Climate Change Bill [Lords]

Public Bill Committee, 1 July 2008.

Clause 12

Gregory Barker (Conservative, Bexhill and Battle)

I beg to move amendment No. 53, in clause 12, page 6, line 40, at end insert—

‘( ) Before determining each indicative annual range the Secretary of State must obtain, and take into account, the advice of the Committee on Climate Change.’.

Good morning, Mr. Cook. Clause 12 is important. Conservative Members in the other place did a splendid job in encouraging the Government to introduce indicative annual ranges. The inclusion of the ranges is a significant enhancement of the Bill. Friends of the Earth described the inclusion of the clause as

“one of the most important changes which the Government made to the Bill”,

because it adds political accountability. Members of the Committee will recall that when the Conservative party launched our climate change Bill in advance of the Queen’s Speech in 2007, the inclusion of annual targets was considered an essential part of the primary reason that any five-year carbon budget would stretch across more than one Parliament.

We rightly argued that we should not allow NIMTOism—the new acronym, meaning not in my term of office—to infect carbon budgets. The system is not sufficiently accountable, so a Government could sit through a full term without ever having to report to Parliament on their carbon reduction performance. It is conceivable that a future Government could then dump their failure on a successive Government, who would have to report on the budget in their first year in office, having had little time to do anything about meeting it.

We need no better example of why the annual ranges are necessary than the current Government’s performance on cutting emissions. Despite three manifesto commitments to reduce emissions by 20 per cent. by 2010, emissions have, in fact, increased since 1997, and the Government quietly dropped their 20 per cent. target to just more than 15 per cent. in 2006. That is what can happen without year-on-year accountability. The addition of indicative annual ranges under clause 12 is a significant enhancement of the Bill, and it is a testament to the sterling efforts of our colleagues from all parties in the other place.

Indeed, Lord Rooker spoke favourably of annual accountability when he said:

“annual transparency and accountability about progress towards meeting the budgets are crucial for all of us. Some indication of the Government’s expected trajectory for reductions over the budget period would help in providing them. It is important that there is no divide between any sides of the House on that.”

The Government further stated in the other place that

“setting out an indicative range for the net UK carbon account for each year of the budget period combined with greater clarity about the timescales of policies to take effect...will ensure that the Government of the day can be properly held to account for progress during each year of the budget period, not just at the end of the period.”—[Official Report, House of Lords, 25 February 2008; Vol. 699, c. 496-7.]

As we all agree on that substantive point, I hope that we can also agree that a range without definition is of little practical use to anyone.

For example, if a five-year budget period has a total budget of 500 million tonnes of carbon, it is hardly of any value to say that the indicative annual range will be between 1 million tonnes and 150 million tonnes per year, whereas it would be of real value if the indicative ranges were set out year by year along the lines of year 1, which must be between 115 and 125 million tonnes; year 2, which must be between 105 and 115 million tonnes; year 3, which must be between 95 and 105 million tonnes, and so on.

As the clause is worded, there is no obligation on the Secretary of State to provide such an instructive range. He or she could set the range so broadly as to be practically meaningless. That is why, in amendment No. 53, we are proposing that the Secretary of State seeks advice from the Committee on Climate Change before setting those annual ranges. The committee would approach the exercise with not only an expert but an apolitical and dispassionate eye. That should prevent any unnecessary politicisation of the annual range, which could otherwise be back-loaded, for example, so that much of the effort would fall into the final year of a budget, by which time the Government who had set the ranges might well be out of office.

I have further broad comments on the clause, but they relate to amendment No. 54.

John Gummer (Conservative, Suffolk Coastal)

I am sorry to have been two minutes late this morning, Mr. Cook. I make the single point that, if one had the chance to read this morning’s newspapers, one would see just how cynical the public is about politicians of all kinds. It made pretty miserable reading for any of us who recognise that politicians in all parts of the House come to this place to try and make the world a better place—even though we disagree with each other, that is why we are here. Today’s Daily Mail, for example, is even worse than usual in its refusal to believe the better of anyone, of any kind, in any circumstances, from the Prince of Wales to the humblest Back Bencher.

Why I feel strongly about the amendment is extremely simple. We need to provide the public with a mechanism whereby that cynicism cannot easily be given rein. My hon. Friend the Member for Bexhill and Battle, in the 97 per cent. of his speech that I was lucky enough to hear, made that point clearly. We need to ensure that there is clear recourse to the Committee on Climate Change in order that the worst may not be thought of politicians.

I have a self-denying ordinance not to praise the Ministers, because it has been bruited abroad that that does them no good. Therefore, I take it as read that they will behave properly. The Secretary of State, for whom I have considerable respect, would certainly behave properly. However, that is not the issue. We are, unusually, legislating for a long period ahead. It is our purpose to create a framework within which we will be working for a long time, under Governments of different persuasions and Ministers of different enthusiasms.

I take that issue hard. During my time as Secretary of State for the Environment, I took a great interest in the design and quality of architecture, never realising that it was my personal interest that led it to be moved forward along the agenda. Others did not have the same interest in the quality of the built environment, particularly my successor, the right hon. Member for Kingston upon Hull, East (Mr. Prescott). He may have had other qualities, but not that one. The result was that that agenda was not taken forward with the enthusiasm and desire that I had wanted.

Climate change is also an area that can too easily rely on the enthusiasm and commitment of individual Ministers. That is why I support my hon. Friend’s amendment. I do not think there is anything in it that could possibly upset anyone, unless they did not want to meet the parameters that I know the Government, the official Opposition, the Liberal Democrats and the Scottish Nationalists all want to meet. It does not seem to be an unreasonable amendment.

Phil Woolas (Labour, Oldham East and Saddleworth)

Two brief comments before I explain the Government’s problem with the amendment, although not with its intent. First, my advice to you, Mr. Cook, and to all members of the Committee is not to read the Daily Mail. The problem goes away. Secondly, my right hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) is responsible for the renovation of St. Pancras station. I must put that on the record.

I always find that it helps to go back to the explanatory notes to put the amendments into context, and the explanatory notes for this Bill are especially good. They explain the purpose of clause 12. As the hon. Member for Bexhill and Battle eloquently outlined, annual accountability was discussed extensively in the other place and we have been over it many times. Clause 12 addresses those concerns by requiring the Secretary of State to produce a report setting out the indicative range for the trajectory of the UK’s net carbon account over the budgetary period. The word net is important. I shall return to the expected range in a moment. Clause 12 is a critical part of the Bill’s framework and will ensure transparency and accountability for progress for every year of the budget period, not just at the end of the five years.

An indicative annual range is superior to earlier proposals for a single-point annual target because emissions can and do fluctuate from year to year for a variety of reasons, some of which are well outside the control of the Government of the day, such as the weather. A particularly bad winter or a mild winter can have a big impact on annual figures. We all agree that we need a system of annual accountability that can deal with real-world fluctuations while still providing clarity about progress to ensure that the Government of the day can be held to account properly.

Amendment No. 53 would require the views of the Committee on Climate Change to be sought and taken into account in respect of the indicative annual ranges before they could be set. That is not consistent with the role envisaged by all of us for the committee. The committee has been established to provide expert advice on the level of the carbon budget. It is for the Secretary of State and Parliament, in consultation with the devolved Administrations, to make decisions on the level of the carbon budget and the policies needed to ensure that the UK remains within that budget, which has been recommended and to all intents and purposes set by the committee.

In formulating its advice, the committee will need to look at existing and planned Government policies and the estimated impacts of those policies in order to understand exactly what measures the Government have in place to meet a given budget. It is then the job of the Government to draw policy conclusions from the committee’s analysis. That will ensure that the Government of the day retain political accountability to Parliament, and through that to the people, for their decisions. We do not want the committee to be seen to be taking a particular policy position, as that could undermine the credibility of the advice that it provides on the carbon budget and its impartiality in performing its scrutiny function.

It will be vital that the committee’s advice is viewed as credible and authoritative. For that to happen, it must be formulated outside the political arena. The committee must therefore refrain from having a role in the choice of policy mechanisms needed to meet a budget. The question of decisions on the indicative annual range is no different. It will be set based on the Secretary of State’s analysis of the policies that the Government intend to implement in order to meet the carbon budget, and when they will take effect. That is why clause 14 requires that the Secretary of State should set out the time scales for the policies and proposals.

The annual ranges will depend on the policies implemented. Decisions on policy matters should be made by the Government, not the Committee on Climate Change, and we fear that amendment No. 53 would jeopardise that position, as it implicitly requires the committee to provide advice on the Government’s policy mix for meeting their overall carbon budget.

I shall now answer the question from the hon. Member for Bexhill and Battle about how wide we expect the range to be. Of course, if it is too wide, it will not fulfil its function and will be meaningless. We must look at the main factors that create uncertainties about annual emissions and assess their likely effect on informing how the range is set.

I have already mentioned the weather; records show that exceptionally cold winters, such as those in 1996 and 2001, caused an increase in emissions by 4 per cent. compared with previous and subsequent years. Another factor is the wider European context and the emissions trading scheme, which covers about half of the UK’s carbon dioxide emissions and allows companies to make decisions over a five-year horizon as to whether and when they abate their emissions. The actual emissions in any one year would not necessarily be a fifth as those policy decisions kick in.

I remind the Committee that the clause refers to the net carbon accounts, which could fluctuate depending on how things are dealt with under the carbon accounting rules. Other important factors include population growth or shrinkage—the annually revised population forecast by the Office for National Statistics directly affects projected emissions. Put simply, the more households that there are in the UK, the higher the emissions are likely to be, although the goal of our housing policy in new build is to neutralise carbon emissions.

The point of having annual indicative ranges, which are preferable, is so that we do not simply take the five-year carbon budget, divide it by five and declare that to be the annual target. We have some flexibility in meeting the budget advised by the committee, which will give the Government flexibility as well as the desired parliamentary accountability. The intention of the amendment is to give more surety, but we fear that it could inadvertently and unintentionally undermine the committee’s impartiality. That is my argument on amendment No. 53.

Gregory Barker (Conservative, Bexhill and Battle)

I understand the Minister’s argument, but he has said some things that are slightly troubling, which I will return to. Indicative annual ranges can take into account varying circumstances or unforeseen events, to which the Minister has alluded. The Committee on Climate Change, which I hope will be made up of eminent but sensible people, will be able to take that in its stride.

I find it slightly strange that the Minister mentioned housing numbers as an unforeseen circumstance. It is odd to think that we might suddenly be taken by surprise at the number of houses built in any one year, as I imagine that the Government can foresee the likely number of new houses or dwellings that will be occupied. The weather, I agree, is out of their control, but I expect them to have a firmer grip on the housing stock. The Minister has alluded to severe winters, but there are mild winters, too. We are more likely to experience milder winters than severe ones as global warming continues apace.

The crux of the issue is the Minister’s suggestion—albeit implicit rather than explicit—that targets should follow policy rather than policy should follow targets. He seemed to imply that it was not for the committee to set policy and that we should therefore not have indicative annual targets, because the policy may direct or produce something rather different. Clearly, it should be the other way round. We should have indicative annual ranges, which have inherent flexibility, and policies should be designed to meet those ranges rather than putting the ranges in place once we know the policies. The policy is the servant, not the master, of indicative annual ranges and the overall carbon budget. The danger with that slightly lazy thinking is that it makes for less ambitious policy making and for the slight sense that there is get-out-of-jail-free flexibility on the targets, particularly if in the two or three years of the near term there is some doubt whether the indicative ranges of the short-term trajectory will be met. The trajectory should be the real spur to more ambitious policies by Governments of whatever political hue.

The case for indicative ranges is very clear, and I have not been persuaded by any argument other than that they should be there. However, the Minister has pointed out his belief that that point is already in the legislation. Clause 12(1) sets out a duty to provide Parliament with a report setting out annual indicative ranges for the UK. For the elimination of doubt, I would have preferred that clause to be tightened by our amendment, but if the Minister is going to resist on that point, I will not push the amendment to a vote. I beg to ask leave to withdraw the amendment.

Gregory Barker (Conservative, Bexhill and Battle)

I beg to move amendment No. 54, in clause 12, page 6, line 41, leave out from ‘which’ to end of line 43 and insert

‘the net UK carbon account for the year must fall in order to meet the carbon budget for the relevant budgetary period’.

Amendment No. 54 directly relates to our previous discussion. It is informed by our concern that indicative annual ranges could be politicised, particularly in a period of likely political change, when the end of the carbon budgeting period would be likely to fall within the term of a new Government. That could lead, if not to political shenanigans then certainly a lack of ambition or other priorities on the part of the Government of the day, whoever they are.

To prevent that situation from arising, we have tabled amendment No. 54, which would put a requirement on the Government to produce an annual range that is tight enough to meet the trajectory required to meet the carbon budgets. As clause 12 stands, all that the Government need to do is predict where the carbon account should be in any given year. Amendment No. 54 would ensure that the annual range is set so as to fall inside the net carbon account for that budgetary period, which would necessitate tightening the annual range to a more meaningful figure.

We are not a long way apart from the Government. Indeed, Lord Rooker, during the passage of the Bill through the Lords, said:

“We need a system of annual accountability that can deal with these real-world fluctuations and uncertainties but which still provides sufficient clarity about progress to ensure that the Government of the day can be held to account appropriately... setting out an indicative range for the net UK carbon account for each year of the budget period... will ensure that Government of the day can be properly held to account for progress during each year of the budget period, not just at the end of the period.”—[Official Report, House of Lords, 25 February 2008; Vol. 699, c. 497.]

That is the crux of amendment No. 54. We believe that tightening the annual ranges to a more meaningful figure will help the Government of the day and inform this legislation.

Michael Weir (Scottish National Party, Angus)

I have a lot of sympathy with the hon. Gentleman’s point, but, given the earlier discussion on the ability of Ministers to amend the carbon budget within the five-year period, how would his amendment fit within that, as it would mean that the range has to show a fall within each year of the five-year budget?

Gregory Barker (Conservative, Bexhill and Battle)

I will repeat the amendment for the hon. Gentleman:

“the net UK carbon account for the year must fall in order to meet the carbon budget for the relevant budgetary period”.

That is what we need to be aiming for. If that budget were not met, an adjustment would be required in the following year, but we should not anticipate that the budget will rise or that the trajectory will be anything other than down.

We all accept that there could be unforeseen circumstances, but we do not accept that there are foreseen circumstances in which we would anticipate a rise in the budget. If we can see factors that are likely to push up carbon emissions, we should take other actions ahead of time in other parts of the economy to depress carbon emissions. The whole point of flexibility is to allow us to deal with unforeseen events, which can only be addressed with the benefit of hindsight.

Steve Webb (Liberal Democrat, Northavon)

Will the hon. Gentleman help me with my understanding of the clause, because I have become more confused? In subsection (2), does “fall” mean decline? It means fall within a range—in other words, the provision states that an indicative annual range is a range within which the figure must fall. That does not mean that the figure must go down; it just means that the figure must fall within the range. Am I right in that understanding?

Gregory Barker (Conservative, Bexhill and Battle)

The hon. Gentleman is correct, but so too is the assertion that the trajectory must be met. Obviously, the trajectory is declining, and we do not anticipate that it will rise. The only reason why it would rise is unforeseen circumstances. Does the Minister foresee any circumstances in which we would anticipate the trajectory rising and not take preventive action?

