My Lords, I beg to move that the Commons amendments be now considered.
Moved accordingly, and, on Question, Motion agreed to.
[The page and line references are to Bill 97 as first printed for the Commons.]
amendments Nos. 1 to 6
My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 1 to 6. I shall also speak to a number of other amendments that are related to this group.
Amendment No. 1 removes Clause 1, the purpose clause, because we do not think it works in practical terms. Having any measure based on global temperatures means that what we have to do is dependent on what happens elsewhere in the world. While we are fully committed to taking action at home, emission reductions in the UK alone cannot deliver this objective. It is only though global action that we can maximise the chance of limiting the rise in global temperatures to 2 degrees centigrade. In future, there may be a different way of framing the level of global ambition. To place an explicit reference to the 2 degrees centigrade goal in the Bill would be inflexible and might become irrelevant, especially when one considers the long-term framework that the Bill’s targets and budget establishes.
Moreover, the early advice from the shadow Committee on Climate Change made a specific link between 2 degrees centigrade and the level of the 2050 target, which underpins every other action required of us by this Bill. The committee’s advice stated that the target to reduce the UK’s emissions by at least 80 per cent is a reasonable contribution to a global strategy of cutting global emissions by around 50 per cent by mid-century. Reductions on this scale are required to limit the expected global temperature increases to around 2 degrees centigrade above pre-industrial levels. In proposing to accept the committee’s advice on the level of the 2050 target, we therefore already intend to set our 2050 target in a way that would be consistent with the 2 degrees centigrade goal. We do not, therefore, consider a specific purpose clause to this effect to be necessary.
Amendment No. 2 would increase the level of the 2050 target to a reduction of at least 80 per cent. This follows the early advice of the Committee on Climate Change, which I announced we would accept in my Statement to the House on 16 October. By ensuring that the UK’s long-term target is based on the most up-to-date science and on independent expert analysis, we will continue to provide leadership within the international debate. This is particularly important in the context of negotiations for a global and comprehensive agreement in Copenhagen in 2009.
Clause 3 provides a power for the Secretary of State to amend the 2050 target, based either on significant developments in scientific knowledge about climate change, or significant developments in European or international law or policy. Currently the developments in scientific knowledge are those since the 2000 report of the Royal Commission on Environmental Pollution. We consider that it is no longer appropriate to refer to the royal commission’s 2000 report as our starting point, because the committee has provided advice on the basis of the latest scientific thinking, which we have accepted. Instead, we consider that the passing of this Act should be the reference point, and we propose Amendment No. 4 to effect this change.
Amendments Nos. 3, 13, 14, 15, 16, 19, 20 and 21 are also in response to the committee’s advice, and have the effect of including the other Kyoto greenhouse gases in the Bill’s targets and budgets. Amendments Nos. 5 and 6 concern the level of the target for 2020. As noble Lords will know, on 1 December the committee will provide its formal advice on the implications for the 2020 target of their advice on the 2050 target. We do not think that a change should be made to the 2020 target before we receive this advice, especially as we closely linked the committee’s advice to the first three carbon budgets. We want to ensure that we get the 2020 target right. Amendments Nos. 5 and 6 would therefore provide for the 2020 target to remain as it currently is; that is, a 26 per cent reduction in CO2 emissions. This recognises that a 26 per cent reduction target that includes all greenhouse gases, is not as demanding as a target of 26 per cent that includes only CO2. We accept that we will have to amend the target soon to account for the inclusion of the other greenhouse gases. As I have said, we simply do not consider it appropriate to make a change to the 2020 target until we have received the committee’s advice on this issue.
Amendments Nos. 8 and 10 revert to the Bill’s original drafting, and place the responsibility for publishing the report on proposals and policies, and sending copies of the report to the other national authorities, with the Secretary of State, rather than the Prime Minister. I understand that the House has been through this matter in some detail at earlier stages of the Bill, so the arguments may be familiar. The Government remain of the view that placing duties on the Prime Minister is unnecessary and inappropriate.
As is conventional in UK legislation, the Bill places a number of duties on the Secretary of State. By this, the law means “one of Her Majesty’s principal Secretaries of State”, which has the advantage that legislation does not have to be amended when the machinery of government changes, and that one Secretary of State can act for another should it be necessary. The doctrine of collective responsibility means that this is the established mechanism to place a duty on the Government as a whole. Thus, the responsibilities in the Bill—including those for meeting the targets and budgets and for producing reports—are not limited to the Secretary of State for Energy and Climate Change.
We therefore think that it is better to revert to the wording in our amendment. There is no question of our collective commitment to tackle climate change. The fact that we have a new department, which has been set up precisely to create a new focus on tackling climate change, is an indication of that. I assure noble Lords that my colleagues and I, working with the Prime Minister and the rest of Government, are committed to finding sustainable, cost-effective solutions to the twin challenges of reducing emissions and ensuring secure supplies of safe and affordable energy.
Moved, That the House do agree with the Commons in their Amendments Nos. 1 to 6.—(Lord Hunt of Kings Heath.)
My Lords, the Minister has given an excellent summary of what we have to discuss here. Let me say just two things. The first is that, as many noble Lords may know, I have taken an interest in this issue for some time. Indeed, I have even written a book on the subject which, I am glad to say, has already been translated into two European languages and three more foreign editions are on the way. It is possible that I have had slightly more influence in that way on affairs than by speaking in this House. That is not the only reason why I have not spoken previously in this House on the Bill. The other reason is that I felt that it was unbecoming for an unbeliever to take part in a religious service, which is what all this is really about.
Nevertheless, we have the amendments that come back from the Commons to us today. The Bill will go down in history, and future generations will see it, as the most absurd Bill that this House and Parliament as a whole as ever had to examine, and it has now become more absurd with the increase from 60 per cent to 80 per cent. I should like to address as briefly as I can—because I do not propose to speak on any subsequent occasion on this subject— why I think that the Bill is so absurd.
Let us pretend that the planet is warming. We know, of course, that it is not. The figures published each year and, indeed, monthly, by the Met Office or the Hadley Centre, which is a department of the Met Office in association with the climate research unit of the University of East Anglia, show without any doubt that there has been no warming so far this century at all. Some people say that there has been a cooling but, although that has been the slight trend, I think that the margin for error is so great that I would not press that, but there has certainly been no warming. The majority of climate scientists do not think that if there were a warming, it would be a disaster.
Nevertheless, it is possible that warming will resume. The majority of climate scientists believe that warming will resume. I am completely agnostic on that; I do not know. Maybe it will, maybe it will not. The complete standstill this century so far was certainly totally unpredicted by all the elaborate computer models that the scientists use. That is not surprising. The climate is an extremely complex system.
What lies behind this? It was implicit in what the Minister said, although he did not spell it out on this occasion, that by taking this massive step of virtually complete decarbonisation of our economy by 2050 in a mandatory way—something that no other country has done for good reason, because no other country has been so foolish, nor do other countries have the slightest intention of going in this way, but I will come to that in a moment—we in the United Kingdom are giving a global lead that other countries will follow.
To understand that, we have to go back briefly to the G8 meeting last year. At that meeting, Europe, led by Germany and the United Kingdom, sought to isolate the United States in its opposition to binding commitments to cut back carbon dioxide emissions by proposing that the whole of the G8 should agree to a 50 per cent cut in carbon dioxide emissions by 2050. I can understand why people are not dying to support anything that President George W Bush supports, but the plan to isolate the United States backfired horribly. Europe was isolated when we got to the G8 summit. The other member countries, Japan, Canada and Russia, all accepted the United States’ position and therefore there was no agreement on a 50 per cent binding commitment to a reduction in carbon dioxide emissions by 2050. Fast forward from that, what has happened? Far from making any headway in persuading the rest of the world, even Europe is now backing off.
I remind the Minister of the original plan, the unilateral European cut. We are committing ourselves to a unilateral cut really, irrespective of what any other country does. After all, we account for less than 2 per cent of total carbon dioxide emissions and that is falling. Therefore, it makes sense only if we can persuade the rest of the world to go along with this.
Even our supporters in Europe are busy backing off. The unilateral cut of 20 per cent by 2020, agreed to by the European Union—with a little teaser that, if the rest of the world joined in, we would go up to 30 per cent—has been completely abandoned. It was never a binding commitment because you can bind only individual member countries and the individual countries of the Union had not agreed—we had but the others had not—to go along with their share in the 20 per cent cut. The seven accession states of central and eastern Europe, plus Italy, have now said that there is definitely no way that they are going to go along with this. The European Union has agreed that this should be looked at again. Nothing will happen. It can only be agreed unanimously and will be looked at again in December this year, after the Poznan meeting, which I hope the Minister will grace with his presence. It will be an educational event for him.
Not only have those countries said that they will not go along with it, but Germany has always had a slightly equivocal position, because, in addition to ostensibly being very keen on this policy, it subsidises its coal industry more than the rest of the European Union put together. Indeed that is contrary to European Union law and it has to secure a waiver from European law to enable it do that, for which it fights to the death, and successfully so far. However, the German Government, have said that energy-intensive sectors must be exempted from the European emissions trading system. Indeed, an official government spokesman said only the other day that we have got to prevent companies being threatened by climate protection requirements. That makes nonsense of the whole policy. If Germany is saying that, the others will go the same way. Therefore, we are in the position of being completely on our own. The point is to get an agreement at Copenhagen, as the Minister said, a successor to the Kyoto agreement which will be about to expire.
The Kyoto agreement called for only a 5 per cent reduction in carbon dioxide emissions. So far, there has been at least a 5 per cent increase in carbon dioxide emissions from the signatories to the Kyoto agreement, and it is rising all the time. This country’s emissions have been rising steadily ever since this Government took office in 1997. The disparity between the words and the facts is astonishing. We got as close as we did to the Kyoto agreement—which was not very close—only because we in effect outsourced our emissions very substantially to the developing world, in particular India and China. This is because manufacturing industry relies on carbon-based energy to a very high degree, and the industry has migrated to a considerable extent to China and India. This is why China is now the biggest emitter of carbon dioxide in the world—bigger even than the United States.
Given that we could not get close to 5 per cent even while it was possible to outsource emissions, it beggars belief that we think we can get to a 50 per cent reduction by 2050, of which our share will be an 80 per cent reduction, at least—the agreement is meant to include China, India and everyone. There is no way in which we can outsource emissions to Mars, so this must be a real reduction. China and India have said that in no way will they accept this kind of curb on their emissions, and quite rightly so. These countries have a real problem that is very serious for them; they suffer from poverty, malnutrition, disease and premature death on a massive scale. They can get out of that only by the fastest possible rate of economic development, which requires using the cheapest energy that they can find. It might not be for ever, but for now and for the foreseeable future that energy is carbon-based energy. They will not take part in this.
Interestingly, the Indian Government recently received a report from a whole lot of experts who said that climate change presented no threat to India. One of the signatories to that report was Mr Pachauri, the chairman of the Intergovernmental Panel on Climate Change, who is Indian himself. No one who has looked at this seriously and dispassionately thinks that this is a sensible policy. Professor Gwyn Prins of the London School of Economics has written very eloquently on the subject—I am sure that the Minister has read what he has written. He is not a scientist, but he entirely accepts the conventional view of the science. He says simply that this policy is madness and cannot possibly work. He has written two well-argued papers, Time to Ditch Kyoto—which means the whole Kyoto approach—and a sequel, which he wrote to help the Poznan conference. The United Kingdom is completely isolated in this. What we are seeking to do is absolutely crazy; it will be immensely damaging to the economy as a whole, and to the poorest people in this country in particular, if we carry it through.
Some people may say that I have forgotten the business opportunities from going along the route of non-carbon-based energy. I confess that there are business opportunities. Noble Lords may or may not be aware that there was a conference in London perhaps 10 days ago called “Cashing in on Carbon”. The promoters said of the conference:
“It is aimed squarely at investment banks, investors and major compliance buyers and is focused on how they can profit today from an increasingly diverse range of carbon-related investment opportunities. The programme features some of the most experienced and respected practitioners in the market and should have very strong appeal to anyone with a stake in this burgeoning market”.
