moved Amendment No. 77:

I disagree with the noble Earl’s amendment. On these Benches we think that we should just simplify the Bill and get rid of Clause 13. My motivation for that is to help the Government’s reputation and to save face in the international arena.

What is this clause about? It concerns small numbers that are there to fudge figures in retrospect. What is the point? By having both the borrowing and the banking mechanism in Clause 13, there are two ways in which targets which have not been met can in retrospect be made to have been met. In doing so, the Government and the UK open themselves to criticism of fixing figures—what is exactly what they would be doing. These mechanisms would be used only if borrowing targets were not met. Why bother to do this with a figure of 1 per cent? Clauses elsewhere in the Bill allow emissions trading and credits, so if there is a problem in this area the Government can buy international credits. We believe these should be restricted, but not excluded. Why then bother to go into this complication of borrowing and banking to fix the figures in retrospect? This area of the Bill can be criticised both within the UK and internationally. It will lead to all sorts of accusations if it is ever used. It is not particularly practical. If the target is missed by 1.1 per cent it cannot be used. Why 1 per cent and not 2 per cent? Why even 0.5 per cent? And if 0.5 per cent, why bother with this mechanism at all? International credits can be bought. That is the way out if there is a real problem with the margin, but it should be done as far ahead as possible.

On the banking facility, again I would ask what other business or organisation, when it gets ahead of its target, is allowed to carry that lead forward? The answer is that if there is momentum, keep it. These targets are difficult to meet as they are so let us move them forward rather than provide an excuse to backslide during the next budget period. I genuinely feel that the Government are creating a rod for their own back with Clause 13 and that it would be better purely to use international credits if they wish to do so. But at the least they should take out this clause because it leaves them open to the accusation of fudging the figures.

I rise to support my noble friend Lord Teverson on this point. There is a real risk that if Governments are allowed to borrow from another year, the temptation will be to do just that; it will be irresistible. Subsequent Governments may then be able to argue that they have been given an impossible task and cannot make up the deficit. For that reason, difficult though greater tightness might be, there has to be that discipline here. I therefore support my noble friend.

I take a slightly different view from that of the noble Lords who have spoken so far because I do see some advantage in having a degree of flexibility to borrow forward and to move on the budget from one year to another. On the point about international credibility, if the Government can act only after having consulted, and therefore effectively on the advice of the Committee on Climate Change—one can assume that they would not act against the advice of the committee—that particular problem is rather less acute than has been suggested by the noble Lord, Lord Teverson. I agree with him that half a per cent seems rather small, and I would be inclined to leave it as it is at 1 per cent in order to give the Government the flexibility to respond to unexpected developments such as, for example, those related to the weather.

Again, my remarks will be very brief. I am not intervening on the subject of the difference between half a per cent and 1 per cent, but I recall that when I was the budget Minister in the European Union, we reached a situation where the Parliament would vote the money that was available to be distributed in a particular year absolutely up to the last euro. As a consequence, there was no way we could adjust because it had done deals on every single piece of expenditure. We the British invented the negative reserve, under which we knew perfectly well that not all the money would be spent. We therefore created a negative reserve that gave us enough leeway to be able to negotiate at the closing stage. Money in other parts of the budget would not be spent and it was simply put back into the negative reserve to fill it up so that it would come out flat at the end of the year. So I am all in favour of having an instrument of a modest kind at the margin in order to make such an adjustment—because of the way in which the world works.

Although we are dealing with small figures here, I shall kick off by saying that the figure of 1 per cent was not plucked out of thin air, and in the course of my remarks I shall seek to explain where it came from and why it is useful. I am dealing with Amendments Nos. 77 and 78, and thus effectively with Clause 13, as the noble Lord, Lord Teverson, remarked, so I shall be slightly longer than I was on previous debates.

The clause ensures that there are strong incentives to over-achieve against budgets and to reduce emissions by more than is necessary. Where this is the case, the surplus emissions may be, but do not have to be, banked for use in the next budget period. The benefits of banking to provide incentives for early action and over-achievement are recognised under the Kyoto Protocol, which also allows for unused emissions rights to be carried forward for future use. We think that this will encourage deeper emissions cuts to be made earlier, which would not be the case if we could not carry forward the savings made by early action. Banking is therefore a good thing in environmental terms because it rewards good behaviour, whether by government, business or other organisations.