Phil Woolas (Labour, Oldham East and Saddleworth)

My understanding is the same as the hon. Gentleman’s—“to fall” in subsection (2) means to lie within the five-year budget. I cannot envisage circumstances in which the trajectory would not fall, unless the American presidential election throws up something really unexpected.

Gregory Barker (Conservative, Bexhill and Battle)

I thank the Minister for that clarification, and it has been useful to raise our concerns. I am looking forward to what the Minister has to say on amendment No. 54.

Phil Woolas (Labour, Oldham East and Saddleworth)

I am grateful to the hon. Gentleman for tabling a helpful amendment. The amendment sounds like common sense, but I did a bit of digging and the issue boils down to the difference between “expects” and “must”. Let me explain—my argument is convincing and I am going to use maths.

The clause requires the Secretary of State to set out the indicative annual range within which he “expects” the net UK carbon account to fall—to lie within—for each year of the budget period. Amendment No. 54 would change that to the range within which the net UK carbon account “must” fall to meet the carbon budget. I consider the amendment unnecessary, given the existing provisions in the Bill about both the Government’s duty to meet the five-year carbon budget and the strong framework for annual accountability. By inserting “must”, the amendment would effectively change the budgetary period to an annual one, which is not the intention.

Let me explain the practical problems.

The way in which the Bill is worded makes it clear to Parliament, and to everyone else, whether the Government are taking the necessary actions throughout a budgetary period to ensure that the budget is met, but the Government will not be acting unlawfully if emissions increase, although I imagine that they could increase only slightly beyond the level that the range sets out. Underpinning that, clause 5 places a duty on the Government to ensure that the net UK carbon account for a period does not exceed the carbon budget—the five-year period.

That means that the indicative annual ranges will effectively have to be set with a view to meeting the budget. No matter where we are within the range each year, at the end of the period we must still meet the budget. In addition, there is the strong annual framework that I have spoken about. Under clause 35, the annual report by the committee must set out, inter alia, whether the budget is likely to be met. That is part of the process which, I think, the other place urged upon us; certainly, the pre-legislative scrutiny Committee did.

I am not sure how amendment No. 54 would work in practice, as there would be both a budget that had be met and a range for each year, which also had to be met. The range recognises that emissions fluctuate—we are agreed on that—so it would be possible for the net UK carbon account to lie within the range for each year of a budget, but for the total net carbon account to exceed the budget at the end of the period, because if we hit the top of the annual range each year, that would, by definition, be greater than the five-year budget. There is, therefore, a practical problem with changing “expects” to “must”. My argument is that it essentially makes the annual period the budget and not a range, and mathematically, the possibility of hitting the top of the range for each of the five years would defeat the five-year budget target, which is more important.

John Gummer (Conservative, Suffolk Coastal)

That is a good explanation. Perhaps the Minister would be kind enough to recognise the thought behind this amendment and others, which was admirably expressed by the hon. Member for Angus. If one looks at how the Bill must be written, the Government should be able to make alterations, which may be up or down. Those of a cynical disposition might say that that is all very well, but if the Government were so minded, they could defeat the whole purpose of the Bill. We know that it would be difficult, within the parliamentary arrangements, for that to happen. It would be helpful, however, if the Minister undertook to identify other parts of the Bill that exemplify the points that he made in accepting the reasonable nature of the amendment. This is one of those occasions where we must ensure that we are getting it right and meeting public expectations. I have some sympathy with what the hon. Member for Angus said, both today and in previous sittings.

Phil Woolas (Labour, Oldham East and Saddleworth)

I have been reflecting that perhaps The Guardian is even more cynical than the Daily Mail. It certainly puts me in a worse mood. I can do what the right hon. Gentleman requests. I do not believe that in the other place there was a challenge to the point that he makes. I made reference to the interrelationship with clause 5.

I shall briefly put my mathematical argument, which I think is a convincing one. Let us say that the relationship between a range within which emissions must fall and an overall budget did not work. Suppose the budget is 100, and for each year of the period the range is set between, for the sake of argument, 15 and 25. If the net carbon account for each year was 23, 22, 24, 25 and 21, we would still have complied with amendment No. 54, which states that the net carbon account “must” fall within the range, but we would have missed the five-year budget.

Martin Horwood (Liberal Democrat, Cheltenham)

The Minister’s maths are good, but his politics are less good. The annual targets do not release the Government from the obligation to meet the five-year budget. The mathematical possibility that the top of the range could be hit five years running and the budget therefore missed does not mean that the budget must not be met. That still applies. There are two sets of complementary targets. Of course, if the top range of the budget for the annual targets were hit repeatedly, budgets in later years would have to be made tighter and lower.

Phil Woolas (Labour, Oldham East and Saddleworth)

That is why I said that the problem is the word “necessary”. The amendment is unnecessary because of the point made by the hon. Member for Bexhill and Battle. By inserting the word “must”, a duty is placed on the Secretary of State under clause 12 that could be used to override the obligation that we spent three hours debating earlier. It confuses budgets and annual ranges.

Martin Horwood (Liberal Democrat, Cheltenham)

Again, the Minister is mathematically right but politically wrong. The problem is not that the maths do not add up, but that they would need to be added up only after the subsequent general election. By supporting the amendment together with the Conservative Front Benchers, we seek to hold the Government more precisely to account on an annual basis.

Phil Woolas (Labour, Oldham East and Saddleworth)

I am glad the hon. Gentleman accepts my maths, even if he does not agree with me on the policy. I do not believe that the amendment achieves what he wants it to do. In fact, it could achieve the opposite. In the run-up to a general election, the Government could set the annual indicative figure at the top of the range. That would be within the law under the amendment, but outside the law under the earlier obligation to meet the five-year carbon budget. That would create political confusion. Precisely because I do not want to do that, the amendment is unnecessary.

The amendment would take us into an area where the annual indicative range would effectively become an annual budget. That is not what we are trying to achieve here or in the other place. I hope the hon. Gentleman accepts that my policy is right, that my politics are right and not particularly partisan, as this will happen in the future, and that clause 5 overrides the need for amendment No. 54.

Gregory Barker (Conservative, Bexhill and Battle)

I have listened carefully to the Minister and have endeavoured to follow his maths. His point is persuasive. I understand and appreciate the point made by the hon. Member for Cheltenham that setting more robust indicative annual ranges does not in any way negate or offset the Government’s legal obligations to meet the carbon budget. However, I am mindful of the Minister’s point that inserting the word “must” could call into question the supremacy of the five-year carbon account, and we do not want uncertainty or confusion in the Bill.

Clarity is desirable, but I accept that the amendment may not be the best way of achieving that. We will look again at the issue. In an ideal world, there remains a case for tighter, clearer and more effective annual indicative ranges within the context of a finite five-year carbon budget. I beg to ask leave to withdraw the amendment.

Phil Woolas (Labour, Oldham East and Saddleworth)

We have not touched on subsections (3) and (4), which are important. I reassure the hon. Gentleman that subsection (1) states that the Secretary of State “must” lay before Parliament, while subsection (3) states that the Secretary of State “must” consult the other national authorities. It is important that reference is made to the devolved Administrations. Subsection (4) states that the Secretary of State “must” send a copy, an imperative repeated in clause 13. I hope there is consensus on the clause.

Clause 13

David Maclean (Conservative, Penrith and The Border)

I beg to move amendment No. 39, in clause 13, page 7, line 13, leave out subsection (3).

Frank Cook (Labour, Stockton North)

With this it will be convenient to discuss amendment No. 55, in clause 13, page 7, line 13, leave out ‘, taken as a whole,’.

David Maclean (Conservative, Penrith and The Border)

Amendment No. 39 suggests that we remove subsection (3). If, by any inadvertence, I pressed it to a Division and if, by any inadvertence, it was accepted, we would delete the words

“The proposals and policies, taken as a whole, must be such as to contribute to sustainable development.”

Let me make it clear that I am passionately committed to sustainable development. I do not wish to remove the subsection from the clause, but I am advised that such a suggestion is a means by which we can discuss matters. I want to find out what the Government mean by sustainable development, hence my proposal that we remove those words from the Bill. My remarks will be brief because I want to hear the Government’s interpretation of “sustainable development” and to know what their policies and proposals, taken as a whole, will look like if we are to ensure that they contribute to sustainable development.

I shall define what sustainable development is not. What is unsustainable development? I like the definition that an unsustainable situation is one where the natural capital—the sum total of nature’s resources—is used up faster than it can be replenished. Sustainability requires that human activity uses nature’s resources only at a rate that can be replenished naturally.

Inherently, the concept of sustainable development is intertwined with the concept of carrying capacity. Theoretically, the long-term result of environmental degradation is the inability to sustain human life. Such degradation on a global scale could imply the extinction of humanity. I will not go down that route, which I explored in detail last week in the context of biodiversity and rain forests.

I am passionately committed to sustainable development because it is one of the main things that I spent a lot of time negotiating at Rio. When, as a Minister, I had to negotiate a working breakfast with the Chinese at 7 am, with the Indians at 8 am and with the Americans at 9 am, I needed a sustainable biodiversity system myself to survive. Agenda 21 was one of the key documents that was signed and we negotiated every word of it. As an incoming Minister, I had no idea of the importance in UN-speak of getting each word correct. If we had accepted the sloppy word, it would have meant £3 billion extra being paid into some fund. Our representatives were cautious as we negotiated the words.

Since 1992 in Rio, the term “sustainable development” is thrown about everywhere. With all due respect, I have a parish council that puts down a new little park bench on the grass with a couple of daffodils and says that it is fulfilling Agenda 21, the sustainable development agenda. In some ways, the term is being diminished. There is utter confusion about its meaning.

With due deference to the current Government and to the Government of whom I was privileged to be part, I believe that the Brits are pretty good at defining such matters. I left Rio understanding the meaning of “sustainable development”, and I am certain that the Government have a clear concept of its meaning. We should impose more on the rest of the country and the rest of the world, because our concept is probably right.

Gregory Barker (Conservative, Bexhill and Battle)

My right hon. Friend is making another important point. I wholeheartedly agree with him. “Sustainable development” is widely misused. A large part of the problem is that it has been confused with the term “sustainable growth”.

Frank Cook (Labour, Stockton North)

Order. I appeal to members of the Committee to address their remarks to the Chair.

Gregory Barker (Conservative, Bexhill and Battle)

I beg your pardon, Mr. Cook, for my discourtesy.

The problem is that sustainable development has been confused with sustainable growth. Often, when people use the term “sustainable”, it has nothing to do with environmental sustainability, but means growth that will go on and on and never end.

David Maclean (Conservative, Penrith and The Border)

My hon. Friend is right, and that could be a justifiable definition of “sustainable development”. I conclude with these remarks. The term is in the Bill, but it is not defined—I cannot find a definition of “sustainable development” in the Bill. I suspect that this subsection is one where Government advisers will say “Well, Minister, if it is deleted, so what? It does not remove anything from the Bill. If it stays in, so what? Who cares? It does not add anything to the Bill either.”

I want the provision to mean something, so when people look through the Bill and come across the 12 pages on carrier bags and the bit on waste and garbage—they will not see any mention of rain forests or biodiversity—they will at least see “sustainable development” and say, “Ah! That means X.”

Frank Cook (Labour, Stockton North)

Order. It is difficult for the Chair to tell who is rising if hon. Members do not rise.

Gregory Barker (Conservative, Bexhill and Battle)

Clause 13 is an important part of the Bill. It requires the Government to prepare a programme of emissions reductions in order to stay within the carbon budgets established by the Bill. However, we must be mindful that in order to reach macro-level targets, by which I mean national and international level climate change mitigation, many micro-level projects must be carried out. There is a responsibility on us, as policy makers, to ensure that we do not undermine the natural environment at a local level in the process of trying to save it on a global level.

My right hon. Friend the Member for Penrith and The Border and I tabled our amendments to get the Government to explain exactly how they interpret sustainable development, taken as a whole, as opposed to assessing each individual policy and proposal on the grounds of its unique sustainability criteria. My right hon. Friend did an excellent job if raising the issue of sustainable development as a term. I wholeheartedly agree with him that the term is often meaningless and is sometimes used as greenwash. I am not suggesting that that is the case with this Bill, but it happens frequently elsewhere. A definition of sustainable development would help to inform the wider debate around environmental issues as a whole, and perhaps bring some clarity and rigour back to our language on this most important of debates nationally.

Amendment No. 55 would require the removal of the phrase “taken as a whole”, which currently appears in line 13 of clause 13. Its removal would require each individual mitigation option to be assessed against the principles of sustainability, rather than assessing proposals and policies only as a whole in the round. That would allow a Government to appraise the different mitigation options available and choose accordingly, rather than only viewing the sustainability of a policy on a macro level.

One need look only at the unfortunate example of biofuels to see that just because the ultimate Government objective is sustainability, it does not mean that the policy goals to get there are themselves, largely through perverse or unintended consequences, inherently sustainable. It is all well and good to say that one cannot make an omelette without breaking eggs, but surely everyone in Committee agrees—I know that my right hon. Friend agrees—that it is nothing short of sheer madness to chop down the world’s single most precious natural resource, the pristine rain forests, in the name of the environment to achieve a nominal biofuel target.

While reducing emissions from vehicles is an important part of reducing our overall carbon pollution, if we can only meet the requirements of the biofuels directives at the price of the Borneo rain forest, it would be a Pyrrhic victory—target—indeed. A more sustainable option, for example, would be to improve the fuel efficiency of our cars and make significant transport emissions reductions, while at the same time developing a biofuels policy that does not accelerate the destruction of the lungs of the earth or contribute to the extinction of the orang-utan or less cuddly species.

We understand that there will be difficult choices in assessing our options for decarbonising the economy—it will not always be a win-win situation. However, as responsible stewards of today’s environment, as well as tomorrow’s world, we want, as far as it is possible to do so, to ensure that those choices are made transparently and on the basis of a clear definition of sustainability, rather than exclusively through the lens of cost-effectiveness or the overarching 2050 emissions-reduction targets.

For that reason, Conservative Members in the other place successfully argued for the requirement that the Government’s programme of action should meet the carbon budget in the Bill and be underpinned by the principles of sustainable development. In doing so, the Government saw fit to introduce a caveat into clause 13, which states that policies to achieve our interim and long-term targets “must”, when

“taken as a whole...contribute to sustainable development.”

In light of that, will the Minister clarify his interpretation of that phrase? I want to know that, in striving to achieve the emissions-reduction targets to which all of us in this place are committed, we are not legislating to allow Government policy to ride roughshod over short-term or immediate sustainability concerns.

Martin Horwood (Liberal Democrat, Cheltenham)

It is good to be serving under your chairmanship again, Mr. Cook.

The two amendments raise important issues, and it is particularly important that amendment No. 55 is passed. Looking for a definition of “sustainable development”, I can trump the right hon. Member for Penrith and The Border by going back to 1987 and the report for the UN by Gro Harlem Brundtland, “Our Common Future”. That defined sustainable development as

“development that meets the needs of the present without compromising the ability of future generations to meet their own needs”,

which is a wonderfully classic and succinct definition.

