UN Framework Convention on Climate Change

Lord Barker of Battle Excerpts

Thursday 18th April 2013 Westminster Hall

[Mr Tim Yeo (South Suffolk) (Con)]

I warmly welcome the opportunity to debate the UN framework convention on climate change process—a subject in which the Select Committee on Energy and Climate Change takes a close interest, and will go on doing so during 2014. Our previous report on the subject was published in July 2012, and I will run through some of the recommendations.

In general terms, we attach importance to the UNFCCC process. It is the international route for trying to reach agreement on how to tackle climate change. It is clearly—evidence shows this—a tortuous route, so while we affirm our belief in its vital importance, we should not feel dismayed or frustrated by the lack of progress. There is a danger in thinking that unless we reach a global agreement, nothing much will have come out of this. I believe that the existence of the UNFCCC process is a valuable spur to countries doing things individually. Many of the commitments that have been made on emissions targets and the progress on achieving climate change legislation around the world have resulted, at least in part, from the fact that we have the parallel process taking place—international negotiations—which focuses the minds of individual Governments.

In that context, I commend the work of GLOBE International, with which many members of my Committee and several hon. Members present are closely engaged, in helping to spread awareness of the benefits of climate change legislation. As we speak, the Chinese version of the latest GLOBE legislative study is being unveiled in Beijing by some of our colleagues. Does my right hon. Friend the Minister want to intervene?

[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

No.

[Mr Yeo]

I am sorry; the Minister was paying such close attention that I thought some gem—some pearl—must be about to drop from his lips, but that will come later.

Let me deal with some of the key recommendations and the responses to and outcomes of the report—first, on monitoring, reporting and verification. We recommended that the Department of Energy and Climate Change push for a single accounting regime to ensure effective MRV. DECC agreed that a common accounting framework was necessary and hoped to see progress on that at Doha. The outcome was a number of changes to the MRV framework to improve transparency and accountability.

Energy efficiency is a subject close to the heart of my Committee in a number of contexts, and we recommended that the Government prioritise it as a mitigation strategy, using EU cohesion funds and EU emissions trading scheme credits to drive energy efficiency policies. The Government agreed with those recommendations, although they noted the need for a stricter cap or for structural reforms to achieve that with the EU ETS. I shall return to emissions trading in a moment.

On the role of the UNFCCC, the Committee considers it the leading multilateral forum through which to combat climate change. The Government share that view. We should not allow the rather tortuous progress to be a reason to despair. Alongside the international process, the bottom-up process should give every possible encouragement. We increasingly see individual countries making national commitments.

--- Later in debate ---

[Mr Lilley]

The hon. Lady may seriously believe in the use of renewables in places where it is sensible to use them. If an area is a long way from the grid, it may be sensible to use a windmill or a solar panel, even though it will not provide light at night or electricity when the wind is not blowing.

[Gregory Barker]

Batteries.

[Mr Lilley]

If my right hon. Friend the Minister thinks that it is economic at present to store electricity in batteries, he is living in a dream world. That means that it will be not two times as expensive, as is the case with wind, or eight times as expensive, as is the case with solar, but more like 20 times as expensive if it is stored in batteries. If someone could develop storage for renewables, that would be wonderful; I would be grateful to him and he would be a great benefactor to humanity. However, I do not think that my right hon. Friend knows of such an invention.

[Gregory Barker]

My right hon. Friend is comparing two completely different things. He is talking about industrial-scale storage. As the hon. Member for Liverpool, Wavertree (Luciana Berger) said, the reality in the developing world is that most people require very small amounts of energy. Typically, they need it to use a laptop, a phone and possibly a refrigerator. Battery storage is not only viable, but happening at scale. There are nearly 500 million people in India off the grid, and hundreds of millions of people in Africa.

[Mr Andrew Turner (in the Chair)]

Order. I have two points. First, the intervention was too long. Secondly, Mr Lilley needs to bring his remarks closer to the subject.

