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European Council: 14-15 December 2006

My Lords, the noble Lord is quite right. I agree with him that we should not be apologetic about starting the emission trading system. A price has already been put on the product. It is early days and there will be changes. I do not know whether it was discussed in more detail than I indicated in the Statement, but the fact is that we are working with the Commission to encourage a strengthening of the European emission trading system. The EU heads agreed that climate change and energy should be considered together. The energy policy contains many of the levers that we want for a transition to a low carbon economy. Good progress has been made on climate change and energy security under the Finnish presidency. The German presidency will start in January. Germany has announced upfront that climate change will be a key feature of its presidency. We look forward to a spring European Council, which is likely to have a strong focus on climate change and energy issues. We will play a central role in ensuring that the EU continues to demonstrate its commitment to tackling these issues. We need to make some changes to policy; and to be ambitious and not mealy-mouthed about it. The emissions trading system will probably require some changes. But the fact is that once the Governments have set a price on the market, the market will perform. I hope that in future that can work as well as it does in other areas.