I plucked that definition from the website of the Sustainable Development Commission, which has rightly highlighted the risk that the various definitions of sustainability, which include social and economic factors as well as environmental ones, can be used to muddy the debate and allow unsustainable policies to go forward. In particular, economic sustainability is often taken to mean “business as usual”, and it is used to justify policies that are the exact reverse of sustainable when examined from an environmental perspective. The biofuels example mentioned by the hon. Member for Bexhill and Battle is interesting, although, frankly, a policy that allowed unsustainable biofuels to form the basis of our future biofuels policy would not be “sustainable” under any of the definitions.

A rather better example, which is specifically the responsibility of the Department for Environment, Food and Rural Affairs, involves setting the shadow price of carbon, which had a direct impact on the decision to endorse the third runway at Heathrow. The precise definition of the shadow price used by DEFRA in effect reduced the social cost in environmental terms of the Heathrow third runway from some £13.5 billion, which it would have been if the methodology applied by the Stern report had been used, right down to £4.8 billion, thereby making the difference between that third runway going ahead or not. That is a brilliant example of how the use of “sustainable development” needs to be precisely defined. In that sense, taken as a whole, one could say that the third runway at Heathrow is part of a package that the Government might excuse as “sustainable” in the medium term. Looked at in isolation, however, it is clearly not a sustainable policy.

John Gummer (Conservative, Suffolk Coastal)

Does the hon. Gentleman agree that another example that illustrates that point is the way in which the Government make their judgment about sustainable development and the protection of the sea coast and rivers through the Environment Agency? By changing the terms, what properly used to be considered as a matter for defence is now being abandoned, because points are not awarded to anything that might mean protecting the natural and historic environment. Again, that issue concerns the definition of what is sustainable.

Martin Horwood (Liberal Democrat, Cheltenham)

I am grateful to the right hon. Gentleman; he obviously has expertise in this matter relating to his past responsibilities and his constituency. He has made an important point, although the sustainability of sea defences must be considered from an environmental perspective as well as from a local one.

In conclusion, definitions are important, and perhaps the Minister will address the relative importance of economic and environmental sustainability in his remarks. In light of the Stern report, we know that long-term economic sustainability is intimately linked to the environment, although in many parts of government there is still the temptation to prioritise short-term economic growth over true environmental sustainability.

Phil Woolas (Labour, Oldham East and Saddleworth)

The right hon. Member for Penrith and The Border has referred to Agenda 21. He made the important point that the profound effect of that conference was to set out a process that has significantly changed how we and other countries look at the world. It has had a significant effect on our analysis of economics, and it challenged some of the basics of supply and demand economics in a beneficial way. It has been noted that, on current estimates, we are using the resources of three planets when we only have those of one. That is not sustainable and people understand that.

I will go into the technical details to explain the Government’s approach. The purpose of the clause is to require the Government’s proposals for meeting carbon budgets to contribute to sustainable development. That is central to Government policy—we want to live within environmental limits and we can only do so by means of a sustainable economy. That policy is partly expressed through the Sustainable Development Commission, which was established in order to provide scrutiny and encouragement and to ensure that Whitehall, and its wider tentacles, are acting sustainably.

An expression of the meaning of sustainable development is within the SDC’s remit, and I will outline it for the Committee. The principles of sustainable development are ensuring a strong, healthy and just society, living within environmental limits, achieving a sustainable economy, promoting good governance and using sound science responsibly. Those principles were outlined in Rio.

Gregory Barker (Conservative, Bexhill and Battle)

Those terms are themselves open to interpretation. What does the Minister believe a sustainable economy actually means? That phrase is often abused or misused.

Phil Woolas (Labour, Oldham East and Saddleworth)

A sustainable economy is a low-carbon economy that puts a net contribution to carbon in the air in a downward direction. It is about not only carbon, but how we ensure that we recycle and reuse resources without a net depletion of the earth’s natural resources, including biodiversity. I am getting too academic—for the Committee as a whole, not particularly for you, Mr. Cook—and you are going to pull me back. I wish that I had not said that.

Let me turn to amendment No. 39. To ensure that we meet our objectives for the five principles, we require that every Department publishes a sustainable development action plan. In addition, the impact assessment process, which must be applied to every new policy, requires appraisals of the environmental, social and economic costs and benefits of policies. As hon. Members know, we try to build the idea of sustainability that stems from Rio into everything that we do. The reason for enshrining the principle in legislation, therefore, is to ensure that policy makers keep applying good sustainable development in future years and under future Governments. We also expect to be closely scrutinised by Parliament against the sustainable development requirement in the Bill.

The Government added subsection (3), which the amendment would remove, in the other place. We were responding to the strong views held there, with which we agreed, that the proposals and policies should contribute to sustainable development. For the reasons that I have explained, that is important and something that should be retained. I understand the intention behind amendment No. 39, but it would not achieve that aim.

David Maclean (Conservative, Penrith and The Border)

Does the Minister mean that the Bill should contribute to sustainable development in the UK only, or that the policies and proposals in the Bill should help to contribute to sustainable development in the world, which would allow carbon trading and so on?

Phil Woolas (Labour, Oldham East and Saddleworth)

Within the world. Our sustainability is dependent on that point. The right hon. Gentleman referred to the often arduous process of international agreement. The acceptance of sustainable development in United Nations forums, and the fact that it is written into treaties, is extremely important for this country and the rest of the world. To try to extract that would be practically impossible in terms of the global economy and dependence on resources, food and so on. That would also take us back to the debate on clause 1, which you, Mr. Cook, will not let me return to.

Amendment No. 55, which relates to achieving sustainable development, is about creating the right balance. We need to ensure that the UK’s package of policies for reducing emissions maintains the balance among the key elements of sustainable development. It would be a good idea to compare this policy with the carbon budget itself. Within the context of meeting a carbon budget, some Government policies may give rise to increased emissions, but the important principle is that the total net UK carbon account should be restricted. Given that policies to meet budgets are in that way considered as a whole, it makes sense that they should contribute to sustainable development as a whole. I have already set out the existing processes that are applied to every new policy individually.

John Gummer (Conservative, Suffolk Coastal)

I am unhappy about that particular part of the explanation. For example, the Ministry of Justice is just about to take over a newly refurbished building that used to be the Home Office. Despite considerable efforts, the Ministry of Justice still refused to accept that putting in hydrofluorocarbon-driven air conditioning was wholly contrary to any concept of sustainable development. It said that, taken as a whole, what it was doing was better than what was there before. Of course, it was Mr. John Gieve who did that, as is the case on many such occasions. The fact of the matter is that the one get-out that every civil servant and every Minister has is to say, “Taken as a whole, our policies are right, but we have an excuse for this one.” The new Home Office had the same excuse. It said that it had signed up to the waste electrical and electronic equipment directive, which would not allow non-HFC air conditioning. I use that example because, after all, HFCs are 2,000 times as damaging to the climate as CO2. Unless we take everything into account and do not allow Departments to get away with “taken as a whole”, we will not win the battle.

Phil Woolas (Labour, Oldham East and Saddleworth)

I felt uncomfortable in putting the argument because I knew that the right hon. Gentleman would come up with an example that would be difficult to justify. In practice, under the new regime in the Bill, the carbon reduction commitment will include Whitehall Departments, so the “taken as a whole” excuse will be removed. I know that he will welcome that in the real world.

My second argument is stronger and more convincing. Consider the opposite situation, in which one had to judge every action and policy as part of the whole and to rule out any action or proposal that, in and of itself, was damaging according to the sustainability criteria. An ambulance trip that used polluting fuels, taken as a whole, would not be allowed, and one could consider other examples. The right hon. Gentleman shakes his head in mystification, but that is a good example.

There are times when actions are necessary. The impact of the action may be negative, but it can contribute to an action that is positive overall. It is rather like asking which is the most important wheel on the car—the front right, the front left, the back right or the back left—when all are needed.

John Gummer (Conservative, Suffolk Coastal)

On the Minister’s example of the ambulance, there can be no one alive who would not agree that it would be a contribution to sustainable development to ensure that somebody got to hospital in time. That must be the serious answer to the question. No one would say that we should not do something because it costs a certain amount of carbon to do it.

However, a question must be asked about the individual action. We cannot allow an individual action to be smothered by the generality of “taken as a whole”. I cannot imagine a single proper action that would be stopped by the removing the phrase “taken as a whole”, but I can imagine many improper actions that would be more difficult if the excuse did not exist. I believe that in the Minister’s heart of hearts he knows that taking that little bit out would not put anyone in a difficult position. Leaving it in will mean that they will go on doing the things that they do now, as we have seen in the two examples that I gave.

Phil Woolas (Labour, Oldham East and Saddleworth)

I did not find the right hon. Gentleman’s argument against my ambulance analogy very convincing. I thought that I did well in picking that example against the much tougher example of his experience of the Government Department.

Let me reinforce my point. By including the phrase “taken as a whole”, we are allowing for the carbon budget, and the policies and proposals to meet it, to allow an increase in emissions in some areas so long as they are paid for, and more so, elsewhere in the economy.

The hon. Member for Cheltenham said that we had supported the third runway at Heathrow. Let me be clear about the Government’s policy. We said that we would support the development of the third runway, but only if we could be confident of meeting the strict environmental conditions set out in the White Paper. There is clearly a net judgment in all these matters. If one were simply to delete “taken as a whole” from subsection (3), that would not allow our economy to function properly. It would not allow people to go about their daily business. It is the whole that we are trying to address, not each individual part. The right hon. Member for Suffolk, Coastal continues to look bemused.

John Gummer (Conservative, Suffolk Coastal)

The Minister has explained the difference between us. I do not believe that we should do anything that cannot be said to contribute to sustainable development. That is why I am opposed to the third runway at Heathrow, which is nonsense, and I am certainly opposed to reworking the figures to make that fit the environmental requirements, which is what the Government did, as the hon. Member for Cheltenham pointed out. However, the point is that the Minister must believe that the third runway at Heathrow contributes to sustainable development, because if it does not contribute to sustainable development, he cannot support it. That is the problem for us. We are committed to a concept that nothing of that kind should be done unless it contributes to sustainable development. If it is unsustainable, we should not do it. That is why Opposition Members are very strongly opposed to the methodology that the Government are using. That is why the phrase “taken as a whole” is so dangerous.

Phil Woolas (Labour, Oldham East and Saddleworth)

I am grateful to the right hon. Gentleman. He has outlined a principle very clearly, and I admire him for that. He is right that I do not agree with him. I do not accept that we can run our economy in a sustainable way, taken as a whole, based on the principle that he has outlined. That would prevent us from doing many of the things that we already do, and one could argue that in all sorts of ways. I will stick with my ambulance example. He says that if there is a policy in isolation that does not in and of itself contribute to sustainability, we should not do it. I think that there should be other judgments—it might depend on who is in the back of the ambulance.

Let me remind the right hon. Gentleman of Ministers’ responsibilities. Let us suppose that it was my certain belief, based on advice, knowledge and certain communication—I shall deliberately choose the difficult example of Heathrow to try to pursue my argument—that a failure to expand Heathrow would inevitably result in an expansion of Charles de Gaulle and Schiphol. I am not saying that, just in case the journalists are quoting me out of context, as they never do in either the Daily Mail or The Guardian. However, let us suppose that, and that the policies of the Governments of the day of France and the Netherlands did not impose environmental criteria on Charles de Gaulle and Schiphol and excluded them from their considerations. Let us say, therefore, that the emissions caused by the expansion of aviation at those two airports would be greater than those predicted as a result of Heathrow. What would be the right decision under the right hon. Gentleman’s principle?

John Gummer (Conservative, Suffolk Coastal)

But then the hon. Gentleman would be making what he should be making: a decision on sustainability. He is saying that he will have looked at the circumstances not in the round or as a whole, but on that specific decision, given the particular parameters that he has put forward, and he would be making a proper decision about sustainability. It would not be about “taken as a whole”, as he has interpreted it. He would have interpreted that phrase as meaning that one can score off sustainability with other interests. I am saying that the definition of sustainability—this is why the question of how one defines sustainability is so important—involves making the sort of decision that the hon. Gentleman has just made. We disagree about the third runway at Heathrow because I do not believe that it is necessary, because there are other ways of doing things, and because the proposition that he put forward is not true as it would not stop anyone else from building runways. Indeed, it would encourage them. Therefore, the proposal is not sustainable.

If the Minister continues to use his argument, he is making the same references as I have made. He does not need the words “taken as a whole”. That is what we are arguing about, not a runway. The phrase is not necessary to defend him in his position. If it were left in the clause, it would enable someone to decide to have a third runway, even though that person had not made out a sustainable case for it.

Phil Woolas (Labour, Oldham East and Saddleworth)

Fascinating, except that the Bill requires those criteria to be judged. The logical consequence of the right hon. Gentleman’s principled stand is that we would not need the rest of the Bill. We would not need carbon budgeting, carbon trading and the other things that we have been talking about. We would simply say that an individual action must contribute in and of itself to sustainability. I simply do not agree.

Tony Baldry (Conservative, Banbury)

Is not the candid explanation of why the Government do not want to remove the phrase that if they were to do so, it would be possible for any group to go to the High Court for judicial review and say that a particular development was not sustainable development? There would thus be an argument with the courts about a nuclear power station, for example. That is why the Government want the phrase. As I said earlier, they are desperate to ensure that the Bill, when enacted, does not get anywhere near the courts. It has been judicially proofed so that it cannot be challenged.

Phil Woolas (Labour, Oldham East and Saddleworth)

The hon. Gentleman must have been reading the Daily Mail. He is inculcated with cynicism. We included the provision in response to the other place, not out of fear of judicial action. I was trying to help. Sometimes when we read the Daily Mail, we conclude that we should not have bothered.

The right hon. Member for Suffolk, Coastal outlined an important position and showed the evolution of his policies and politics. I am not sure that his point is shared by the hon. Members for Vale of York and for Bexhill and Battle, nor do I think that the right hon. Member for Witney (Mr. Cameron) would agree with it because there would be huge consequences. However, I am repeating myself, so I shall now sit down and shut up.

David Maclean (Conservative, Penrith and The Border)

I have listened carefully to the debate and I am not convinced that the Minister has spelled out a good, sound British definition of sustainable development, as I had hoped initially. The hon. Gentleman’s heart is in the right place, as is the Government’s, but I do not know where their head is. Perhaps the cause is my thick head. I do not understand fully what the hon. Gentleman was attempting to say and I am not sure that has he cut through the confusion of the plethora of definitions of sustainable development that exist throughout the world.

The Gro Harlem Brundtland Commission was a good starting point. When we were in Rio, the definition,

“Development that meets the needs of the present without compromising the ability of future generations to meet their own needs”

was quoted about 10 times a day. It is simple and straightforward, but applying it to every aspect of business and industrial development, agriculture, farming, mining, quarrying, building and our lifestyle, and then to the lifestyle of other countries with completely different economic systems, takes us into severe trouble.

