Further consideration of amendments on Report resumed.
224: Before Clause 62, insert the following new Clause—
No secondary legislation, including any order or regulations, may be made under this Act unless it is necessary for the proper operation of the Act and is compatible with the principal aim of the Act.”
The noble Lord said: My Lords, I am not sure why this amendment finds itself in this position on the Marshalled List, for it is a general purpose clause which covers wide-ranging elements of the purpose of the Bill. Indeed, it refers to the primary aim of the Bill, but there it is. I am pleased to have the opportunity to speak to it.
The amendment places a duty on the Secretary of State such that all secondary legislation that comes from the powers created in the Bill is compatible with the primary aim of the Bill: stopping climate change. Your Lordships decided to include a specific primary aim in the Bill, and that primary aim is the anchor of this further amendment.
This is very much a framework Bill. Much of the efforts that will be made to reduce emissions and stop global warming will come through secondary legislation, much of which will be highly specific. It is of the utmost importance then that all regulation coming from the Bill be tethered to its primary aim. We have spent a long time examining this Bill: eight days in Committee and we are now on the fourth day of Report. I believe that our scrutiny has been worthwhile. However, when it comes to putting the Bill into practice, when the orders start being made, we need to have some way to ensure that the overall goals that have energised our debates on the Bill are still considered with the same force.
We want to avoid situations where we are failing to see the forest for the trees and sometimes contributing more to climate change through our actions than stopping it. The case of biofuels is the famous example— denuding entire landscapes of forests in the interests of producing carbon-neutral fuel. The amendment aims to stop that sort of thing from happening. In practice, it would put pressure on the Secretary of State to consider carefully all of the implications of each statutory instrument and its potential effect on the environment. I know that that should happen now. However, this amendment seeks to place a guarantee in the Bill that every effort made is an effort in the right direction. We want to take out the room for excuses and ensure that real progress is made to stop climate change. I beg to move.
My Lords, the noble Lord, Lord Taylor, suggested that this was a general purpose clause, but it is more a general non-purpose clause from the Government’s point of view. The amendment would prevent the Government bringing forward any secondary legislation that was not strictly “necessary” for the “proper operation” of the Act, or which was not compatible with the 2 degrees centigrade goal.
The noble Lord made clear, and I understand, the spirit behind his amendment. We debated its intention in Committee. My noble friend Lady Morgan said that the amendment could have a very significant effect on the Government’s ability to meet targets and budgets set under the Bill. Requiring all secondary legislation to be “necessary” for the operation of the Act would prevent trading schemes being introduced under Part 3, or the amendment of targets and budgets—just to give some examples. The Government would be liable for judicial review if we did not meet the tests set out by the amendment, and the court could order that any secondary legislation that did not meet those tests should be quashed.
I entirely understand why the noble Lord is seeking to be specific in the amendment and to ensure that the main principles of the Bill are realised. The Bill’s powers to make secondary legislation have been scrutinised by the Delegated Powers and Regulatory Reform Committee, and we have been able to accept virtually all its recommendations; so there has been a proper process to ensure that the powers in the Bill are appropriate. I note that the majority of powers to make secondary legislation use the affirmative resolution procedure, so they will have to be debated and approved by both Houses of Parliament. That is the essential parliamentary safeguard on the majority of secondary legislation that could come forward under the Bill, and there is ample opportunity for scrutiny. The Government have introduced a significant number of amendments on Report that would strengthen Parliament’s role, and we have debated a number of them today. In some cases, for instance with regard to parliamentary oversight of the carbon accounting rules, we are actually going beyond what the Delegated Powers Committee recommended. We have also made commitments about the scope for further parliamentary debates on climate change.
Amendment No. 224 requires all secondary legislation to be compatible with limiting the average increase in global temperatures to 2 degrees centigrade. As we discussed in Committee, the idea of a compatibility test would have limited practical effect. It would be ever so difficult to establish that a single piece of secondary legislation was, on its own, incompatible with the Bill. Even if a particular statutory instrument could lead to an increase in emissions, that would not in itself necessarily be incompatible with the aims of the Bill, because there would be nothing to stop compensatory action being taken in another area. So, in that respect, we could honestly say that no Government with an order or statutory instrument, if looked at in isolation, could be accused of producing something that was not compatible with the Bill.
Therefore, we have two positions. First, we do not think that the amendment could achieve its aims. Secondly, if it were to do so and under judicial review it was established that a piece of secondary legislation was incompatible with the aims of the Bill, we would be in the extremely difficult position that such secondary legislation would be quashed. All Governments, properly, both for themselves and for their successors, seek to avoid in legislation any dangers of that kind. I am not denying the intentions of the noble Lord; I am saying that Amendment No. 224 is either dangerous or ultimately futile because of the way in which a Government could phrase their arguments. In either case, it will be understood by the House why the Government reject it.
My Lords, one can sense one is after the break, so to speak, when adjectives such as “dangerous” and “futile” are used to describe what to my mind is a relatively modest measure. I am disappointed that the Minister is resisting the amendment. It proposes a new clause that is designed to ensure that there are no waifs and strays of secondary legislation creeping out of the Bill, and it tightens up the Bill as a framework Bill. It has all sorts of provisions within it. All this amendment seeks to do is to make sure that any secondary legislation that originates from this Bill, when it becomes enacted, is properly for the purpose of the Bill and the Bill alone.
I know that all Governments look at such legislation and think: this is restricting elbow room; this is restricting freedom of manoeuvre; this Bill is perfectly workable without this amendment in it. In other words, it adds nothing to the utility of the Bill as an agency of government. However, the amendment makes sure that the Government, whatever Government, focus properly on the operation of the Act. It requires that anything that is done is necessary for the operation of the Act. It also requires that it is compatible with the purposes of the Act, the principal aim of the Act. Some might say it is an overreaching target. The fact that the Government are rejecting the amendment suggests that it is too far for the Government to go. That is regrettable. The Bill would be better were this clause included. But, given the fact that the Government are not happy to accept it, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
225: After Clause 62, insert the following new Clause—
“Waste reduction provisions: interim report
(1) If it appears to the Secretary of State that it will not be possible to lay a report under section 62 in relation to a pilot area before the end of three years beginning with the day this Act is passed, the Secretary of State must lay before Parliament an interim report in relation to that pilot area before the end of that period.
