Carbon Budget Order 2016

Lord Deben Excerpts

Tuesday 19th July 2016 Lords Chamber

[Baroness Worthington (Lab)]

My Lords, I add my congratulations to the Minister on taking up her new role, which combines energy with her previous role of business. I declare an interest: as a civil servant I took part in the drafting of the Climate Change Act. I am delighted to see that these orders are tabled today.

The Climate Change Act is, I believe, a world leader. Its depoliticised structure gives it flexibility and strength; it can bend, so it does not need to break. The level of the fifth carbon budget was announced on 30 June, one of the most extraordinary days in one of the most extraordinary weeks in British politics. The reason is that the Climate Change Act creates a legal metronome, providing a long-time structure that rises above such short-term perturbations, even when they are so all-consuming.

In this context, the Government are to be praised for agreeing to the targets proposed by the Committee on Climate Change and on setting a budget that is on average 57% below 1990 for the period around 2030. However, there are many unresolved issues surrounding the carbon budgets and how they are accounted for.

During the recent Energy Bill, we had a long debate about the fact that, after 2020, there will no longer be any specific targets that require us to continue investing in low-carbon energy infrastructure. This is because the EU targets dictating the build-out of renewables will cease to apply. The noble Viscount, Lord Ridley, alluded to this in his speech, and indicated that we might be overcomplying with our renewable electricity target. I point out to the Minister that we are underdelivering on the two other portions of that target, so it is not right to say that we are going to be overcomplying with the EU legislation.

That aside, the fact that there are no renewables targets may not be a bad thing, but we need targets that will help to ensure that we see investment in low-carbon technology across the spectrum, including nuclear and carbon capture and storage, where I know there is more common ground between both sides of the House in supporting those technologies.

The noble Lord, Lord Teverson, also alluded to that issue and mentioned the EU emissions trading scheme, which will of course carry on. As things stand today, we will continue to use that trading mechanism to count towards our budgets—that is to say, we will use the overall allocation of EU emissions allowances as a measure of whether we have stayed within our budgets, rather than the actual emissions occurring here in the UK. We propose to fix that loophole by making clear that for the fifth carbon budget actual emissions will be counted, not offset emissions using EU allowances. A vote on this issue was won twice in this House but overturned in the Commons. I continue to believe that this is a necessary change of policy, and ask the Minister to seriously consider starting an immediate review of the current accounting rules so that early guidance can be given about how the fourth and fifth carbon budgets will be accounted for. That is even more critical, given the uncertainty that has been triggered by the recent referendum.

As things stand, we will not find out precisely how budgets can be met until a statutory instrument is passed after the start of the budget, so in 2029. This provides no clear guidance for those wishing to invest in UK infrastructure and is suboptimal, to say the least. I believe it will prevent actual investment in physical UK infrastructure from coming forward. The noble Viscount, Lord Ridley, has constantly referred to the cost of tackling climate change, but it is also true that one person’s cost is another person’s investment.

Although the Energy Bill sounds technical, and to a degree it is, I stress that this issue is not secondary to the search for a return to true economic growth; it is of central importance. If we find ourselves in a situation where future trade rules are set by the WTO, we will still be constrained in what we are able to do to stimulate economic growth. However, addressing environmental threats justifies government intervention under the WTO. Reinvesting in our energy systems and infrastructure provides one compelling WTO-proof way to rebalance the economy and stimulate real-world growth.

It is not just good economics to take action on climate change; it is also good politics. People care about climate change. Irrespective of what we have heard here today, they care, and it is not just the politicians who—the Minister referred to herself in this context—almost unanimously voted in favour of passing the law in 2008, it is not just the NGOs and it is not just progressive business voices; it is also the general voting public. We especially care when our homes and businesses are flooded or damaged by storms. We care when we cannot escape the stifling heat or unusually cold temperatures.

However, we also care on a deeper level. We want the next generation to have access to opportunities we did not have. We want to believe that we worked hard for a reason. If people believe their lives are going to be worse, their worries greater and their chances more limited by a world destabilised by an unstable climate, that will be a source of anger and frustration. The impacts of unchecked climate change will be felt widely by children alive today, with impacts growing, potentially exponentially, over time. It is our moral duty to act now, in full knowledge of the risks we are storing up, to reduce those risks as fast as possible.

