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Carbon Budget Order 2011

My Lords, I should declare my interest in this topic. While I worked at Friends of the Earth, I instigated the campaign that secured cross-party support for a new legal framework to tackle climate change in the UK. That campaign was based on a policy document where I argued in favour of a series of legally binding carbon budgets to deliver a steady trajectory of emissions reductions over time. While on secondment to the Office of Climate Change, I was made part of the team tasked with drafting the Bill. There, the concept of carbon budgets was further developed and other elements were added, most importantly the creation of the independent Committee on Climate Change, an expert body set up to advise government on crucial aspects of the implementation of the Bill including, most importantly, the levels at which future budgets should be set. It will come as no surprise, therefore, that I am a passionate defender of this world-leading legislation. I should also state that I am a director of a not-for-profit organisation that is a watchdog on the carbon market. The UK was the first country in the world to commit to a long-term, legal framework to deliver a low-carbon economy by 2050. This was a bold but necessary action to which we must remain committed. There are many reasons for pursuing legislation in the UK. On the one hand, there is the moral imperative. The UK is the home of the industrial revolution. This generated great wealth, no doubt, but the burning of fossil fuels also unleashed an unforeseen environmental risk of the gravest proportion. The countries and people who will suffer most from the effects of global climate change are those who have done least to cause it. We therefore have a duty to lead the way in delivering the next great energy revolution. The Climate Change Act is designed to do just that. Then there is the economic imperative. The UK no longer enjoys large reserves of low-cost fossil fuel-based energy. We will become increasingly reliant on imported fuels if we do not act to increase our efficiency and exploit alternative forms of power. These will be predominantly renewable and nuclear power, but with the application of carbon capture and storage—all the elements of which have been proven; it is simply a case of joining them together to make it work commercially—making the continued used of fossil fuels possible into the future. If handled correctly, the shift to low-carbon sources of energy will deliver huge investment into the UK, creating jobs and boosting GDP. Finally, there is the political imperative. At the time of drafting the Climate Change Act, we were hopeful that a new legally binding international treaty would be agreed in Copenhagen. Sadly, this did not come to pass and, even now, negotiations are proceeding at something akin to a snail's pace. There is now no certainty that a new framework will be agreed in time to extend existing commitments which run out at the end of next year. However, the rationale for legislating in the UK was to demonstrate political leadership and to inspire others to follow. I am pleased to say that, even in the absence of a UN-agreed framework, other countries are acting, and many cite the UK’s Climate Change Act as a source of inspiration. A recent report by Globe International documented legislation in 16 countries, including some of the world's largest emitters. This does not include legislation at a sub-federal level, which is most notable in the US, where, sadly, lack of progress at a federal level remains disappointing. Perhaps the most significant sign that the world is waking up to the threat of climate change and taking action to avert it is what is happening in China. While China’s economy continues to be heavily dependent on fossil fuels, its latest five-year strategy set out clear commitments to invest low-carbon technologies. It clearly sees that it is in its own interest to develop on a low-carbon pathway. I should like to say a few words about the orders before us this evening. The first sets our fourth carbon budget for the period 2023-27. I am very pleased that the Government, after some apparent internal debate among Cabinet colleagues, finally accepted the proposals put forward by the Committee on Climate Change and have agreed to set a limit of 1.95 billion tonnes of carbon dioxide-equivalent for this five-year period. This provides the clarity of intention that those companies seeking to invest in low carbon infrastructure need. On the second of the orders, the carbon credit limit order, however, the Government have ignored the advice of the committee, which recommended that no carbon offsets should be allowed as part of the second budget; that is, no emissions credits from projects overseas beyond those that are permitted in the EU Emissions Trading Scheme. Instead the Government are proposing that 55 million tonnes of emissions could be offset, with the UK’s carbon budget effectively increased by that amount over the period. This is an unnecessary provision which undermines the security of investment that the budget framework is intended to create. It is unnecessarily timid. Latest estimates published in June 2011 show that emissions for this period are already predicted to be 114 million tonnes below the level of the cap set in legislation. So we already have plenty of wriggle-room. My fear is that adding a further 55 million tonnes of potential emissions serves simply to undermine certainty. It could mean that weak policies are implemented. If we do not introduce policies now, we will have a very hard time ratcheting down later. In scientific terms, it makes much more sense to act earlier to avoid increasing the risk of climate change. This is an unnecessary provision, and it disappoints me that the Government felt it necessary to make it. We must think of this in the long term. Each future budget requires us to take more action. If we simply take a strategy of off-setting we are just storing up more liabilities for ourselves in the future. Can the Minister please give us an assurance that this a provision of the last resort and that the knowledge that such provision exists will not weaken the policy framework that will be put in place to deliver our long-term carbon budgets?