(2) The interim report must contain—
(a) a description of the scheme and of the respects in which the provision made or to be made by it differs from that made by the schemes in other pilot areas,(b) a copy of the order made by the Secretary of State under section 61; and(c) a description of the respects in which the relevant enactments and guidance applying in that area differ from that applying—(i) in other pilot areas, and(ii) in areas not designated as pilot areas.(3) If the scheme has not been implemented, the interim report must contain a description of the progress made towards its implementation.
(4) Otherwise, the interim report must contain—
(a) a description of the scheme’s operation, and(b) an assessment of the progress made towards achieving the scheme’s objectives, if such an assessment can reasonably be made.”
The noble Lord said: My Lords, on behalf of my noble friend Lord Rooker, I rise to move Amendment No. 225. I hasten to add that if the noble Lord, Lord Taylor, thought that we were post-dinner and that therefore the Government were being unduly aggressive, I apologise for that tone. Secondly, I have now got an amendment in which I can be conciliatory. Therefore, I hope to work my way back into his good books. When we discussed the waste provisions issues in Committee, my noble friend Lord Rooker said that he would look again at the whole issue of engaging Parliament in the evaluation of pilots. We had a short debate before dinner on some of these issues. We recognise that the previous drafting left some noble Lords with considerable concern that pilots could carry on for long periods of time without any flow of information back to Parliament on their progress. Amendment No. 225 addresses those concerns. The amendment will require that the Government have reported back to Parliament on all of the pilots within three years of Royal Assent to the Climate Change Bill. So, for any of the pilots on which we have not provided a final report within three years, we will at least lay before Parliament an interim report on their progress to date.
In this situation, we would seek to provide as comprehensive an interim report as possible, reflecting the extent to which a pilot had progressed in the time that it had been in operation. The structure would follow as closely as possible the structure of the final report, as can be seen in subsections (2), (3) and (4) of our amendment. In particular, any report must describe the scheme and explain how it differs from schemes operating in other pilot areas. It must also contain a copy of the designation order. In the case that a scheme has not begun when the interim report is laid, the report must describe progress towards implementation. But if the pilot is already under way, the report should assess the progress towards meeting objectives that far.
The value of Amendment No. 225 is in making absolutely sure that Parliament and the public are kept well informed about, and closely involved with, the pilots as they progress. On this basis, and as explained by my noble friend in his factual briefing note which he circulated on 20 February, we are hopeful that we can have a debate in both Houses of Parliament, if and when the Government wish to roll out the powers to all English local authorities. I hope it will be recognised that this amendment is a step to meet concerns expressed in Committee. I beg to move.
My Lords, this amendment goes some way to answering questions put by a number of noble Lords concerning the start time, the duration and expected end of the pilots, in that we now see that three years from the date of the Act being passed is the overall time span. There will of course be no reason why one or more pilots should not have been completed within two years but this overriding span is none the less of interest.
The Minister gave a good explanation in response to another question; he said that the interim reports will be out within three years if it is not possible to produce the full report. That is a great help to the House. When we earlier got into problems that might arise with devolved legislation, the Minister was good enough to explain the arrangements and agreements made with, for instance, the Scottish legislature to bring into action the carbon reduction commitment in a parallel state to that operating in England. I realise that these provisions do not apply to Scotland but does the Minister have any indication whether the Scots will try to deal with waste through future legislation or are they in the happy state of being able to ignore it?
My Lords, I agree substantially with the comments of the noble Duke, the Duke of Montrose. I will not interfere with his comments on Scotland; I do not consider myself an expert on that—on this issue at least. This is a helpful and welcome amendment, which goes some way towards clearing up the considerable confusion felt in Committee about what would happen when the pilots finish and how they will be dealt with and rolled out. I am not sure that it goes as far as we would want in order to clarify the situation but it goes some way.
The Minister pooh-poohed the idea that the House of Lords would want to know much about this or get involved in it until the affirmative instruments were introduced. There are means by which Members of this House can debate things if they really want to, and we may want to do so even if the Government do not think that it is terribly important. Some of us are very interested in this.
The amendment suggests that the contents of the interim reports will be very much the same as those of the final reports—apart from the concession that they are interim. One assumes that the assurances given in Committee about what the reports will include—some of us tried to make the legislation much more detailed—will apply. I assume that that is okay.
There is still concern about the process getting quite messy. Let us assume, for the purposes of this debate, that there will be five pilots; some of us think that there may be a different number in the long run. If there are five pilots, they may take place over different periods of time—one may be longer than another or start later than another—they may finish at different times, and some of them may run over the three-year limit within which an interim report has to be provided. It is not clear how the rollouts will operate. Suppose that there are several three-year schemes and a two-year scheme, which finishes and is a great success, and it is thought that the provisions of that scheme should be rolled out across England. That can be done while the other pilots are still taking place. When the other pilots report—on an interim or final basis—can there be a rollout of a different scheme? Is that possible under this legislation or would it mean that the orders rolling it out would be amended to encompass different things? For example, there could be a highly successful sack-based scheme and the Government could say, “This has really worked well in the Cotswolds, we want to roll it out across the country”. What would happen if further information comes through six months later about a successful weight-based or volume-based scheme somewhere else? Would there be amendments to the statutory instruments, to the affirmative orders, or would there be different orders from which local authorities could choose? There seems to be scope for messiness, certainly confusion, over what is possible and what is not, after a series of reports.
Equally, if an interim report comes back within three years, and there is a rollout on the basis of that, can the authority carrying out that pilot continue with it, even though it is different from what has been rolled out? On the basis of the interim report, the Government may modify and amend the scheme and then roll out that amended scheme. What would happen to the pilot scheme in the remaining period of time? Would it continue to the end, when we would get the final report? I am not sure that all the detail has been thought out properly. There is plenty of time—this has to go through the House of Commons, and Members there can enjoy themselves talking about it. The government amendment is an improvement but they are not quite there yet.
My Lords, my response to the noble Lord, Lord Greaves—I hope he will accept that it is based on unexceptionable principle—is that pilots plus independent local government means variety. He seems to be asking whether we have thought through how prescriptive we can be to get one uniform position, but the whole concept of pilots is that there are varied potential strategies. It will be for local government to decide, if a pilot has achieved some success, whether they choose the result of that exercise. They may await the outcome of another one coming along a little later or, if there are two pilots, they will have to choose. Local government will be able to make decisions within the framework of the ideas that are being rolled out.