[Mr Lilley]

I am merely explaining why the COP process is completely ridiculous and will not result in any agreement. We have this unrealistic agreement between the two Front-Bench speakers that the matter will be solved by installing a few wind turbines and solar panels in villages in Tanzania. India and China, in which effectively half the world’s population live, are industrialising. They are industrialising not by building a few windmills and solar panels, but by building nuclear—sometimes, but that is very expensive—coal above all and gas where they have it. Of course they will sometimes use renewables where it is appropriate and where an area is a long way from the grid, but let us not kid ourselves that because we have seen one windmill in Africa, the whole developing world will develop by means of renewables. If the two Front-Bench speakers, who are united in their lunacy, would like to tell me that that is seriously their belief and that they think the developing countries will grow primarily by harnessing renewables, I will give way to them.

[Gregory Barker]

rose—

[Dr Whitehead]

rose—

[Mr Lilley]

The Minister.

[Gregory Barker]

I thank my right hon. Friend. The key point here is that we are not comparing shale gas in America with the opportunity for development in the developing world. We are comparing the marginal cost of a diesel generator for hundreds of millions of people in the developing world with a renewable alternative. In most cases, it is viable without any form of subsidy.

[Mr Lilley]

Well, that is fine. Let it go ahead.

--- Later in debate ---

[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

I thank my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) because I thought this might be a slightly dry debate with the usual suspects in violent agreement, but it has been much more rigorous, thoughtful and lively. The real thanks for the debate must go to my hon. Friend the Member for South Suffolk (Mr Yeo), the Chair of the Select Committee. I thought at the outset that this is a strange time in the calendar for a debate on the United Nations framework convention on climate change, because the reality of seasonality in such matters is that negotiators do not start to clear their throats and focus on COP until the second half of the year. The debate has shown that there is a great deal to discuss, and some important points have come out.

I do not share all the analysis of my hon. Friend the Member for South Suffolk, particularly of the carbon floor price, but I share his view and take on board some of the criticism from the shadow Minister about the need for a strong emissions trading scheme and a uniform price signal on carbon throughout the European Union. It would negate the need for a carbon floor price here in the UK and for a unilateral policy. We consider the impact on British industry’s competitiveness in every policy. We take that extremely seriously, and that is why the Government broke with previous policy and introduced a substantial package of measures to help energy-intensive industries to deal with the cost impact on their businesses of supporting renewables.

The hon. Member for Glasgow North West (John Robertson) made a sensible speech, and I listened carefully to his points about members of the Select Committee and GLOBE attending COP last year and before then. When I first attended as a Minister, I was struck by the lack of support, hospitality and information-sharing with parliamentarians at those important negotiations. In the past couple of years, I have tried to go out of my way to make parliamentarians feel more part of team GB and certainly to make available more of the facilities. However, we can go further, and the hon. Gentleman is right that we should co-ordinate more closely. I am happy to consider whether there is a possibility of including them in the delegation.

I am not making a commitment, because clearly there is a difference between the Executive, who speak for Her Majesty’s Government, and the House of Commons, which challenges and scrutinises the Government. We would not expect it to have the Government’s role, but the hon. Gentleman and the hon. Member for Brent North (Barry Gardiner) are absolutely right that, because of the reputation of GLOBE UK and Parliament, they can bring a lot to the party. The issue does not involve partisan politics, but there may be some subtleties about the legislature and the Executive. I will look at the example that the hon. Members raised, and perhaps return to it at a meeting here or in the Department.

Perhaps the liveliest part of the debate was the speech and interventions from my right hon. Friend the Member for Hitchin and Harpenden. However, I fear that his whole thesis was to drag us down into the climate and energy politics of either/or when we are trying to develop, both here and globally, a pluralistic approach to energy. We do not want either/or—fossil fuels or renewables—but gas and wind. There will be a need for coal, but also for biomass. We want solar and hydro. We want large-scale solutions deployed, as well as distributed generation. We want industrial-scale generation and consumer generation. The 21st century calls for plurality of energy supply, sources and technology, as opposed to a monolithic, one-size, fossil-fits-all model at home and abroad. That will be good for security as well as value and climate.

