Carbon Budget Order 2011

Duke of Montrose Excerpts

Tuesday 28th June 2011 Lords Chamber

I predict that before too long, possibly when the Secretary of State for Energy and Climate Change is reshuffled, more sensible minds will start looking at the whole climate change framework of which these orders are a part. The noble Baroness, Lady Rendell, wrote a book called A Fatal Inversion. I believe that an inversion is taking place which could be fatal for the reputation of some people in this debate. Those who criticised the AGW consensus were portrayed as the zealots and the cranks. That is now being turned on its head and those who question the consensus are increasingly being seen as the rational moderates. It is the defenders of the consensus who are dogmatically driving the UK into ever more unilateralist positions.

[The Duke of Montrose]

My Lords, I am very interested to follow the noble Lord, Lord Turnbull. He talked about agnosticism and it seems that we are in the area of faith. The Americans believe “In God we trust”, as they say on their dollar, while here we are saying, “In certain elements of science, we either trust or we do not trust”.

I am grateful for the explanations offered in the notes and I was interested to see the estimate given of the cost that might be incurred by this fourth budget. It is stated as a least-cost path of £1.9 billion with a top figure of £7 billion, if we attempt to reach it purely through cutting emissions within the UK. I do not know whether this is of any comfort to the noble Baroness, Lady Worthington, but the 55 million tonnes that are mentioned in the Explanatory Note on the credit limit order—in a sort of back-of-the-envelope calculation, as far as I can see—are about 5 per cent of the total non-EU carbon credits that will be required. That is a pretty marginal effort.

However, that raises a question about the statement in the Explanatory Memorandum, which states that we are,

“currently working with EU partners to try to secure an EU 2020 reduction target of 30%”.

The noble Lord, Lord Turnbull, brought that up. I would be interested to know whether my noble friend the Minister could tell the House what stage that has reached. I hope he might accept that the marginal abatement cost goes up with each increase in the reduction target. Are there any figures of what they estimate this beefed-up target might incur? There is a question as to whether this credit limit on non-EU certified emission reductions includes any allowance to accommodate the revision in the EU target. As we said before, it is such a small element of the thing overall but it might have to be part of the review that has been mentioned.

[Lord Prescott]

My Lords, I shall make a brief intervention in view of the time. The noble Lord, Lord Turnbull, was in fact my Permanent Secretary at one stage and was the Cabinet Secretary when we established the lead on Kyoto and a legal framework. Clearly, he has done some rethinking on this matter since he joined this House and I look forward to further debates. Let us be clear, however: the previous Government established a lead, and we were proud of it. To be honest, this Government are continuing it. My main worry is: what if you do not achieve the legal framework that you are after? There is not a chance in hell of getting a legal framework. I am one of those who have advocated it, but China will not have it and the Americans cannot deliver it. Quite honestly, you might think that the Europeans are going to go to 30 per cent from 20, but I predict that is highly unlikely.

What worries me about that is that it will feed all the pessimism of people who feel that this will be a failure and run costly to our industry, but we must maintain the momentum of the Kyoto principles. That is important, but we should recall that 2012 is the end of the Kyoto period. Is it going to continue with a legal framework? No, it cannot do that by 2012, or you will find that the Kyoto framework will fall—as the Americans would want—and there would be renegotiation. I hope that the Minister has a plan B here. If we are having plan As and plan Bs, one of them should be to recognise that we will not get a legal framework by 2012, yet the Kyoto principles should not fall.

There will be great division between the developed and the developing countries. It is already on the cards that way so if that is not going to be achieved, what will happen then in Europe? Many of those in the central European belt and coal areas will say that they are not going to go to 30 per cent. There is a great possibility that we will not now be able to deliver on the Europe promise, which with courage the Government have said they will do. They are now going for an 80 per cent project, which has little chance, frankly, of being achieved, but then most of us will not be around by then to say whether we were right or wrong. There is a certain amount of posturing going on around this, which can undermine the momentum we have with the Kyoto principles.

I think I said this when there were Questions in the House: I fear we will then step back and say that we were the ones who led the way, but if we cannot get the others to follow, then blame them not us. There should be a plan B. We should already be thinking about how we carry on beyond that period. It is not unusual for Europe to stop the clock: it did it all through negotiations and continues to do it. It sets a timetable. Let me suggest that in plan B we go beyond 2012, perhaps to 2015. The voluntary framework agreed in Cancun and now being discussed in Durban is difficult enough to implement in all its many manifestations and we have to make sure that we have another plan in mind or it will collapse.

My fear is that we will get up and say that we were the ones who were leading, but we have got no army and nobody is following us. Then everybody will say that Kyoto 2 has failed; that you cannot get an agreement and that will damage the momentum to deal with the problem of climate change. In conclusion, I ask the Minister whether we have got a plan B. The Minister has already said that if we do not get Europe with us on 30 per cent we will reconsider the position. Is that right? We could still continue the legislative framework, if that is what we choose, while most of the world stays on a voluntary one. Have we alternatives so that we do not damage the possibility of a Kyoto 2?