My Lords, I agree with all the Minister says. I am asking what the Government, not local government, are going to do if a scheme is rolled out on the basis of a pilot. Is there then the provision for rolling out further schemes and will that be done on the basis of amendments to the statutory orders or on the basis of a series of different statutory orders from which councils can choose?
My Lords, these issues have to come back to Parliament anyway. I am trying to explain that I cannot be prescriptive about how the Government are going to address each of these pilots and their consequences. All I can indicate is the principle that the legislation envisages, which is the unexceptionable principle I have adumbrated. The noble Lord said he agreed with the sentiment behind it. That ought to do. I also accept his point about this House or Parliament debating these issues. Certainly it will be necessary for Parliament to have a say. Whether this House debates the issues will, of course, be for business managers to decide at the time. But as the noble Lord has indicated, if an issue is of significance to noble Lords, there are many and varied ways in which it can appear before us in terms of the business of the House. I have not the slightest doubt that that requirement will be fulfilled.
On the question asked by the noble Duke, the Duke of Montrose, this is English legislation. In fact, it is pretty close to becoming almost English local government legislation—pace the noble Lord, Lord Greaves. Therefore I have nothing to say about Scotland as far as this part of the Bill is concerned. Just as local authorities will look at the pilots for indications of how they can organise their schemes locally, I do not have the slightest doubt that Scottish local authorities could benefit from such activity. Knowing the Scots, they will choose wisely and well from the best of English examples.
On Question, amendment agreed to.
Clause 63 [Waste reduction provisions: roll-out or repeal]:
225A: Clause 63, page 29, line 11, leave out “one or more pilot areas” and insert “all the pilot areas that are in operation”
The noble Lord said: My Lords, in moving Amendment No. 225A, I shall also speak to Amendment No. 226A in the same group. I will not spend much time on Amendment No. 225A, which would require all the pilots to run for the same time and end at the same time. We have discussed this today. It is clear that the Government do not agree but envisage a series of pilots, perhaps of different lengths and perhaps starting and finishing at different times. My view is that this is messy and will lead to problems, but I will not pursue this further today.
Amendment No. 226A would require at least three months to elapse following the laying of reports—this would probably apply to interim reports as well—before a scheme was rolled out. That would allow sufficient debate inside and outside Parliament. It is a fairly simple point. We do not want reports, whether interim or final, to be produced on pilots, or rollouts to appear very quickly without adequate thought and time for discussion. I think, from what the Minister has already said today, that I have had satisfactory assurances in principle on this matter, but I would be grateful for them again now. I beg to move.
My Lords, I will do my best to satisfy the noble Lord on Amendment No. 226A. I understand his desire to ensure that the rollout is fully thought through, but I do not agree that the amendment would be the right way to do it, particularly given the benefit to local authorities of being able to respond to the pilots in a timely fashion. We may have enough evidence to proceed to rollout before three months after the last report is laid. If we do, we would be doing local authorities a disservice by holding back the powers. Again, as my noble friend put it more politely, getting fixated at this stage on timetables and dates is not helpful to anyone. It is not helpful to local government. It fails to recognise the situation on the ground and to appreciate that we in government are quite serious about ensuring that we will take a decision on rollout only when we feel that we have collected enough good quality evidence from the pilots. This has to be sold to the public, after all.
Admittedly we want to move quickly—we make no apology for that—but we want to move in the right direction, so we will not rush decisions based on partial evidence. That is an important point. It is not possible to be absolutely precise at this point about the actual timetables.
My Lords, I am grateful for the Minister’s comments, which were extremely helpful, particularly towards the end.
This goes back to the basic worry that the scrutiny of this legislation, which could be rolled out across the country, is being done on the basis of five pilots. There is a fundamental problem in that we are looking at how the pilots could work when, in practice, if one or two of the pilots are successful, the Government will be given considerable powers—subject to parliamentary consent, I agree—to amend the schemes and roll them out in a way that ideally should be done during consideration of primary legislation. Having said that, I am grateful for what the Minister has said, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
226: Clause 63, page 29, line 21, at end insert—
“( ) Where the amendments include such provision, they must also include provision—
(a) for a statutory instrument containing the subordinate legislation to be subject to annulment in pursuance of a resolution of either House of Parliament, or(b) requiring a draft of such an instrument to be laid before and approved by resolution of each House of Parliament before the subordinate legislation is made,as the Secretary of State thinks fit.”
On Question, amendment agreed to.
[Amendment No. 226A not moved.]
226B: Clause 63, page 29, line 26, at end insert—
“( ) An authority which is operating a pilot waste reduction scheme may at the end of the period specified in the order designating the scheme or at any time thereafter—
(a) terminate the scheme, or (b) continue to operate the scheme until such time as the Secretary of State issues an order under subsection (2)(b) or (4).”
The noble Lord said: Amendment No. 226B concerns an issue we discussed in Committee, which was not resolved satisfactorily. What happens when a collection authority completes its pilot? It may consider that it has been successful and want to continue; the report has been sent to the Government, but they have not yet issued the orders and regulations to roll it out. The concern is that the whole local refuse collection system would be disrupted because the pilot would have to stop and perhaps start again in three or six months’ time.
I think that the Government will say that the amendment which they have just moved on interim reports will go some way towards solving this problem in some places. If an interim report is produced before a pilot finishes and the roll out of that as it is, or as it is amended, takes place before the pilot finishes, that authority would be able to continue in the same or an amended way. But in other ways it will not.
In Committee, the Minister said, “A pilot is a pilot. It is time limited and it finishes”. But that does not match common sense in the real world. If an authority is to be encouraged to take this seriously, it will need to invest a considerable amount of money—£200,000 has been suggested as a reasonable amount to set the system up. It will have to set up the necessary structures and organisation to carry out the pilot, and will involve employing staff and changing the ways of working and administrative systems. To expect it to stop, even if it has been successful, is not common sense and is not the real world. This amendment would do what the Government say they want to do; that is, it gives flexibility and assistance to local authorities and gives them the ability to decide for themselves.