I am glad to say that among those prominently represented was the group of which the noble Lord, Lord Stern, is deputy chairman. I am sorry that he is not in his place on a Bill of this importance. So the people who gave you the glories and the joys of mortgage-backed securities are now offering the great business opportunity of carbon-backed securities.
I always like to look on the bright side: it is possible that this Bill is not as bad as it might seem on paper. Under the Bill, there is no reason why we need to cut our carbon emissions. We can do it entirely by purchasing emission reduction certificates under the clean development mechanism from China, India or wherever. Although that would be a quite unnecessary transfer of resources to other countries—perhaps they deserve it, I do not know—it would be less costly than trying to cut back carbon dioxide emissions ourselves, which would be immensely more damaging.
A number of journalists and other academics have demonstrated the clean development mechanism to be a complete scam. What now happens is elementary economics: if a price is put on carbon dioxide, people will produce it. Various countries are busy producing emission reduction certificates so that they can be sold. The Chinese have done a very good business in this. They are very sharp and very much on the ball. They are now getting huge revenue from the certificates, which have no bearing on the carbon dioxide concentrated in the atmosphere. They are making so much money that the Chinese Government are taxing them in order to help their government revenues, which gives them more money to spend on their massive coal-fired power station programme. That is not only madness, but also highly unpopular.
There has been so much interest in the American presidential election that people have not looked as closely as they might have done to two other elections which have also taken place in recent weeks in English speaking democracies—in Canada and New Zealand. I say to my own party, in particular, that it should watch and take note of the fact that in both countries this issue was prominent in the debate. There was a rather weak, very shaky minority Conservative Government in Canada. The Liberal Opposition thought that it could come to power with what it called the “green shift”, which really tackled this issue. It was so unpopular that the minority Conservative Government increased their representation considerably and the leader of the Liberal Party of Canada is about to resign his post, if he has not already done so.
In New Zealand, a Labour Government, led by a very able woman Prime Minister, was in power for a very long time. Again, they said, “This is the big issue”. Although we may think that it is ridiculous for New Zealand to say that it is giving a global lead, it is no more ridiculous than us saying that. Having an elaborate system to cut back on emissions and having an emissions trading system was so unpopular that the Labour Party lost office. The Conservative Opposition, to their great astonishment, found that they won the election.
My Lords, that is a very good point. The main thing in the Australian election was that the people were sick and tired of John Howard, whom they felt had been there for far too long. It is true that the Leader of the Australian Labor Party said that he would sign the Kyoto agreement. People thought that that was a good idea. I happened to be in Australia at the time of the election and watched people being interviewed on television. The interviewer rather shrewdly asked a lot of people, “Are you in favour of signing the Kyoto agreement?”. A great majority said, “Yes, we are”. The next question was: “Do you know what the Kyoto agreement is?”. They said, “No, we don’t”. The new Australian Government are now having to implement these things and their standing in the polls has plummeted. I am glad that the noble Lord raised the issue of the Australian political scene, which is always an interesting one.
I shall take a moment to warn my noble friends on these Benches. This is extremely unpopular. The Government are shrewd in turning the tables on the Conservative Party on the tax issue, deftly jettisoning any idea of prudence and saying, “We are now the party of tax cuts”. As we move closer to the next general election, if it should happen that the Labour Party feels there is a possibility that it might lose it, the Prime Minister will have no hesitation at all in putting this issue on the back burner, saying grave things about other countries not having agreed to it, or the need to look after the economy in these difficult and stressful economic times, thereby leaving the Conservative Party high and dry.
The noble Lord, Lord Mandelson, who I am delighted is now a Member of our House, adds greatly to the gaiety of nations wherever he goes. It is great that he has come here. He is very shrewd, and I am quite sure that that is the advice he will be giving the Prime Minister. I hope that not merely for our party’s sake but, above all, for the sake of our country, we recognise that this is complete madness. We are on our own completely and should desist from going ahead with it.
My Lords, I used to be on a different side on this issue until I was given a small book written by an ex-Chancellor of the Exchequer, in which he showed that global warming stopped in about 2000; that the warmest year was in 1934; and that Arctic sea ice is bigger this year than it has been for several years. He planted in my mind not a small seed of doubt but a great array of cuttings of doubt as to whether global warming was continuing.
If we have all grasped the piece of religious mania that the world will be so hot that palm trees will grow only in Orkney, and that desertification will spread when the evidence for it seems to be very much less than before—serious doubt has arisen in my mind—we will all look awful asses for following the Pied Piper of Hamelin, or his next best friend, along a road that does not exist.
My Lords, I hate to argue the other way. I was about to speak specifically about the amendments, but without getting into a Second Reading debate, which could almost happen here, many noble Lords will want to make it clear that we read much of the scientific literature intelligently. We consider and assess the evidence, we look at what is happening around the world, and we see the consequences not so much for this country but for developing countries in the future. We say, “If there is anywhere that we apply a precautionary principle with action, it is here”. That is why most sides of this House have welcomed the Bill.
I particularly welcome the move to 80 per cent. As the noble Lord, Lord Lawson, pointed out, there are all sorts of ways in which we can dodge that, but we will return to it at a later stage. I congratulate the Government on having bitten the bullet on this target. None of us underestimates the effect of this, or what we will have to do to achieve it.
It is a shame that we have removed the Prime Minister’s responsibility for this voyage. If anything has a wide-ranging effect, it is this issue, and perhaps for once the head of the Government should take personal responsibility for it. It is not a matter of fundamental principle, but it would match the occasion. The purpose clause would be useful to show the objective but, again, it is not fundamental. The key issue is the target. I was concerned that we would still have 60 per cent while saying that we were going to have something else and so would have the wrong number in the Bill. The noble Lord, Lord Turner, needs congratulating on the work that he and his committee have done within the timescale, and I welcome the fact that we have the right number in the Bill.
My Lords, the noble Lord, Lord Lawson, may be unaware that this is my first entry into the Climate Change Bill as well. He described himself as a non-believer taking part in a religious ceremony. After my tour around the Department of Health, the Department for Work and Pensions and the Ministry of Justice, I could perhaps best describe myself as an agnostic. However, although I have listened carefully to what the noble Lord has said regarding what the Bill is really all about, supported by the noble Earl, Lord Onslow, one cannot ignore the reports of the various bodies that have looked into these matters so carefully. For instance, the fourth report of the Intergovernmental Panel on Climate Change showed overwhelming evidence of climate change. Its evidence was peer-reviewed by large numbers of expert scientists. It is indisputable that polar ice caps are melting—we can see that with our own eyes.
My Lords, that is not true of the past year. The noble Lord’s predecessors were seriously misinformed by his officials, and I suspect that he will be too. That is a real problem for him, and I feel for him. The fact is that in the Antarctic, where most of the ice is, the ice is thickening and has been for some time. In the Arctic this year there has been a greater extension of ice than ever before.
Furthermore, I would be interested if he could refer me to where in the fourth report of the Intergovernmental Panel on Climate Change it says that it makes sense for us to have a binding commitment to cut back carbon dioxide emissions by 80 per cent by 2050. That is what we are talking about here. The science may be the background, but we are discussing what is a sensible policy.
My Lords, surely the point is that that report and others have provided the evidence that the Government have now considered and which has informed our decision to go for the 80 per cent target. I refer the noble Lord to the committee of the noble Lord, Lord Turner, which, as he will know, reported a few weeks ago. It said that we know more about how rising temperatures will reduce the effectiveness of carbon sinks. It says that, unlike the authors of the report by the Royal Commission on Environmental Pollution, we have the benefit of models that include the warming effect of gases other than CO2. It says that the reduction in summer Arctic Sea ice in recent years has been greater than predicted by any of the models, and that the summer melt of the Greenland ice sheet has accelerated. It says that it is now realised that atmospheric pollution has probably masked some of the greenhouse gas warming that would have occurred, so that as air quality improvements continue to be achieved even more warming can be expected. It says that there is now a greater understanding of the range of potential climate change impacts. Finally, the latest global emission trends are higher than anticipated in most IPCC scenarios, largely because of higher economic growth and a shift towards more carbon-intensive sources of energy. It is not unreasonable for the Government to have taken that seriously.
My Lords, I am not a scientist, and it is not my role to debate the intricacies of scientific arguments, but I can and do pray in aid the reviews, the committees and the expert groups that have looked into these matters and which have informed the Government’s decision: it is on their conclusions that the 80 per cent target is now based.
I listened with great interest to the strictures of the noble Lord, Lord Lawson, about the Government taking a lead that he said other countries would not follow. I accept that the challenge we have set ourselves is massive, but I would not underestimate the potential of this country to influence international debate and considerations. I am not pessimistic about the current negotiations, despite the way that he has described them; I am confident that we will move from the EU into discussions towards Copenhagen. This country’s lead will have a powerful impact on our ability to come to international agreement.
The noble Lord raised issues about—shall we say?—the credibility of projects such as CDM projects. I understand the point he makes, but it is right that this country is a strong supporter of CDM initiatives. We look to international processes to ensure the integrity of those systems.
The noble Lord, Lord Teverson, has welcomed the amendment made in the other place setting the 80 per cent target, but says that there are ways it can be dodged around. I hope he will have confidence that it is not the Government’s intention to reach a conclusion on the level of the target and then legislate to find ways around it.
On the question of whether the Prime Minister should be in the Bill, I do not want to repeat my arguments from earlier but, although they may seem to be technical, they are in fact substantive. This Government and this Prime Minister are committed to what we have set out to achieve. On that basis, I hope the House will accept this group of amendments.
Amendment No. 7
7: Page 6, line 32, at end insert-
“(i) the emissions of greenhouse gases from international aviation or international shipping that the Secretary of State expects to arise during the budget period.”
7B: Page 6, line 32, at end insert-
“(i) the estimated amount of reportable emissions from international aviation and international shipping for the budgetary period or periods in question.”
7C: Page 6, line 32, at end insert-
“( ) In subsection (2)(i) “the estimated amount of reportable emissions from international aviation and international shipping”, in relation to a budgetary period, means the aggregate of the amounts relating to emissions of targeted greenhouse gases from international aviation and international shipping that the Secretary or State or (as the case may be) the Committee estimates the United Kingdom will be required to report for that period in accordance with international carbon reporting practice.
( ) Such amounts may be estimated using such reasonable method or methods as the Secretary of State or (as the case may be) the Committee considers appropriate.
( ) The duty in subsection (2)(i) applies if and to the extent that regulations under section 30 do not provide for emissions of targeted greenhouse gases from international aviation and international shipping in the budgetary period or periods in question to be treated as emissions from sources in the United Kingdom for the purposes of this Part.
( ) Section 30(1) (emissions from international aviation and international shipping not to count as emissions from UK sources for the purposes of this Part, except as provided by regulations) does not prevent the Secretary of State or the Committee from taking into account the matter referred to in subsection (2)(i) for the purposes of this section.”
My Lords, I beg to move that the House do disagree with the Commons in their Amendment No. 7, substituting the words on the Marshalled List in lieu, and that the House do agree with Amendments Nos. 12, 18, 25, 28, 31 and 74.
These amendments deal with emissions from international aviation and international shipping, perhaps the most technically complex issue we have had to discuss during the passage of the Bill. Throughout the discussions, the Government’s position has been that it is vital to put in place strong mechanisms for dealing with emissions from international aviation and shipping, but that finding the right way of deciding which of those emissions should be allocated as being the UK’s responsibility is not possible at the moment. The set of amendments on which I seek your Lordships’ agreement reflects that position. The amendments would take us as near as is currently possible to including these emissions in the Bill’s targets and budgets, and would also ensure maximum transparency about how we deal with them in the meantime.
Many contributors have provided valuable views and support in taking forward our thinking on this difficult matter. In particular, the Joint Committee which scrutinised the draft Bill considered it in great detail, and Members of this House and in the other place put forward proposals. More recently, the views of the shadow Committee on Climate Change have helped to shape the amendments which are being considered today.