I do not want to prolong the debate. I want the phrase to stay in the Bill, so of course I shall not press the amendment to a Division. I will conclude by trying to shed some light on the Home Office windows and HFCs. I did not intervene in the debate—it might have been regarded as facetious—but I spent four years in the old building, where we were not allowed to open the windows because the top half was heavier than the bottom half. They were hinged, almost in the middle, and the top half could swing round, hit someone on the back of the head and knock them down seven storeys on to the Scots Guards’ parade ground below. The answer to the problem is not whether the gas is an HFC or another one, but to let us just open the windows in future, rather than use millions of pounds worth of air-conditioning. The same may apply in this Room in future.

At times, when we are looking at such highly complex subjects, we ought to get back to a bit of simplicity. The concept of sustainable development is simple. It is important. It is something to which Parliament will return again and again, not necessarily in the Bill, but on other occasions. It should stay in the Bill, but I hope that in future the Government will be clearer about what they mean by sustainable development. I beg to ask leave to withdraw my amendment.

Clause 14

Phil Woolas (Labour, Oldham East and Saddleworth)

I beg to move amendment No. 4, in clause 14, page 7, line 20, leave out ‘Prime Minister’ and insert ‘Secretary of State’.

Frank Cook (Labour, Stockton North)

With this it will be convenient to discuss the following: Government amendment No. 5.

Amendment No. 33, in clause 18, page 10, line 4, leave out ‘Secretary of State’ and insert ‘Prime Minister’.

Amendment No. 76, in clause 36, page 19, line 10, leave out ‘Secretary of State’ and insert ‘Prime Minister’.

Amendment No. 77, in clause 36, page 19, line 13, leave out ‘Secretary of State’ and insert ‘Prime Minister’.

Amendment No. 85, in clause 36, page 19, line 19, leave out ‘Secretary of State’ and insert ‘Prime Minister’.

Phil Woolas (Labour, Oldham East and Saddleworth)

We move on to clause 14. The reason for the clause is that an essential objective of the Bill is to provide transparency about the Government’s plans and actions for tackling climate change. As part of that transparency, the Bill requires the United Kingdom Government to publish their proposals for meeting each carbon budget. The report produced must be laid before Parliament as soon as is reasonably practical after the setting of the budget. By providing a clear indication of the strategy, the Government aim to reinforce business and public confidence that robust plans are in place to ensure that the budget will be met.

The 15-year plans published under clause 14—the three five-year budgets—play an important part in providing the greater predictability that the Bill aims to introduce. Businesses and households that are planning investments will want to know not just the overall level of the UK-wide budget, but the choice of policies that could be implemented to ensure that the budgets are met.

My right hon. Friend the Chancellor has announced that the first three carbon budgets and the plans for meeting them will be set out alongside the 2009 Budget. That timing draws an important parallel, also made by the Chancellor. Just as our public finances must balance over an economic cycle, so we must live within our carbon budgets for the health of the wider world and, therefore, for ourselves. The report will be crucial in bringing together a range of policies and showing how they will combine to meet the carbon budget. That will be a combination of existing measures—those, for example, contained in the energy White Paper—and new measures, to be announced within the report or over the months before its publication.

At present, clause 14 places the duty on the Prime Minister, reflecting a change made to the Bill in the other place. I agree that, to tackle climate change, we need a strong effort, not just across Government, but across society as a whole. All parts of our society will have a role to play. It is also the case that the Prime Minister is personally committed to the fight against climate change.

Gregory Barker (Conservative, Bexhill and Battle)

The Minister refers to the Prime Minster who, with the best will in the world, does not have a long tenure left. Speaking about legislation that he hopes will run to 2050, surely the Minister cannot make such a reference and expect the Committee to accept arguments based solely on the current occupant of No. 10? We do not know what the personal commitment of any given incumbent of No. 10 will be in 2020, 2030 or 2040. It does the Minister no good at all to set out a personal conviction about the current, temporary occupant of No. 10 when defending the legislation.

Phil Woolas (Labour, Oldham East and Saddleworth)

I am grateful for the intervention. I was taking the opportunity to make a partisan point. Hon. Members on both sides of the Committee do that and the Government have the right to do so as well. I do not argue that we should take direct reference to the Prime Minister of the day out of the Bill because the current Prime Minister is personally committed to the policy goals of the Bill. My argument is based on the definitions of how we make legislation in this country. Bills refer to the duties of the Secretary of State and throughout the years that has clearly been interpreted to mean the Government collectively. That is why actions and instructions are given in that way.

By placing specific duties on the Prime Minister of the day, the wrong interpretation could be given and political mischief could be made. The Daily Mail and TheGuardian might suggest that not putting the words “the Prime Minister” in the Bill could be interpreted as meaning that the individual Prime Minister of the day was not committed to the aims of the Bill, which would not be fair.

David Maclean (Conservative, Penrith and The Border)

Please correct me if I am wrong, but does not Lord Stern continue to report to the Prime Minister on forestry issues? If that is the case, surely it is inconsistent for the clause to refer to the Secretary of State instead.

Phil Woolas (Labour, Oldham East and Saddleworth)

Knowing Lord Stern of Brentford, I do not think that he considers that he reports to anyone. He says what he thinks and he says it robustly. I do not accept the right hon. Gentleman’s argument. Amendment No. 33 would have the effect of transferring further responsibilities to the Prime Minister as an individual, in this case in relation to the report required under clause 18. Amendments Nos. 76, 77 and 85 would transfer responsibility to the Prime Minister individually for laying before Parliament the Government’s response to the annual report of the committee, as required under clause 36. I have explained why we disagree with the amendments, and I have moved new clauses to give responsibility to the Secretary of State, which, let me make it clear, means the Government collectively.

Gregory Barker (Conservative, Bexhill and Battle)

My right hon. Friend the Member for Penrith and The Border makes a good point about Lord Stern, but he is not the only senior policy adviser on climate change issues who reports not to DEFRA but to the Prime Minister. Johan Eliasch, whom the Prime Minister trumpeted with great publicity last year during his brief honeymoon, is another individual who reports directly, privately—I have not seen any of his advice published or any interviews that he has given—and confidentially to the Prime Minister. How are those considerations likely to be elucidated by the Secretary of State for the Environment?

Phil Woolas (Labour, Oldham East and Saddleworth)

We are talking about law. It is the custom and practice in the United Kingdom Houses of Parliament that duties are placed upon the Secretary of State. As I have already explained, that means the Government collectively. The Secretary of State delegates his or her duties to his or her Ministers and we are all appointed by and are accountable to the Prime Minister. That is clearly understood.

There are two intentions behind placing the duty on the Prime Minister. One is including the Prime Minister’s name as an indication that the Government accept that this is a most important matter—we have described it as the most important matter facing humankind. The argument put by others is, I believe, politically motivated, given that a responsible Minister would take the advice of parliamentary counsel. There are important reasons why, under legal process, the Secretary of State is used. I am advised that it is not possible to take legal action against the Prime Minister individually. It is possible to take action against the Secretary of State only, the meaning of which is the Secretaries of State collectively. There is good motive and bad motive behind this attempt to include the Prime Minister. As ever, I am being honest with the Committee.

Tony Baldry (Conservative, Banbury)

Can the Minister help me on a boring machinery of government point? We all understand how, for example, public spending is worked out. Departmental Secretaries of State have bilaterals with the Chief Secretary and eventually the Budget gets carved up. Clearly, getting the carbon budget sorted out will require a fair amount of negotiation among various Departments as to where the burdens fall. It would help the Committee if we could understand whether a Cabinet Sub-Committee will do this and, if so, whether that will be chaired by the Secretary of State for Environment, Food and Rural Affairs. Given that I suspect that there will be some fairly serious horse trading on this matter, one might imagine that, at some stage, the Prime Minister—whoever that might be—will have to adjudicate. Can the Minister give us some guidance on the machinery of government process for setting the budget? That is something of a policy wonk question, but the answer will be helpful to the Committee.

Phil Woolas (Labour, Oldham East and Saddleworth)

That is an important question. I bet that neither the Daily Mail nor The Guardian will report the answer, but that is probably because it is an important subject. I shall stop making digs at those two newspapers as it is probably a bad career move.

The answer to the hon. Gentleman’s question is, as he will expect, that the Cabinet will take overall responsibility, but there is an existing Sub-Committee on Environment and Energy—the ED(EE). I occasionally get sent to it. The Cabinet Sub-Committee is dedicated to the environment and energy and is chaired by the Chancellor of the Exchequer. Its membership includes the Secretaries of State with responsibility for environment, energy, transport and communities and local government, and people from other Departments. That Committee has been established under the authority of the Prime Minister to take collective decisions in this area. We envisage that the Cabinet itself will take the final decision. I hope that that has shed some light on how we intend to proceed.

Several hon. Membersrose—

Phil Woolas (Labour, Oldham East and Saddleworth)

Rather than stopping interventions, I have now prompted more, as transparency always does.

Nick Hurd (Conservative, Ruislip - Northwood)

Will the Minister confirm that Prime Minister Blair chaired the energy and climate change Sub-Committee under the previous Administration?

Phil Woolas (Labour, Oldham East and Saddleworth)

I cannot confirm that, but I shall come back to the hon. Gentleman. The Cabinet Sub-Committee structure is much improved in my view. It is much more streamlined, much clearer and more pragmatic. Sofa government has ended and proper decisions are taken in proper places under the new structure, which I welcome. The hon. Member for Banbury asked an important question because behind it is recognition of the importance of the carbon budget-setting process and the policy-setting process that flows from that.

Steve Webb (Liberal Democrat, Northavon)

One of the Minister’s arguments against including the words “Prime Minister” in the provision was essentially that we do not do that kind of thing in legislation. I am sure that he will have been briefed and will thus be aware that the Regulation of Investigatory Powers Act 2000 places a duty on the Prime Minister to report to Parliament. One reason for that was that there were concerns about the power and it was felt necessary to assure people that the Prime Minister was involved. If it was okay in that instance, is not the present one even more important?

Phil Woolas (Labour, Oldham East and Saddleworth)

Perhaps I may deal first with the point made by the hon. Member for Ruislip-Northwood: the previous Prime Minister chaired the previous Committee on energy and the environment, and the Deputy Prime Minister was the deputy Chairman. The Committee is now chaired by the Chancellor of the Exchequer. I congratulate the hon. Member for Ruislip-Northwood on his recollection and, perhaps, homework.

To return to the question asked by the hon. Member for Northavon, there is a difference. I have checked out the list of things that the Prime Minister is required by legislation to do, in contexts where my predecessors as Ministers in this situation lost the argument. There are some pretty obscure ones, but the difference is that the very nature of the Bill, as the hon. Gentleman accepts, is to put a legal duty on the Government to meet their carbon budget. It is not possible, I am advised, to take legal action against the Prime Minister. Legal processes relate to the Secretary of State. That should give the hon. Gentleman the reassurances that he needs.

Anne McIntosh (Conservative, Vale of York)

I mean to help the Minister. He says that he does not want the Prime Minister to be mentioned in place of the Secretary of State in the provision because the legal action that might arise could be pursued against only Secretaries of State collectively. However, does he realise that what we want the Prime Minister to do in this instance is report on the policies, not deliver on them? If we consider the percentage of carbon emissions for which DEFRA is responsible, the Minister will know that the bulk of such emissions fall to other Departments. That is an additional reason to agree to including the Prime Minister in the provision—purely with respect to the duty to report to Parliament—rather than the Department, whose duty it will be to deliver.

Phil Woolas (Labour, Oldham East and Saddleworth)

I take the hon. Lady’s point, although I am disappointed that she does not support my efforts to increase the standing of the work of the Department for Environment, Food and Rural Affairs in future—the provision would have consequences in that regard. My arguments about breaking with the way we do things remain valid—I do not use the term “break with tradition”, as I am all in favour of that if it makes an improvement, unlike, often, the hon. Lady’s party. The traditionalist wing of the Conservative party argues that we should keep things as they are unless there is a good reason not to. A good reason has not been put forward. Therefore, to be consistent, the traditionalists should support the status quo.

My point is that there is a good reason for designating Secretaries of State in law, rather than the Prime Minister or other Ministers. It is not just a matter of tradition, but part of our legal framework. I ask the Committee to accept my explanation. I think that I have answered the question asked by the hon. Member for Banbury by explaining the seriousness that is given to the matter within the machinery of Government. I hope that the matter will not be pressed to a vote.

Gregory Barker (Conservative, Bexhill and Battle)

I also want to move amendments Nos. 46 and 47 to 51.

Frank Cook (Labour, Stockton North)

Order. The amendments being debated with amendment No. 4 are Government amendment No. 5 and amendments Nos. 33, 76, 77 and 85. Amendments Nos. 46 and 47 to 51 are in the next group and are not to be discussed yet.

John Gummer (Conservative, Suffolk Coastal)

I feel very strongly about this matter and think the Minister has been ill advised as to why this is so necessary. I remember when we started on this whole course, when the then Prime Minister set up the first committee that was to report on these matters, under Sir Crispin Tickell. That committee reported directly to the Prime Minister; that was the purpose of it. Sir Crispin had access to the Prime Minister. He reported to the Prime Minister, and the Prime Minister presented such reports as he made. That was done so that we could say that the issue of climate change was so important that it had to be a central concern of the Government as a whole.

That was in the days in which there was a much stronger Department of the Environment in the simple sense that—and I make no criticism—it had control of local authorities. It spent a quarter of the budget of the nation. It controlled planning, water and other resources. It was a Ministry that had in its own hands the mechanisms of delivery of many of the issues of sustainable development. In particular, it had the mechanisms by which we would meet our carbon budget. Even in those circumstances, and with a Secretary of State whom I think most would admit actually cared about these matters, and was in the same position as the present Secretary of State for EFRA—I am not making a distinction—it was felt by the Government to be far too important not to commit the Prime Minister to that purpose.

In the days when I had to explain that, because the concept of climate change was nothing like as central as it is today, I used to use the example of the Health and Safety Executive’s belief that if one runs a business, even if one has a special health and safety director or officer, health and safety should be the responsibility of the chief operating officer. In every company on whose board I have ever sat, I have always insisted that that should happen. Only by doing that does one say that the most important thing about the business is that people go away at the end of the day as healthy as they can. That is duty No. 1 of any employer. It is a mechanism of showing that a business has chosen to emphasise what is the key issue for its future.

The key issue for the future of the United Kingdom and the world is dealing with climate change. In history, in circumstances when that was much less understood, the Prime Minister took that responsibility. Rather slowly, it has emerged that under the Cabinet arrangements under the previous Prime Minister, he took that view too. I remember the announcement when he said that he had to be chairman of this, and the Deputy Prime Minister had to be his deputy, because it was so important. I did not choose the Deputy Prime Minister; he did, and that is the situation, but if he were the Prime Minister, that was the right thing to do.

The body is now chaired, if I may so, by the one man who appears to know nothing at all about the issue, but who is there because it is accepted that one cannot deal with these matters unless not just the responsibilities of DEFRA, but the energy bit as well, are treated together. As neither of those Secretaries of State could chair it, we have to have somebody else. As happens in all Governments, the Chancellor of the Exchequer is given the job, whether he knows anything about it or cares about it. I think that that is a thoroughly bad way forward.