In Committee, we discussed the linked issue of whether the rollout would be compulsory or voluntary. The Minister referred to the Climate Change Bill briefing paper 15, the second factual briefing note on waste reduction schemes. Paragraph 13 sets out very clearly that rollouts will not be compulsory; that local authorities will be able to choose from a variety of schemes; that they will be free to determine the areas and households; and that they will be able to make their own decisions within the parameters of the Bill. That was an extremely useful briefing from the Minister. It answers all the problems and fears that were raised on this matter in Committee, particularly by me. I beg to move.
My Lords, the noble Lord has been commendably brief in moving this amendment and I shall be equally brief, if I can, in responding. I understand where the noble Lord is coming from, but there are some problems with the legal drafting of the amendment. It will bring me to my conclusion if I go through the two of them. First, at the end of the period in which the authority has been designated, the authority must already terminate its pilot scheme as the power to operate the pilot will lapse, so there is no need for a further clause to permit termination.
Secondly, the power to operate the scheme is available to an authority only via an order designating it as the pilot for a fixed period or by an order applying the powers to all authorities. Either way the powers can be brought into effect only by the Secretary of State. The amendment, although seeking to bridge the gap between the two types of orders, is not legally sound, as an authority cannot use the powers without action by the Secretary of State. Despite the intention, Amendment No. 226B on its own has no practical effect.
I understand that the intention is to avoid the dislocation between the pilot phase and the rollout phase. If there were a gap between the two, any authority running a pilot would temporarily have to unwind the scheme only to reinstate it, which would be confusing for residents and expensive for the council. It is a concern that we share, but we fully believe that we can manage the situation under the legislation as drafted. It is true that the situation could arise; it gives the noble Lord concern; we share that concern, but we are fairly confident that the proposed legislation will enable us to manage that situation.
My Lords, I am suitably admonished for my inadequate legal drafting, but as I do not claim expertise in that, I am not too bothered by it. I claim expertise in how local authorities work and how it affects residents, which is the substance of the issue. I am extremely grateful for the way in which the Minister has now understood the problem, and accepts that it has to be sorted out. I should be extremely grateful if he could write explaining how the problem would be tackled under the proposed legislation. He said in a bald sort of way that it could be dealt with under the Bill as it stands. I should be grateful if he would write to explain how. Will he do that?
My Lords, I could do it by making a longer speech if I am allowed to come back. I was just trying to make the point.
The Bill contains powers to report finally on each of the pilot schemes at a point at which we feel the evidence is sufficiently robust and capable of meeting the conditions set out in the legislation. Crucially, as we have said many times, we do not have to wait until the scheme has reached its final designated day before we report on it. Nor do we have to wait for every single designated pilot to run its course before we take an evidence-based decision on whether or not to roll out the powers more widely. The key thing is the quality of the evidence rather than tying ourselves down to a date.
This flexibility is crucial to the schemes and our ability to act responsively and responsibly. It also means that, as long as we designate a pilot for a sufficient period, it need not be the case that the powers run out before a decision is made whether to roll it out.
My Lords, I am very grateful for that, but I can still foresee circumstances in which there might be problems. General elections might be called, or goodness knows what might happen. I do not understand why it cannot be put into the Bill in an appropriate manner drafted by government draftsmen to say that this is possible to take account of problems that might occur. I am happy to have the Minister’s assurances. Perhaps people in the House of Commons might like to look at it again to make sure that it is sorted out. I thank the Minister and his colleagues for the consideration and care with which they have treated this part of the Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 6 [Renewable transport fuel obligations]:
227: Schedule 6, page 68, line 6, at end insert—
“(3) It is the duty of the Administrator to ensure that only renewable transport fuel that—
(a) causes or contributes to the reduction of carbon emissions over its total lifecycle from planting or production to use, and(b) contributes to sustainable development and the protection or enhancement of the national or global environment generally,qualifies as a permitted fuel under this Act.”
The noble Lord said: My Lords, I shall be brief. We now come to the renewable transport fuel obligations. We are all agreed that the whole purpose of this measure will fall if we do not ensure that biofuels and all the other types of fuel do not contribute to a reduction of the carbon footprint. The Bill does that to some degree in terms of the administrator’s duties and the way in which the measure is rolled out. However, we on these Benches feel that it is not tight enough and that is why we have tabled the amendment.
Whatever the Minister’s reply, it is highly unlikely that I will divide the House on this issue. At this stage I would be interested in understanding how the Government are going to ensure that even the requirements in the Bill as it stands are met. I ask this in the knowledge that this is not an easy subject for which there are easy answers, but it is important to understand the Government’s intentions in terms of enforcing the restrictions in the Bill at the present time. I beg to move.
My Lords, we are pleased that the noble Lord, Lord Teverson, has introduced this amendment and we support the intentions behind it. We mentioned in Committee that the market for renewable fuels must be genuinely renewable. We are committed to the idea that steps should be taken to ensure that we do not inadvertently cause more damage to the environment when acting with the aim of stopping climate change. We hope that this sort of thing will be covered by the principal aim of the Bill, which your Lordships’ voted to include; that is, that the policy will always be bound to an overall target and an overall impact. We do not agree with using biofuels that cause more damage to the environment and contribute to climate change through deforestation. That is not compatible with the general aim of stopping global warming, regardless of the fact that using them might offset some of our emissions in terms of our targets.
We need to be careful about focusing too much on emissions reduction with a specific goal in mind when the wider implication could be worse for the environment in the end. The important point underlying the amendment is supported most ardently on this side of the House. However, in the light of the general aim of the Bill, we do not see that this amendment is as necessary as it might otherwise have been, if only for the fact that it would not be in the RTF administrator’s power to ensure that the fuel meets the standard of this amendment. We would be very interested to hear further undertakings from the Minister regarding the ways in which he plans to deal with the RTFO.
My Lords, I shall speak briefly. Having served on the biofuels inquiry held by your Lordships’ House, I can say that we were depressed at how difficult the certification of biofuels is going to be. While we may talk about biofuels being certified as not having been grown in a deforested area, I can tell noble Lords that, after visiting nine countries in central and south America over the past few years, the difficulty is that the biofuel crops are grown on land that for decades was cultivated for growing food. The biofuels are certifiable, but the fact is that food growing has shifted to the newly deforested areas. Food is needed for consumption in-country and does not need to be certified. This is an easy way around the certification issue and it is very difficult to address.
I am sure that the Minister will say that this is a matter for Europe. I should be grateful if he could give me an indication of how Europe is going to address certification because the issue is important.