Banking can also help to reduce the costs of mitigation, especially where abatement becomes more expensive over time, while still ensuring that emissions, over the period as a whole, are limited. In the context of the policies designed to establish a carbon price, banking reduces the risk of price spikes or crashes at the end of the budget period. There is some evidence, cited in the Stern review, that allowing banking between phases of the United States Acid Rain Program, for example, helped to deliver early reductions and improved participants’ efficiency. This evidence suggested that because of the ability to bank from the first phase into the second, the emissions reduced in phase 1 were twice that required to meet the cap.

Unlimited banking is allowed for companies operating under the EU Emissions Trading Scheme, which covers around half of the United Kingdom’s carbon dioxide emissions. Allowing banking under the Bill ensures that there is no inconsistency between the two systems. Without banking, the risk is that effort will be focused on trying to meet budgets exactly, rather than reducing emissions by more and going beyond the budget. Given the problems of the natural variability of emissions, and the uncertainties over what level of carbon savings will be achieved by many policies, removing banking will also increase the risk of not meeting the targets at all.

Clause 13 allows borrowing of emissions from the next budget, but only in strictly limited circumstances. This is to help deal with unexpected natural events, such as a particularly cold winter at the end of a budget period, that could otherwise mean a budget or target is missed. Amendment No. 77 would halve the limit on borrowing to 0.5 per cent of the following budget. As I said, the current limit of 1 per cent in the Bill is not a number plucked from thin air. It reflects the likely situation when an unexpected shock towards the end of a budget period would otherwise lead to a risk of missing the budget.

Analysis suggests that allowing up to 1 per cent of a future budget to be borrowed would be consistent with the rise in emissions that may result during an unexpectedly cold winter, or with the uncertainty around emissions data. There have been three large emission rises due to unexpectedly cold winters since 1990, the coldest of which led emissions in these years to be between 3 and 4 per cent higher than the year before. This effectively means that if 0.8 per cent—that is to say, 4 per cent divided by the five years of the budget period—of the subsequent budget were borrowed, the shock could be absorbed with a 1 per cent limit on borrowing, and the budget would still be met. This would not be the case with a limit set at 0.5 per cent, as Amendment No. 77 proposes.

Another important source of uncertainty is the time it takes to make sure that the UK emissions figures are completely accurate. Provisional figures for emissions in the final year of the budget period will be available shortly after the period ends. These figures are generally accurate to within a few percentage points, but the final confirmed emissions figures are not available until later. Again, if the emissions figures for the last year of the budget period were to be revised upwards by this amount, as the period had already ended, the Government’s options would be incredibly limited.

One option available to the Government following the end of a budget period is to buy international credits from the carbon market. As we discussed earlier, there are concerns within the House about this. The 1 per cent limit is therefore considered the most appropriate approach in providing a small degree of flexibility to smooth emissions across budget periods but, crucially, without undermining the clarity and certainty that the budget system as a whole provides. I have given an example of realistic figures from cold winters since 1990. We have an example where we can deploy the figures.

I turn to Amendment No. 78, which would require approval from the Committee on Climate Change.

I do not think the Minister is correct. The EU ETS is a trading system not a target system. Article 13 of directive 2003/87/EC, which set up the EU ETS, specifically states under “Validity of allowances”:

“Four months after the beginning of the first five-year period referred to in Article 11(2), allowances which are no longer valid and have not been surrendered”—

that is, used—

“and cancelled in accordance with Article 12.3”—

which concerns trading—

“shall be cancelled by the competent authority”.

You can over a one-year period use trading, but over a five-year period—and we are talking about five-year budget periods within this context—you cannot transfer certificates under the EU ETS from phase 1 to phase 2.

I hope I have got this right. I shall take advice if I have not. I was working within the five-year budget but I also mentioned that if you come to the end of that budget period and you do not receive the figures until long afterwards, the options are limited because the five-year budget period has ended. The 1 per cent is within the five-year period and, as I understand it, we are not planning to go from one budget period to another. But I shall take advice on that.

The supposition was that it was the equivalent of borrowing under the EU ETS and that certificates under that scheme remain valid. They do between individual years but they certainly do not between five-year periods, which are the different phases of the EU ETS. So they are cancelled; you cannot bank between phases of the EU ETS.

I am not saying that we are going to go over from one budget to another. We are in agreement with that. As I understand what I have put before the Committee, I was dealing with the five-year period of a budget but not going over from budget 1 to budget 2—that is, from the first five years to the second five years. That would be a problem. I promise to write because I am probably going to get the figures wrong but, as I understand it, there is no difference between us. That is why I made the point that if the emissions in the last year of a budget period—that is, a five-year period—were revised upwards by an amount because of an exceptionally cold winter, if the period had already ended the options would be incredibly limited for the Government because we would be in the next budget period. As I understand it, the implication is that we would not go over from one budget to another. Effectively, what you have got has to be contained within the budget period, which is exactly what the noble Lord is saying in regard to the trading system.