In the quality of life commission that I had the honour to chair, we proposed that the new Department that we would create would be a much more powerful version of DEFRA and would retain and bring back some of the powers that were sadly removed from it ad hominem, or ad feminem—we all know how DEFRA was created. Our idea was that there would be somebody in that Department who was the equivalent of the Chief Secretary to the Treasury so that it was accepted that the carbon budget would be a tough one and somebody in that Department—the Minister might find himself in that position—would have the power that the Chief Secretary has to say not just to DEFRA, but to all Departments, “You have to meet the budget.” No doubt people would come to that Minister, even though he was a junior in the Cabinet. The one time someone goes to a junior Minister is when they go to the Chief Secretary to argue their case. The Secretary of State for Defence would be there arguing with the Minister about his carbon budget, although the hon. Gentleman would then be a right hon. Gentleman and a very powerful man.

That is the concept that we had. We recognise that it demands a serious change in the structure of Government. If we could have put that in the Bill, that would have been good. It would be non-party political to say that the two Departments created ad hominem and ad feminam have failed because they were each built for a person and not for a purpose. That is one of the problems with the Department for Communities and Local Government, and it is the problem with DEFRA too. I have no doubt that any Government, including the present one, will change the structure of Government given the effluxion of time, so that they face what has to be done, rather than operating on the basis of personalities, of who has to be given what.

If that is the case, we will have a more powerful DEFRA, so the argument could be that DEFRA should have the responsibility. However, that argument does not stand, for a simple reason. It will be an uphill battle for all of us to make people understand that doing the job that we need to do is the central purpose of Government. We need those token statements. I say that as a traditionalist. We should never change things unless we can show that they are broken, but if we can show that they are broken, we should change them rapidly. The present system is broken. The Department is not strong enough. It does not even chair the Committee that it should be dealing with. There is nobody in the Department who has ever shown that he could make other Ministers meet DEFRA’s the demands. I say that with great sadness, because it ought not to be so.

We have to find a way through, and I beg the Minister to think again. He is making the situation worse. He knows perfectly well that if we had “Prime Minister” in those places in the Bill, the difficult legal situations would not matter a fig. I remind the Minister what I said about the lawyers in the Department of the Environment when I went there: they are there to deliver what the Government want in a way that makes what the Government want legal. They are not there to explain to the Government why they cannot have what they want. If the Government wanted the words “Prime Minister” in the Bill, they would appear there. That is a fact. The Government would tell the lawyers to go where they ought to go, to the underground dungeon where they find the legal mechanisms to deliver the policies that the Government decide on.

I do not support the proposition of the interesting argument about who one can sue who for what. I just want to say to the Minister that if he takes the words “Prime Minister” out of the Bill, he will say something very clearly to the public. He may not mean it, but he will say, “The Government do not take the same view of the importance of the Bill as the House of Lords took.” It may have been better for the House of Lords not to put “Prime Minister” in, although I do not happen to think so, but as those words now appear in the Bill, I beg the Minister not to remove them.

Tony Baldry (Conservative, Banbury)

Should not the Committee take notice of the House of Lords on the issue? The House of Lords has a large number of people, such as Lord Wakeham, who have been through the process so often and who have understood at the sharp end how the machinery of government works. The other House collectively put that in because it recognised that the carbon budget will work only with such a mechanism.

John Gummer (Conservative, Suffolk Coastal)

I am sure that is right, but I want the Minister to take seriously what he would be doing by taking “Prime Minister” out. First, I do not think it will be out permanently—the House of Lords will put it back in again, because it is so clearly important. The public will see taking it out as the Government resiling from the centrality of the issue.

My hon. Friend the Member for Bexhill and Battle was right to point out that the issue is not about the present Prime Minister. Many of us have our doubts about the present Prime Minister and his commitment to climate change, but some people do not have those doubts. That argument is perfectly reasonable and even party political, but I do not mind. The measure relates to any Prime Minister. I want the incoming Prime Minister to know that the issue is his or her responsibility. I want people to recognise that until 2050 that is their responsibility, in a way that nothing else is. That it is not in any other Bill, because the Bill is not the same as other Bills. No other Bill has ever laid such responsibilities on the Government. No other Bill has ever looked forward, specifically, to a point so many years ahead. That is why the Bill is important. If the Minister goes on in this way, I am seriously worried about the impact that it will have.

Gregory Barker (Conservative, Bexhill and Battle)

Does my right hon. Friend agree that the argument boils down to a simple issue—leadership? On the issue of climate change, which runs across the economy and society, involving every aspect of our national life, not having the Prime Minister at the helm sends an extraordinarily confusing and weak message to the British electorate. The issue is so important, yet it can be devolved to a Secretary of State whom they may never have heard of.

John Gummer (Conservative, Suffolk Coastal)

I hope the Government will show a greater awareness of public feeling about the matter than has sometimes been true of late. The Minister is the sort of Minister who might understand that. I very much hope that he will desist from pressing the amendments.

Martin Horwood (Liberal Democrat, Cheltenham)

I oppose Government amendments Nos. 4 and 5.

The Minister has great intellectual powers, but even those are stretched by trying to justify the removal of the words “Prime Minister” from clause 14. He seriously suggested that it was less confusing to have the words “Secretary of State” in the Bill, arguing that that somehow implied responsibility across Government. From our earlier debates, it is clear that the confusion would be far greater if the words “Secretary of State” appeared in the Bill.

As the hon. Member for South Swindon rightly pointed out, we are not talking about the delivery of the policies in detail. We are talking about a duty to report to Parliament. That seems an easy duty to lay, legally, on the Prime Minister. The right hon. Member for Suffolk, Coastal is exactly right. When I was in business, lawyers were paid to tell us how to do things, not paid to tell us how not to do them or why they are impossible.

It is important for the words to be retained and extended to clause 18 as well, and to clause 36 to take account not only of the initial proposals and policies for meeting carbon budgets, but of the duty to report on compensation for budget excess, if that occurs, and to respond to the committee’s periodic reports on progress. Amendment No. 85 spotted a reference to the Secretary of State that we had not identified, although probably not the most crucial one, in respect of the person who lays the order. However, I am happy to support it, for the sake of consistency.

My hon. Friend the Member for Northavon, with uncharacteristic unkindness, once referred to DEFRA as a “piddling little Department”. Let me put it more sympathetically. Staff and Ministers at DEFRA have often proved themselves very committed and very understanding of the issues of climate change. Indeed, its former Ministers have periodically added to the ranks of the greenest Members of Parliament. The right hon. Member for Suffolk, Coastal is a case in point, but there are some on the Labour benches as well. If DEFRA is piddling, it is at least piddling in the right direction. The risk is that it is simply outgunned by much more significant Departments.

The Department for Communities and Local Government refuses to accept that housing targets should be amended in a housing downturn, when the growth rate is half the rate anticipated when those targets were set. The Department refuses to accept any arguments about the environmental consequences of ploughing ahead with those high housing numbers without democratic consultation at local level.

When large amounts of land are cleared for development—both greenfield and brownfield, to accommodate extremely high numbers—the result is that, in a downturn, the greenfield sites, having been released for development and being the more profitable, are developed first, so the environmental damage is greater. The argument should be in favour of sustainable development, and the understanding of sustainable development should be promoted in order to change such policies.

The Department for Transport, contrary to what the Minister implied, is giving a green light to the third runway at Heathrow and is responsible for policies relating to the level of investment in our railways. It seems an opportune moment to mention the Swindon-Kemble line, a crucial part of that investment, where the doubling of capacity needed would help to take people out of their cars in large numbers and stop them travelling from my constituency to Swindon to avoid the terrible rail service that we have at present. Such investment is crucial to the local battle against climate change.

The Department for Business, Enterprise and Regulatory Reform proudly boasts of its support for renewables, but refuses to accept feed-in tariffs in the passage of the Energy Bill—[Interruption.] The Minister chunters, but we were in the Committee at which feed-in tariffs were specifically rejected by the Minister for Energy. They have been pushed into the long grass, or at least the medium-length grass, for yet more consultation, and could take years to implement. DBERR also endorsed the building of Kingsnorth power station, with CO2 emissions 70 per cent. higher than any alternative.

Mr. Woolasindicated dissent.

Steve Webb (Liberal Democrat, Northavon)

The Minister shakes his head, but I have been on the Environmental Audit Committee when Energy Ministers defended the building of Kingsnorth without locking in carbon capture and storage technology.

Frank Cook (Labour, Stockton North)

Order. I remind the Committee that we are engaged in line-by-line scrutiny, which is a very good principle. I ask the Committee to look at the amendment under consideration, which reads:

“leave out ‘Prime Minister’ and insert ‘Secretary of State’.”

Martin Horwood (Liberal Democrat, Cheltenham)

I am grateful for your guidance, Mr. Cook, and of course you are right. I should have been pointing out on each of the examples that DCLG is responsible not to DEFRA, but to the Prime Minister, that the Department for Transport is responsible not to DEFRA, but to the Prime Minister, and that DBERR is responsible to the Prime Minister, as is the Treasury, whose green taxes are such a crucial element of the battle against climate change. We are seeing the potential undermining of public support for green taxation because of the Treasury’s unwillingness to link green taxes explicitly to reductions in other taxes to make it clear that it is revenue-neutral.

The international Departments are similarly responsible to the Prime Minister and not to DEFRA. They are responsible for climate change negotiations at international level and for policies that will influence the way in which Governments all over the world tackle climate change in their own environments.

Karen Buck (Labour, Regent's Park and Kensington North)

Is it not also true that all the examples cited by the hon. Gentleman would, under the Bill, be subordinate to the targets that we are setting for CO2 emissions, so the issue of who is responsible is irrelevant?

Martin Horwood (Liberal Democrat, Cheltenham)

The hon. Lady makes an important point, but it actually supports our argument for having the Prime Minister’s name on the face of the Bill. It is precisely because all the policies and proposals set out in clause 14 will be implemented by a range of Departments that it is important to make a Minister responsible for them and for laying the report before Parliament. The Secretary of State for Environment, Food and Rural Affairs simply will not be responsible for most of those policies and their impacts.

Steve Webb (Liberal Democrat, Northavon)

Further to my hon. Friend’s response, is it not also the case that there is an aggregate target for the whole of Government, rather than individual Departments? If the Prime Minister is not responsible, the Department for Transport might say that it would only do a small bit of the work, although it felt that the Government targets were great, because someone else should have the hassle of doing the rest of it. Only the Prime Minister has the authority to bang heads together.

Martin Horwood (Liberal Democrat, Cheltenham)

My hon. Friend is exactly correct. We are all familiar with the experience of trying to raise an issue that seems to blur boundaries at ministerial questions and being told by the relevant Minister that it is a matter not for them, but for one of their colleagues.

DEFRA’s website sets out the precise impact of the various areas with regard to carbon emissions. The 2006 figures showed a UK total of 554 million tonnes. Of those, 221 million tonnes came directly from energy supply, which is the responsibility of DBERR and through it the Prime Minister, but not DEFRA. Business contributes 92 million tonnes, which, again, is the responsibility of DBERR and the Prime Minister, but not of DEFRA. Transport contributes 133 million tonnes, which is the responsibility of the Department for Transport, and the residential sector contributes 81 tonnes, which is largely the responsibility of the Department for Communities and Local Government and the Prime Minister, but, again, not of DEFRA.

The only areas that are directly attributable to DEFRA’s responsibility were the 4.5 million tonnes of CO2 from agriculture and 400,000 tonnes of CO2 from waste management. Obviously, the picture on methane is different, but even in that regard a substantial amount comes from non-DEFRA areas of responsibility. Some of the larger sources of emissions, such as transport and energy supply, are still increasing, so it is vitally important not to send the wrong signals on who will take responsibility.

This is both a political and a legal issue. Politically, the rapier-like question from the hon. Member for Ruislip-Northwood precisely highlighted why we have to worry about a lack of interest from the Prime Minister on the issue. The fact that the Prime Minister has decided to abandon the chairmanship of that vital committee is possibly an indication, which Opposition politicians fear, that he is losing interest. This is a wonderful political opportunity to reinforce the Prime Minister’s personal commitment and ensure that all future Prime Ministers are held similarly accountable.

In legal terms, my hon. Friend the Member for Northavon briefly mentioned two pieces of legislation that set an important precedent—the Intelligence Services Act 1994 and the Regulation of Investigatory Powers Act 2000. As GCHQ is located in my constituency, I am particularly pleased with those examples. The point is that they cover an important matter of absolutely vital national interest. It was for that reason that the then Home Secretary, the right hon. Member for Blackburn (Mr. Straw), made it clear why the powers in that Bill were being laid on the Prime Minister and not on himself. He said that it would offer public reassurance on the use of powers in that Bill, and the power given to the Prime Minister was to lay before both Houses of Parliament a copy of every annual report made by the interception of communications commissioner under subsection (4), together with a statement on whether any matter had been excluded from that copy in pursuance of subsection (7).

That is an identical kind of reporting requirement to those that we are discussing in relation to the clause. If it was legal for him, why is it not legal under the Bill? That seems to be a powerful legal argument. The right hon. Member for Suffolk, Coastal made an eloquent plea for the Minister not to wriggle out of the situation on legalistic grounds. That is exactly right, otherwise we might suspect that fiddling is still a more appropriate description.

Michael Weir (Scottish National Party, Angus)

The right hon. Member for Suffolk, Coastal made an impassioned plea, and I endorse his argument. Throughout our discussions, we have been saying that the United Kingdom is a leader and is making a strong commitment by drafting the first Bill on carbon reductions. A further signal would be to include the Prime Minister in the Bill to show that the reduction of carbon emissions is the greatest issue of our age.

On a more practical level, over the years carbon budgets will perhaps become the most important part of the Government’s business in setting the carbon target to 2050. It will be a cross-departmental process, and it will undoubtedly mean great squabbling between Departments on how the carbon cuts are allocated. As has been pointed out, many carbon-emitting industries are not under the control of DEFRA. At present, 37.4 per cent. of carbon emissions come from the energy industry, and 17.8 per cent. come from other industries—both sets of emissions are under the control of DBERR. In effect, more than 50 per cent. of all carbon emissions come from its departmental portfolio. It might therefore be more appropriate for DBERR to have control of carbon emissions, not DEFRA. The decarbonisation of our energy supplies will be crucial in whether we can reduce carbon emissions in the first place, irrespective of what form of energy we might support in the future.

I ask the Minister to consider a point to which he has referred on several occasions. The reduction of carbon emissions concerns not only the UK Government, but devolved Administrations. There will have to be great contact between the various Administrations to reach agreement on how they tackle their part of carbon reduction. For example, the Scottish Parliament is to have its own climate change Bill, which is due to be published shortly. There will be similar movement in Wales as the Assembly gain more powers, which will happen under the measures currently passing through this place. The same will apply to Northern Ireland, so there will have to be great contact between the First Ministers of the devolved Administrations, along with the Prime Minister, through the Joint Ministerial Committees.

If we are to impose reductions and agreement is to be reached between Departments and the devolved Administrations, the matter must be under the personal control of the Prime Minister. They must provide leadership to show that we are all working together and demonstrate the importance of such matters throughout the United Kingdom. The clause needs to retain reference to the Prime Minister in order to send out a clear signal.