[Glyn Davies (Montgomeryshire) (Con)]

I am particularly interested in plurality and retaining public support. As a political institution, Parliament can act only with public support. Does the Minister accept that, whatever avenue the Government go down that impacts on our climate change policy, public support is important? We have a disconnect growing between the people and the Government. Eventually, the Government’s policy will fail.

[Gregory Barker]

There is an important balance to be struck. Of course, we are here to listen to and represent our constituents, but we also have a leadership role. If ever we were reminded of the importance of not bending to public opinion in the short term, but aiming for the right long-term solution, it was this week, with the funeral of Lady Thatcher, who understood that being unpopular in the short term and not listening to the crowd can often not only be the sensible and right thing to do, but pay dividends in the long term.

On the issue of Lady Thatcher, perhaps because of the week of that extraordinary and very moving funeral, it is worth remembering that it was Mrs Thatcher, as she was then—a scientist by training and a Conservative by conviction—who more than any other world leader acted to put climate change on the international agenda. At the Royal Society, of which she was a fellow—one of the very small band of Conservative MP scientists—she said:

“For generations, we have assumed that the efforts of mankind would leave the fundamental equilibrium of the world’s systems and atmosphere stable. But it is possible that with all these enormous changes—population, agricultural, use of fossil fuels—concentrated into such a short period of time, we have unwittingly begun a massive experiment with the system of this planet itself.”

That was said in 1988, which shows extraordinary foresight.

Pursuing that line of inquiry—Lady Thatcher did not just make one speech on climate change, but several important interventions—she went to the United Nations the following year, in 1989, and crystallised her thinking. More than 20 years later, what she said then is relevant to this debate today:

“the problem of global climate change is one that affects us all and action will only be effective if it is taken at the international level.”

Lady Thatcher’s actions led, in large part, to the Rio Earth summit of 1992 and to the UNFCCC process that continues today.

The process continues with all its imperfections. There have been huge setbacks to date, not least at Copenhagen in 2009. Having participated on behalf of the Government in three COPs now and their subsidiary meetings, I am under no illusions about the difficulty of negotiating a global treaty. However, I must tell the Chamber that having returned last week from the Major Economies Forum on Energy and Climate, which meets during the year to consider action in the UNFCCC, I detect movements of the tectonic plates. I am not suggesting that we are back to where we were in 2008, when we were all expecting global cap and trade, but we are seeing significant policy shifts—or at least the consideration of policy shifts—between what is now termed the G2, or the key players, which are China and the USA. That will not come overnight. A lot more is still to be delivered, but we are seeing the signs of a recognition that they have to deal with the problem. It cannot be ducked.

Part of the reason why we are seeing politicians show, at national leadership level, a willingness to return to the subject from which President Obama and the Chinese leadership were severely scorched—from the experience of Copenhagen in 2009—is that they are driven not only by the science, but by the economic reality of the imperative of diversifying energy sources away from fossil fuels and the recognition that the low-carbon goods and services sector globally is now worth more than $3 trillion, and is growing.

As the hon. Member for Liverpool, Wavertree (Luciana Berger) pointed out, here in the UK, that is a sizable factor in our growth, not only in terms of the narrow subsection of wind or subsidised renewable energy, as the low-carbon sector runs much more broadly than that and includes energy efficiency and a range of innovation of products and services. That is why, this year, in recommitting the coalition to being the greenest Government ever, our Prime Minister said that not only are we in a global race, but the countries and economies that will win the global race are those that are most efficient, and the most efficient will be those that drive after energy efficiency and renewable energy.

The Government’s clear ambition is to be a leader, not because we are on a moral mission at the expense of our national prospects, but because we recognise that it is a massive economic opportunity. That is why we think that we can seek not to disadvantage industry, but to obtain a first-mover advantage. My right hon. Friend the Member for Hitchin and Harpenden is out of step with the CBI and with a whole range of smaller businesses, which make that argument strongly to the Government.

[Barry Gardiner]

I wholeheartedly agree with the point that the Minister is making. Is he aware of research now being conducted that seems to suggest that countries that have legislated on climate are attracting most of the international investment in this area?