Amendment No. 78 requires approval from the Committee on Climate Change before either borrowing or banking and effectively confers powers on the committee which are beyond what we consider appropriate. We believe it is for the committee to advise and for the Government to take decisions—a theme which I have followed throughout the Bill—and Amendment No. 78 would change this relationship. Our view is that ultimately the decision as to whether to use the banking or borrowing provisions should rest with the Government of the day given the importance of the decisions on other factors within the Government’s gift, including economic competitiveness, fiscal policy and policy delivery. I therefore ask that the amendments be withdrawn and Clause 13 stand part of the Bill.

I have received a note which it will probably be helpful to explain before I write to the noble Lord. You cannot bank between phase 1 and phase 2—that is, between 2005-07 and 2008-12—because phase 1 is a preparatory phase. From phase 2 onwards you can bank between the periods. So there is a difference there but I will write and clarify that point.

As the noble Lord will be aware, the scheme post 2012 has not yet been agreed so we do not know what the situation is. There has not been a European decision over the scheme so I think that is probably unlikely.

I am not going to argue with the noble Lord—he knows more about this than I do—but my note says that from phase 2 onwards you can bank between periods. Presumably there have been some initial discussions within the EU on this.

Am I right in assuming that everybody else will be covered with a copy of the Minister’s letter to the noble Lord, Lord Teverson?

It goes without saying; therefore, it is always best to say it. Yes, naturally, those who have participated in the debate will receive a copy of the letter.

That was all very interesting. Amendment No. 77, which would have replaced “1%” with “0.5%”, was a probing amendment to see what the reasoning behind the figure was. That still needs some clarification when we receive the letter.

I was interested to hear the Minister speak of the benefits of the “banking and borrowing”. It was a useful debate. The Minister’s response regarding the committee in relation to Amendment No. 78 was not surprising. I beg leave to withdraw Amendment No. 77.

Amendment, by leave, withdrawn.

[Amendment No. 78 not moved.]

Clause 13 agreed to.

Clause 14 [Final statement for budgetary period]:

[Amendments Nos. 79 to 81 not moved.]

moved Amendment No. 82:

We understand that the amendment would change the wording of what is to be required in the final statement for budgetary periods. Where the Bill states that the report must state the final amount of,

“UK emissions, UK removals and net UK emissions of that gas”,

the noble Baroness, Lady Miller, would change it to state,

“domestic UK emissions, UK domestic removals, and UK financed international and net UK emissions”.

The goal is unclear.

Will there be a way of determining in the report precisely where foreign credits are coming from? Surely that could be a matter for private companies to decide. If one of the arguments for trading internationally is to help subsidise green energy in underdeveloped countries, is there any way of knowing whether that is happening? Will the Minister explain his idea of precisely what the report would outline and in what detail?

I support the amendment proposed by the noble Baroness, Lady Miller of Chilthorne Domer, in principle. I spoke earlier about the importance of keeping the international credits to a reasonable limit to ensure that we really do drive the decarbonisation of the UK economy. Anything that can provide that degree of transparency should be commended.

Again, I come before you in answering this debate on Clause 14 to refer to another clause that we have not yet reached. Clause 14 clearly separates out information on activity within the UK and activity overseas. Clause 14(2) requires the Secretary of State to report on UK emissions, UK removals, and net UK emissions for each greenhouse gas included within the budget. The terms used in Clause 14 are all defined in Clause 24, which makes it clear that they are referring only to activities which take place within the UK’s borders. The proposal to add “domestic” to Clause 14 would not add anything to these existing provisions, and is therefore redundant.

The Bill also allows the Government to count activity overseas to reduce emissions or enhance removals towards the UK’s budgets. However, this is the case only if these activities are backed up by carbon units. The country which financed the activities is not relevant; it is where the carbon units end up which matters. Clause 14(3) already requires the Secretary of State to report on the use of carbon units during the budget period and to describe the number and types used. There is therefore already a clear separation in Clause 14 between domestic activity and overseas activity, which is the nub of the argument. We fully accept that—there is no distinction between us on this matter. However, the amendments do not add to this clear separation and, in fact, their effect is to confuse the defined terms and concepts used in the Bill. If one rewrites the clause with the amendments as they would change it, it becomes incredibly confusing and tortuous. The amendments are simply not required. There is a clear separation between the activities in the UK and overseas, and the definitions to cover ourselves are in Clause 24.