I will briefly echo the words of the noble Baroness, Lady Featherstone, on the Paris agreement. The fifth carbon budget is our own version of the Paris agreement. It covers the same period and is in sync with the levels we would expect to take under that target. The noble Viscount, Lord Ridley, is looking at me quizzically, but his statements were full of errors, because it is not true to say that all EU member states were expected to take a 40% target. There is such a thing as redistribution of the effort across the member states. Therefore, it is not true to say that everyone would be on 40% and that we are necessarily going further than that.

I end with a question about the Paris ratification. Recent analysis has shown that we are tantalisingly close to seeing Paris become law this year, and the UK could make all the difference. Can the Minister say when her Government plan to initiate the legal process of ratification, and if it will not happen immediately, why not?

[Lord Deben (Con)]

My Lords, I declare an interest as chairman of the Committee on Climate Change. I remind your Lordships that the committee has a statutory requirement to provide the most cost-effective way of reaching the statutory commitment of cutting our emissions by 80% by the year 2050. I also remind your Lordships that that is not as ambitious an end as the Paris climate change agreement demands. Therefore, far from being ahead of other people, we have a sensible programme to reach somewhat less than will have to be reached under the climate agreement.

My noble friends Lord Lawson and Lord Ridley do themselves a disservice when they suggest that, because Britain has so small an amount of emissions, we do not count. Yet in their arguments for Brexit, their whole point was that Britain counts on its own. I merely suggest that if we say, “Well, other people can get on with it, but we won’t”, we let down future generations in a way which I hope my noble friends will sometimes be concerned about. They are seeking to stop this generation protecting the next generation, which is why the Climate Change Act has been, and remains, supported by all parties. That is why it is so important to have a system of budgets, as we have, so that everyone understands where we are going and the speed with which we hope to go there.

I have no idea whether the new arrangements will be better than the last as regards Ministers, but I warn my noble friend Lord Lawson that he has underestimated the commitment of Greg Clark as Secretary of State. I do not think he has read what Greg Clark said about his commitment to climate change, or the commitment to oppose climate change which is clearly on the record from our new Prime Minister. As the independent chairman of the Committee on Climate Change, I shall keep both of them down to their words. However, I merely remark that there is no way of dealing with these situations unless business is part of it—so I am not instinctively opposed, particularly as infrastructure, too, has to deal with these issues. I am pleased to see that the chairman of the infrastructure commission has made it clear that he will seek to deal with infrastructure within the context of the carbon budget.

I remind the House that we have reduced our emissions significantly, largely in the power sector. These are not exported jobs going somewhere else; we have done it. Sometimes I wish that my noble friends would appear at the presentations from the Committee on Climate Change. They would find that many of the things they have said are just not true. We have shown that there is no offshoring and that the poor are much more damaged by climate change than any other section of the community.

When my noble friend Lord Lawson refers to the poor, I remind him—I have looked carefully at his Budgets—that the poor did not feature large in those Budgets. But those who care about the poor, and the people who talk about the poor because they work for the poor—all those international organisations, from Save the Children right the way through to CAFOD and Oxfam—are quite clear that climate change is the biggest danger to poor people that exists, and therefore we have to deal with it in a cost-effective way.

Of course there is some argument about whether we should have this little bit of flexibility. However, it is flexibility based on the principle that some of the forecasts may not be accurate, because it is a long way ahead, and in those terms the Committee on Climate Change has accepted that that should be so.

I could of course answer each of the points that my noble friend Lord Ridley has made, but I do not want to cut out my other noble friend who sits next to me, so I will finish by saying this. Brexit is important but not central. This is our Climate Change Act—the Act which leads the world and which makes Britain the sort of leader that my noble friends thought we ought to be when they talked in the Brexit debates. I think that Brexit is a terrible mistake, but I know that the Climate Change Act puts us in a position genuinely to make a proper contribution for the next generation, and it is there that the jobs will be.

I end with a very simple point. Economic self-harm would be not having the Climate Change Act. That is what you would do if you did not want new jobs and green jobs, if you did not want to sell abroad because you have green products and if you did not want to be the kind of country that leads the world. Self-harm is denying the Climate Change Act. I am proud that all-party support has today enabled the Government to implement the fifth carbon budget as proposed by the Committee on Climate Change.