My Lords, my noble friend Lord Davies of Oldham has just commented that that is a tough one and the noble Baroness is right to a certain extent.
This issue is so complicated that the note I have on the purpose and effect of the amendment runs to more than six pages, but my speaking note is three pages long. I make no criticism of anyone, but it is an incredibly complex area and the House would not thank me for going through all the purposes and effects at this time of night. I shall stick to the speaking note which I hope will address most of the central issues that have been raised.
The amendment proposed is designed to place a new duty on the administrator of the renewable transport fuel obligation to ensure that only biofuels that deliver carbon savings and that contribute to sustainable development and the protection of the environment generally should be eligible under the RTFO for certificates. In Committee I said that the sentiments behind the amendment are ones with which the Government wholly agree. I also outlined why the Government believe that this is not something the UK could readily do in a way which is consistent with European Union or World Trade Organisation trade rules. We do not have agreed standards for sustainability or an agreed methodology for calculating the carbon savings of biofuels. If the UK imposed its own standards those are likely to be challenged.
Our preferred approach has been to lobby the European Union to introduce a mandatory sustainability framework. In part it is due to these efforts that the draft renewable energy directive, published on 23 January this year, contains a sustainability requirement and criteria as well as a greenhouse gas saving requirement and methodology. The Government will continue to negotiate at EU level to ensure that these requirements are as robust as possible.
The proposed amendment will not be needed in order for us to implement the renewable energy directive when it is adopted. Nor do we think that it will work as intended to provide an interim carbon and sustainability regime during the period before the directive is implemented. The proposed new Section 125A(3), which the amendment would insert into the Energy Act 2004, imposes a duty without defining what is meant by sustainability or how carbon emissions are to be calculated. To avoid uncertainty, the RTF order would need to be amended to clarify the criteria for sustainability and carbon saving. The new section and the amendments to the order would have to be notified to the European Commission under the technical standards directive and would be subject to a standstill period of delay.
The initial standstill period would, we believe, be 12 months because the UK legislation would concern a matter covered by the draft renewable energy directive. The standstill period would be extended to 18 months if the Council adopts a common position on the draft directive. By the time that the standstill period is over, the renewable energy directive is likely to have been adopted and the directive provisions would supersede the proposed UK legislation.
In addition to the standstill required by the technical standards directive, further delays might arise from compliance with the Government’s obligation under the Energy Act to consult on the required amendments to the RTF order and with the affirmative resolution procedure applicable to the amending order. With the delays described, in reality the choice is either to continue with the renewable transport fuels obligation we have now, with a reporting mechanism rather than mandatory standards, until the directive, containing sustainability and greenhouse gas saving requirements, is implemented, or to revoke the order and withdraw the renewable transport fuels obligation until the directive is implemented. It is better to continue with the RTFO and its reporting mechanism, which will encourage the development of information supply chains. This will help the development of mandatory standards in the future.
On a couple of points that were also raised, it is worth putting on record that the definition of a sustainable biofuel and the methodology for calculating carbon savings are rapidly evolving. Trying to impose standards before any consensus is reached will be difficult. The RTFO carbon and sustainability reporting mechanism is an important first step towards mandatory standards. The renewable energy directive will, when adopted, provide mandatory standards on an EU-wide basis. We hope and believe that this will be generally welcomed. UK officials will be working hard in the detailed negotiations to ensure that the standards will deliver the right results.
The Government are taking seriously the concerns about the sustainability of biofuels. On 21 February the Government announced a review, led by the Renewable Fuels Agency, of the emerging evidence of the indirect impacts of biofuel production and what these mean for future biofuel policies and targets. The review will take into account recent studies that have suggested that the indirect or displacement impacts of biofuels have not been properly taken into account in earlier carbon-saving calculation methodologies. Initial analysis will be provided to Ministers as soon as possible, with a full report to follow over the summer. The review should help to ensure that we have the right evidence base to support decisions on the future of the renewable transport fuel obligation scheme and longer-term targets and, we hope, cover exactly the kind of example that the noble Baroness, Lady Miller, gave of land being swapped for one purpose to avoid having the certificate and used for another purpose—in this case, chopping down the trees and growing food—that does not require the certificate. Clearly, the whole chain is not right; it is not consistent with what we all understand as sustainable biofuels. The issue here is serious. My two notes cover the very point that the noble Baroness has raised, so she has scored a bull’s-eye there. We hope to cover that with what we have announced.
I cannot defend the delays, by the way. That is the procedure under the EU for this legislation, and there is no way we can change it. These enormous delays are due to the technical standards directive. In a way, one can see why that process is there: if you come along with a EU-wide standard, you do not want all 27 members going off and doing their own thing. You would end up with a standstill. The alternatives are that we pull back from what we have been doing and do nothing, which would not send the right signals, or that we do what we have been doing to create a reporting mechanism and gather some better information. Of the two courses the latter is preferable, and that is the one there would be consensus for.
My Lords, I thank the Minister for his extensive reply, which I have to admit was very persuasive. For the second time this evening I am fully persuaded. The irony, as the Minister well knows, is that the whole biofuel debate moves at a faster rate than political dialogue. To be frank, I am not sure that there is an easy answer. I am persuaded by the Minister and by the momentum we have had in terms of the European Union to ensure that we do as well as we can in that route. That becomes particularly important within a single market.
At the end of the day, though, the only way that this can be solved is through a price mechanism that values the rainforest that would otherwise be chopped down. There will be an economic incentive if there is a greater economic benefit from rainforests not being cut down for other uses, and the system will solve itself through the market. Otherwise, as with anything else, the market will find a way around and rainforests and other important carbon sink areas will disappear, whatever artificial constraints we put on it. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
228: Before Clause 65, insert the following new Clause—
“Measurement of emissions by the Export Credit Guarantee Department
(1) The Export and Investment Guarantees Act 1991 (c. 67) is amended as follows.
(2) In section 7 (reports and returns), after subsection (1) insert—
“(1A) The annual report shall include an assessment of the direct and indirect contribution of greenhouse gases to the climate from those enterprises for which arrangements were entered pursuant to sections 1, 2 or 3 in that year.””