I thank the Minister for his reply. I accept that Clause 24 gives definitions, but the Minister spoke of UK activity, which could be taken to mean financial as well as emissions-reducing activity. I fully accept that the wording that my amendment produces might be confusing, but we have a job to do to make absolutely clear what is what. The other confusion that arises when you start to look at Clause 24 is between carbon reductions and other greenhouse gas reductions. I am sure that when we get to that clause the Minister will explain that more fully, but I am very concerned that the public should be able clearly to see that distinction. We are back to the old thing that we talked about before—that it would be so much easier to describe things with a graph.

I accept what the Minister says and would be interested in coming back to the matter, possibly at Report through different amendments to Clause 24, addressing the issue of overseas emissions being absolutely not included in any description of what the UK has achieved in reductions.

In advance of reaching Clause 24, I am quite happy to give a commitment that we will look again at the clarity of the definitions in Clause 24 to obviate the need for the noble Baroness to come back on that. I cannot promise that that will happen at Committee stage, but I may have something more useful to say when we get there. To that extent we will certainly consider the issues that she raised, but not in Clause 14.

I am grateful to the Minister for that response, which I very much welcome, because, with all the expertise that he has at his fingertips, he will undoubtedly come up with something much better than I could. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 83 and 84 not moved.]

moved Amendment No. 85:

Before I decide whether or not I am at all minded to support this amendment, what different types of carbon unit can there be? Subparagraph (b) talks of details of the,

“type of those carbon units”.

I do not understand what they are.

I think that the Minister said that there were different types—

No, no; with respect, the amendment—your amendment—refers to different types of carbon unit. I would be interested to hear the answer myself.

I shall write to you.

I do not want to make a cheap point, because I am very conscious of the fact that in the past quarter of an hour I may have used the term “different carbon units”. I am not certain whether I did, but the fact is that we are discussing Amendment No. 85, it does not have my name on it and I do not have to answer any questions about it.

I remind noble Lords that all of the provisions in the Bill have been agreed with the devolved Administrations. That is my starting point. The statements under Clause 14 will provide all the information necessary to determine whether the Secretary of State has met the budget for that period—that is, whether the net UK carbon account does not exceed the budget.

The Clause 14 report will provide information only on the amount of carbon units which have been credited to or debited from the net UK carbon account. Under the Bill, the duty to meet budgets rests with the Secretary of State alone and it is the Secretary of State alone who has a net carbon account. The devolved Administrations do not have net carbon accounts under the Bill, so it is not clear what information the Secretary of State would be expected to provide as a result of this amendment. The provisions of the Bill have been agreed with the devolved Administrations. As many aspects of climate change policy are devolved, it would be perfectly possible for the devolved Administrations to bring forward their own legislation to tackle climate change, within the scope of their competence. That needs to be said, too. The Administrations have agreed the terms of the Bill, but within the rules and protocols relating to devolution, they are perfectly able to bring forward legislation if they wish. However, the net carbon account holder is the Secretary of State alone.

I suggest that the different carbon units are probably the two Kyoto mechanism ones, the joint implementation units—the clean development mechanism units and also the EUTS. They are sometimes seen as having a different level of validity in terms of their effectiveness and how well they have been audited. I suspect that is probably what the noble Earl refers to.

I am interested in the Minister’s reply on the relationship with the devolved Administrations. It sounds to me not as if the Minister is going to be not at the mercy of the devolved Administrations, but as if the devolved Administrations are going to set their own targets for saving carbon emissions and buying carbon credits. The Minister will be left to make up the difference, or set the targets, in whatever way seems wisest to him—but it will be after the devolved Administrations have come to him and told him what they plan to do.

I have just found the phrase. I did use the phrase—in fact, it is in the Bill. On the last line of page 7, paragraph (b) states,

“give details of the number and type of those carbon units”.

So there is a delineation there of the type of carbon units, but I do not think that relates to the amendment.

On devolution, I suspect that there will be other debates on this. I have nothing further to say in this debate. The reality is that this Bill has been agreed with the devolved Administrations, but many of the policy areas are devolved matters.

I thank the noble Lord, Lord Teverson, for coming to my rescue and saving me a letter, and I thank the Minister for clarifying his position. It seemed to us that it would be very useful to have an indication of how the devolved Administrations are coming to terms with, and helping to achieve, the UK target—which ones are pulling their weight and which ones are not. The essence was to give us a breakdown of which of the four areas of the United Kingdom were responding favourably, and which not. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 86 and 87 not moved.]

Clause 14 agreed to.

