Greenhouse Gas Emissions Trading Scheme (Nitrous Oxide) Regulations 2011

Duke of Montrose Excerpts

Tuesday 17th May 2011 Grand Committee

[The Duke of Montrose]

My Lords, I congratulate my noble friend and the Government on bringing in the regulation before it is compulsory—really at the earliest opportunity—to limit nitrogen oxide production in the production of nitric acid. I must declare an interest as someone with an interest in agriculture, because it will be very helpful to agriculture for this assistance to be given to the fertiliser industry.

Following the same lines as my noble friend Lady Parminter, I do not know whether there is scope in the course of the Minister’s reply to consider the question that anthropogenic NO₂ emissions are doubling the amount expected from natural microbial action. In the whole agricultural scene, emissions of that gas are serious. One would like to know whether the Government are pursuing suitable protocols to determine emission levels of nitrogen dioxide and what can be done to limit them.

[Lord Taylor of Holbeach]

My Lords, I thank all noble Lords who have participated in this useful and productive debate—in particular, the noble Baroness, Lady Smith of Basildon, for advising me in advance of what she was particularly interested in. I am happy to be able to address those issues.

What has been very satisfying has been the support that the measure has and the acknowledgement that this is the right way in which the Government and industry can work together for the benefit of the United Kingdom economy in general and United Kingdom investment.

The noble Baroness asked about the monitoring system. The installations covered by EU ETS are required to monitor and report emissions. At the end of each year, they are required to surrender allowances to account for their installations’ actual emissions. The annual emissions figure must be approved by an independent third-party verifier. That operates not just in this area but across the EU ETS scheme. That is part of GrowHow’s existing commitment in its carbon reduction programme.

The noble Baroness also asked about the consultation process. We used the shorter consultation process. As there was a single manufacturer involved, we felt that it was unnecessary to have a protracted consultation period. In fact, there were three other consultees: Scottish and Southern Energy, Scottish Power and the Chemical Industries Association. All were generally supportive of the N₂O opt-in. Concerns were raised by the Chemical Industries Association about the proposal, included in the consultation, to place a legal requirement on nitric acid producers to return the allowance if they reduced levels of nitric acid production—the partial closure rule—but the Government have agreed that partial closure is unnecessary and we will not be insisting on that in the regulations.

The noble Baroness also asked about the obvious concern, given the hiatus in the market earlier this year, on EU ETS registry security. The UK registry is widely recognised as one of the most secure registries in Europe, but, EU-wide, the Commission has issued a draft regulation to address those security issues, and we are engaging with the Commission and other member states on that. Our aim is higher levels of security in the registries while ensuring that we still have a liquid and well functioning market. The Government are well aware of our role as a leading member and are working closely with France, Germany and Spain to try to ensure that the standards throughout Europe are maintained at a high level to reduce that risk.

My noble friend Lady Parminter asked about air quality. That is a very reasonable question to ask. There is no degradation in air quality as a result of those operations. The measure reduces nitrous oxide emissions so, if anything, there should be an improvement, but we could not quantify that exactly. She then asked, as did my noble friend the Duke of Montrose, about the relationship of the regulations to the policy of carbon reduction and nitrous oxide reduction for agriculture in general and about what progress had been made on that front. I cannot answer that question directly, but it is interesting. I will ask my noble friends in Defra to write to put noble Lords in the picture on that.

Meanwhile, if I may, I commend the regulations for approval.