In its interim advice the committee advised that international aviation and shipping emissions should be included in the UK’s efforts to reduce overall emissions by at least 80 per cent by 2050, but that they should not be included in the Bill’s targets at this time because of the lack of an appropriate methodology. The committee also recommended that emissions from these sectors should be reflected in its annual reports of progress and should be taken into account in the setting of budgets. This is a comprehensive set of recommendations, and I believe that all of them are provided for in the amendments that I bring before the House tonight, which would do three main things.
First, Amendments Nos. 12 and 18 would require that emissions from international aviation and shipping must be included in the Bill by 31 December 2012, or that the Government must lay a report before Parliament explaining why that is not the case. That approach is closely aligned with the view previously agreed by this House: the differences are in how we define the emissions and in providing an earlier deadline for inclusion or explanation that aligns with the budget-setting process.
On defining these emissions, the House recognised that one possible method would be by reference to the transport of goods and passengers. However, there are other potential options for definition, and we do not want inadvertently to rule them out. This is why we are seeking to revert back to the broader language of “international aviation and shipping emissions”, which is established terminology within the UN and EU.
Secondly, Amendment No. 25 would require that the Committee on Climate Change must, when providing its advice on carbon budgets, give its view on the consequences of including emissions from international aviation and shipping within the targets and budgets. Amendments Nos. 28, 31 and 74 are consequential to Amendment No. 25.
Thirdly, Amendment No. 7 reflects the view, as put forward by the noble Lord, Lord Turner, in his letter to the Secretary of State, that although the right methodology does not yet exist for including these emissions in the carbon budgets, decisions made by the committee or the Government in relation to the budgets must take into account projected emissions from international aviation and shipping.
At Commons Report stage, the Government accepted an amendment which reflected the committee’s view, but on the basis that we would need to discuss the specific drafting with parliamentary counsel. Amendments Nos. 7B and C provide the new, revised version. These amendments would require both the Government and the committee to have regard to projected emissions from international aviation and international shipping in setting, and advising on, carbon budgets, respectively. They also provide that these projections may be estimated using such reasonable methods as the Secretary of State or the committee considers appropriate. I beg to move.
Moved, That this House do disagree with the Commons in their Amendment No. 7 but do propose Amendments Nos. 7B and 7C in lieu.—(Lord Hunt of Kings Heath.)
7D: (to Amendment No. 7B in lieu) Line 2, leave out “reportable emissions from international aviation and international shipping” and insert “emissions of targeted greenhouse gases from international aviation and shipping attributable to sources in the United Kingdom”
7E: (to Amendment No. 7C in lieu) Line 2, leave out “reportable emissions from international aviation and international shipping” and insert “emissions of targeted greenhouse gases from international aviation and shipping attributable to sources in the United Kingdom”
7F: (to Amendment No. 7C in lieu) Line 7, leave out “will be required to report for that period in accordance with international carbon reporting practice”
The noble Lord said: My Lords, that procedure is probably longer than my speech. I do not know whether you can table probing amendments at this late stage of the Bill, but I am sure that the Minister will tolerate it. What concerns me, particularly in the case of international shipping, is that a number of studies over the past two years have made clear that the current measurement of emissions, both globally and relating to the UK in particular, underestimate the carbon emissions of the sector. I am not being negative about the shipping sector, because it is a very efficient form of transport in terms of carbon consumption. Indeed, if we could increase shipping at the expense of other forms of transport, we would strongly welcome that. What I seek do in these amendments, rather than leaving the term “reportable” that is vague and suggests adherence to the existing way of calculating these emissions, is to make sure that they are the emissions properly attributable to the United Kingdom. That is clearly what everybody means, but at the moment they are not the current reportable emissions. I would welcome assurance from the Minister on this matter. I beg to move.
7G: Line 11, at end insert “and the Secretary of State shall publish details of the methodology used”
The noble Lord said: My Lords, this group is of a complexity that I have not experienced before. Amendment No. 7G provides for the publication of methodology. As my colleagues in another place made clear on Report, Conservatives welcome the inclusion of aviation and shipping emissions in carbon budgets. I speak in support of the government amendments to Commons Amendment No. 7.
In the debate in another place, the Parliamentary Under-Secretary for Energy and Climate Change indicated that tidying-up amendments would be necessary. As in your Lordships’ House, there was a long and detailed debate in the other place on the issue of emissions from aviation and shipping, and it is not necessary to repeat that debate here. We on these Benches welcome the Government’s amendments, but still consider them incomplete because of the absence of any requirement on the Secretary of State to publish the methodology used to arrive at the estimated tonnage of emissions from these sectors. We have argued at every stage of this legislation that transparency, and government accountability to the expert opinion of the Committee on Climate Change, are of paramount importance. That is why we have tabled Amendment No. 7G to government Amendment No. 7C. I hope that the Minister will assure me and the House that, whatever methodology is used to come to an estimated figure on emissions from aviation and shipping, this will be made available for parliamentary and public scrutiny.
I understand the amendments of the noble Lord, Lord Teverson, to government Amendment No. 7, and his reasons for proposing them. I hope that we all agree on the necessity for more fully drafted amendments in lieu, as the Government have put forward this evening. However, it is important to note an area of weakness that is addressed by the amendments of the noble Lord, Lord Teverson. The government amendment requires “expected reportable emissions” to be taken into account, rather than “expected emissions”. This might sound like pedantry, but I have been made aware that the difference is significant. It is widely accepted that, particularly in the case of shipping emissions, there are weaknesses in the current reporting methodology that lead to the UK figures being significantly underestimated. We are all aware, thanks in part to the many debates in both Houses, that the Government are not in a position to legislate for a specific methodology to be used for the counting of emissions from international aviation and shipping. However, it is not sensible to limit the legislation to a method that is widely accepted to be flawed. We should make the remit flexible enough to include a better projection methodology, if or when one is developed in the future. I thank Friends of the Earth for bringing this issue to my attention and call on the Minister to give the assurances that I have sought from the Government. I beg to move.
My Lords, I am grateful to both noble Lords for their amendments. They provide an opportunity for the Government to respond to a number of points that are entirely reasonable given the changes that were made in the other place.
The issue of emissions from international aviation and shipping is very important. However, the fact that there is as yet no agreement on how to allocate those emissions means that we have to deal with this matter in a particularly sensitive way. That is the intent behind the government amendments. I say to the noble Lord, Lord Teverson, that calculating emissions that are properly attributable to the UK is a very important aim. The government amendments would require the committee and the Government to take account of the aggregate of the amounts of emissions of targeted greenhouse gases from international aviation and international shipping that the UK will be required to report for that period, in accordance with international carbon reporting practice.
The problem that we have with the noble Lord’s amendment is the link to the UK. Currently there is no agreement on what proportion of these emissions is attributable to the UK. This amendment puts us back in the position that we tried to avoid, of the Government deciding unilaterally on an allocation methodology. Our contention is that, while the UK is undoubtedly influential in international discussions relating to these sectors, we are not in a position to dictate how these matters are dealt with. It is important that whatever we do is consistent with international agreements. For that reason, the government amendments use the only internationally agreed way of establishing a link between the UK and emissions from aviation and shipping—the agreed reporting methodology. If the UN reporting requirements change over time, the government amendment is linked automatically to the up-to-date accepted practice. By making the link, we ensure maximum transparency about the approach taken, and consistency with whatever international negotiations provide for.
It is difficult to envisage a situation in which the UK would not have to report on emissions from international aviation and shipping to the UN or some other international organisation. In the unlikely event that the UK duty to report to the UN on those emissions was discontinued, the Bill has a mechanism to deal with this. We can specify an alternative approach by making an order under Clause 86, linking the report to any different reporting protocol at European or international level.
The second paragraph in government Amendment No. 7C would provide that projections might be carried out using,
“such reasonable … methods as the Secretary of State or … the Committee considers appropriate”.
That also gives us flexibility. Clause 11(3) already states that:
“Nothing in this section is to be read as restricting the matters that the Secretary of State or the Committee may take into account”.
For instance, the committee might choose to take a different approach, or international reporting requirements may change. However, that would not preclude consideration of international aviation and shipping emissions in whatever way was considered appropriate.
I accept that the question of the methodology is very important. In his amendment, the noble Lord, Lord Taylor, invites the Government to publish the methodology. I hope that I can reassure him on this point. The UK Government already publish projections of future CO2 emissions for international flights from UK airports, and we intend to continue to do so. The previous reports were published in 2004 and 2007, and it is intended that further forecasts will be published on a regular basis.
In the other place, the Government made a commitment that we will publish at least one forecast of international aviation emissions for each budgetary period sufficient to inform decisions on setting carbon budgets, so the basis of our projections will be perfectly clear. As I have already indicated, the Committee on Climate Change will provide advice in relation to each carbon budget, and that advice is required to take into account all the factors listed in Clause 11 including, if Amendments Nos. 7B and 7C are agreed to, emissions from international aviation and shipping. The committee is required to publish its advice and, if they take a decision different to that recommended by the committee, the Government are required to explain why.
In setting out proposals and policies for meeting the carbon budget, the Government must explain how those proposals and policies affect different sectors of the economy. In conclusion, the Government have sought to ensure that this is a robust process, within the current uncertainties about developing a methodology, but ensuring that their approach is as transparent as possible. As I have already indicated, if the Government took a different decision to that recommended by the committee, they would have to publish the committee’s advice and they would have to explain why they would take a different decision.
My Lords, I thank the Minister for going through that in some detail, and I recognise his full sincerity in what he said. I am not going to press my amendment, but—I agree that the committee will do this—it is extremely important that the Committee on Climate Change will make sure that the reality of emissions from the sectors are fully taken into account, rather than just reportable numbers based on bunkering, or on other basic measures that are somewhat unsatisfactory at the moment. I beg leave to withdraw the amendments.
Amendments Nos. 7D to 7F, as amendments to Amendments Nos. 7B and 7C in lieu, by leave, withdrawn.
My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 9. In speaking to this group, I shall also address Amendments Nos. 11, 17, 17A to 17C, 49 and 50.
There has been substantial discussion during the passage of the Bill about the importance of driving emissions reductions in the UK. The Government agree with this principle, and we have designed the Bill to provide a clear framework for action. Under the Kyoto protocol, developed countries have each been given a maximum allowance, or target, for greenhouse gas emissions over the period 2008-12.
As noble Lords know, the UK is one of the few countries that is on course to substantially beat its target, but we are keen to make reductions beyond those required under Kyoto, and over a longer timescale. That is why we have brought forward the Bill. In trying to achieve deeper cuts, we are also strong supporters of the EU Emissions Trading Scheme, which sets a cap, separate from the Kyoto limit, for emissions from energy-intensive industry. That cap covers about 50 per cent of carbon dioxide emissions in the EU and in the UK.
Both Kyoto and the EU ETS allow countries and participating companies, respectively, to buy credits from projects to reduce emissions in developing countries that are not subject to a cap. The use of these credits is itself limited in both cases. The idea is that emissions reductions can be made where it is most economically efficient to do so, but that reductions are still very much driven in participating countries too. By supporting projects in developing countries, we are also helping those countries, so that their growing economies are low-carbon from the start. Project credits are subject to close scrutiny by a UN board to provide maximum certainty that they represent genuine emissions reductions.
Our aim is that the Bill should drive emissions reductions in a way that is consistent with our participation in both Kyoto and the EU ETS. The Bill, with amendments made in the Commons, contains specific provisions that enshrine in law our intention to reduce domestic emissions and provide transparency about what actually happens.
Clause 34 requires the Committee on Climate Change to advise on the extent to which the carbon budget should be met by action in the UK and by the use of overseas credits. In addition, having set carbon budgets, the Government must develop and publish proposals and policies for meeting them. Amendment No. 9 proposes adding further transparency. It would require that the Government’s report on proposals and policies for meeting budgets, under Clause 14, must set out the implications of those policies for the relative balance between action to reduce UK emissions and the use of overseas credits.