Anne McIntosh (Conservative, Vale of York)

The most disappointing part of the Minister’s speech was his not accepting the outcome of the debate and the vote in the other place. We are not convinced by his argument why the Prime Minister should not play such a role. As I said earlier, the Prime Minister should report. We are not asking the Prime Minister to deliver, but it is only the Prime Minister—whoever they may be—who has the international status and the domestic gravitas to report on such issues.

As for percentages, the energy industry, which falls to DBERR, is responsible for more than 37 per cent. of carbon emissions. Road transport alone, which falls to the Department for Transport, accounts for more than 21 per cent., and other industries, which presumably include aviation, shipping and others, account for almost 18 per cent. and fall partly to the DBERR and partly to DEFRA. Residential households produce 15 per cent., and the hon. Member for Cheltenham has said that agriculture, farming and waste management constitute the small amount for which DEFRA is responsible. I am not convinced by the Minister’s argument, although I welcome his assurances that he wants to give more certainty to households and businesses.

Mention has been made of the Department’s clout and responsibilities. My right hon. Friend the Member for Suffolk, Coastal referred to the Conservative party’s quality of life policy group and proposals for beefing up the Department, and I believe that his point was much more convincing. How does the Minister respond to that?

Clearly, the Prime Minister should be responsible for reporting to Parliament on the matters before us. Page 18 of the Government’s final impact assessment states:

“Overall costs can be minimised by setting the right policies in place to incentivise the most cost-effective methods of mitigation.”

Surely, that should be a role for the Prime Minister, not individual Secretaries of State—albeit through the Secretary of State with responsibility for the environment.

Paragraph 2.3.10 on page 19 of the impact assessment states:

“The choice of policy instrument is also likely to have a significant distributional effect: regulation, market mechanisms or fiscal measures will have divergent distributional impacts.”

That assessment goes on to argue that businesses and households are looking for continuity and determination in the Government’s policy from the outset. However, in moving the amendment, I did not hear from the Minister why he believes that a Secretary of State is better placed to fulfil that responsibility. Under the Intelligence Services Act 1994, which was passed by a Conservative Government, the Prime Minister has duties similar to those before us today and must report on national security. The hon. Member for Cheltenham gave a similar example, but there are also less obscure ones. For example, let us bear in mind that a previous chief scientific adviser has said that climate change is the greatest threat facing this country.

On Second Reading, my hon. Friend the Member for East Surrey (Mr. Ainsworth) stated:

“The real test of the Bill will be whether it changes the mindset in Whitehall and Westminster to ensure that respect for the environment truly finds a place at the heart of policy making and Government practice.”—[Official Report, 9 June 2008; Vol. 477, c. 56.]

We believe that DEFRA is already collapsing under the weight of its responsibilities for flooding, farming, food, nuclear waste, water supply, fishing, coastal erosion and biodiversity. It has enough on its plate without being asked to do this as well. We are not trying to give the Prime Minister a vast number of new tasks.

When the Prime Minister’s initial reporting duties were first mooted in the other place, the Bill contained more of them than it does now. Most of them dealt with reporting on facts and other historical issues, which would not change as a result of the Prime Minister making the statement and producing the report. Such responsibilities would require the Prime Minister to report only on aspects of the Bill that are truly and inevitably cross-departmental. Those responsibilities are, first, that the Prime Minister must respond in Parliament to the Committee on Climate Change’s annual report on national progress towards meeting out carbon budgets, and, secondly, that the Prime Minister must report on Government strategies for meeting those budgets. The second duty would occur approximately every five years. The Prime Minister would be required, therefore, to produce just one report to Parliament per year on certain matters, plus an additional report on strategy approximately every five years. If the Minister puts the matter to a vote and wins, I hope that he will at some stage—either when he sums up this group of amendments or on another occasion—specify what additional resources will be made available to his Department to draw together those strands. Lord Rooker clearly stated to the EFRA Committee, on which I have the honour to serve, that there will be no further legislation or responsibilities, because the Department has no resources.

Tony Baldry (Conservative, Banbury)

Since the Bill was debated on Second Reading, Lord Stern has advised that the cost of tackling global climate change has doubled from his original estimate of 1 per cent. of GDP to 2 per cent. Introducing carbon budgets will not be painless, and there will be a hit on various sections of the economy. We all know that those various sectors will go to their sponsoring Departments and make special pleas as to why they should take less of the hit on carbon budgets than other areas of the economy. That will particularly be the case in a time such as this, when the economy is in some difficulty. One only has to pick up the business section of any national newspaper or look at shares in the house building industry to know that it is having a difficult time. I suspect that many in the house building industry will then go off to the Department for Communities and Local Government, which sponsors the construction sector, and say, “We should not have to take such a great hit because of the impact that this will have on us in a difficult economy.” Therefore, someone within the machinery of government will have to make some fairly difficult decisions on how the carbon budget is allocated.

This is a totemic Bill and a totemic clause. If the present Government wish to remove the clause from the Bill, it is a matter for them, but it will send out a clear political signal. I just hope that my right hon. Friend the Member for Witney (Mr. Cameron) makes it clear that when he becomes Prime Minister, he will chair the appropriate Cabinet Committee. He, as Prime Minister, will chair the Committee and every other Secretary of State will know that they answer to the Prime Minister. I have to say that going to a Cabinet Committee chaired by the Prime Minister concentrates the minds of Secretaries of State and junior Ministers wondrously. If my right hon. Friend the Member for Suffolk, Coastal were here, he would agree with me, as would my right hon. Friend the Member for Penrith and The Border.

I am quite sure that when my right hon. Friend the Member for Witney becomes Prime Minister, he will personally present this report to Parliament. By omission and by their actions, if the present Government and the governing party wish to make that political point, it is up to them. However, without changing the legislation and without having to amend an Act of Parliament, an incoming Prime Minister can achieve what he wishes to achieve by making it very clear that that is how he intends to conduct business in Whitehall. In so doing, he will make a very clear statement that by voting blue, a person goes green.

Phil Woolas (Labour, Oldham East and Saddleworth)

We have had an important debate on what I thought was a minor amendment. Perhaps, in addition to my previous argument, I should put some arguments in response to Committee members. We have had a number of thoughtful interventions, and I do not think that hon. Members are trying to cause political embarrassment.

The hon. Member for Banbury has said that it is a matter for the Government and that the Government should live with the consequences, and I understand his point. Let me put the arguments specifically and then generally. Amendments Nos. 33, 76, 77 and 85 relate to later clauses in the Bill and have been tabled by the hon. Members for Cheltenham and for Northavon. They relate to subsections (1), (2) and (5) of clause 36, and they create specific duties in relation to specific actions—for example, the Prime Minister, rather than the Secretary of State, may by order extend the period in the Bill and must consult the other national authorities.

Let me repeat, however, that when one uses the phrase “Secretary of State”, it means Secretaries of State collectively. Clearly, the Secretary of State for Environment, Food and Rural Affairs is not the only Secretary of State to discuss issues with the devolved Administrations; as we all know, the Transport Secretary, the Defence Secretary and others also do so. Some of the amendments are therefore too prescriptive and do not meet the general point that hon. Members have made, because they do not signal the importance that the Government give those issues.

We gave a great deal of thought to our reasons for not supporting these amendments and for resisting the amendments in the other place. We want to create machinery of government that makes the Bill work precisely because of the point made by the hon. Member for Banbury. We are talking about important decisions, and there will inevitably be disagreements and conflicts in government.

The hon. Member for Vale of York talked about the respective sponsored emissions by transport and business. Again, I can answer her point technically by saying that the phrase “Secretary of State” refers to Secretaries of State collectively. However, let me draw a parallel with finance, because Opposition Members’ arguments on carbon budgets and reporting duties also apply to finance. The Chancellor of the Exchequer reports the finance Budget, but one does not hear the argument that the Prime Minister should do so or, by implication, that the Budget is not an important document. We decided against naming the Prime Minister, because we thought that that was tokenistic. We deem the carbon budget to be important, so we want it to work within the machinery of government.

I will not respond to the teasing of the hon. Member for Cheltenham, who implied that I was a piddling Minister. I will not tease him in return about his support for GCHQ, although I thought that he was against surveillance and things of that nature.

Martin Horwood (Liberal Democrat, Cheltenham)

I am grateful to the Minister for trying to assure us that it is less confusing to have the Bill refer to the Secretary of State than the Prime Minister. Will he explain precisely how clause 18 would work? If we went over the carbon budget, and Secretaries of State—plural—had to lay reports before Parliament, would the Chancellor be the first one to do so because of the taxation issues, and would he then be followed by the Secretary of State for Transport, the Secretary of State for Communities and Local Government and so on? Alternatively, would the Secretary of State for Environment, Food and Rural Affairs somehow include their reports in his? How could that possibly work in practice?

Phil Woolas (Labour, Oldham East and Saddleworth)

It is a fair question. It would be the Secretary of State for Environment, Food and Rural Affairs. What I am trying to get across, however, is that when the Environment, Food and Rural Affairs Secretary makes such a report to Parliament, it will be cleared across Government, as is the case with all written and oral statements and with reports that are required by statute. That is how the Secretary of State represents the Government collectively. The question of which individual lays the report is not as important as the machinery of government behind it, which entails a collective decision. I will follow that line of argument.

Martin Horwood (Liberal Democrat, Cheltenham)

If the carbon budget was missed overwhelmingly because of the contribution of transport—let us say that aviation emissions had got out of control and that that was the key political issue—would the Secretary of State for DEFRA answer questions about emissions and defend aviation policy on behalf of the Department for Transport?

Phil Woolas (Labour, Oldham East and Saddleworth)

That is how government works. I have already been quizzed about Heathrow this morning. Transport Ministers often have to answer for policies that are not directly within their remit, which is the point. We believe that including the individual title “Prime Minister” in the amendments is a token—let me put it that way—if not tokenism, which is not the best way for the Government to work. That is why we urge the Committee to resist the amendments tabled by the hon. Member for Cheltenham amendments and return to this clause what was taken out in the other place.

Gregory Barker (Conservative, Bexhill and Battle)

The Minister bases his case on procedures and mechanisms in the machinery of government, but does it not boil down simply to political clout? He has made a comparison with the Chancellor of the Exchequer, but the Chancellor lives at No. 11 Downing street, immediately adjacent to the Prime Minister, and occupies a great and historic office of state that sits at the very top of Cabinet precedent. With respect, unless the Environment, Food and Rural Affairs Secretary has a unique personal relationship with the Prime Minister, they will not have that standing in government. We know that, because that position is usually somewhere in the middle or right at the bottom of the list of Cabinet appointments. It is simply not living in the real world to compare the punch and political authority of the Environment, Food and Rural Affairs Secretary with that of the Chancellor of the Exchequer, let alone the Prime Minister.

Phil Woolas (Labour, Oldham East and Saddleworth)

I do not accept that that reflects an understanding of how government works. First, policies need to be cleared across government. Secondly, the introduction of carbon budgets greatly enhances the importance of the policy decisions that flow from them. If the hon. Gentleman accepts that—I think that he does, because he has said so—I am grateful to him for his view. The hon. Member for Banbury has also referred specifically to that point, and he must also accept that the machinery of government has to be able to cope. Just as finance decisions are addressed across Departments and the ring is held by the Treasury, so carbon budgets must be spread across government and the ring must be held by both the Treasury and DEFRA. We are not arguing about that. We are arguing whether the Prime Minister should be mentioned in the Bill, but the very nature of our system of government is that Ministers are accountable to the Prime Minister, which is implicit.

Steve Webb (Liberal Democrat, Northavon)

Does not the analogy with the Chancellor break down, because the Chancellor has one thing that the Environment, Food and Rural Affairs Secretary does not have? The Chancellor raises money and allocates it to Departments, whereas the Environment Secretary does not have a pot of carbon to hand out between Departments and simply has to hit a target. If the Department for Transport or another Department were to say, “No; we want a bigger share of the carbon budget,” the Environment, Food and Rural Affairs Secretary would not have the clout to arbitrate and would have to go through the Prime Minister, which is why the Prime Minister should be accountable.

Phil Woolas (Labour, Oldham East and Saddleworth)

We are all accountable to the Prime Minister for everything. We are appointed by the Prime Minister and we are sacked by the Prime Minister. That is the way in which we run this Government. The Committee on Climate Change advises the Environment, Food and Rural Affairs Secretary, and in that analogy they have a carbon pot.

We are approaching lunch time, so I commend Government amendments Nos. 4 and 5 to the Committee and urge it to resist amendments Nos. 33, 76, 77 and 85.

Tony Baldry (Conservative, Banbury)

On a point of order, Mr. Cook, is it in order to ask the Minister for an explanatory memorandum on the new schedule relating to paper bags? New schedule 1 is 13 pages long and, as it is likely to be discussed in the last Committee sitting and is opaque, will the Minister provide us, between now and then, with a plain English explanatory memorandum, so that colleagues can understand what it is all about?

Frank Cook (Labour, Stockton North)

It is in order to ask, and I am sure that the Minister has taken note of your question.

Gregory Barker (Conservative, Bexhill and Battle)

I beg to move amendment No. 46, in clause 14, page 7, line 21, leave out ‘report setting out’ and insert

‘detailed strategy report setting out the measures,’.

Frank Cook (Labour, Stockton North)

With this it will be convenient to discuss the following amendments: No. 47, in clause 14, page 7, line 22, at end insert

‘, and the indicative annual ranges within the net UK carbon account for each year must fall in order to meet the carbon budget for the relevant budgetary period (“the climate change strategy”).’.

No. 48, in clause 14, page 7, line 23, leave out ‘report’ and insert ‘climate change strategy’.

No. 49, in clause 14, page 7, line 28, leave out ‘report’ and insert ‘climate change strategy’.

No. 50, in clause 14, page 7, line 30, leave out ‘report’ and insert ‘climate change strategy’.

No. 51, in clause 14, page 7, line 33, leave out ‘report’ and insert ‘climate change strategy’.

Gregory Barker (Conservative, Bexhill and Battle)

Clause 14 places a duty on the Prime Minister to put together a report setting out proposals and policies for meeting the carbon budget. However, the existing proposal is not robust enough. The Prime Minister should be able to tell Parliament not only what we should be doing to meet the budgets, but, crucially, how we should do it. That is an important difference. Rather than merely producing a report, it would show far greater leadership if the Prime Minister were to set out a detailed climate change strategy on how the Government are going to meet those demanding targets.

The Prime Minister should not merely report on the progress made in the past and display a map of where we need to go. They should lead on how we will meet our targets in future. The reporting procedures in the Bill will not be complete unless they include a duty for the annual reports to contain an assessment of the effectiveness of the measures taken to reduce carbon emissions. The amendments would require that the statement laid before Parliament should include a comprehensive report on the effectiveness of the climate change strategy as well as details of any further policies or proposals that may need to be included. Government policies to reduce emissions should be assessed regularly, their successes should be reported on openly and changes should be proposed wherever progress is falling short.