Clause 15 [Final statement for 2050]:

[Amendments Nos. 88 to 93 not moved.]

Clause 15 agreed to.

Clause 16 [Alteration of carbon budgets]:

[Amendment No. 94 not moved.]

Clause 16 agreed to.

Clause 17 [Consultation on alteration of carbon budgets]:

moved Amendment No. 95:

If the noble Lord, Lord Taylor, considers that we are moving at a dizzying pace, it shows how well he has adjusted to the parliamentary process and the timescale to which we work. I believe that we are making the progress that we could all have anticipated and I am grateful for the thoughtful way in which both opposition parties are putting their views at this stage.

Clause 17 requires the Secretary of State to obtain the views of the Committee on Climate Change and to consider the views of the devolved Administrations before amending the budget. It sets out a slightly different approach to how the views of the devolved Administrations should be taken into account, depending on whether the budgetary period has already begun. I should have thought that it was eminently reasonable to be able to give a more extended time before the budgetary period is under way. We must remember that the consultations will have taken place before the budgetary period has begun. In setting up the budgetary period, the Secretary of State has to involve the devolved Administrations in consultation. However, once the period is under way, amendments will by definition need to be effected more quickly, because they will relate to a more limited timeframe.

That is all that Clause 17 does. It provides for a reasonable period for the more considered opinion, which is the basis on which the Secretary of State goes forward. However, if adjustments are necessary during a budgetary period and the case has been established for such changes, it is right that the devolved Administrations should respond within those constraints.

The noble Lord’s case would be stronger if the devolved Administrations had put this position to us with the force that he has, but they have been consulted about this clause and are entirely happy with it; they see the logic that underlies it. As my noble friend said, we have carried out very extensive consultations with the devolved Administrations, and Northern Ireland and Scotland have already passed motions of assent to the proposals before us. The noble Lord is as ever extremely well motivated with regard to his amendment, but the devolved Administrations do not think it necessary. If we look at the logic of the way in which the consultation process is to be undertaken, there is not a great deal to object to there. The amendment would greatly limit the flexibility provided in the Bill in Clause 17 and we obviously want to sustain that flexibility.

I turn to Amendment No. 96. Clause 17 as drafted requires that the Secretary of State must publish a statement setting out whether and how the amendment of the budget takes into account any representations by the devolved Administrations. I want to emphasise that it may look as if the clause rather suggests a limited obligation on the Secretary of State. In legal terms, “whether” means “whether or not” and “how” means “how or how not”. In other words, the Secretary of State under the phraseology in Clause 17 is obliged to give a very full account in his statement on whether and how the amendment of the budget takes into account the representations of the devolved Administration. It is not a limited or cursory approach but a fully comprehensive analysis of the representations that have been made and the Secretary of State’s responses. I recognise that as a probing amendment this is a very well motivated amendment and a very accurate one. At first sight of the clause it may look as if the Secretary of State is potentially involved in a rather superficial response in his statements—not so. In order to be watertight in legal terms, that statement has to take in the full range of representation and to argue the case for and against such representation. It is a very comprehensive document and I hope the noble Lord feels assured on that point.

I wonder if the Minister could clarify something for me. If for any reason one of the devolved Administrations gets into difficulty one year with being able to reduce its carbon, for example, or work within its limitations, is something built into the Bill that I have missed which makes allowances for that? Scotland could have an emergency for one year and not then be able to fulfil its obligation to the original agreement. Clearly this does not allow for that. It may be that elsewhere in the Bill exceptions have been made for that. I would be grateful for a bit of clarification.

The answer to the noble Baroness is that it is a UK symbol of account and therefore the measurement is the UK. In order for the United Kingdom to be able to meet its targets, it would have to take account of any such potential dereliction on the part of a devolved Administration and it would be beholden upon the Government to make other arrangements to cover for the weaknesses which might obtain in one area. That is a straightforward reflection of the fact that this is a United Kingdom Bill and the Secretary of State is responsible. That is why he has the powers that he has, which we sought to defend when they have been under challenge at times in the Bill. The responsibility rests with him but, by the same token, in the case of failures within the framework of the United Kingdom in any one area he or she must take account and make arrangements accordingly. It is the responsibility of the Secretary of State.

I might come back again on that one. For example, on waste and recycling, at the moment I understand that the county—if I can go down to a local level—is responsible for targets being met, but it is not the collection body, or the body that enables it to happen. That comes down to district or borough councils. In some ways, my reading of this is that it is exactly the same position. This aspect of the responsibility, willingness or ability of the devolved Administrations to meet those targets will then put on extra pressure. For example, if Scotland—this is a bad example as I am sure that Scotland would not be at fault—were unable to meet those targets, is the Minister saying that the rest of the Administrations within the UK would have to take up the slack? How will it happen in practice?