In addition, Amendment No. 11 would introduce a new clause requiring that, in considering how to meet the long-term target and the carbon budgets, the Secretary of State must have regard to the need for UK domestic action on climate change. That is a clear legal requirement and statement of intent, which for the first time puts into domestic law the need for action here in the UK to reduce emissions.
Clause 25 would set in the Bill a minimum level of domestic effort in meeting budgets; in other words, a flat maximum for the use of carbon credits. Noble Lords will be aware that the Government do not support this approach. That is why we have proposed Amendment No. 17, which would delete Clause 25. Our view is that setting a binding limit in the Bill would send the wrong signal to our international partners about our support for a truly global carbon market. This is particularly important given the ongoing negotiations on a comprehensive, global, long-term framework for action, which we hope to agree at Copenhagen in December next year.
The Stern review showed that international emissions trading under binding caps plays a vital role in the global response to climate change. The noble Lord, Lord Stern, reaffirmed this during debates on the Bill earlier this year:
“Carbon trading has a very powerful role not only through cost but in that much broader and deeper context of putting a global deal together”.—[Official Report, 11/3/08; col. 1416.]
We consider that a more appropriate method for tackling this key issue would be the requirement to set a flexible, less rigid limit on the use of credits. Amendments Nos. 17A, 17B and 17C have been proposed to achieve this.
Amendment No. 17B would require the Secretary of State to set a binding limit on the use of carbon units for each budgetary period in secondary legislation, taking into account the views of the Committee on Climate Change on the appropriate balance between domestic and overseas effort. This limit would also have to be set in the context of the requirement, which Amendment No. 11 would introduce, to have regard to the need for UK domestic action on climate change. In proposing a limit, the Secretary of State would also have to consider each of the matters in Clause 11 which must be taken into account in coming to,
“any decision … relating to carbon budgets”.
With the exception of the first budgetary period, where the limit is to be set at the same time as the level of the budget, the amendment would require that the limit be set 18 months before the start of the budgetary period in question. This would ensure that an appropriate limit could be set once the level of the budget is known and the wider policy context, including the international situation, is clear. If a limit was set in the Bill, as in Clause 25 and Amendment No. 17D, further primary legislation would be required to adjust this if it was considered necessary. This might be in order to comply with or maintain consistency with the requirements of a future international agreement.
Clause 25 also creates difficulties with timing. Due to the way the limit is calculated under Clause 25, the limit could be confirmed as an absolute amount of carbon units only once net UK emissions for the previous budgetary period are known. The final level of net UK emissions for the previous budgetary period, and thus the level of the limit on carbon units, would not be known until 17 months into the budgetary period to which the limit applies. This would considerably reduce the transparency about the amount of credits that may be counted towards the net UK carbon account and would undermine the certainty for business, stakeholders and parliamentarians. By contrast, under the process we are proposing, the limit would be known before the relevant budgetary period begins. This will allow policies to be put in place to ensure that the limit is not exceeded.
Amendment No. 17B would also provide an important flexibility, which Clause 25 and Amendment No. 17D do not provide, that particular units may be excluded from counting towards the limit. This would allow, for example, the exclusion of carbon units arising as a result of UK companies’ participation in the EU ETS counting towards the limit. A limit on credits which affected the EU ETS sector by including emissions allowances sourced from participants in the scheme elsewhere in the EU would conflict with the UK’s commitment to this key policy measure. This approach would also undermine the economic efficiency of the trading scheme by placing further requirements on UK-based participants which were not imposed elsewhere in the EU. Such a limit would also cause a real likelihood that we would find ourselves with inconsistencies or a lack of transparency, which would go against everything we are trying to do in this legislation. In addition, given the clear links between this issue and carbon budgets more generally, I consider that the devolved Administrations should have a similar clearly defined role regarding setting limits on the use of carbon credits. Amendment No. 17B provides for that.
Amendment No. 17C would supplement the new clause proposed by Amendment No. 17B by specifying in Clause 27 that any carbon units in excess of the limit set may not be counted towards the net UK carbon account. This amendment effectively puts in place the binding nature of the limit for the purposes of carbon accounting. The final amendments in this group, Amendments Nos. 49 and 50, are minor and technical and relate to the purchase of carbon units by Her Majesty’s Government.
Moved, That the House do agree with the Commons in their Amendment No. 9.—(Lord Hunt of Kings Heath.)
My Lords, I will speak to my Amendments No. 11A, 17F and 17G. Much has been achieved during the passage of the Bill, not least in this House. It is now a considerably stronger and better Bill than when it first arrived here one year and three days ago today. The time taken to see the Bill through reflects the consideration given to the issues raised by it. In the pre-legislative process, the Joint Committee of both Houses chaired by the noble Lord, Lord Puttnam, provided a great platform for improving the Bill, but the area of domestic effort and the use of carbon units remain its Achilles’ heel. We in this House made a clear and positive decision to quantify the domestic effort but the Government reversed that decision in another place. If we want the Climate Change Bill to be a world-class act, we need clarity on this issue.
We on these Benches have long argued that this Bill represents a crucial opportunity for the United Kingdom to lead the world, not only in legislation but also in the jump to a low-carbon economy and all the benefits that this will bring to the first movers in a new era. The whole point of this Bill is to provide the market with the long-term clarity and certainty it needs to compete and be the best in the world in this new economy. Business is up for the challenge and it is encouraging to see that one of the most enthusiastic advocates of this issue is one of Britain’s largest energy companies, Scottish and Southern Energy. Why does it support it? It knows that the investment decisions it makes today will lock in the carbon footprint of its business for the next 40 years. It needs to know now what the rules of the game are before it spends billions investing in new infrastructure that will bring heat and power to millions of people in Britain.
Another reason why we consider this to be a vital issue is that relying significantly on emissions reductions overseas is frankly a bad habit for our economy to get into. We cannot allow low-carbon economies to develop elsewhere in the world while we are left behind in an indulgence-buying, carbon-emitting, old style economy. It may be cheap to do so now when the carbon price is still relatively low, but this will become an extremely expensive habit if and when the carbon market does what it should and a tonne of CO2 becomes far more expensive. All the more reason not to lock in a carbon-intensive infrastructure now when we know it will become more expensive in the future. We would literally be asking our children to pay expensively tomorrow for our cheap and gluttonous extravagance today. Such a course would do little to show the rest of the world that the UK is serious about moving to a low-carbon economy with all the benefits for innovation, employment and new business opportunities that this will bring.
We also recognise that it is not necessarily possible to find an ideal or correct balancing percentage between domestic and non-domestic effort. The noble Lord, Lord Teverson, has tabled an amendment suggesting that the division between the two should be 50:50, whereas the original Clause 25, as agreed in this House, was for 70 per cent domestic and 30 per cent non-domestic effort. For this reason we have considered it important for the Committee on Climate Change to be consulted on this issue, as detailed in Commons Amendment No. 11. We all know that the committee as defined in the Bill will have expertise in far more than climate science. According to Schedule 1, the committee will also have expertise in, among other areas, business competitiveness, economic analysis and forecasting, and emissions trading. It would then seem only sensible that we consult this esteemed group on this vital question, just as we considered and will continue to consider its advice on the 2050 target and the setting of carbon budgets.
I am pleased to see that the Government have now decided to put a requirement on the Secretary of State to take the views of the independent committee into account, as clarified in the government amendments, and I thank the Minister for the way in which he explained that in moving the amendment. We greatly welcome the Government’s amendment to Amendment No.17, which shows that they have reconsidered their actions in the Public Bill Committee in the other place in removing what was then Clause 25. The Government’s new additions after Clause 11 will clearly go a long way to address our concerns over the limit set on the use of carbon units, but we think it is worth while to press the Minister on his definition of “carbon credits”. The Government’s amendment would allow limits to be set on the use of all carbon units, meaning the clean development mechanism (CDM), the joint implementation (JI) credits, and the EU allowances (EUAs). The subject matter is awash with acronyms but we shall try to keep our heads above water. To be effective in ensuring that the UK moves to a low-carbon economy, any limit needs to apply to all carbon units. However, the latest signals from the Government suggest that EU allowances are going to be exempt from this list, which will be limited to CDM and JI credits. Can the Minister tell the House whether that is the case, and if so, why?
The Minister will know that if that were to happen, the UK could simply buy more EU allowances from other EU countries. Those countries would simply import more CDM to compensate. It would be a form of carbon unit laundering, purchasing EUA credits from other EU states which replace the EUA credits that we have bought with more CDM credits, which they can then purchase from outside the European Union Emissions Trading Scheme. Can noble Lords be assured that the amendments which the Government propose will drive the de-carbonisation of our economy, particularly our power sector, which the noble Lord, Lord Turner, who unfortunately is not in his place, recently recommended was so vital?
Finally, I should be grateful if the Minister could clarify how the Government intend to account for the emissions from sectors under the EU ETS, which is a complex but critical issue. A recent consultation on carbon accounting from the Department of Energy and Climate Change—we on this side of the House welcome the creation of the new department—makes it clear that the Government intend to use the UK’s Emissions Trading Scheme cap for the first carbon budget period, which runs from 2008 to 2012. However, beyond 2012, the whole structure of the EU ETS will be radically transformed. Quite simply, Europe is moving away from an ETS cap, set at national level, and is moving towards setting a single, Europe-wide cap. While that has many merits it creates a very significant problem for accounting for the ETS traded sectors under the Climate Change Bill, as there will no longer be such a thing as a UK cap. DECC’s consultation acknowledges that there is an issue, but offers no solution to the problem. Can the Minister explain how emissions from the EU ETS sectors will be accounted for in carbon budgets after 2012?
There is also a risk that under the Bill sectors outside the ETS—for example, transport, building stock, and non-energy intensive industry—may be expected to take on more ambitious measures to compensate for a weak EU-wide cap on the ETS sectors. Can the Minister clarify what options the Government are considering which would allow the UK to set a tighter carbon budget for the ETS sectors, particularly in the power sector, than would be implied by the cap set at EU level? I look forward to hearing the Minister’s assurances on these critical issues.
My Lords, I wish to speak to Amendment No. 17D as an amendment to Amendment No. 17A. It says here that I have spoken to this with Amendment No. 9, but I am not sure about that. Clearly, this is a core area of belief and it is what the Bill is about. Should there be domestic targets or should this be written in the context of the wider world?
Before this debate, I would not have thought that the noble Lord, Lord Lawson, would be my major witness on how the targets for the Bill could be avoided. The minor ways are the banking and borrowing provisions which allow carbon output and accounting to be pushed from one period to another—all those fudge factors are in there at the moment—and the major one is offshoring. I am sure that, in the summer, the Minister saw a Defra and Stockholm Environment Institute report called Development of an Embedded Carbon Emissions Indicator. It is an excellent document. It asks what the carbon content of our exports and imports is. Effectively, it is asking what the carbon consumption of the United Kingdom is over time, as opposed to our carbon production. Of course, carbon consumption in many ways is a better economic indicator of carbon than production—what the UK consumes rather than just produces and perhaps exports.
That report highlighted the fact that currently we consume something like 37 per cent more carbon than we produce and that gap is getting broader. Why? It has everything to do with the global economics of trade, in that many of our carbon-intensive industries are going to the developing world, while we concentrate on and expand our economy in terms of services and low-carbon technologies. That is not good news. It says that as a country we are responsible for far more carbon emissions than we report, but we are able to offshore them. Ironically, we tut-tut at China for its increasing emissions, but a large proportion of those emissions are ones which we have exported.