I am quite up front in saying that we in the Conservative party fully intend to be the Government responsible for the report on the first budgetary period, so we should be holding ourselves to the highest standards of accountability in meeting those targets. I consider the strategy report to be like the annual finance Budget. The Chancellor proposes a tax and spending regime for a year and says that he will bring in x billion pounds in taxation and spend y billion pounds on providing services. However, it is inevitable that in the following year the Chancellor will find that growth was not exactly as predicted or that events caused a little bit more spending than proposed, so in the next Budget he will therefore make the necessary adjustments to get things back on track. If we are to bring carbon emissions under control, that is how we should deal with them.

There is precedent for placing a duty on the Government to produce such a strategy report. For example, section 2(1) of the Warm Homes and Energy Conservation Act 2000 places a duty on Ministers to

“prepare and publish...a strategy setting out the authority’s policies for ensuring...that as far as reasonably practicable persons do not live in fuel poverty.”

Section 2(5) requires Ministers to

“take such steps as are in its opinion necessary to implement the strategy.”

There is also precedent for requesting a detailed report or proposal. Schedule 5 to the Planning and Compulsory Purchase Act 2004 and schedule 89 to the Local Government and Housing Act 1989 both require the submission of detailed proposals. The requirement for a detailed report already exists in regulation 32 of the Ionising Radiation Regulations 1999.

With specific reference to amendment No. 47, as we have already discussed, it would make eminently good sense to set out indicative annual ranges in this detailed strategy report. The strategy report should be the natural and authoritative place for the Government to publish their indicative annual ranges.

Phil Woolas (Labour, Oldham East and Saddleworth)

I thank the hon. Member for Bexhill and Battle for laying out his amendment, which, if I have understood him correctly, would replace the words “report setting out” with

“strategy report setting out the measures”.

Further amendments would replace the word “report” with “climate change strategy”, so I am glad to see that he has adopted the language of new Labour, although I prefer plain English, especially in relation to legislation.

The hon. Gentleman has made a serious point, however, so let me respond. I shall deal with amendment No. 47 separately, as you have asked us to, Mr. Cook, but amendments Nos. 46, 48, 49, 50 and 51 would change the wording to a “climate change strategy” setting out measures, proposals and policies. The practical effect of the amendments would be negligible. The only possible problem with them is that the report will cover measures to reduce emissions only and will not cover adaptation to climate change. There might be a point to calling the report a climate change strategy, but equally it might be misleading.

The report published under clause 14 plays an important part in the greater predictability provided by the Bill’s framework. We all agree that those who are planning investments want to know not only the overall level of the UK-wide budget, but the choice of policies that will be implemented. The report will be crucial in bringing together policies and showing how they will combine to meet the carbon budgets. In that context, we cannot see what amendment No. 46 and amendments Nos. 48 to 51 would achieve. The report required under clause 14 will already have a high status, which has been further emphasised by the Chancellor’s announcement that the Government’s plans for meeting the first three carbon budgets will be set out alongside the Budget 2009.

It is not clear how calling the report a strategy or requiring it to contain measures in addition to proposals and policies will fundamentally change its nature. In addition, calling it a climate change strategy might be misleading, as the report will cover mitigation only—measures to reduce emissions. It will not cover adaptation to climate change, which will be dealt with by the Government’s adaptation programme in clause 56. Of course, I agree with the hon. Gentleman that the report will be an important document, but the amendments are unnecessary. I shall stop there, because I think that amendment No. 47 will be dealt with separately.

Frank Cook (Labour, Stockton North)

Order. For clarification, amendment No. 47 is part of the group of amendments.

Phil Woolas (Labour, Oldham East and Saddleworth)

Amendment No. 47 is similar to amendment No. 54, which we have already dealt with. Amendment No. 54 would have turned the annual indicative range into a range within which the net carbon account “must” fall, and colleagues will remember that debate from this morning. Amendment No. 47 would give rise to the same problems: as before, the annual net UK carbon account for any one given year could be outside the range but the budget could still be met. Alternatively, for one year we could be within the range, but still exceed the budget as a whole. The intention behind the indicative annual range is to provide an indication of what is expected to happen within each year of the budget based on the proposals and policies. Therefore, while I welcome the intention behind the amendments, I do not believe that they are necessary.

Gregory Barker (Conservative, Bexhill and Battle)

We believe that there is more to a strategy than to a report. A report could be a very staid, brief and backward-looking document, whereas a strategy must be exactly that. I take on board what the Minister has said and note his reluctance, and I will consider the matter further. I beg to ask leave to withdraw the amendment.

Phil Woolas (Labour, Oldham East and Saddleworth)

I beg to move amendment No. 8, in clause 14, page 7, line 29, at end insert—

‘( ) The report must outline the implications of the proposals and policies as regards the crediting of carbon units to the net UK carbon account for each budgetary period covered by the report.’.

This is an important part of the package of Government amendments. It relates to the balance between action to reduce emissions in the UK, action at European Union level—by UK companies through the European Union emissions trading scheme for example—and the purchase of international carbon units. Clause 25, which was a change made in the other place, seeks to ensure the correct balance by placing a limit on the contribution that action at EU and international level can make towards our carbon budget. We will come to that clause later.

The Government do not believe that an inflexible limit is the best way to approach the issue. However, we recognise that the balance between action at UK, EU and international levels is extremely important. The Bill helps us to achieve that by providing a clear framework for action and ensuring greater clarity for industry and households about our path towards a low-carbon economy. We must send a clear signal to our international partners about our commitment in the UK to tackling climate change.

Amendment No. 8 will add to existing provisions in clause 34 by increasing transparency. Clause 34 already requires the Committee on Climate Change, as part of its advice on each of the five-year carbon budgets, to advise on the extent to which the carbon budget should be met by action within the UK and the use of carbon units. The amendment goes even further; clause 14 requires the Government to lay a report before Parliament setting out proposals and policies for meeting the carbon budget. Amendment No. 8 means that that report must also set out the implications of those proposals and policies with regard to the relative balance between action to reduce emissions within the UK and the purchase of carbon units, which hon. Members on both sides of the Committee have asked for.

For instance, the report could include information on the role of the emissions trading scheme in helping to meet our budgets or detail the Government’s broad expectations for the purchase of carbon units through EU or international trading mechanisms that may come about in the future. We want to keep the balance between action at UK, European Union and wider international levels under review, and, if necessary, we will revisit our approach ahead of each budgetary period.

Steve Webb (Liberal Democrat, Northavon)

The Minister has said that the report will reflect what happens in the EU ETS. Businesses are the bodies that buy and sell the credits, and the Government want 100 per cent. tradability. Therefore, if a business exceeds its carbon quota and buys credits to offset that, the net effect will be nil. Given the Government’s world view, where there is no cap on the percentage that can come from overseas, the number will always be the same. In what sense will information be conveyed in the report, when we know in advance what the answer will be because the ETS cap is fixed in advance?

Phil Woolas (Labour, Oldham East and Saddleworth)

That is a good question. The hon. Gentleman has said that we want 100 per cent., but we do not—we want flexibility for 100 per cent. We will have this debate later, but, in practice, one has to achieve a balance between UK domestic emissions capping and what is available for offsetting overseas. I do not want him to leave this debate thinking that we want 100 per cent., as we do not. We want to get the balance right. The simple point in what I have just said, which I want to emphasise, is that we want flexibility. I believe that the hon. Gentleman agrees with me—Members of his party in the other place did.

I believe that the amendment helps to provide the clarity for which business and others have been calling. Incidentally, for maximum transparency, the report in clause 14 to which the hon. Gentleman has referred must be laid before Parliament at the same time as each budget is set, which is a point that we probed during consideration of an earlier amendment.

Gregory Barker (Conservative, Bexhill and Battle)

We have not reached the vitally important issue of using overseas carbon credits in Committee, but I have no doubt that it will be an extremely important and engaging discussion when we do. My party is strongly of the opinion that if we are to secure first-mover advantage in the new low-carbon economy, it is vital that the UK focuses its investment here in Britain, facilitating dynamic industrial change in our economy, rather than through a trading system that would involve the majority of the money going overseas. We certainly need to do that if we are to develop the skills, jobs and technologies to make Britain a truly green economy, but I shall save that debate for another sitting.

We will support Government amendment No. 8. Whatever their designs may be towards the distribution of domestic versus international carbon reductions—we all have different views on the exact distribution—it is certainly in the best interests of all concerned and of the Bill that the implications of carbon trading are examined and included in the strategy report.

Clause 15

Phil Woolas (Labour, Oldham East and Saddleworth)

I beg to move amendment No. 6, in clause 15, page 8, line 14, leave out ‘passenger travel and imports or exports of goods’ and insert ‘aviation or international shipping’.

Frank Cook (Labour, Stockton North)

With this it will be convenient to discuss the following: Government amendment No. 7, in clause 30, page 15, line 36, leave out subsections (1) to (5) and insert—

‘(1) Emissions of greenhouse gases from international aviation or international shipping do not count as emissions from sources in the United Kingdom for the purposes of this Part, except as provided by regulations made by the Secretary of State.

(2) The Secretary of State may by order define what is to be regarded for this purpose as international aviation or international shipping.

Any such order is subject to affirmative resolution procedure.

(3) The Secretary of State must, before the end of the period of five years beginning with the passing of this Act—

(a) make provision by regulations as to the circumstances in which, and the extent to which, emissions from international aviation or international shipping are to be regarded for the purposes of this Part as emissions from sources in the United Kingdom, or

(b) lay before Parliament a report explaining why regulations making such provision have not been made.

(4) The expiry of the period mentioned in subsection (3) does not affect the power of the Secretary of State to make regulations under this section.

(5) Regulations under this section—

(a) may make provision only in relation to emissions of a targeted greenhouse gas;

(b) may, in particular, provide for such emissions to be regarded as emissions from sources in the United Kingdom if they relate to the transport of passengers or goods to or from the United Kingdom.’.

Amendment (a) to Government amendment No. 7, in line 13, leave out from ‘Kingdom’ to end of line 15.

Amendment (b) to Government amendment No. 7, in line 13, leave out from ‘Kingdom’ to end of line 17.

Amendment No. 81, in clause 30, page 16, line 9, leave out from ‘passed’ to end of line 11.

Amendment No. 82, in clause 30, page 16, line 11, at end insert—

‘(5A) Regulations under this section must provide for emissions arising from the transport of goods to the United Kingdom to take account of all stages of the journey of those goods to the United Kingdom from their point of origin, where any part of that journey has been by sea or through the Channel Tunnel.’.

New clause 1—Emissions from international aviation or international shipping

‘(1) Emissions of greenhouse gases from international aviation and shipping shall count as emissions from sources in the United Kingdom for the purposes of this Part from 1st January 2013, as provided by regulations under this section.

(2) The Secretary of State may by order define what is to be regarded for this purpose as international aviation or international shipping.

(3) An order made under subsection (2) is subject to affirmative resolution procedure.

(4) The Secretary of State may make provision by regulation as to the circumstances in which, and the extent to which, emissions from international aviation or international shipping are to be regarded for the purposes of this Part as emissions from sources in the United Kingdom.

(5) Such provision may be made only in relation to emissions of a targeted greenhouse gas and in making such provision the Secretary of State shall have regard to international carbon reporting practice.

(6) Regulations under this section may make provision—

(a) as to the period or periods (whether past or future) in which emissions of the targeted greenhouse gas are to be taken into account as UK emissions of that gas, and

(b) as to the manner in which such emissions are to be taken into account in determining the 1990 baseline in relation to those periods.

(7) They may, in particular—

(a) designate a different base year, or

(b) designate a number of base years, and to provide for the emissions in that year, or the average amount of emissions in those years, to be taken into account as if part of the 1990 baseline.

(8) Regulations under this section are subject to affirmative resolution procedure.’.

Amendment (a) to new clause 1, in line 14, at end insert—

‘(5A) Regulations under this section must provide for emissions arising from the transport of goods to the United Kingdom to take account of all stages of the journey of those goods to the United Kingdom from their point of origin, where any part of that journey has been by sea or through the Channel Tunnel.’.

Phil Woolas (Labour, Oldham East and Saddleworth)

We come to the detail of the Bill, and I suspect that there will be a robust debate.

Frank Cook (Labour, Stockton North)

Oh.

Phil Woolas (Labour, Oldham East and Saddleworth)

Robust, not long, Mr. Cook. There is no reason why the debate cannot be short. The arguments have been rehearsed in the other place and during pre-legislative scrutiny. The Liberal Democrats have long campaigned for the existence of pre-legislative scrutiny. I have never seen a correlation between the amount of time spent on such scrutiny and the amount of time spent in Public Bill Committee, but I live in hope.

Government amendments Nos. 6 and 7 aim to clarify the Bill’s language, while also working, of course, within the spirit and the intent of the amendments made in the other place. They replace

“international passenger travel and imports or exports of goods”

with

“international aviation or international shipping”.

Let me explain why.

As amendment No. 82 recognises, one possible way of defining these emissions is by reference to “the transport of passengers or goods”. However, there are, of course, other ways—I argue better ways—to define those emissions, which we do not want to rule out inadvertently. That is why I want to revert to the broader language of

“international aviation or international shipping”,

which is established terminology within the United Nations and the European Union, as the right hon. Members for Suffolk, Coastal and for Penrith and The Border will, I hope, recognise.

Furthermore, the proposed clause 30(2) gives the Secretary of State the power to:

“define what is to be regarded...as international aviation or international shipping.”

This power was originally part of the Bill, but it was removed in the other place. It is a useful supplementary part of the Bill’s framework. It allows us to clarify what we are talking about when we refer to:

“international aviation or international shipping”

emissions, and to update that definition as necessary. For instance, and this is a very important point, the definition would be updated if there were—I hope and expect that there will be—an international agreement on how to allocate emissions to individual countries.

Finally, the other place set a deadline of within five years of Royal Assent for the Secretary of State either to include international aviation and shipping emissions in the UK’s targets under the Bill or to explain to Parliament why that has not been done; it was an opt-out rather than an opt-in, if I can put it that way. Given the importance of securing international agreement on those issues, we remain concerned that setting an arbitrary deadline risks being perceived negatively by our international partners. However—I look to my hon. Friend the Member for Bury, North at this point—given the strength of feeling in the other place and elsewhere on this issue, the Government are prepared to accept the duty to act within five years, either by including those emissions in our targets or by reporting to Parliament to explain why that was not possible—in other words, the opt-out rather than the opt-in.

If I may, let me briefly set out what clause 30(4) does, as amendment No. 81 would remove it. We believe that it is necessary, because it clarifies that the Secretary of State’s ability to make or amend regulations on this issue does not end once the five-year period from Royal Assent has elapsed. It ensures that the Secretary of State can still make regulations or amend regulations that have already been made.

If after, say, eight years, there was international agreement on a different way of allocating emissions between countries, which does not preclude an international agreement before that time, clause 30(4) would allow us to amend our regulations to reflect that agreement, but only after an affirmative vote in both Houses. Alternatively, if we wanted to make some minor and technical changes to our existing regulations, as is bound to happen at some point between 2013 and 2050, clause 30(4) clarifies that that is possible.