The noble Baroness will recognise that the targets and the compliance of the devolved Administrations will have been the product of considerable consultation with the Secretary of State before they are arrived at. I am not an expert in local government but in a sense her parallel is exact. In certain areas the devolved Administrations will have their responsibilities and strategies on how to hit certain targets, and they will have reached the decision on their contribution with the Secretary of State. If there were a deficiency, the United Kingdom would be responsible for it.

I must pursue this a wee bit further. I accept that if one of the devolved authorities fails for a particular reason to meet its target it is a United Kingdom responsibility to meet the overall target if at all possible. That does not alter the fact that there is then a devolved authority that, for want of a better word, is in dereliction at that time. The question is whether the devolved authority has to catch up on its target or does the United Kingdom—the other two devolved authorities plus England—continue carrying that authority and its deficit ad infinitum? Is there an arrangement by which the devolved authorities have overall responsibility within their targets to catch up their deficits if they find themselves in the unfortunate position of having such a thing?

There is no responsibility written in the Bill in those terms, but the noble Lord will recognise that what is described in the Bill is the relationship between the Secretary of State and the devolved authorities. I appeal to his profound understanding of politics. This is a transparent and open process and in a clear case where there has been a significant dereliction that would be for a pretty good reason. To put it mildly, the whole nation would know of it, not just the devolved Administration.

Of course the Secretary of State would have to reach a judgment on how reparation would subsequently be made. The judgment might well be entirely right, fair and proper and the devolved Administration who had missed the targets might well be expected to make the reparation next time. On the other hand, it might be judged that no one could have foreseen the circumstances where the failure occurred. Within that framework, the Secretary of State might judge that with its rather greater resources it should be borne by the United Kingdom, which at the end of the day is responsible to the international judgment on these matters. I make the obvious point to the noble Lord, and indeed to the noble Baroness, that we are dealing with a process of consultation and an adjustment of understanding what is sought and should be achieved. There will be toing and froing within that framework in very much the same way as the noble Baroness has identified in her use of other authorities as an illustration. What is clear in the Bill is that the actual achievement of targets is the responsibility of the Secretary of State.

I thank the Minister for that response. He correctly identified these amendments as being of a probing nature, but he and the whole Committee should be grateful to my noble friends Lady Byford and Lord Dixon-Smith for raising the issues in the way they have done—for the first time, although we have had indications of them earlier on various amendments. It shows the potential for tensions that might exist between the United Kingdom Government and the devolved national authorities. We live in a democracy where the governance of one part of the United Kingdom is not forced to be the same or to have the same political beliefs as those of another, and tensions can be built into such a system.

It is particularly interesting that the Minister confirms that it is the United Kingdom that will actually have to adjust to any deficiency of delivery by a national authority. I presume that means buying carbon credits internationally in some way or other, so there is a budgetary implication for the United Kingdom Government. I do not know whether the Minister has thoroughly thought that through. I am very reassured by his comments on Amendment No. 96, which made it clear that the Secretary of State has to do, in effect, what our amendments sought to achieve. I am interested in the response we have had to this very useful debate about the relationship of the Bill, the authorities, the discussions that have currently taken place and the commitments that have been made up to date—knowing full well of course that no parliament can bind its successor and that the agreements that have been made with a devolved authority currently within the United Kingdom may not be persistent. It is important that we have mechanisms for resolving these difficulties, because I suspect that differences of political impact and political priorities may produce tensions within the system on occasion. But, given the lateness of the hour and the commitment of the Minister to talk on these matters, I beg leave to withdraw the amendment.

Amendment, by leave withdrawn.

[Amendment No. 96 not moved.]

Clause 17 agreed to.

Clause 18 [Alteration of budgetary periods]:

[Amendments Nos. 97 and 98 not moved.]

Clause 18 agreed to.

Clause 19 [Targeted greenhouse gases]:

moved Amendment No. 99:

If this amendment were to be agreed, I could not call Amendment No. 101 by reason of pre-emption.

This has become an interesting discussion and I shall be keen to hear the Minister’s reply. In particular, perhaps he could clarify for us whether the gases listed under Clause 64 are exactly the same as those in the Kyoto agreement. I understand that under the Kyoto agreement these gases have all been allocated a carbon equivalence and are therefore totted up as part of the savings in carbon emissions.