The noble Baroness said: My Lords, the amendment aims to deal with reporting authorities and who should be reporting. Some time ago, in Clauses 12, 13, 14 and 15 in the Bill, we discussed accounting and what should be accounted for. We discussed the emissions that the UK itself emits and the reductions that the UK buys in terms of carbon units from abroad. The only area we have not discussed is emissions that occur overseas but are actually financed by the UK. That is where the Export Credits Guarantee Department comes in. Through that department we are financing some £1.8 billion worth of support for UK exporters. I have tabled the amendment because much of that support is for very carbon-intensive industries.
The amendment requires an additional section to be inserted into the Act governing the operations of the ECGD to make it a statutory obligation that it should publicly report on the greenhouse gas emissions associated with the activities of that department and the projects that it supports—as outlined in Sections 1, 2 and 3 of the Act that set it up. I am not asking for a lot in this amendment because the department currently measures the levels of its greenhouse gas emissions caused by the projects that it supports. However, although that information is already gathered, it is not publicly available. The fact that the department already collects all the information on greenhouse gas emissions associated with the projects it supports from the questionnaires that it sends out to its customers, means that to require it to report that information and be transparent in its operations is a very short step.
The purpose of the amendment is therefore to ask the Minister whether the Government will require that to happen. I beg to move.
My Lords, I support the amendment. It seems to me perfectly sensible. It is not asking the ECGD to do anything extra in collecting information. All we are asking that body to do is to publish information that it already has. I understand that the German equivalent—the German export credit agency—already has to publish such information. It would not be very difficult for us to do so. It represents a commitment in line with the commitments that various government departments have made on climate change and I urge the Government to be sympathetic to the arguments in the amendment.
My Lords, unless I have completely misunderstood the background note to this amendment and the speeches from my noble friend Lord Dubs and the noble Baroness, Lady Miller of Chilthorne Domer, who say that they are not asking a lot—actually they are asking quite a lot and they probably do not quite appreciate it. My noble friend raised an issue about what they are doing in Germany, which has figured a lot tonight. If Germany is doing what I am about to say, and it is the reason why we could not accept this, further and better particulars need to wing their way down the Corridor.
The noble Baroness is absolutely right to raise the issue. Looking at the broader impact, what the UK is funding through taxpayers’ money and the activities of UK companies is very important. It is a complex area and there are some difficulties with the approach taken in the proposed amendment. It would place a new statutory purpose—as well as a significant burden of work—on the Export Credits Guarantee Department. The ECGD’s role is to benefit the UK economy by helping exporters of UK goods and services to win business, and UK firms to invest overseas, by providing guarantees, insurance and reinsurance against loss.
Where appropriate, the department undertakes rigorous environmental and social impact assessments, as required in its business principles. These cover the environmental impact of projects on their surroundings, the effects upon local populations, and the sustainability of the development. Like all government departments, the Export Credits Guarantee Department monitors its own sustainability through its Sustainable Development Action Plan. In 2007, the Sustainable Development Commission declared the department the most improved government department across a range of sustainability indicators.
However, the role of the Export Credits Guarantee Department is not to measure the emissions of all the projects it supports and we do not believe that it should do that. The controlling owners or managers should report those projects’ emissions. But the Export Credits Guarantee Department neither owns nor manages projects: it provides insurance to UK enterprises. No international rules call for export credit agencies to report emissions. I also suggest that an amendment to the Climate Change Bill is not the right place for this. The Export Credits Guarantee Department is subject to an Act which can be amended with proper scrutiny by Parliament. Dropping it in the Bill at this stage does not allow for that, with all due respect. Care and attention must be exercised before we rush into a new primary purpose for a government department, which is what we would be doing, and the costs and benefits must be assessed in advance.
The amendment would in any case not achieve the purpose intended by the noble Baroness. As worded, it would make the Export Credits Guarantee Department responsible for all emissions of its customers and their customers. So if it reported one Airbus, it would be responsible for reporting all the emissions for Airbus and all the emissions for all the airlines that bought Airbus aircraft. Leaving aside the work involved in gathering such information from organisations that would have no obligation to provide it to the Export Credits Guarantee Department, any such figures would be meaningless in the context of showing what emissions the Export Credits Guarantee Department is supporting.
I hope that is nice and clear in Hansard, so that when they come to look at amendments in the other place, they know what they need to do and not do.
My Lords, I thank the noble Lord, Lord Dubs, for hurrying back to speak to this amendment, which both he and I think is important. The Minister has clearly grasped that there is an important point here. I certainly would not accept, as I said when I moved the amendment, that it creates a huge new burden of work for the department, because it already gathers all this information. All we are asking for is that it should be transparent and publish it.
The Minister also said that the department seems to think that it should gather information about environmental impact and so on “where appropriate”. In talking about carbon emissions, an extremely serious issue, it is surely always appropriate that that information is gathered. There can be no excuse for it not to be, and it needs to be made public. Whether it is the most improved department depends on where the baseline was.
I come back to the fact that about £1.8 billion of taxpayers’ money going to support things that the public cannot know about, and having emissions that they cannot be aware of, is unacceptable. I am sure that between now and Third Reading the Minister may be able to give me more interesting information on where the Government intend to go with this issue, even if not in the Bill. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 65 [Report on climate change: Wales]:
229: Clause 65, page 29, line 40, at end insert—
“( ) The report must, in particular, set out how the Welsh Ministers intend to exercise the power to give directions under section 56 (directions to reporting authorities to prepare adaptation reports).
( ) Nothing in a report under this section affects the exercise of the Welsh Ministers’ power under that section.”
On Question, amendment agreed to.
Clause 69 [Fines for offences relating to pollution]:
230: Clause 69, page 31, line 34, at end insert—
“( ) Regulation 39(2)(a) of the Environmental Permitting (England and Wales) Regulations 2007 (S.I. 2007/3538) (maximum fine on summary conviction of an offence committed before the commencement of section 154(1) of the Criminal Justice Act 2003 (c. 44)) is revoked.”
The noble Lord said: My Lords, the amendment will make a change to the environmental permitting regulations. These regulations are a recent better regulation measure which has integrated waste management licensing with pollution prevention and control permitting. However, because of an anomaly between two pieces of primary legislation, the fining powers of magistrates’ courts have had to be reduced significantly for waste management offences.
