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European Council: 14-15 December 2006

My Lords, may I press the Minister further on climate change, particularly the emissions trading system? I very much welcome the communiqué’s concentration on climate change and the fact that there will be a major strategic discussion next spring that will, I hope, lead to real action over the long term. However, we can sometimes be too pessimistic about the emissions trading system. First, a huge amount of carbon trading has taken place since the scheme was introduced and, although it has many flaws, the current system is a financial market that works and has an important operating base in the United Kingdom. We can already show that climate change management can start to work through market mechanisms. We should not underestimate its success so far. Having said that, the system is now entering a phase—leading up to 2012—that will decide its success. For the moment, much is needed to ensure that the system works effectively between now and 2012 in terms of allocations among industries and which industries are included. What practical conversations have there been between heads of Government in this key area to ensure that the 2008 to 20012 period for the emissions trading system works effectively, so that it can be one of the major global tools for climate control, given that one in five of the world’s carbon emissions comes from the European Union? The amount is, admittedly, smaller than that of China, but we are still a major player globally.