[Gregory Barker]

There is certainly a strong correlation between regulatory certainty and investor certainty, and lower cost of capital and the flowing of funds into those high-growth sectors. However, another canard that I have to shoot down is the idea that we live in an era of cheap fossil fuels and expensive renewables. Certainly, in the developing world, that is not true. I simply draw the attention of my right hon. Friend the Member for Hitchin and Harpenden to the fact that, between 2011 and 2014, India will spend $14.267 billion subsidising kerosene, LPG and natural gas. That is one of the largest elements in its national budget; it is largely responsible for the massive calls for structural reform in India, and it is seen as a brake on growth, because the country is subsidising not renewables, but fossil fuels. It is simply wrong to argue anything other, but nor is it an either/or choice.

[Mr Lilley]

The Minister is making an ineffective debating point. The Indians want their consumers to have cheap fuel at the point of purchase. That may be a misguided policy; it would not be one of the British Government’s, but they choose to subsidise the products that are already the cheapest, not those that are initially the most expensive. If wind and sun were cheaper, perhaps they would subsidise them, but the Minister cannot really pretend that wind is therefore cheaper, because they are subsidising other things.

[Gregory Barker]

No, but my right hon. Friend will know that last year, the wholesale cost of gas rose by 35%. The cost of renewables is consistently coming down. He will know that the cost of solar crashed in the past two years, and that in many cases, with high irradiation, such as in the developing world—

[Mr Lilley]

The Minister is changing his argument.

[Gregory Barker]

No, I am not. I am responding to my right hon. Friend’s point. The cost of fossil fuels in the developing world in the past two years has largely increased—in some cases, very substantially. The cost of renewables is coming down. That is why India has launched its national solar mission and why it is investing in wind. It is using the subsidy not simply to subsidise consumers for a product that they cannot afford, but as an investment to bring down the cost to the point that they can afford it. When the counterfactual is distributed diesel generators, often no subsidy at all is needed.

Small-scale generation is not some piffling irrelevance, as my right hon. Friend seemed to imply, but it is the reality for hundreds of millions of people in the developing world. Hundreds of millions in Africa and about 400 million in India do not have access to the grid and are not likely to get it any time soon. That is not just an economic imperative; it is a moral one as well. They are not sitting there wanting American-style fridge-freezers and huge cars; for them, a luxury is a light at night or a laptop, so that their kids can have an education or the most rudimentary internet access.

My right hon. Friend seems to think that the American economic model for shale gas is easily replicable in the rest of the world. It is not. If there is cheap gas to be had, we want it here, but it is not a binary world of black and white choices between renewables and fossil fuels.

[Mr Lilley]

I am overwhelmed by my right hon. Friend’s eloquence and verbosity. If he is saying that renewables are more economic than fossil fuels, that is wonderful—let us leave it to the market, and they will be adopted—but he cannot simultaneously say that we ought to be subsidising them and that they are already as cheap as or cheaper than fossil fuels.

[Gregory Barker]

Let me explain it one more time. Fossil fuels have been around for centuries. They have had plenty of time to develop, as I think my right hon. Friend will agree. I think that he may have worked, as I have, in the oil and gas industry before coming into politics. The fact is that continuing to supply oil and gas, LPG, petroleum and kerosene at scale to the Indian population requires a structural subsidy. We are not proposing a structural subsidy for renewables; subsidy is justifiable only in any circumstance if there is a chance of getting to a non-subsidised point. We should not subsidise any technology, whether renewable or fossil fuel, if all we are doing is pouring good money after bad. Subsidy for renewables can only be a short-term or at best a medium-term strategy.

[Barry Gardiner]

Perhaps a common point of agreement between the Minister, the right hon. Member for Hitchin and Harpenden (Mr Lilley) and myself is that any subsidy should be in place only because of a market failure. It is almost impossible to justify a subsidy on that basis to fossil fuels, which have had more than enough time to establish themselves, whereas there is a failure in the renewables market. We need to get renewables to the point where they become a full-scale technology and are able to operate at only marginal cost. I presume that the Minister, the right hon. Gentleman and I would all agree that, at that point, subsidies should be withdrawn from them also.