I have tried to get to the bottom of this and to put in more normal language what we mean by trying to look at the domestic production of carbon in this Bill rather than the broader carbon budget. One could illustrate that by saying that perhaps, later this evening, I will invite the Minister to the pub next door and in there we will see two fat guys discussing how to lose weight. We might listen in to their conversation and they might challenge each other to lose weight. They might say, “We are both overweight, which is bad for us and it is not government policy either, so let's commit to losing five stone each within a year with the prize of a bottle of champagne”. Having listened to that, we think we will go back, in a year’s time, to see whether the task has been achieved. In a year’s time, we go to the pub again and one of the guys is substantially thinner but the other one is exactly the same. The thin one says, “I have achieved my target; I have lost five stone so I can have my bottle of champagne”, but the other guy says, “I have won as well and I claim my bottle of champagne because I have lost five stone”. The thin guy will say, “I am sorry; you look exactly the same weight as before”, to which the fat guy will say, “No, it is quite all right, I paid my brother to lose five stone and I have a certificate from his doctor to tell you that he lost five stone, so I win a prize as well”.
The Minister would say that that is absolutely all right because in terms of the nation's health, one person losing five stone is as good as anyone else losing five stone, but everyone in the pub will know that that individual is a fraud and I believe he would be treated with derision for having delegated his healthcare. That is exactly the same as how we look at the UK economy in regard to carbon. It is no good saying that we will delegate this task. Not only have we delegated our carbon-intensive production to the developing world, but we will be even cleverer than that now and will let the developing world do the carbon reductions for us; we will claim them and we will feel good while it has to do the heavy lifting. Somehow that is not right; there is a strange logic there.
That is why we on these Benches are still unhappy that there is no commitment in the Bill to domestic carbon reduction in the economy. I accept that the methodology used to move forward and the Conservative amendments are much better than the Bill was when it left the Commons, but there is an important issue about leadership here. Whatever we say as a nation, whatever the Government say and whatever is said about leadership, the gaping hole on the face of the Bill regarding finding someone else to do our cleaning up potentially wrecks that leadership and that moral authority.
I tabled an amendment which suggests that we move from 70:30, as the ratio was, to 50:50. I will not move that amendment because 50:50 is still derisory. I am glad, however, that the Government have understood that there is a big issue here and it is one that they have tackled to a degree. I have faith in the climate change committee and I hope it will come forward with good logic and tight targets. This is one area of the Bill, however, where I believe the Government have a major problem in their authority and global leadership.
My Lords, I, too, wish to speak on the subject. This evening marks the final phase of a legislative journey that for me started 18 months ago when I was asked to chair the joint parliamentary committee scrutinising this Bill. In another sense, it also represents the starting point in the far longer and more difficult slog of implementing the Bill’s best intentions.
This Bill will only be the first piece in the legislative puzzle that is likely to be required if we are to achieve our aim of a sustainable society and a sustainable planet. I have little doubt that by 2020 this House will be debating the pros and cons of what for the present I will describe as personal carbon allowances. After a great deal of argument, the House will pass some tentative legislation to this effect. I hope that it will not be so tentative that it will fail to achieve the result that by then will be badly needed.
If today I am able to give this Bill eight and a half out of 10, it is more to do with the ambitions it sets for itself than the rather limited means it has chosen to achieve them. On more than one occasion, I have warned of the possibility of this Bill morphing into a carbon trading Act. I am sorry to say that, despite the best possible intentions, this is largely what has happened.
Although a great deal could be said on this subject, I will restrict myself to addressing the broad thrust of this group of amendments. Why do I remain intransigent on the subject of a cap on the purchase of overseas carbon credits in compensation for domestic emissions? There are two principal reasons. First, I reject the simplistic economics that insist that a unit of carbon saved is the same wherever in the world that saving comes from. On a purely like-for-like basis, that may be true but the situation is far more complicated and rather more interesting than that. A unit of carbon purchased from a developing country has a tangible benefit both in its own terms and as a means of transferring capital from what for convenience I will call the rich north to the impoverished south. It is, however, solely a one-for-one transaction, having little or no afterlife or long-term value. A domestic carbon saving, on the other hand, can well be a precursor, as we have seen with recycling, to permanent behaviour change, leading to the saving of many carbon units. So, instead of one for one, or like for like, it becomes one for many. This should not be allowed to become a zero-sum game.
I was interested to hear the noble Lord, Lord Lawson, because in one respect, and only one respect, he is absolutely right. The notion of this Bill as a carbon trading Act is a real danger. The same fertile imaginations that brought us our present credit crunch are without doubt sharpening their swords to take a slice of the secondary trade in carbon emissions. It will only be a matter of time before one of our national newspapers blazons a headline, “Carbon trade scam revealed”. I urge the Government to look carefully at what they are setting in train. The conditions exist for something frightening to occur.
The noble Earl, Lord Onslow, who is not in his place, said he believes people will look back on this Act—as it will be then—and think we were a bunch of “arses”; I think that was his word. I have made a promise to myself that I intend to bind all contributions to this Bill in a leather book, give it to my great-grandchildren and ask them to read it, say every five years, and decide for themselves who were the greater arses during the passage of this Bill.
The second reason for my intransigence is well rehearsed. The Kyoto Protocol, of which we were an early signatory, is absolutely clear that purchased carbon credits will be supplemental to domestic savings. No amount of ministerial tautology—
As I was saying, no amount of ministerial tautology can convince me that “supplemental” means anything other than less than the principal sum, which this amendment generously concedes might be up to 50 per cent.
The full implications of this Bill will over time ask a great deal of every citizen in this country. For that reason alone, it must start its legislative life by being unblinkingly honest. Despite the many problems this amendment causes—over the past few months, officials have tortuously tutored me in all of them—it will be a great mistake to allow this piece of legislation to pass, leaning as it does on what to the man or woman in the street would appear to be a rather convenient piece of legal juggling, no matter how justified.
The Library of the House checked the Law Reports on the use of the word “supplemental”. I am satisfied that my understanding of the word is the one the courts use.
To that same person in the street “supplemental” will continue to mean “supplemental”. Until the forthcoming Copenhagen summit decides to remove that injunction, or at least find another way of describing it, no honeyed words from my noble friend on the Front Bench are likely to change my view that this is a disproportionately important matter. It is disproportionately important because this is all about trust. If Governments have learned nothing else in these past few months, it should have been that trust is not just one factor in their relationship to the electorate; it is the whole ball of wax.
The Government sit on a knife edge. If trusted, they might achieve a great deal. If they allow that trust to slip, however, the abyss beckons.
My Lords, it is a pleasure to respond to this debate. May I say to my noble friend Lord Puttnam, who is agonizingly close to missing his aeroplane, that it was a privilege to hear him speak. It is interesting to hear what he will say to his grandchildren about this Bill. I was trying to decide with the excellent team of officials who have formed the Bill team over a long time what comparative piece of legislation one could compare this Bill to. The best I can come up with is the 1948 NHS Act—a Bill of immense importance which, 60 years later, is still relevant.
I accept that the Bill has been improved enormously during the passage through your Lordships’ House and another place. I agree with my noble friend that this is a question of trust because this is partly about legislative requirements and partly about leadership. It is about leadership in this country—Government and Parliament showing how important it is to deal with climate change—but also about giving the UK a solid basis from which to negotiate internationally.
I disagree with the general sentiments of my noble friend and the noble Lords, Lord Taylor and Lord Teverson, on this matter. Before I come to the amendment, it is important to reflect that the critical requirement is on the UK Government that net emissions must be reduced by at least 80 per cent by 2050. The Government must set and meet five-year carbon budgets starting from this year. It also requires that the Secretary of State, in carrying out his duties, must have regard to the need for UK domestic emissions reductions. Government Amendment No. 17B would require a limit to be set for each budgetary period on the number of overseas credits that can be purchased to meet the budget, and the Committee on Climate Change will be advising on the appropriate balance between domestic effort and the use of overseas credit.
We think that we have listened carefully to the principal points made in the debate, but as I have explained, the government amendments will provide the flexibility to exclude credits of a certain description that we believe to be essential to preserve the integrity of the EU ETS.
My Lords, I do not mean to suggest that in moving his amendments, the noble Lord is seeking to undermine the integrity of the EU ETS. Our fear is that that might be an unintended consequence—I put it that way—or certainly in relation to how it might be seen internationally. We are worried about the impact in terms of UK support for the EU ETS. We might disagree, but I would not want to suggest that the noble Lord himself in his amendments is seeking to undermine the EU ETS, and indeed I have taken on board his comments about ways in which the scheme should be regulated more rigorously. I hope that I have clarified the issue up to a point.
We do not want to penalise companies which decide that it is more cost-effective to generate energy in the UK than in other EU countries, resulting in UK emissions going up, but EU-wide emissions coming down. I want also to address a very important point made by noble Lords. The use of uncapped credits by the EU ETS needs to be carefully controlled. We are in the middle of negotiations on phase 3, but my understanding is that the Commission is proposing that there should be no new access to the clean development mechanism credits in this phase. Although we do not want to legislate in an area that we fear might be seen to undermine our support for the EU ETS, we recognise that additional measures are needed in the traded sector.
I understand the points made by noble Lords about the probity, if you like, of the trading scheme. The noble Lord, Lord Taylor, asked how EU ETS credits will be accounted for after 2012, and reflected that we have already acknowledged that the accounting process will become more complex in phase 3; that is, post-2012. The way to consider how best to link the Bill to phase 3 is once the EU negotiations have concluded, but it is a matter to which we will need to pay close attention. Having expressed his support for the noble Lord, Lord Teverson, the noble Lord, Lord Lawson, has not stayed to develop the theme he introduced in his speech at the beginning of our debate. However, it is clear that we need to do all we can to ensure the integrity of the credits used. We want to do all we can to ensure that the process is transparent and robust. To that end, we will need to keep on monitoring and working internationally to ensure that that is so.
In answer to the noble Lord, Lord Taylor, on what the carbon units will be, in the consultation we are currently undertaking on carbon accounting regulations, it states:
“We propose to count the following as carbon units: assigned amount units, certified emission reductions for the clean development mechanism, removal units, emission reduction units and the European unit allowances for the EU ETS”.
I am happy to provide further information on this if the noble Lord requires it.
We then come to the substance of the debate. The noble Lord, Lord Teverson, tempted me down to the pub to witness two thinnish men observing two fat men drinking. He thought that it simply is not acceptable that even though the fat of the nation had reduced by the relevant amount, one of the fat chaps had said he was going to reduce his weight, but in the end did not do so. The noble Lord found that to be a problem. He knew that my response would be that collectively it is all right because the overall fat of the nation was coming down, and he knows that I will answer by saying that ultimately what counts is reducing emissions generally worldwide. We believe that through the enactment of this Bill and through the hugely challenging 80 per cent target, we are demonstrating the kind of leadership that both he and my noble friend Lord Puttnam require.
It is also fair to point out, and it has been acknowledged, that the last thing the Government want to do is say, “It’ll be all right because we can simply trade away the issues we need to tackle in this country”. I think that the Government have clearly signalled that they have done and will continue to do all they can to reduce emissions in this country. The amendments I have tabled articulate that aim and make it clear that the Committee on Climate Change will ensure that these matters are brought to the attention of the public and Parliament. However, in the end we worry about the impact of the amendments tabled by noble Lords on the EU ETS, and that is why we think, after a great deal of consideration and debate in the other place, along with the amendments being brought forward, that we have achieved the right balance that allows the necessary flexibility within the context of an utter determination for us overall to meet the 80 per cent target.
On Question, Motion agreed to
Amendment No. 10
My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 10. I have spoken to this amendment with Amendment No. 1.
Moved accordingly, and, on Question, Motion agreed to.
Amendment No. 11
11: Insert the following new Clause-
“Duty to have regard to need for UK domestic action on climate change
(1) In exercising functions under this Part involving consideration of how to meet-
(a) the target in section 2(1) (the target for 2050), or
(b) the carbon budget for any period,
the Secretary of State must have regard to the need for UK domestic action on climate change.
(2) “UK domestic action on climate change” means reductions in UK emissions of targeted greenhouse gases or increases in UK removals of such gases (or both).”
My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 11. I have spoken to this amendment with Amendment No. 9.
Moved, That the House do agree with the Commons in their Amendment No. 11.—(Lord Hunt of Kings Heath.)