At first sight the amendment moved by the noble Lord, Lord Teverson, seems to be a splendid effort to tidy up the Bill. No doubt the noble Lord has thought about this issue a great deal more than I have done, but there is a critical difference in that under Clause 19 the definition of a greenhouse gas is subject to affirmative resolution, whereas under Clause 64 it is subject only to the negative procedure. I do not know how much argument will arise about which gas should be included or added, but I should like to think a great deal more about whether the affirmative resolution is the route to follow.

Clause 19 is also part of measures required under Clause 10 which have to be taken into account by the climate change committee, and that is quite an important element. I am sure that further criteria will emerge regarding chemicals that affect elements of the atmosphere.

I see hydrofluorocarbons in the list in Section 64. I know that somewhere down the line I have run into chlorofluorocarbons, but I do not know whether they are already included or whether we will be extending this list to cover other elements. There are obviously nasty things out there that can have a large effect on climate change and I am interested to hear what the Minister has to say about that.

I very much hope that the Minister will take on board this amendment. One problem that we often underestimate is the financial impact of not dealing with certain gases. Hydrofluorocarbons—HFCs—are quite extensively used in the production of strawberries in order to prolong their growing season. Without them it would be very difficult to grow strawberries in this country in the way that we have. They have a financial benefit and were exempted by the Government on the basis of their extending the growing season for strawberries. However, as a carbon-equivalent gas, it has a massive impact on the environment. They have the effect of carbon but by many magnitudes.

Dealing with such gases by means of the affirmative resolution procedure would be a positive step. One problem we will face is the financial implication of including certain gases while excluding others. We should not shy away from the difficulties that some sections of agriculture will face depending on whether use of these gases is banned or allowed. If we are to allow their use then we should understand the implications for carbon equivalence.

I wonder whether the Minister will cast his mind back to the recent Greater London Authority legislation which the Government amended to include all greenhouse gases as regards the Mayor’s climate change strategy, recognising that that should include the whole basket of gases. Why have the two been separated again in this Bill? With regard to strawberries, the growing season is incredibly long in Somerset and Devon and they do incredibly well anyway.

At this point in the evening I do not want to delay the Committee on what is an extremely complicated issue. I have just been rereading the Joint Committee’s report, which covers several pages on this issue. However, it is worth putting the Joint Committee’s conclusion on the record, because it made some recommendations and I would like to have the Government’s response to them.

The Joint Committee—on which the noble Lord who moved this amendment was a member, though he was not able to carry us wholly on his views while in committee—agreed on balance with the Government that it is reasonable for the Bill to focus on reducing carbon dioxide emissions. It went on to say that,

“this in no way relieves the Government of its responsibility to continue to reduce other greenhouse gases, (both by reasons of domestic necessity and our international obligations). Accordingly, it is essential to monitor all greenhouse gas emissions, in part so as to provide greater transparency when comparing UK performance against EU and Kyoto targets. We recommend that the Bill should be amended to require both the Government and the Committee on Climate Change to include within their monitoring and reporting a clear analysis of all emissions which contribute to global warming, including non-CO2 greenhouse gas emissions. We further recommend that this be done with the explicit intention of providing a stepping stone to a more comprehensive approach to setting targets across the whole range of greenhouse gases, were that approach to emerge as a result of future international negotiations”.

I think that that is an important set of recommendations directly relating to the point made by the noble Lord who moved the amendment. I would be grateful if the Minister could give some indication of how the Government are going to respond to that recommendation.

I wonder whether it is just me who is getting confused by the hour. Clause 19(1)(a) clearly defines carbon dioxide, but paragraph (b) refers to,

“any other greenhouse gas designated”.

I am getting totally lost in this because I would have thought that paragraph (b) covers the very points that the noble Lord raised in moving his amendment.

Without differing from my noble friend, who I love dearly, paragraph (b) refers to gases designated by order of the Secretary of State, whereas carbon dioxide is on the face of the Bill. That is a distinction. Can the Minister explain why that distinction is made?

I shall try to answer the points, but one of the most confusing things for me is that I am responding to a group made up of Amendments Nos. 99 and 100 and Clause 20 stand part. The two amendments are in Clause 19, and there is another group consisting of Amendments Nos. 101, 102 and 106, which affect Clauses 19 and 20, as do Amendments Nos. 103 and 105. I cannot for the life of me see why I am required to speak to Clause 20 stand part when I am only dealing with Amendments Nos. 99 and 100 in Clause 19 and I still have other amendments to deal with. The whole point of a clause-stand-part debate is that it takes place at the end of the debates on the amendments when the Committee has discussed the Bill to see whether all the points have been answered. However, I have got a speaking note and at this time of night I am going to stick to it because it is the last time I am coming to this Box tonight. That is unsatisfactory because it is not a clear cut-off, but simply because of the way we are.