[Gregory Barker]

The hon. Gentleman makes that point far better than I did. I am not in favour of subsidies. They are a short-term means to an end, and they certainly should not be in place if there is no prospect of getting rid of them in the longer term. I have tried hon. Members too much with my tirade on that.

Let me turn to the COP negotiations, particularly the UK Government’s position and our priorities in respect of getting a global deal. Before I do so, I remind the House what we agreed in Doha. The 17th COP in Durban in 2011 was another step in the development of the UNFCCC, as was the Cancun conference the year before, but it was also a significant turning point. At that point, all the countries committed to agree a new global deal by 2015 and increase efforts to reduce emissions. Last year’s conference in Doha was the next step to make progress on both those issues.

The annual conferences should be seen not as major breakthrough points, but as steps forward. Even the annual conference in 2015, where we hope to agree the new global deal, will also include ongoing implementation decisions and perhaps further steps in the period to 2020 on how the new global deal will be implemented in detail. In that regard, our objectives at the Doha conference last year were largely achieved. We agreed a high-level work plan to negotiate the new agreement by 2015, and we rationalised the negotiation process to give space to deliver the work plan and take forward work to increase the emissions reduction effort in the meantime. Hon. Members might think that that sounds like process. It is. To negotiate a new global deal with 194 countries in three years, the process must be right. It is a challenge, but it is what we are doing.

We also made progress in further building and implementing the key elements of the UNFCCC regime, including on climate finance. I must say to the hon. Member for Liverpool, Wavertree that, far from trailing, the UK has a strong reputation on climate change, and our international reputation as a leader is rising, particularly in relation to private sector finance and investment, adaptation, technology and the rules set to measure, report and verify countries’ emissions. Getting the process right and continually building elements are vital to tackling a global problem of the scale of climate change, which is why each annual conference is a step forward.

[David Mowat]

I am listening carefully to what the Minister is saying about the COP process. One of my thoughts is that some of the time would be better spent considering abatement, as well as deals. We talked earlier about the fact that many millions of square kilometres in Russia might become usable as a result of climate change. Should we not be thinking about that globally as well?

[Gregory Barker]

We absolutely need to draw on such issues. One thing that we know for certain is that there is no silver bullet for the agenda, and we cannot afford to ignore any strand. This week, I had hoped to be in Delhi for the clean energy ministerial, which considers a range of technological solutions outside the constraints of the UNFCCC negotiating process and, to my mind, is becoming an increasingly important forum for driving the technological innovation that we need and giving the agenda much more positive spin—forgive the word. People can see tangible things to invest in that are themselves a natural good. Abatement falls into the category of things that we need to do more to consider. I do not suggest for a moment that the UNFCCC is a universal panacea, nor that risks do not attach to it, but it is our best hope of getting an overarching international framework, which in turn is our best hope of driving progress at a global level.

I said that the UK is an internationally renowned leader in climate finance. In Doha, the UK demonstrated that it was on track to deliver our £1.5 billion fast-start pledge by the end of 2012, and as the hon. Member for Brent North said, we have delivered it. We also set out for our developing country partners what the UK climate finance contribution will be in the period to 2015.

However, the key thing—we are good at this globally, and we have a strong representation—is to make the point that public finance can only go so far. We cannot push British taxpayers—or, come to that, any other taxpayers—to keep increasing the amount of public contribution. Public finance, like subsidy, is there to catalyse private sector interventions. We are seeing increasing private sector interest in scaling up investments, so I think there is a realistic possibility of meeting the pledge made at Copenhagen to mobilise the $100 billion a year from developed economies into climate measures in developing economies, not principally from the public sector or the pockets of taxpayers in developed economies, but from mobilised private sector sources that see the opportunity to make returns on attractive clean energy and climate mitigation solutions. On that point, I bring my speech to a close and thank the Committee for its report.