[Amendment No. 11A, as an amendment to Amendment No. 11, not moved.]
On Question, Motion agreed to.
Amendments Nos. 12 to 16
17: Leave out Clause 25
17B: Insert the following new Clause-
“Limit on use of carbon units(1) It is the duty of the Secretary of State to set a limit on the net amount of carbon units that may be credited to the net UK carbon account for each budgetary period.
(2) The “net amount of carbon units” means-
(a) the amount of carbon units credited to the net UK carbon account for the period in accordance with regulations under section 27, less(b) the amount of carbon units debited from the net UK carbon account for the period in accordance with such regulations.(3) The limit for a budgetary period must be set-
(a) for the period 2008-2012, not later than 1st June 2009, and(b) for any later period, not later than 18 months before the beginning of the period in question.(4) The Secretary of State must set a limit under this section by order.
(5) The order may provide that carbon units of a description specified in the order do not count towards the limit.
(6) An order under this section is subject to affirmative resolution procedure.
(7) Before laying before Parliament a draft of a statutory instrument containing an order under this section in relation to a budgetary period, the Secretary of State must-
(a) take into account the advice of the Committee on Climate Change under section 34(1)(b) (advice on use of carbon units) in relation to that period, and(b) consult the other national authorities.”
17C: Page 14, line 20, at end insert-
“( ) The net amount of carbon units credited to the net UK carbon account for a budgetary period must not exceed the limit set under section (Limit on use of carbon units) (limit on use of carbon units) for the period.”
My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 17 and do propose Amendments Nos. 17B and 17C in lieu of the words so left out of the Bill. I have spoken to these amendments with Amendment No. 9.
Amendments Nos. 17D to 17G, as amendments to the Motion, not moved.
Moved accordingly, and, on Question, Motion agreed to.
Amendments Nos. 18 to 21
Amendments Nos. 22 to 24
My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 22 to 24. I am most grateful to the Deputy Speaker for his professional guidance through the intricacies of this stage of the Bill. In moving these amendments, I shall speak also to Amendments Nos. 26, 27, 29, 30, 32 to 39, 53, 55, 60, 65, 69, 70, 72, 73 and 75. The key amendments in this group form a comprehensive package of government amendments introduced in the other place to clarify the role of the adaptation sub-committee of the Committee on Climate Change. These amendments also concern the formal vesting date of the Committee on Climate Change, the date by which it is to provide formal advice on the 2050 target and the level of the first three carbon budgets.
We listened carefully to the arguments put forward in this House about adaptation. We fully agree that expert advice and scrutiny of how the Government assess the risks and implement their adaptation work programme are important and useful, and we believe an adaptation sub-committee of the Committee on Climate Change could have a potentially useful role in this regard. However, we believe that the Committee on Climate Change’s role on adaptation should be consistent with its work on mitigation; that is, giving technical advice and analysing and scrutinising progress. We think it should have a slightly different role from that originally proposed by this House. Our amendments propose that it should provide technical advice to the Government and the devolved Administrations on the UK risk assessment and progress reports to Parliament about the UK Government’s adaptation programme.
As we propose new adaptation functions to the work of the Committee on Climate Change, we have made small amendments around the provision of information, guidance and directions relating specifically to the committee’s new adaptation functions. We also propose to change the date by which the Committee on Climate Change’s advice is required and the commencement date for Part 2 in order for the committee to be brought to life and formally give its advice on 1 December. There are also a small number of minor and consequential drafting amendments in this group. I hope noble Lords will accept that this has been a positive response to debate in your Lordships' House.
Moved accordingly, and, on Question, Motion agreed to.
Amendments Nos. 25 to 39
My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 40 to 42. I shall speak also to the other amendments in this group and address Amendments Nos. 43A and 43B, which have been tabled in response to the clear views expressed by the Delegated Powers and Regulatory Reform Committee in its 15th report of the 2007-08 Session.
The purpose of the first group of amendments is to achieve a significant reduction in the number of single-use carrier bags distributed in the UK. More than 11 billion single-use carrier bags are distributed each year. They have a direct environmental effect as a particularly visible form of litter when discarded irresponsibly, through the risk they present to marine life and the emissions that they generate from transport and waste management. However, their disposable, easily-substituted nature also makes them an iconic symbol of our throwaway society. By taking action on single-use carrier bags, we hope to catalyse other beneficial behaviour changes, including an increase in public waste awareness and greater participation in recycling by consumers.
As announced in the Budget, we wish to take enabling powers to require retailers to charge for single-use carrier bags. However, before these powers are exercised, we want to give retailers the opportunity to pursue, on a voluntary basis, a significant reduction in the number of bags they distribute. We believe that we could achieve at least a 70 per cent reduction in the number of single-use bags distributed if a charge were introduced. The Government would be prepared to impose a charge if a similar reduction could not be achieved through voluntary action.
The effect of the new clause introduced by Amendment No. 43 is to introduce a new schedule conferring powers on the relevant national authorities in England, Wales and Northern Ireland, but not Scotland, as requested by the respective devolved Administrations, to make regulations about charges for single-use bags. The specific powers are contained in the new schedule, which Amendment No. 78 introduces. It is split into three parts covering powers to require a charge for bags, powers to create civil sanctions in respect of sellers who breach such regulations and procedural matters.
Part 1 of the new schedule provides powers to make regulations about charging for the supply of single-use carrier bags. It provides for regulations to: require sellers of goods to charge for single-use carrier bags supplied at the place where they are sold or for the purpose of delivering goods; define sellers of goods; define a single-use carrier bag; specify the minimum amount that sellers must charge for each single-use bag; appoint an administrator to administer the provisions made by regulations and confer appropriate powers and duties on him, including enforcement powers and duties; and require that records are kept of the amounts raised by the charge and the uses to which the proceeds are put. We will consult formally on these points of detail, prior to the introduction of secondary legislation. The first set of regulations will be subject to the affirmative resolution procedure.
Part 2 of the new schedule contains provisions about civil sanctions. The provisions in Part 2 follow the model used in the Regulatory Enforcement and Sanctions Act 2008. Of the possible sanctions in that Act, we are proposing fixed monetary penalties, variable monetary penalties and compliance notices only. Administrators will be able to choose which sanction is appropriate on a case-by-case basis. We will not be creating any criminal offences and have proposed that any fixed penalty fines in respect of breaches of the proposed bags regulations be kept to a minimum of £5,000. There is, however, provision to require retailers to publicise the fact that they have breached the regulations.
At this stage, I should like to bring to the attention of the House the government amendment to Commons Amendment No. 43, Amendment No. 43B, which ensures that any future regulations concerning the levels at which variable and non-compliance penalties are set will be subject to the affirmative resolution procedure. That was recommended by the Delegated Powers and Regulatory Reform Committee. The Government are grateful for its advice and are seeking to comply with it.
Part 3 of the new schedule provides for the regulations to be made by a single national authority or by two or more national authorities as joint regulations. There could therefore be a single set of regulations covering England, Wales and Northern Ireland if the three authorities agree. It also disapplies the hybrid procedures to any draft regulations made under the powers contained in the new schedule as we are providing for the power to name specific retailers who will be subject to the charge. The same approach is taken in relation to the waste reduction scheme provisions in Clause 70(5). Amendments Nos. 52, 54, 56 to 59, 61 to 64 and 67 are consequential on the new clause and schedule.
By tabling these amendments, the Government are responding to clear, strong public demands for action on single-use carrier bags. These enabling powers provide a powerful lever in our continuing efforts to phase out single-use carrier bags in favour of longer-lasting, more sustainable alternatives.
The other amendments in this group—Amendments Nos. 40, 41, 42, 66, 77 and 80—relate to powers to allow for up to five pilot waste incentive schemes in England, as set out in Part 5. Amendment No. 41 ensures that the Secretary of State may exercise powers to make subordinate legislation or issue guidance under the waste reduction provisions separately to the designation of a specific pilot area. This ensures that the Government can provide a clear framework for pilot authorities wishing to pilot a scheme before they submit proposals. Amendment No. 40 is a technical amendment consequential on Amendment No. 41.
When the House previously discussed the Bill, my noble friend Lord Rooker, who was the Minister in charge at that point, mentioned our intention to bring forward an amendment to clarify that a local authority’s duty to arrange for collection of household waste in England is discharged by collecting waste that is presented for collection in the way specified in a Section 46 notice to residents; for example, in a specified receptacle. Any waste left in contravention of a Section 46 notice need not be collected. Once a local authority has informed residents of how they should present their waste for collection—for example, by putting it in a bin—the authority need not collect any waste left lying outside that bin, the so-called side waste. Amendment No. 42, which would apply to all waste collection authorities in England and Wales, seeks to achieve this. As explained, such policies have been successfully operated by a significant number of authorities, with the support of their communities, using powers conferred by the Environmental Protection Act 1990. As part of a good overall service, they have helped householders to understand how much waste they produce and encouraged them to increase the amount that they recycle. In line with good practice, the Government expect that authorities will use all the powers available to them proportionately and sensibly, hand in hand with effective communications and support for residents.
We do not believe that the sensible use of these powers should lead to uncollected rubbish building up in local communities. It is important to note that all authorities will continue to have to meet existing requirements to collect household waste. In addition, local authorities have a duty, under Section 89 of the Environmental Protection Act 1990, to keep land under their control clear of litter and waste. This approach is not a new one; Defra set out its position in a letter to local authorities in August 2005, but it has not always been clearly shared by all authorities, which is why it will be helpful for local authorities to have a single, clear point of reference in legislation.
Amendment No. 66 is consequential on Amendment No. 42. Amendment No. 77 would ensure that the power to allow waste collection authorities to require an occupier to place waste for collection in receptacles identified by specified means—for example, by tags or stickers—is available only to those authorities in England which are operating a waste reduction scheme in their area. Finally, Amendments Nos. 80 and 81 would amend the Long Title of the Bill to reflect the addition of the subject matter introduced by Amendment No. 42. I clarify one point that I made earlier about fixed penalties for breaches of proposed bags regulations. I stated that the penalties would be kept to a minimum of £5,000. This was a slip of the tongue; I meant a maximum of £5,000 and apologise for that error. I commend the amendments to the House and beg to move.
Moved, That the House do agree with the Commons in their Amendments Nos. 40 to 42.—(Lord Davies of Oldham.)
My Lords, before I speak to these amendments, I declare an interest as a co-chairman of the Associate Parliamentary Group on Strategic Resources. This used to be called “Waste”, so it is connected to this topic. I am happy to support this amendment and I thank the Minister for introducing this and the other amendments within this group. My party supported the inclusion of Schedule 6 in Committee in the other place. Energy costs and climate change notwithstanding, we consider it vital to act on the scourge of plastic bag litter in our country. The single-use carrier bag is an icon of our throwaway society. On a journey through the countryside, there are few things more infuriating than seeing plastic bags stuck in trees and hedgerows. They cause environmental damage, endanger our wildlife and pollute our seas and waterways. This country currently uses more than 13 billion single-use carrier bags each year; that is more than 500 bags a year for every household in Britain. We agree with the Government that something must be done to reduce this figure. I am happy to support Commons Amendment No. 43 and emphasise a new imperative to see waste as a strategic resource.
My Lords, I welcome the plastic bag initiative, whether it is enacted or whether persuasion works on retailers. Over the time that I have been a Member of the House, we have heard many Questions in the Chamber about plastic bags. A village called Modbury in south Devon, with which I have been associated for much of my life, was, I think, the first village or settlement in the country to ban the plastic bag within a community. It shows how such matters can mushroom. I very much welcome the amendments.
On Question, Motion agreed to.
Amendment No. 43
43: Insert the following new Clause-
“Charges for single use carrier bags(1) Schedule (Charges for single use carrier bags) makes provision about charges for single use carrier bags.