With regard to Amendments Nos. 99 and 100, which would include the basket of the six Kyoto greenhouse gases—the Clause 64 gases—within the Bill’s targets and budgets framework, we accept that there are strong arguments for including other greenhouse gases in our targets. However, the vast majority—some 85 per cent—of the UK’s contribution to climate change is from carbon dioxide emissions. We have a good understanding of the costs and benefits of reducing CO₂ emissions, whereas there is much less understanding about the cost-effective potential of reducing other greenhouse gas emissions, particularly in the long-term. That is not to say that we are doing nothing about it because we are taking measures in terms of local authority waste to reduce methane emissions from landfill, which account for 3 per cent. In pushing the uptake of anaerobic digestion for manure slurry and other organic waste and attempting to reduce other greenhouse gases, detailed work is going on in the department. However, 85 per cent of our contribution is to carbon dioxide emissions and we know more about how to deal with them.

The Joint Committee looked closely at this issue, and came to the view that:

“These issues are complex and, in our view, cannot easily or quickly be resolved”.

It therefore recommended that there should be annual reporting on all greenhouse gas emissions, and we have accepted that recommendation. The Joint Committee also recommended that this should be a stepping stone, as the noble Lord said, towards an approach which addresses all greenhouse gases. That is provided through Clause 19 and will form part of the review of the 2050 target by the Committee on Climate Change. We have asked the Committee on Climate Change to look at this issue as part of its review of the 2050 target, so that we can take an informed decision on the level of the target and on whether to include other greenhouse gases now. I am here as the Defra Minister, it is true, but it is not my day job, and I regret that I do not know whether we have publicly said that we have asked the climate change committee—which we have not set up, but the secretariat is there in shadow form—to do that so the work is under way.

We believe that it makes sense for all these issues to be looked at together, and that the climate change committee will have the right expertise to do this most effectively. We therefore propose to await the committee’s advice before making any decision to change the basis of the target.

In addition, since the Bill was published, the timing for the committee’s review of the 2050 target has been brought forward. We are therefore also looking at whether Clause 19(2) remains appropriate. Clause 19(2) would prevent other greenhouse gases from being included in a budget period which had already started—the intention behind this provision was to provide greater certainty to the relevant sectors of the economy. However, now that the committee will review the 2050 target alongside its advice on the first three carbon budgets, we are reassessing the effect of Clause 19(2) and may—I suspect that means “will”—bring forward a Government amendment on this point in due course.

Turning to the intention of noble Lords to oppose the Question that Clause 20 stand part of the Bill, Clause 20 is an important part of the Bill which builds on the provisions of Clause 19. We will shortly discuss this clause in more detail—for example, in addressing Amendment No. 105—but let me say for now that the main intention of Clause 20 is to ensure the approach taken in the UK is able to match the international context.

I would urge noble Lords to reserve their judgment on whether or not this clause should stand part of the Bill until we have debated the other amendments relating to it. I realise that in our selection it is Amendments Nos. 99, 100 and Clause 20 stand part, but if we do not push that now we will come back to this and we can clear up the points relating to Clauses 19 and 20 early tomorrow.

Since the committee is coming up with a set figure for greenhouse gases, will that be implemented across government? At the moment there is a discussion about the value of carbon dioxide emissions between Defra and DBERR. If the committee comes up with a sensible solution, will that be adopted by all government departments?

I think I had better say yes to that and if I am wrong I will correct it tomorrow.

I posed particularly the question about the recommendations of the Joint Committee and I thank the Minister for a helpful and constructive answer, which I think takes us a considerable step forward.

The reason for including a debate on whether Clause 20 should stand part is because if the amendment was accepted, the other clause would become irrelevant and thus not needed in the Bill. It is not because we are against it, but it is not relevant because greenhouse gases are included in all the provisions of the Bill. That is how I see it, so that is why I have included it here.

There is a lot of good news here from the Minister, and indeed some of what he has said is new to me. I have learnt that this is being pursued actively. However, given the correct arguments the Government have put in so many other areas on being compliant with international standards, I do not understand why they do not take a decision on that basis and simply go with the rest of Europe and the Kyoto process. Why is that so difficult when the Government would be seen as being more successful in their record so far if they took that route? I would not want to persuade the Minister on that basis, but I am sure that this is an area we shall come back to. For the moment, however, 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.

House adjourned at 10 pm.