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Carbon Budget Order 2011

I thank the Minister for his introduction today to these two orders. It builds on the fourth carbon budget statement on 17 May. It is important that the objective to reduce emissions of greenhouse gases by 80 per cent of 1990 levels by 2050 has been enshrined in legislation. It underlines the commitment shared across the political divide—excepting the noble Lord, Lord Reay, and others I admit—over the long-term approach required to combat the effects of climate change. It sends a clear signal to the international community that the UK is committed to the low-carbon economy. The noble Lord, Lord Teverson, has put forward a strong case that climate change is happening and I know many are frustrated at the low level of action by other governments. It is important that we also recognise the work of the Committee on Climate Change, that it is a crucial part of the assessment of the latest climate science, the evolving international framework and the critical pathways required. I pay tribute to it for its expert advice to Government. That is not to say that these orders are not controversial. Indeed, the Minister may recognise that the importance of the imperative to make early progress across Government required the intervention of the Prime Minister. It has also not gone unnoticed that for the first time the CCC’s recommendations have not been accepted in full. While it is recognised that the first three carbon budgets were set after the EU had already agreed the 2020 target, the fourth carbon budget is being set in advance of any EU decisions and without any overarching EU framework being in place. In the light of this, will the Minister outline the reasons behind the justification to reject the tightening of emission targets in the second and third carbon budgets covering the years 2013 to 2022? I enjoyed and look forward to the contributions in your Lordships’ House from my noble friend Lady Worthington. She brings great knowledge on these issues. She has asked the Minister about the size of the carbon offsets under the second order that were are debating today and the signal it may give. While it is understood that the Minister would like to have these credits as a fallback position, is he able to say why he fears these may be necessary, bearing in mind that the CCC recommended that they should not be relied upon and the budget should be met through reduced emissions? Under the Climate Change Act, emission reductions by the UK’s industrial and power sectors are determined by the UK’s share of the emissions trading system cap. This system has been the subject of attack and fraud and has been suspended at unfortunate regularity. Bearing in mind the reliance that the Government are now putting on it, is the Minister confident that its operation will be secure and that it will be fit for purpose? What bearing will this have on the review he is reserving for Government in 2014? Should domestic commitments place the UK on a different emissions trajectory than that agreed by the EU? What level of divergence will lead to the Government revising their aims and what are the implications this may bring to policy commitments? The Government’s clear prior view in the criteria for this review will be needed to ease uncertainty in industry and non-governmental organisations. Could the role and scope of the 2014 review be clarified in the policy decisions that the Government will announce following this Motion today, due to be brought forward in October? The Minister will not need to be reminded again how important it is for the market that there is certainty and consistency of measures if industry is to have the confidence to invest. There are two aspects to this. First, there is the necessity to encourage the renewables sector through the system of ROCs, RHI and feed-in tariffs to provide the long-term development of technologies. Does the Minister recognise the damage that has been done to this sector’s confidence following the announcement of the review of that regime? Furthermore, the Government have cut funding in green R&D, including funding of the Carbon Trust research into biofuels and funding for marine technology development. Secondly, in the interests of energy-intensive users, will the Minister give assurances that he will work with them exhaustively to ensure that UK jobs are protected and that continuous efforts towards energy efficiency and demand management in these industries are fully acknowledged? It is apparent that mechanisms to mitigate effects in this sector were not properly considered by the department before the carbon floor price was set in the recent budget. It is important to get the balance right, the speed of change right, ensuring the UK maintains an industrial sector, greening that through new technologies and creating new green growth into the future. Consistency of policies and their implementation is vital to create the confidence required for the long-term investment needed—some £16 billion annually throughout the 2020s—that the UK is open for business. With regard to setting the carbon floor price in the budget, and recognising that the budget is an annual event, will the Minister confirm whether this will be subject to annual review and restatement or the price announced will be adhered to? In a Statement in May, the Minister said that the, "““fourth carbon budget will result in no additional costs to the consumer during this Parliament””.—[Official Report, 17/5/11; cols. 1289-90.]" Is the Minister confident of this? I understand that Ofgem predicts a possible doubling of energy bills to £2,000 per household. It is understood that, with an expert body such as the CCC, the department does not need to consult consumers on today’s Motion. However, is the Minister satisfied that the voice of the consumer is adequately heard in the CCC? Would he welcome some strengthening of that voice, especially through consumers’ local representatives in local government? I say this fully appreciating that it will be some time before the Green Deal brings benefits to the housing sector and that the issue of local carbon budgets has yet to be resolved. There is much that we can debate and there are many issues behind the setting of a fourth carbon budget. The noble Lord, Lord Teverson, has spoken about the importance of demand reduction. While the budget sets the objectives to be attained on the way to the ultimate goal of reducing CO2 emissions, the policies that will underpin attainment of these goals have still to be clarified and their detail examined. We shall look forward to the announcements in October and meanwhile support these orders tonight.