(2) In that Schedule-
Part 1 confers power on the relevant national authority to make regulations about charges for single use carrier bags;Part 2 makes provision about civil sanctions;Part 3 makes provision about the procedures applying to regulations under the Schedule.(3) In that Schedule “the relevant national authority” means-
(a) the Secretary of State in relation to England;(b) the Welsh Ministers in relation to Wales;(c) the Department of the Environment in Northern Ireland in relation to Northern Ireland.(4) Regulations under that Schedule are subject to affirmative resolution procedure if-
(a) they are the first regulations to be made by the relevant national authority in question under the Schedule,(b) they contain provision imposing or providing for the imposition of new civil sanctions, or(c) they amend or repeal a provision of an enactment contained in primary legislation.(5) Otherwise regulations under that Schedule are subject to negative resolution procedure.”
43B: Line 21, after “sanctions,” insert-
“( ) they increase the amount or maximum amount of a monetary penalty or change the basis on which such an amount or maximum is to be determined,”
My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 44 to 46. I shall speak to the other amendments in the group. I will also discuss Amendment No. 48A, which is an amendment to Amendment No. 48. The amendments in this group give effect to the Government’s proposals for a new community energy-saving scheme. Amendments Nos. 44, 68, 79 and 82, if agreed to, will make the changes necessary to enable the Secretary of State to bring forward secondary legislation setting out the detail of the new scheme. The community energy-saving programme was announced by the Prime Minister in September as part of the home energy-saving package. It forms a central plank of the Government’s new proposals to help households save energy and money, which is more essential than ever at this time of high energy prices. The precise arrangements will be subject to extensive consultation and we do not yet have fixed ideas on all aspects of the programme. It might help if I mention some of the key features that would be included in the subsequent secondary legislation, as we envisage them.
The programme will be based on the model of the existing carbon emission reduction target, under which we set the energy companies’ targets for promoting energy efficiency in households. In this case, we will be looking specifically for a community-focused approach. We want to see the programme delivered, as far as possible, through the partnership of energy companies, local authorities, community groups, third-sector organisations and other bodies. Experience suggests that it is when all the key local players work together and deliver action on a street-by-street and house-by-house basis that communities and individuals respond best to the help available. The new scheme will be funded and delivered both by the energy suppliers and the electricity generators. The generators are not, at present, covered by the carbon emission reduction target, but we believe that all companies in the energy market now have a responsibility to help those in need of support. We will set out more precise detail as we move towards the stage of public consultation. I hope I have been able at least to give an outline of an important and imaginative scheme to deliver assistance to households at a local level, involving the co-ordination of partners.
I turn to Amendments Nos. 45, 46, 47 and 51, which concern corporate reporting on greenhouse gas emissions. We agree with those who have spoken earlier in this House and with opinion expressed in the other place on the need to find the right way to ensure that businesses play their part in the nationwide effort to reduce emissions. We propose our amendments in that context.
My Lords, I will come to that point as I deliver my argument, because there is a full context for that activity. The noble Lord has raised an extremely important point but, if I may, I shall describe how we envisage the whole structure working. I may be able to answer him more precisely within that framework.
We want to provide as much certainty as possible for the business community—the noble Duke/Earl is reflecting uncertainty—about the levels. I understand the point that he is making. That is why we are concerned to resolve that and a number of other points. He will recognise that we want to show leadership internationally in this area for the business community. The amendments are therefore designed to reinforce the Government’s commitment to the importance of corporate transparency, and to taking forward the process as quickly as possible.
Amendment No. 45 would require the Secretary of State to introduce guidance on corporate reporting by October 2009. That will provide a structure to help companies and others to report their emissions where they choose to do so. We will consult on the guidance next year, working closely with key stakeholder groups, including the CBI, to ensure that it fully reflects current best practice and is practicable for businesses to work with.
Since we last considered the issue of corporate reporting in this House, we have looked a little further at the evidence of costs and benefits of requiring all large and medium-sized companies to report on their greenhouse gas emissions. Our initial analysis shows that, although companies which voluntarily measure and monitor their greenhouse gas emissions may be more likely to manage them effectively, there is no settled evidence that being required to report on emissions would drive emissions reductions.
More work clearly needs to be done to clarify the situation. Amendment No. 46 would commit the Secretary of State to review the contribution of mandatory corporate reporting to achieving the UK’s climate change objectives, and report back to Parliament by December 2010 at the latest. The review will allow us to assess the current legislative and voluntary requirements and design a targeted reporting requirement that addresses those gaps proportionately.
Of course, I am strongly mindful of the view originally taken by this House on the role of mandatory corporate reporting. Amendment No. 47 would require the Government to introduce mandatory reporting by April 2012, or to lay an explanation before Parliament as to why they have not done so. That would make clear in the Bill our intention to move towards mandatory reporting of emissions, provided that we can be sure that it is environmentally beneficial and cost-effective.
Setting a deadline of 2012 to establish a standard will allow time for businesses to prepare and for proper consideration of the issues by government and stakeholders. We consider that it is important to include a deadline, as that provides greater certainty to businesses and stakeholders. I believe that the proposals are both ambitious and proportionate, while containing important flexibilities. For that reason, I consider that Clause 80, which was proposed in this House, is no longer necessary. Amendment No. 51 would remove it from the Bill.
I now turn to Amendments Nos. 48 and 48A and 48B. Amendment No. 48B is a re-drafted version of Amendment 48. I propose that Amendment No. 48 should be disagreed to, and that the new clause in Amendment No. 48B should be added to the Bill in lieu.
Amendment No. 48B would require the Treasury, acting through the Office of Government Commerce, to produce an annual report on progress made towards improving the efficiency and sustainability of the government estate. The report will specifically cover the steps taken to reduce the size of the civil estate; to achieve further efficiencies from the Government’s existing buildings; to improve the sustainability of those buildings; and to ensure that new buildings procured are in the top quartile of energy performance.
It is right that the Government lead by example. We must get our own house in order if we expect others to take the necessary action to tackle climate change. That is why we are committed to taking action in this area, which builds on other commitments we have made on improved sustainability. For example, government departments will be included in the carbon reduction commitment, which will incentivise the introduction of energy efficiency measures and the occupation of more energy-efficient office space.
My Lords, we want the Government to lead by example in tackling the issues involved in the exercise. That is why, as the noble Lord will appreciate, our main energies will be devoted towards making sure that government offices and buildings hit the targets.
The question of whether there may be an aspect of trading is a good try, but I will not be called on that question at the moment. If the noble Lord is saying that it would not look very good if the Government purported to set an example of direct action and then found other ways to solve the problem, it is quite clear from our amendments that we want to rest responsibility on government departments to shape up to those challenging objectives, because of the crucial issue of leading by example. The plastic bag issue is the same. We all recognise that plastic bags are not the only form of waste over which we need to get control, but they are one on which we can demonstrate that we set an example that we expect others to follow.
We have put in place robust mechanisms to provide a strong role for the Office of Government Commerce, as the government office which leads on improving the efficiency and sustainability of the government estate and operations. The procurement of new energy-efficient buildings is just one element of the strategy to reduce energy consumption, but we are fully committed to procuring buildings in the upper quartile of energy performance. I am that sure noble Lords will recognise the seriousness of our intent. To allow the provision to be kept relevant and up-to-date, we have also provided an order-making power so that descriptions of buildings covered by the report can be changed over time. Any order would be subject to debate in both Houses.
The final amendment in this group, Amendment No. 75, makes a small change to the trading scheme powers in Schedule 2, by ensuring that trading scheme regulations may make provision to levy charges from third parties, as well as participants, for the cost of operating the trading scheme. We want third parties to have access to trading schemes, as that will ensure that a deeper and more liquid market may develop than would be the case if only participants were allowed to trade. In the absence of the amendment, third parties would be able to take part in a scheme’s trading element but there would be no express power to levy charges from them towards the cost of operating a scheme. We do not think that desirable. There is a clear, practical need behind this adjustment, which is to ensure equitable treatment of both trading scheme participants and third parties.
In moving the amendment, I am conscious of the point that the noble Earl, Lord Montrose, identified—
My Lords, the noble Duke. That is at least the second time that I have made that catastrophic error; I do apologise to the noble Duke, and I hope that he will forgive me on this occasion, especially as he will recognise that most of the provisions of the amendments apply to England, Wales and Northern Ireland and do not affect Scotland at all, so I am very grateful for his presence. It keeps me in order in addressing noble Lords properly and accurately in this House.
I wanted to say to him that, because the clauses in the Bill and the amendments that we have tabled are, inevitably, about general powers, and we clearly have to consult about the detail, which we intend to lay out in secondary legislation, I cannot give him a precise answer to his question.
I am able to say that it is exactly that kind of question—which category of corporate body would be subject to the requirements—that we need to consult on, before we decide the details that will be subsequently developed in secondary legislation. I hope he will appreciate that, at this stage, the Bill sets out to create the framework in which we will be able to operate constructively, particularly as a great deal of this work will depend on the willing co-operation of a large number of corporations, bodies, local authorities and the voluntary sector in this country.
My Lords, I shall speak to Amendment No. 47B. We support the government amendments to the Commons Amendment No.48, just as we supported the original Amendment No. 48 introduced on Report in the other place. Anyone who has heard my colleagues’ contributions on this Front Bench—in the daisy chain of Bills: Planning, Energy and Housing and Regeneration, the latter now an Act I believe—and my contributions on climate change will know that we have long recognised that the benefits of going low carbon extend far beyond stabilising our climate. Going low carbon will also mean saving people money by making their homes and businesses more energy efficient.
The amendment will improve the sustainability of existing public buildings and ensure that new buildings procured by the civil estate are in the upper quartile of energy performance. We believe that energy efficiency improvements are one of the keys to short term domestic emissions reduction, as well as having positive carbon abatement costs, which will create new jobs and generate new wealth for our economy. We are also mindful of the fact that home energy prices are at record highs and that many of Britain’s poorest families will be facing a tough winter ahead. While we cannot expect the measures detailed in these amendments to help people this coming winter, in the longer term, we can acknowledge the difference that they will make in helping those suffering fuel poverty. I am happy to support these important amendments.
I return to my Amendment No. 47B on the issue of carbon reporting for businesses. While we on the opposition Benches acknowledge the distance moved by the Government on this issue, we feel that still more could be done. If any noble Lords saw the opinion piece in the Financial Times on Friday 16 November 2008, from James Murdoch, the chief executive of News Corporation Europe and Asia, they will have seen that many leading businesses clearly agree with the Conservative Party that the Government are not leading sufficiently strongly on this issue.
This House will recall that it was here that the original mandatory carbon reporting requirements were put into this Bill, only to be removed in the Public Bill Committee in another place. After some considerable pressure, the Government clearly saw the error of their ways and settled on the stipulation that the Secretary of State must make regulations for certain companies by 6 April 2012. This certainly is an improvement, but the message coming to us from many large and progressive businesses is that they are already accounting for their carbon emissions and do not see why they should have to wait another four years before they should report.
To quote James Murdoch's Financial Times article:
“The UK government is afraid this will be a burden, but many of the best companies already do it. They are finding cost savings and opportunities”.
Mr Murdoch further notes that:
“Saying we can tackle climate change without public company disclosure is akin to thinking obesity”—
we are back to the champagne again—
“can be solved if people do not weigh themselves”.
For this reason we have tabled an amendment to Commons Amendment No. 47, which would give the Secretary of State powers to choose not only the classification of companies which are to be included but the date from which such inclusion would commence, in advance of 6 April 2012. We accept that there must be discretion for the Secretary of State to choose which category of company should be included and when. However, this means that, for example, all FTSE 350 companies could be regulated to report by January 2010.
We think it wise that the largest of businesses, which already have significant environmental reporting responsibilities, should not have to move like some sort of Second World War Atlantic convoy, at the pace of the slowest ship. Instead, the biggest companies should be regulated to break ahead of the pack and allow the smaller and less regulated companies to enter the process at a later date. In today's economic environment it is imprudent for any business with responsibilities to its shareholders to continue to ignore the commercial risk of not accounting for the low cost of its carbon pollution, a cost which we now agree is here to stay.
