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Climate Change

I watched with interest the Liberal party conference and the proposals that came out of it. My simple point, however, is that it is important to step up the differential rates between cars of different capacity. As the hon. Gentleman draws me into that area, I wish that the Chancellor had done more, and I hope that we will continue to go in that direction. The hon. Gentleman also minimised the warm front scheme. I do not belittle the achievement of better insulation for 1.1 million people. Nor do I belittle the £800 million available between 2005 and 2008 for increasing and taking forward the warm front scheme. Those are important initiatives. If people want to build consensus, it is important to recognise what the Government have done. We need to recognise the challenges before us. A 20 per cent. reduction in carbon emissions by 2010 is a big step, which we will have to work hard to achieve. The Government’s aspiration for 20 per cent. renewables by 2020 is regarded by many in the industry as impossible. Achieving our medium-term target of a 60 per cent. reduction in carbon emissions by 2050 would be an amazingly hard step, not just for Government and domestically, but internationally, too. The Government have been extremely strong in raising climate change on the domestic agenda. Looking back to Kyoto, the role of the European Union was important, but so was that of our Deputy Prime Minister. Who would have thought that climate change would be one of the top two agenda issues at Gleneagles? That would have been unthinkable a decade ago. Keeping the discussion going to St. Petersburg in Russia was also an important step forward, as was the Gleneagles dialogue, a sophisticated diplomatic approach outside the United Nations framework, which, because of its size, will prove difficult. I was excited by what was achieved in Mexico last week, and I was disappointed at what remains to be done. I guess that all of us look forward to Nairobi next month. Again, it will be hard for us to make progress through the United Nations process. But it is important that the British Government continue to show leadership. The big challenge is post-Kyoto in 2012, which is only six years away. We need to use international discussions now to make our arguments for what comes next. I am not entirely clear about what should come next, but I do know that there is a false dichotomy between those who argue for targets and those who argue for technology. The real gain will be made by introducing targets that encourage new technologies, so that we have a target-led approach that produces market-led solutions through technology. The big challenge is carbon pricing, as the hon. Member for Ruislip-Northwood (Mr. Hurd) rightly said. If we are serious about making change, we have to secure a high, stable price for carbon that can be maintained for a long period. The buzz phrase in the industry—I hear it from British electricity generators—is carbon pricing that is long, loud and legal. As a catchphrase, that has much substance. The way to achieve that new, higher price for carbon is to build on what we have. I accept that phase 1 of the European emissions trading scheme is in its infancy, but there have already been difficulties. I suspect that phase 2, which we are working towards, will be much more robust. It is important that it is transparent, open and honest, and does not lead to anti-competitive behaviour across Europe. We must move towards a fair auctioning system, rather than the calculations that have been part of phase 1, in which vested interests and a ““business as usual”” approach have been prevalent. The real prize will be phase 3 of the European emissions trading scheme. The discussions of that phase have to be linked to the post-Kyoto discussions. We have to extend the European emissions trading scheme to aviation and other transport and industries that hon. Members have mentioned, and we must also extend it from Europe internationally. That is an amazing challenge. Unless we can achieve a firm, stable and high price for carbon, the new investment—in new plant and equipment—that we need alongside the change in behaviour, will not happen. Let us rally the consensus around carbon pricing. It will have real effects on the aviation industry. Members on both sides of the House have talked strongly about the threat of aviation, but a true trading system could help us to make progress on that. I am keen to achieve consensus, but let me strike a discordant note. It is easy to have a consensus about not very much. The Liberal Democrats and the Conservatives have a consensus on climate change, but it is on the headline and the principle. When it comes to the mechanics of the necessary policies, it is hard to build consensus. For example, where does the Conservative party stand on wind farms? Are they giant bird blenders? Does the Conservative party want a moratorium? It should make its position clear. The Conservatives should also make their position clear on the renewables obligation. We have had some discussion of that this afternoon and it has been a useful mechanism for encouraging new technologies. We do need a more sophisticated system, and the energy review acknowledges that. The consultation on the issue has just started. I think that there is a place for nuclear, and a strong argument to support replacing nuclear with nuclear. However, if we argue that nuclear is the last resort, it is clear that that replacement will never happen. It is never easy to build consensus, but the climate change Bill that many hon. Members have mentioned in the debate would serve as a vehicle for a discussion and give us an opportunity to talk about consensus. There are merits in introducing year-on-year reductions, and the discussion about the Bill has, at the very least, raised the profile of the argument. Even so, difficulties remain, as any such Bill would involve domestic rather than international targets. It would introduce year-on-year changes, rather than the lengthy planning period— 15 years at least, or perhaps even longer—needed for the introduction of a trading scheme. To that extent, it would deal in aspirations rather than mechanisms. I listened very carefully to what my right hon. Friend the Secretary of State said about carbon budgeting. I hope that the Government will introduce relevant measures in the forthcoming Queen’s Speech. Even if a Bill on carbon budgeting is not announced then, I hope that the possibility of introducing an overarching scheme to that end will be discussed further. When the Labour party renews itself—hopefully next spring—I hope that a policy initiative will be produced that will make a break with the Labour party of the past, and drive us on to becoming a new Labour party that is environmentally sensitive and in touch with people’s aspirations for the future. My final point is more parochial. I come from a coal mining area, and coal has been facing a difficult time. Many people have said that we met our Kyoto targets because of the dash for gas, although I think that our success in that regard is due to the coal industry’s decline. However, I was pleased that the energy review spoke strongly about coal having a place in the future. Real problems exist at the moment. As my hon. Friend the Member for Morley and Rothwell (Colin Challen) noted, UK Coal, our biggest producer, is arguing about price with generators such as EDF. We can sort out difficulties like that, but the challenge for coal has to do with the environment rather than economics. The question of how we burn coal—whether we use supercritical boilers or go down the gasification route—is immaterial, as the market will decide that. More important just now is the fact that people like Richard Budge and his company called Powerfuel, together with Powergen and RWE, are looking to bring new, cleaner coal plants onstream. The problem that they face is that the carbon allowance offered to new entrants to the market is only 40 per cent. of the benchmark level for a new gas plant. Therefore, people who want to bring in cleaner coal technology are left at a competitive disadvantage. It cannot be sensible policy to prohibit or restrict new entrants to the market who will be cleaner producers of energy from coal when the comparators for them are plants that are more polluting. The Government must look at that problem, as a matter of urgency. In addition, we must move away from the notion of carbon capture and sequestration, even though the concept is a good one and I am pleased that experiments are taking place, such as at the new Powergen plant on the north Norfolk coast and at the proposed RWE plant on the Thames. Carbon capture has plenty of potential, and it could be used to enhance our oilfields, but it is not a silver bullet. The technology is at a rudimentary stage. One of the things that I want from the Stern review, which will be published shortly, is an acknowledgement that carbon capture and storage will be good for the UK and that investing money now will save money in the long run. We want new coal plant in the UK, but that is as nothing compared to the demand for coal in India and China. In this country and in Europe, we must demonstrate that we can burn coal more cleanly and deal with the consequences of carbon emissions. Saving a tonne of carbon in India or China has equal consequences for us in the west; we live in a global world. My message to our Government is that although they have achieved a lot, they must continue to hit their targets. Unless they do so, we will lose the moral high ground—the leadership that could take us to a greener, cleaner environment in the future.