The Government are concerned about the potential effect on the deterrence of waste crime and the amendment will allow us to put things back as they were as quickly as we possibly can. The gap on current estimates will be April to late July, two months after estimated Royal Assent for the Bill. The timing of the amendment will reduce that unfortunate window of opportunity for the enforcement of the lower penalty than the Government and the whole House would consider desirable. Once this part of the Climate Change Bill is commenced, magistrates will again be able to impose fines of up to £50,000 for waste management offences: a proper deterrent. Accordingly, I beg to move.
On Question, amendment agreed to.
231: Before Clause 70, insert the following new Clause—
“Guidance on reporting
(1) The Secretary of State may issue, or cause to be issued by an authorised body, guidance regarding the information concerning a company’s greenhouse gas emissions which should be publicly disclosed by such a company as part of its annual reporting.
(2) The guidance may relate to the appropriate content and form of such disclosures and any matter necessary to promote the provision of transparent and comparable data regarding the greenhouse gas emissions of companies.
(3) The guidance issued under this section may distinguish between different categories of company according to criteria to be determined by the Secretary of State, such as turnover or market share or number of employees or any other criteria the Secretary of State deems relevant, and may contain different standards for each category of company in respect of the content and form of the disclosures and other matters referred to in subsection (2).
(4) Any company which is required to produce a business review under the Companies Act 2006 (c. 46) must report on greenhouse gas emissions having regard to any guidance given under this section and the Secretary of State may provide that compliance with any such guidance will be presumed to constitute compliance with section 417 of that Act in respect of reporting on such emissions.
(5) The power to give guidance under this section includes the power to vary or revoke it.”
The noble Baroness said: My Lords, I realise that it is late but this is a very important issue, first raised in Committee by the noble Lord, Lord Whitty. My name was on his amendment and his is on my amendment. This time the amendment has been redrafted to make it more in keeping with the provisions of the Companies Act in terms of the effects on companies of different sizes or natures. I moved some of the amendments to the Companies Bill on the subject of business reporting when it went through this House. I was struck then by how ready UK business was to accept these provisions, recognising that shareholders and consumers saw such reporting as important. They wanted such reporting to be standardised and transparent so that they knew exactly where they stood, not least in relation to their competitors. It was an area in which they were already ahead of the Government. Under that Act certain companies already have to report on their impact on the environment, as well as on other issues which I will not address here.
The noble Lord, Lord Whitty, rightly pointed out in Committee that,
“much of the reduction in carbon is going to have to be achieved by commercial private enterprises”.—[Official Report, 30/1/08; col. 733.]
He said that he wished to put in place the kind of provision that ensured there was “behaviour change” among managers, decision makers, shareholders and investors so that carbon reduction was seen as relevant to the company’s reputation. The Conservatives did not support this amendment in Committee though I hope they may have shifted their position now. The Minister said that he supported the intention of the amendment but argued that it was premature as it could, in effect, cross with the first reports under the Companies Act which should come out in late 2008 or early 2009. However, he expected that many companies would include information about climate change and other environmental issues in their reports. He said:
“This is going to happen but not in the way and at the speed suggested by the amendments”.—[Official Report, 30/1/08; col. 736.]
We are keen to push this further. The Minister agrees that it is a good idea and that certain companies will need to report on their environmental impact anyway. We state here that the Secretary of State should be able to give guidance on this matter, obviously on a voluntary basis, but that any company that is already required to produce a business review must report within that on greenhouse gas emissions. Such companies might be about to do that anyway. This would make it clear that indeed they should. Although I heard what the Minister said last time about this being premature, I do not think that any of us finds it premature given the scale of the problem we face. It should fit well with what companies are expected to do anyway. This seems to be an opportunity that should not be missed. I beg to move.
My Lords, I have also put my name to this amendment, though we had a rather stronger amendment on this subject from these Benches in Committee. I was persuaded by the noble Lord, Lord Whitty, that what we needed was something that—as my noble friend Lady Northover said—is more in line with the companies legislation. This is an important part of what the Bill could do in major corporations and businesses. The definition of what the Secretary of State has to do, and when he or she has to do it, has been left to their discretion in this clause.
This is an enabling Bill that could achieve that effect in an area that really counts—business reporting. One of the most important things for enabling government to move ahead in this area is the provision of standards so that the companies that are ahead of the game and report this information have a consistent and understandable framework within which to do so. That would put pressure on the corporations that do not report greenhouse gas emissions or carbon emissions to come into line and do so.
How does the Minister see international and European standards coming together with regard to the climate change disclosure board and the international accounting organisations that set standards for company reports? From looking at its website, I seem to remember that Defra suggests its own ways for companies to report carbon emissions. We need to bring this together so that there is consistency and others have to catch up with the corporations that are already well ahead in this regard and willing to do this. I agree that that has to be done within a timescale that allows the standards to be agreed, probably on an international basis, but a signal needs to be sent out that this will happen and that it is important that it does happen. That is why I think that of all the debates we have had in the last hour and a half, this is probably one of the most important in terms of the practical achievement of the real goals of the Bill.
My Lords, if my memory serves me correctly, when this matter was raised in Committee we had an incredibly truncated discussion. I cannot remember the cause of that but I remember telling my noble friend Lord Whitty that we had to finish at a certain time for various reasons. It may have been a Wednesday but the debate was truncated. I apologised to my noble friend and to others because the amendment was discussed at a late hour and I think the whole thing took about 10 minutes. Therefore, my response will be a bit longer than the speeches we have heard although it will not be too long.
The noble Lord, Lord Teverson, and the noble Baroness, Lady Northover, are right—these are incredibly important issues. Like them, the Government are very keen to promote transparency of carbon reporting by companies. I want to discuss the activity that is already going on in this area. It is not as though we start from a clean sheet.
At present a large number of companies are in fact already required to report on their carbon emissions. There are mandatory reporting requirements for approximately 1,000 UK companies included in the EU Emissions Trading Scheme, and about another 5,000 additional companies will also be subject to mandatory reporting requirements when the carbon reduction commitment comes into force in 2010. This amendment would make additional blanket mandatory requirements for companies to disclose their greenhouse gas emissions in their annual reports.