I finish by again quoting the chief executive of News Corp Ltd, who last Friday said:
“The government should go further in the vital area of company emissions measurement and reporting. The Climate Change Bill, which is now in the final stages of its passage through Parliament, is an opportunity to commit to making reporting of carbon emissions mandatory by 2010 at the very latest. There is no time to lose”.
These Benches entirely agree with those sentiments. There is a lot of pressure out there and that is why we call on the Government to consider Amendment No. 47B as a valuable and necessary enhancement to the Bill.
My Lords, I speak to my Amendment No. 47A as an amendment to Commons Amendment No. 47. This is one of the areas where the pace of understanding of climate change is getting quicker and quicker. A number of us were at a launch of One Vision: Consistency in Corporate Carbon Reporting by the CBI in a room in your Lordships’ House. The CBI is very much—I was going to say a convert, but that probably does not do it credit—a strong advocate of agreeing a sensible and appropriate carbon reporting system and getting it into place, but how long does it take to get the right system which everybody applies in a consistent way? That is the question I have about the timescale, but I very much agree with the view of the noble Lord, Lord Taylor, that we need to do this quickly.
Indeed, regarding slightly smaller or medium-sized businesses, the director of the corporate leaders’ group at the Institute of Directors said that once you realise that it is inevitably going to happen and that the only future is a low carbon future, you want to get on with it sooner rather than later. This is an area where business wants to move ahead, sees that it is right to do so and that there is competitive advantage and cost savings in moving in this direction. Therefore there is an urgent need to get these reporting standards right and implemented.
Hence my shock, I suppose, when I read government Amendment No. 47. It reminded me of one of those plays one used to do at school. You used to have the Sheriff of Nottingham, who seemed to be the authoritative character and who would make a declaration. Here I suppose it is:
“The Secretary of State must, not later than 6th April 2012—
(a) make regulations”—
and so forth, to which you thought, great. But then, of course, in the school play, there is an aside in brackets, “and whispers off to the left”, or in this case:
“lay before Parliament a report explaining why no such regulations have been made”—
and the dastardly Sheriff of Nottingham rides off. Come on, the Government talk all the time about giving certainty to business. I have spent most of my life in business and that is what you want from Government. Some things you may want them to get on with quicker. Some things you may not like particularly, but you want to know where you are. I cannot see any captain of industry, whether of a small business or one of the world’s largest companies, understanding why the Government make such a strong statement but then say, “By the way, if we do not get around to doing it, we will put a report before Parliament. Why not?”. It gives absolutely the wrong signal. It says, “Yes, we want to do this: we are committed, but we might not do it, and this is what we have to do when we fail”. It is a plan for failure.
What business ever says, “This is what we will do when we fail to deliver our corporate mission”? No one does so. One may have contingency plans for failure, but this is not a contingency plan; this is an alternative route—A or B. I do not understand why there is a plan B—a get-out clause in the Bill to broadcast to our corporate nation that, although it wants to get on with it, the Government have no conviction that they will able to make it. That is a great shame. Once again, the rug is pulled out from under the Government’s good intention.
I do, however, congratulate the noble Lord, Lord Davies, on his excellent explanation of why there should not be a trading scheme for government buildings. I wish that I had had that speech to put into one of my other speeches earlier on in the debate.
My Lords, I had not intended to speak, having arrived rather late for the remainder of this debate, but I cannot restrain myself from speaking on mandatory reporting. I very much support what the noble Lord, Lord Teverson, said. I cannot believe that we are still discussing this issue at this stage in the climate change debate. Given the acknowledgement that climate change is one of the most severe threats facing the globe and that businesses, individuals and organisations in this country need to rally round and reduce carbon emissions, the fact that the Environment Agency has produced a valuable series of reports on environmental reporting by British industry, as well as the fact that a disparate variety of companies, large and small, are reporting sporadically on carbon but in a way that is singularly unuseful in tracking progress over time or making comparisons between businesses, it staggers me that we are still talking about some sort of discussion and consultation, with a timescale within which to reach a view about whether there will be mandatory reporting by 2012. All the arguments made by the noble Lord, Lord Teverson, are absolutely the case.
We not only have the sheriff with his noises off; the noble Lord, Lord Davies, seemed to come clean when he remarked that reporting does not necessarily serve as a good indicator for managing emissions. That gave the game away completely. We need not bother to go out to report, so far as I can tell, because the Government seem to have made up their mind. Those graphs in the Stern report on the early reduction in carbon emissions were the most telling; it is not what we do by 2050, but what we do in the next five years, that counts. However, we are going to faff about for four of those five years trying to make up our minds whether some of the biggest companies in this country—which, by reducing their carbon emissions, will benefit by cost-reduction and developing technologies that will serve them well in the global market—should simply write down in some reasonably standard way the product of the work that they inevitably will have to do if we are to hit the carbon-reduction targets. I cannot believe how pusillanimous the Government are being on this issue.
My Lords, I have been caught in some rather devastating crossfire. After all, the noble Baroness, Lady Young, is upbraiding the Government because they seem to have made up their mind, and the noble Lord, Lord Teverson, is upbraiding the Government because they have not made up their mind. It is difficult for me to respond to that duality, except to say that it will not do to argue that Governments are only about good ideas and good intentions. Governments are certainly about good ideas and goods intentions—this Government in particular are full of both—but we are responsible in Parliament for good legislation.
We are discussing not some generalised formula for the nation this evening but what we put into law. I hope, indeed beg, the noble Lords, Lord Teverson and Lord Taylor, not to press their amendments because they both have this element in common—they would put into legislation and make certain something about which the Government are not definitive at present and that would require considerable consultation. It is easy for noble Lords to pluck out of the air one article in a newspaper from however esteemed the source might prove to be, but it will not do for idle reference to be made to the top three FTSE 250 companies, or whatever. The Government cannot work on the basis of surmising these terms; they must have some precision about who is to be involved in this.
I think the noble Lord, Lord Taylor, would certainly accept that his noble friend the Duke of Montrose was concerned about this issue and challenged me first—probably, if I read his interjection accurately, on where the line would be drawn. Corporate reporting certainly involves a burden, and I am quite sure that the noble Duke, the Duke of Montrose, was concerned that the burdens on companies of a certain size might be excessive and might not provide sufficient benefit, consequent upon reporting, which the Government seek. We are not being definitive about that at this stage. We are saying that we must have provision for reporting and the opportunity to ensure that we can take this argument a stage further and make it definitive.
I am grateful to both noble Lords for tabling amendments that are constructively expressed, but the Government are not being definitive at this stage. We need to carry out extensive consultation before we can be definitive, which is why it should be recognised that the Government have amendments in place to create the capacity to act effectively. We are not in a position to be definitive in primary legislation about just where that categorisation takes place or how the reporting should be conducted.
My Lords, does the Minister agree that my amendment would do exactly that; it would give the Secretary of State the power to make different dates for compliance for different categories of companies? Indeed, it very much reflects the sentiment that the Minister has been trying to express; namely, that there is no need to hold back on getting something going simply because there are difficulties with smaller companies. Perhaps one would never include smaller companies in such a scheme.
My Lords, I am grateful to the noble Lord for recognising some of the difficulties that are consequent upon this. That interpretation of his Amendment No. 47B does not detract from the Government’s case, which I have been putting. In fact, it largely follows the line of thinking that I have sought to express. However, we already have this framework in the Bill. The noble Lord’s amendment would not give us any additional flexibility. In fact, we have a slightly greater definition than we are prepared to accept at this point, but I do not think that the positions of the Government and the noble Lord are that far apart. He properly recognises that a considerable amount of additional work needs to be done in consultation. I hear the pleas on all sides. The noble Baroness, Lady Young, would not be in her place if she was not concerned to speed the Government’s processes and I accept the point that she made.
I am merely indicating that the Government need flexibility with regard to this issue. We know that we have to legislate with precision. The whole point of secondary legislation is to fulfil that role. In such an important Bill as this, it would be wrong to insert precision which is not accurate and which we cannot defend. At the same time, it is essential that we have a framework on which we can make considerable progress. I do not think that the Government’s proposals are vastly different from that of the noble Lord. Having heard how close we are to his thinking, I hope that he will not feel it necessary to divide the House on such a limited disagreement.
My Lords, does the Minister recognise the fact that the Government are asking for time to make progress against a background of eight years of annual reporting in considerable detail with City institutions and reporting of these issues by registered listed companies? Eight years’ worth of data and pressure for mandatory reporting seem to indicate that the Government are taking rather a long time to reach a view.
My Lords, that is true with regard to certain categories of companies, but the noble Baroness will recognise that what will be put in legislation will govern all companies so specified and that we have quite a significant task to fulfil in achieving that. I hope she will appreciate that, with regard to these amendments and the very substantial consideration of the issues that we have had in this House and the further consideration in the other place, the issue is not the Government in any way, shape or form resiling from the necessary advance that needs to be made; it is getting the legislation right so that we can make effective and accurate progress. I merely indicate to the House that I will have to take the noble Baroness’s criticisms at this point that some information is available and that we could build on that. We can, but we do not have enough to solve the issues, nor for me to give the definitive reply that the noble Duke, the Duke of Montrose, hinted that I would have to give if I wanted to assuage his anxieties at this stage. Until I am in that position, primary legislation will need to be expressed in the terms which the Government have suggested.
On Question, Motion agreed to.
Amendment No. 47
47: Insert the following new Clause-
“Regulations about reporting by companies(1) The Secretary of State must, not later than 6th April 2012-
(a) make regulations under section 416(4) of the Companies Act 2006 (c. 46) requiring the directors' report of a company to contain such information as may be specified in the regulations about emissions of greenhouse gases from activities for which the company is responsible, or(b) lay before Parliament a report explaining why no such regulations have been made.(2) Subsection (1)(a) is complied with if regulations are made containing provision in relation to companies, and emissions, of a description specified in the regulations.”
My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 47.
Moved, That this House do agree with the Commons in their Amendment No. 47.—(Lord Hunt of Kings Heath.)
[Amendments Nos. 47A and 47B, as amendments to Amendment No. 47, not moved.]
On Question, Motion agreed to.
Amendment No. 48
48: Insert the following new Clause-
“Report on the civil estate(1) It is the duty of the Office of Government Commerce to lay before Parliament each year a report setting out the progress Her Majesty's Government has made towards improving the efficiency and sustainability of its civil estate.
(2) The report must include the progress made towards-
(a) reducing the size of the civil estate;(b) improving the sustainability of the buildings that already form part of the civil estate; and(c) ensuring that any new buildings procured for the civil estate are in the upper quartile of energy performance. (3) Where any new building procured for the civil estate is not in the upper quartile of energy performance, the report must state the reasons why this is the case.
(4) A report under this section must be laid before Parliament not later than 1st June in the year in which it is to be so laid.”
48B: Insert the following new Clause-
“Report on the civil estate(1) It is the duty of the Treasury to lay before Parliament in respect of each year, beginning with the year 2008, a report containing an assessment of the progress made in the year towards improving the efficiency and contribution to sustainability of buildings that are part of the civil estate.
(2) The report must, in particular, include an assessment of the progress made in the year to which it relates towards-
(a) reducing the size of the civil estate, and(b) ensuring that buildings that become part of the civil estate fall within the top quartile of energy performance.(3) If a building that does not fall within the top quartile of energy performance becomes part of the civil estate in the year to which the report relates, the report must state the reasons why the building has nevertheless become part of the civil estate.
(4) A report under this section must be laid before Parliament not later than 1st June in the year following the year to which it relates.
(5) In this section “building” means a building that uses energy for heating or cooling the whole or any part of its interior.
(6) For the purposes of this section, a building is part of the civil estate if it is-
(a) used for the purposes of central government administration, and(b) of a description of buildings for which, at the passing of this Act, the Treasury has responsibilities in relation to efficiency and sustainability.(7) The Treasury may by order provide for buildings of a specified description to be treated as being, or as not being, part of the civil estate for the purposes of this section.
(8) Any such order is subject to affirmative resolution procedure.”