dual approach, focusing on both the short and the long term. The annual rolling targets and the yearly milestones are essential for monitoring the short-term progress, yet these are created with an eye on meeting the interim targets which are to be the scaffolding on which our progress hangs. It is thus very important that the long-term outline for fighting climate change comes from the committee. Any changes to the interim target should come from the scientists on the committee and be subject to parliamentary approval.

These targets are important. It is likely that meeting the interim targets will be the most public indication of a Government’s success or failure in tackling climate change. Thus it is essential that they are realistic and authoritative. Having the committee set them achieves this result. It is essential to provide a genuinely independent yardstick by which we can measure the effectiveness of government action. Thus the amendment ensures that the interim targets are set in a way that squarely removes politics.

My noble friend Lord Brooke of Sutton Mandeville noted on the first day in Committee that he had the accidental fortune of taking credit for the miracle that the British Library opened in 1998. I agree with him that it is difficult for a Secretary of State at any particular moment to be charged with a responsibility that spans 20 or 40 years. However, if these interim targets are set independently and publicly and are tethered to the short-term milestones, it might go some way to having a mechanism to ensure that the long-term targets have real meaning and we will be able to assess a particular Secretary of State’s performance. This must be done in conjunction with reports that not only list the status of carbon counts but also provide an assessment of the measures that have been implemented to reduce emissions. We have tabled amendments to this effect. I beg to move.

I support the amendment and use it as a cover for raising an issue that has been worrying me for the past couple of hours. I am very concerned that the sense of urgency is beginning to seep out of our debate. The word has not been used in Committee today but it remains very important. We have been watched from the Gallery by a number of young people; this is their Bill, not ours. Unless we address the issues we are here to discuss with a greater sense of urgency and with the constant sense that there is a clock ticking, we shall not do the Bill justice.

I have two observations. At the weekend, I was watching World Service Television in Paris and a professor from the Cato Institute in the United States, which is a right-of-centre think tank, was being interviewed. He said in response to what was happening in Bali that any steps taken by any developed country which worked against the interests of industry and business could only damage the prospects of climate change reduction because they would just get in the way of business sorting the whole thing out. That is a rather extreme view and I do not for one moment agree with it.

I also read recently a very good book on aircraft production in Britain in the early years of the war and how, for a long time, it was left to industry to get on with it. It was eventually realised that this was not working and that we were likely to lose the war unless a more determinist position was taken, and a very significantly accelerated process of aircraft production was imposed on the aircraft industry.

We need to strike a balance between assuming that, somehow or other, industry and business will sort this out for us, and the need to understand that the clock is ticking, and to make absolutely clear that the Government have the machinery to impose solutions where and when they are not forthcoming. That need has been a broad underpinning of almost everything we have discussed today. As anyone who reads our report will know, I bow to no one in enthusiastically supporting the formation of the climate committee and its powers and role in formulating policy. But it would be a dereliction of duty if we leave everything to the climate committee without a very clear mandate and timetable, and a sense of the urgency in getting this right. That is not, I am afraid, coming through in Committee today.

I hope to change that sense of a lack of urgency. When I listen to this debate, I think about how old I might be in 2050; I look forward to being 89. I also remind myself that my daughter will be 58 and I hope very much to have some grandchildren, who will be, perhaps, in their thirties. When we start to think about climate change and how we are going to make really quite radical changes to our behaviour, the way we do business and conduct government, we need to inject a sense of urgency and remember that we are talking about the future of our children and grandchildren. I thank the noble Lord for reminding us of the need to inject a bit of urgency into our deliberations.

The noble Lord highlighted that the Government, civil society and industry need the mechanisms and machinery in place to deliver the results that we all want to see. I know from experience of being in Committee that once you get into the detail, it can start to grind slowly. Noble Lords around the House will, I am sure, agree that the weight of responsibility on us to get the machinery and mechanisms right is absolutely self-evident.

When the noble Earl, Lord Cathcart, talked about the kind of scaffolding that he was looking for within the Bill, he painted a picture around these interim targets. We on the Government Benches are talking about scaffolding that is much more based on budgets and budget-setting, advised by the climate change committee, and annual reporting and accountability to Parliament. I am not sure that we are all looking at things from such a different perspective, but we are getting ground into the detail.