As I mentioned in Committee, albeit briefly, the Government see the main objective of narrative reporting within business reviews as providing shareholders and investors with the information they need to assess how directors have performed in their duty to promote the success of a company. Clause 417 of the Companies Act 2006 requires directors of quoted companies to include information on environmental matters, including the impact of the company’s business on the environment. In my 27 years in the other place the only time I was ever successful in the ballot for Private Members’ Bills was when I came twelfth. I thought that I was not going to get anywhere but I introduced a Bill on environmental disclosure in company reports, which we later added to the freedom of information process. Needless to say, that Bill was blocked by the Tory Government of the time, but that was the subject I chose as there was a gap in companies reporting on that area. The fact that the relevant information may be included in company reports to shareholders is neither here nor there; these are public documents and it is very important that this information should be included. I hope that I have given this issue a bit of a push. I am not all bad as a Minister. I had another life when I was a “goodie”.
This is a matter of judgment for directors, according to what they think is necessary to understand the company’s business. Although I anticipate that many directors will include information about climate change and other environmental issues in their reports, there is not yet a robust picture of what reporting is actually taking place, as the requirement came into force only on 1 October last year, as I said in Committee. The Government understand that and have committed to monitor how the narrative reporting requirements are implemented in practice.
During the passage of the then Companies Bill in another place, Margaret Hodge, the then Minister of State for Industry and the Regions, committed to review implementation of the statutory business review provisions of the Companies Act 2006. This review is expected to take place in 2010. The detail of the review is yet to be determined but we envisage that it will provide an opportunity to look at whether information is being provided to shareholders and investors on climate change and other environmental issues in the context of the development, performance or position of a company’s business.
Under the Companies Act 2006, the Secretary of State may also vary the reporting requirements on business—although, as I have made clear, we should not use these powers to impose unnecessary burdens on business. We also think that it is important to recognise that many companies in addition to those involved in trading schemes which are obliged to do so already voluntarily report these data. For example, in 2007, 92 per cent of the UK FTSE 100 companies provided information on their climate change strategies and emissions to the voluntary investor-driven Carbon Disclosure Project.
In terms of guidance on reporting, company law has recently been through a radical reform. The House will recall the debates during the passage of the Companies Act in 2006. Those debates concluded that the introduction of mandatory standards were not in the best interests of shareholders as directors would be best placed to judge what is relevant to report on in the context of their particular business. Mandatory guidance risks companies producing standardised responses designed to comply with guidance rather than proper consideration of environmental and other issues relevant to their business. However, wider support and guidance is available for companies; for example, best practice guidance prepared by the Accounting Standards Board— a body of the Financial Reporting Council—in the form of a reporting statement. This guidance covers environmental issues including emissions management.
Defra has also produced environmental reporting key indicators which help companies through the process of reporting on greenhouse gas emissions data. The Government have also responded to calls from investors and business to make emissions data more comparable, and we support the work of the Climate Disclosure Standards Board to develop an acceptable international framework for corporations to report on climate change issues.
Given those arguments, and with all that is going on, we could not at present support a mandatory requirement for companies to report on their CO2 emissions or for the Government to issue statutory guidance.
The noble Lord, Lord Teverson, asked what the Government were doing on common international reporting. I have touched on the issue. There is no determined and agreed international standard. As I said, we support the work being done by the Climate Disclosure Standards Board. We have also done the work. Defra is supporting the secretariat to the Climate Disclosure Standards Board launched at the World Economic Forum in 2007, which David Miliband attended. That was in response to increased calls for action from corporations and the markets to address global warming. The objectives of the member organisations of the board is to align their core requests for information from companies in order to ensure that they report climate change-related information in a standardised format and in a way that facilitates easier comparative analysis by investors, managers, above all the public, and, I imagine, the parliaments.
We are not starting from a clean sheet: an enormous amount of work is going on. We do not think at present that it would be right to support this extra mandatory requirement on companies. Nevertheless, we entirely share the desire for transparency put forward by the noble Baroness, Lady Northover.
My Lords, I thank the noble Lord for his reply. We do not doubt that his heart is in the right place—and that piece of history rather confirms it. However, I am somewhat disappointed by some of the things he said. There were some mixed messages. As he may remember, the Companies Act was preceded by an agreement between the Government and business on what the nature of the reporting might be but the then Chancellor of the Exchequer, surprising business, knocked that into the long grass. During the passage of the Companies Act we steadily brought back bits of what had been originally agreed but which had been knocked sideways. That came up at just about every stage of that legislation in the Lords, and to some extent also in the Commons. I was involved in the sessions in the Lords.
I hope that we can take this further. It is unfortunate that this issue has come up so late both tonight on Report and did so in Committee, and that we have not therefore been able to give proper consideration to it, because it is extremely important, as my noble friend Lord Teverson said. It is one of the weapons in our armoury in this regard, and many of the businesses that have to report on a mandatory basis would welcome it. Given the lateness of the hour, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 70 [Territorial scope of provisions relating to greenhouse gas emissions]:
[Amendment No. 232 not moved.]
Clause 76 [Meaning of "national authority"]:
[Amendment No. 233 not moved.]
Clause 79 [Index of defined expressions]:
234: Clause 79, page 35, line 20, at end insert—
““Counsel General” (in sections 51 to 59) section 59(8)”
““Counsel General” (in sections 51 to 59)
235: Clause 79, page 35, line 21, at end insert—
““devolved authority” (in sections 51 to 59) section 59(3) “devolved functions”, in relation to a reporting authority (in sections 51 to 58) section 59(4) and (5)”
““devolved authority” (in sections 51 to 59)
“devolved functions”, in relation to a reporting authority (in sections 51 to 58)
section 59(4) and (5)”
236: Clause 79, page 35, line 22, at end insert—
““devolved Welsh functions”, in relation to a reporting authority (in sections 51 to 58) section 59(6) and (7)”
““devolved Welsh functions”, in relation to a reporting authority (in sections 51 to 58)
section 59(6) and (7)”
237: Clause 79, page 35, line 34, at end insert—
““Minister of the Crown” (in sections 51 to 59) section 59(8)”
““Minister of the Crown” (in sections 51 to 59)
238: Clause 79, page 36, line 15, at end insert—
““reporting authority” (in sections 51 to 59) section 59(1) and (2)”
““reporting authority” (in sections 51 to 59)
section 59(1) and (2)”
239: Clause 79, page 36, line 23, at end insert—
““Wales” (in sections 51 to 59) section 59(8)”
““Wales” (in sections 51 to 59)
On Question, amendments agreed to.
House adjourned at 9.51 pm.