The noble Lord will not be surprised to hear that we do not consider that Amendment No. 36 would add anything to the framework already provided in the Bill. The kind of scaffolding he is talking about is there already. In fact, it could undermine a key part of the Bill; that is, the idea of flexible five-year carbon budgeting to take us to 2050. That is the principle underpinning the Bill. There are clear reasons for including an interim target for 2020, which we have all just discussed.

The noble Lord, Lord Crickhowell, who is not in his place just now, reminded us of the importance that the Joint Committee placed on this. Although he made points about the range, the committee particularly welcomed the importance to business represented by the 2020 target. However, to set further interim targets would restrict the flexibility which my noble friend Lord Rooker has highlighted time and again as being of key importance within this Bill. The five-year carbon budget framework provides us with important flexibility.

Setting further interim targets at this stage would effectively dictate the trajectory to 2050 from the start. It is important that the committee is able to advise on the appropriate trajectory to 2050, based on the best information available at the time. This would enable the committee to take account of any future developments—for instance, in climate science, understanding the economics of climate change or the development of new, low-carbon technology.

There is little point in setting the trajectory in statute now, as there are too many uncertainties. The trajectory would probably need to be revised significantly as we progressed towards the 2050 target. As has already been discussed in the context of amendments which called for annual targets and rolling annual targets, it is unclear how such mechanisms would interact. The intention to achieve increased long-term certainty would be undermined by these different mechanisms in the Bill. My noble friend Lord Rooker made commitments to consider quite a number of matters between now and Report, not least how we can strengthen the annual reporting processes to Parliament, which go some way to reassuring noble Lords opposite that we take seriously concerns about transparency and accountability.

The amendment refers to a 2020 target. As we have made clear—my noble friend just highlighted it—the review of the 2050 target by the Committee on Climate Change will also consider the impact on the 2020 target. We are already committed to considering whether the review should be put in statute, as my noble friend has just reminded the Committee.

My noble friend said that there is a great need for urgency. That is why the Government have brought forward, and hope to take a lead with, this groundbreaking Bill. With those comments, I hope that the noble Earl will consider withdrawing his amendments.

I am not totally happy with the Minister’s response. We have consistently tried to strengthen the role of the committee. If it is able to do what the amendment prescribes, it, too, can be inflexible. It would be good if the Minister reconsidered the amendment. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 37 not moved.]

38: Clause 5, page 3, line 33, leave out “the number of years in the period” and insert “five”

The noble Duke said: We had an interesting debate on an earlier occasion when the noble Lord, Lord Teverson, tried to tempt us with the thought of changing away from five years. As far as I could see, the Government were not convinced, and I am not sure that the rest of the Committee was. The amendment would simply tidy up the language of the Bill and make it more precise. The Bill already stipulates that the number of years for a carbon budget period will be five. We see no reason why that cannot be reflected here. The amendment would simplify the language for what the “annual equivalent” means; that is, the carbon budget divided by five. I hope that it will find favour with the Minister. I beg to move.

I thank the noble Duke for raising the amendment. I thought that he was thinking about tidying up the drafting for us.

Amendment No. 38 would change the definition of an “annual equivalent” of a budget, so that it was always the total of the budget divided by five. As we know, the system of five-year budget periods in the Bill mirrors the length of current commitment periods under the Kyoto protocol and the EU Emissions Trading Scheme, as has been discussed in Committee. However, binding targets under the Kyoto protocol currently only extend to 2012, and it cannot be taken for granted that any future international agreement that sets targets would run on a five-year cycle. In fact, we touched on that at close of play in our previous sitting. Clause 18, therefore, allows the Secretary of State, subject to parliamentary approval through the affirmative resolution procedure, to amend the length of a carbon budget. That power can be exercised only if it appears necessary to keep the budgetary periods in line with similar periods under any agreement at European or international level. Before doing so, the Secretary of State must consult the devolved Administrations.

Clause 18, therefore, ensures the timeframe of budgets in the Bill keeps step with future developments in the international context. However, the amendment changes the definition of “annual equivalent” within the budget, so that it is equal to the amount of the carbon budget for the period divided by five. I can understand why the noble Duke has moved the amendment but, given the points that I have made about the international context, he might consider withdrawing it.

I am grateful to the noble Baroness for the way in which she summed up the Government’s position. Of course, when she starts talking about consulting devolved Administrations, all sorts of complications are likely to arise. I would like to reflect on what she has said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 agreed to.

I beg to move that the House do now resume.

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

House resumed.

House adjourned at 9.56 pm.