Let me also briefly set out the three key reasons why the Government feel that we cannot set a date for including those emissions. First and most importantly, we all agree that these are global issues and that a global solution would be the best way forward. Let me reassure the Committee that the United Kingdom is at the forefront of international discussions and proposals to address that point. We are also starting to see progress with both the International Civil Aviation Organisation and the International Maritime Organisation in the United Nations talks. Indeed, it was my right hon. Friend, the Secretary of State who successfully proposed at European Union level that aviation and shipping be included within the targets. If we are to succeed, we will need to persuade other countries that there is no hidden agenda and that we are not trying to force something on them now for narrow economic or political reasons. What we are trying to do is forge a global solution in the best interests of the international community as a whole, recognising that we are talking about global emissions that affect our domestic circumstances and not the other way around. That will be made much more difficult if we have a domestic deadline for deciding what the UK’s fair share is.

As hon. Members know, there are several possible ways of splitting emissions between countries. For some countries, the methods provide radically different answers. Independent analysis carried out for the Government that examined different methods found, for instance, that one of the models gave Belgium, a distinctly trading nation, more than 29 times as many emissions as under the other model. Denmark got more than five times as many, while Sweden got less than half. Such differences carry huge potential economic implications.

It is not simply a case of picking the right methodology. Suppose in 2011 or 2012 we were nearing international agreement, with the UK playing a leading role in the discussions. Then, for entirely domestic reasons, we were forced to choose a particular methodology for calculating the UK’s emissions for “international aviation and shipping”. How would that go down with our partners? Would that not give ammunition to those states—there are many—that do not want to see progress on the issue. They could say that we, the UK, were driven not by genuine desire for global agreement but by domestic concerns.

Secondly, it is not impossible that we could reach international agreement through the United Nations framework convention on climate change, the IMO or the ICAO. The best way to deal with international aviation or shipping emissions is through a sectoral approach—my personal view is that that is the most likely outcome—rather than allocating emissions to individual countries. In fact, that is one of the proposals that we are already discussing. We are already starting to see it at the European Union level, where it is likely that under the ETS aviation emissions will be allocated to airlines rather than to individual member states. Once in the EU ETS, aviation emissions will be capped, and any increase will have to be met by reductions elsewhere. Any reduction in aviation emissions would simply lead to emissions going up somewhere else, which is how emissions trading works.

Martin Horwood (Liberal Democrat, Cheltenham)

What is the most optimistic assessment for when such a sectoral international agreement might be implemented?

Phil Woolas (Labour, Oldham East and Saddleworth)

The honest answer to that question is by December 2009. There is pressure for an agreement—remember that all countries are facing the issue, but what is important is that it is part of the UNFCCC. However, I take the hon. Gentleman’s point—the bottle-half-full approach may be seen to guarantee that we are not dependent on international agreements, but I will come to my arguments against that in a moment.

Anne McIntosh (Conservative, Vale of York)

Before the Minister leaves that point, I have a concern with that approach. If the emissions attach to the airlines, then the airlines would be penalised by passing through a European Union airport. International flights could simply bypass the European Union, which could penalise our competitiveness. That has been put to us by the CBI.

Phil Woolas (Labour, Oldham East and Saddleworth)

The hon. Lady is right. That is the issue with an international agreement. That is the ultimate interdependency. Just as I have argued that a global agreement is the best option, the next best option is a European Union agreement and after that national definitions, which I believe would cause all sorts of problems.

I point out that today my right hon. Friend the Secretary of State for Communities and Local Government has outlined the agreements by local authorities on their performance indicators. Many of those local authorities—across the political spectrum, I am delighted to say—have adopted the CO2 emissions target within their area. How are we to allocate them? Are we to say to Hillingdon, because it is the host to Heathrow airport, that all the emissions resulting from the economic of the airport should be assigned to Hillingdon borough council?

I shall choose a better example relating to my hon. Friend the Member for Southampton, Test. Will all the shipping in and out of Southampton be ascribed to Southampton city council? I can see arguments in favour of that, but it would be unfair to the people of Southampton. It is not a trite point; it is an important one. We all want an international agreement, but it is a question of how one defines where the emissions should be allocated. The Government are not trying to duck that. The essence of our policy is that all emissions should be based on science, and I cannot argue for carbon markets or for a cap-and-trade system unless I argue for science. It is a matter of how we allocate.

There is no guarantee that it is possible to calculate what is a UK emission, or the emissions of any other individual countries. Surely what matters is what action is taken to tackle the contribution that the aviation and shipping sectors make to climate change. It does not matter to me whether that action is taken at national, European or international level. Of course, we have a leadership role, which the Government’s proposals recognise, but working towards that agreement should be our priority. We must recognise that what we agree internationally could be completely incompatible with national emissions targets, so we should not prejudge that issue now.

I conclude my remarks by saying that, as was recognised in the other place, these issues are very complex, but more importantly, they are very significant. We have already said that with respect to international aviation emissions, we expect to take a decision on whether to include those emissions in our targets well before 2013. We have already asked the Committee on Climate Change to look at that as part of its first task.

There are significant practical questions. That is why, for instance, the Committee’s work plan, which is available publicly on the Department for the Environment, Food and Rural Affairs website, states:

“One possible answer is that it may be much easier if attempted at EU rather than national level.”

For instance, what is the UK share of emissions? How would that work alongside aviation’s current inclusion in the EU ETS? Would one have two systems running alongside each other, and if so, how would that work?

Shipping is an even more complex question. Neither I nor the Government are trying to duck the issues. Ships can go for many months without refuelling, and they can also take on fuel from tankers in international waters. Based on fuel sold within the UK, shipping emissions have declined over the past 10 years. By any other measure, however, shipping in and out of the UK has increased over that period, so how does one account for that?

Finally, especially if we are acting alone, what of the risk of perverse impacts, which hon. Members often point out when they scrutinise Bills? What of the problems such as planes and ships filling up elsewhere and arriving with a heavier fuel load, or of air traffic simply diverting from Heathrow to Amsterdam or Paris, or of ships docking at Rotterdam and their cargo being driven here by truck? All those scenarios could increase emissions rather than reduce them.

I look forward to the debate on these points, but I ask the Committee to accept the good intent and practical implementation policies behind the Government amendments.

John Gummer (Conservative, Suffolk Coastal)

I want to share with the Minister something that, as a representative of Felixstowe, which is now Britain’s largest port, I am worried about. I am concerned not only about the emissions per tonne of diesel, but the quality of the diesel that is used. We, in the European Union, have been slow in saying that ships that use filthy diesel are not allowed to dock. I am not talking about whether they take that on board, but just that they should not be allowed to dock. We need to reduce the direct air pollution effect of ships, which is very strong—as anyone with a coastal constituency in this country knows. I am not criticising the Minister, but it is interesting that he should have given all the different examples, but did not refer to that. Such action would have a dual effect. It is something that we could do, and it is a matter that the Government could lead on in the European Union. Proportionately, Britain is more affected by the filth from dirty ships than any other country in Europe. Can we not take that on board?

Phil Woolas (Labour, Oldham East and Saddleworth)

I am grateful to the right hon. Gentleman. With your indulgence, Mr. Cook, I wish to make another point. We are also a world leader in engine design and manufacture. The most efficient ship engines in the world are our military ship engines. For reasons not primarily to do with emissions, but with refuelling Type 55 frigates, I highlight Rolls-Royce. I mention that because part of the supply chain is in Oldham, East and Saddleworth. I shall stop there, hoping that the Oldham Evening Chronicle correspondent has noted that important remark.

The right hon. Gentleman is correct. I am trying to ensure that we have a verifiable emissions capping regime and recognise its global nature, that we give UK plc competitive advantage, when we can, and that we do not unduly punish the UK. I think that I am right that 30 per cent. by volume in his example of trade between the UK and the European Union comes through Felixstowe dock, which is significant. I used the Heathrow and Southampton examples but, given that my hon. Friend the Member for Southampton, Test is about to intervene, I suspect that Southampton is bigger than Felixstowe in volume trade.

Alan Whitehead (Labour, Southampton, Test)

I regret to say that Southampton is not bigger in volume trade than Felixstowe, but obviously the quality of trade is better.

The right hon. Member for Suffolk, Coastal has cited the example of dirty diesel. There are also other factors relating to what shipping carries, how efficiently it carries it, and over what distance. Given that 95 per cent. of what we consume comes into this country via ports, notably Southampton and Felixstowe, we are concerned about what is coming in and going out on ships, too. What is the value per mile travelled, for example?

Do the ships, when in port, give back the electricity that they are consuming when they lie idle? Can they be plugged into the port when they are in dock? If that were part of the package, Southampton would make an interesting net contribution, as would Felixstowe, from the power source of ships lying in port. Will my hon. Friend be considering those matters when examining the contribution made by shipping in respect of CO2 measures?

Phil Woolas (Labour, Oldham East and Saddleworth)

My hon. Friend’s intervention illustrates the complexity of the matter. The Government are not trying to dump the issue. We have argued—above all countries in the European Union—that, of course, aviation and shipping emissions should be included in a scheme. Given the importance that we place on the cap-and-trade system and carbon trading, it would be nonsense for us not to do so. That does not disguise the fact that there are the complexities to which my hon. Friend has referred.

Let me mention some further items to consider. Should we look at emissions from the transportation of goods to the UK at all stages of the journey? Ships that dock in Southampton may well be carrying goods, including passengers, from one country to another—they may be dropping off at Southampton, taking on new cargo and moving on elsewhere.

I suspect that the whole Committee is trying to include aviation and shipping in a pragmatic way, so let me point a way forward. There are already international rules on how to calculate the emissions from, for example, journeys through the channel tunnel. If the electricity is generated on the French side, the emissions belong to France; if the electricity is generated on the UK side, they are our emissions. I am trying not to score a point, but to show the difficulties. The alternative approach, which we will discuss later, risks double counting. We also have the problem of the administrative burden. How do we ascribe goods where part of the journey was by sea? Would we need to examine every single journey of every single ship and aircraft? Huge uncertainties and data problems need to be considered.

The Government’s approach meets the objective of those who are rightly campaigning for the inclusion of aviation and shipping emissions in the Bill and the international agreement. Let us move forward on the best basis.

Anne McIntosh (Conservative, Vale of York)

I am more confused now that the Minister has moved the amendment than I was before. In his amendment, is he saying that the Government could introduce regulations that apply to aviation and shipping and remove the other aspects of international transport? He referred briefly to trucks, which surely provides an opportunity for us to charge, for example, the Dutch and German hauliers who come in with full tanks of more polluting diesel that is cheaper than in the rest of Europe. Currently, they can undercut domestic hauliers, who cannot compete with their prices, on cabotage. I am slightly concerned that by including aviation and shipping, but putting it out to the long grass—longer than five years—he is also excluding railway and road transport. Is that the purpose of his amendment?

Phil Woolas (Labour, Oldham East and Saddleworth)

Certainly not. I accept the hon. Lady’s point, but the framework that we have put forward is the best one from the UK plc point of view, and that it also achieves our objectives. Government amendments Nos. 6 and 7 work within the spirit of the changes to the Bill made in the other place. As I hope the hon. Lady recognises, we have considered that matter, which is backed up by statements from my noble Friend Lord Rooker. Those changes set a deadline of five years from Royal Assent to either include those emissions or to report to Parliament on why it has not been done. I am trying to say, “Okay. You’ve got a point. We need to include them and give surety to industry and the public that they are included, but can we have five years to reach an international agreement?” If we do not do that, we will have to explain why that is the case to Parliament and decide where to go from there. That is my proposition and I hope that the Committee will accept amendments Nos. 6 and 7.

Frank Cook (Labour, Stockton North)

Order. I need to clarify something. I am anxious to preserve the tolerant, friendly, brotherly, and almost comradely exchanges that are taking place, which I do not want to impinge on adversely, but I must draw a distinction between interventions and speeches. Some interventions have been very long, and speeches have then taken up and made the same points that were made during the interventions. Will hon. Members try to analyse their interventions and speeches.

Gregory Barker (Conservative, Bexhill and Battle)

I hear what you say, Mr. Cook, and will do my best to comply.

It is vital that aviation and shipping in the broadest sense are included in this Bill. Despite the surfeit of amendments, and amendments to amendments, it is important to note—I am grateful for what the Minister has said—that a great deal more unites the parties in Committee than divides us, although there are differences of opinion nevertheless. We all agree on the necessity of including carbon pollution caused by aviation and shipping in our national carbon budgets. We all agree that that is, unfortunately, a process far easier said than done, which is why we have reluctantly agreed on the necessity of a four to five-year delay before including aviation and shipping properly in the carbon budget.

We have also come to the conclusion that it is right to agree with the Government that they should be able to define exactly what constitutes emissions from aviation and shipping and to say under what circumstances those emissions should be counted as arising from the UK—the Minister explained that point very well in his speech. However, due to the seriousness of the issue, which goes to the heart of the Bill, I want to reiterate for the record the scope of the problem.

Aviation is the fastest growing source of greenhouse gas emissions in the United Kingdom and many advanced economies throughout the world. In the unlikely event that the UK’s 2050 target remains at just 60 per cent., current forecasts project that emissions from aviation will be equivalent to 26 per cent. of the total UK carbon allowance. That is why people are right to be alarmed at the role of aviation, not because of what it is emitting now, but because of its potential to dominate the carbon economy landscape by 2050. If we end up going for an 80 per cent. reduction target under current growth rates, aviation could account for more than 50 per cent. of the UK’s total annual carbon budget by 2050. To say that that would put extreme pressure on other sectors of our economy to meet our budget targets would be a massive understatement, even before we begin to consider the additional impact of the multiplier effect of releasing heat-trapping gases at high altitudes.

In its 1999 report, “Aviation and the Global Atmosphere”, the intergovernmental panel on climate change put the multiplier effect at two to four times the actual emission because of the effect of being emitted at high altitude. If that is taken into account, aviation emissions account for well over the total of the UK’s allowance by 2050, assuming a reduction target of 80 per cent. That paints a dramatic and horrifying picture, but it shows the key role that solving the problem would have in achieving a reduction in our national carbon emissions. I believe that we can ultimately solve the problem.

As the Minister has said, emissions from shipping are trickier for two main reasons. First, shipping emissions are far more difficult to calculate, primarily because aeroplanes, by and large, carry fuel for only one trip at a time to keep their weight to a minimum, but ships are not constrained in that way and often refuel every few weeks. Furthermore, ships can refuel in many parts of the world, few of which have a proper carbon accounting mechanism. The second reason why shipping is more problematic to calculate is that while it is still a significant polluter, it is by far the most carbon-efficient method of international freight transport. The comparative figures that I have seen show that sea freight emits between 30 to 90 g of CO2 per tonne of freight per kilometre. Road freight, on the other hand, emits between 130 to 190 g per tonne per kilometre.

While shipping must internalise its carbon pollution costs, we must ensure that we do not, through well meaning but poorly designed legislation with unintended consequences, offer a perverse incentive to more carbon-intensive modes of transport, such as road freight, over the more efficient movement of goods by sea. For example, if shipping becomes heavily regulated inappropriately, there might be an incentive to have ships dock at Rotterdam or, worse, Istanbul, and then drive across the continent and into this country via the channel tunnel. That was the reasoning behind the Conservative amendments in the other place that changed aviation and shipping to the broader term, “international trade and transport”. We want further to enhance the existing clause through the addition of amendment No. 82, which would require the assessment of emissions to take into account all stages of the goods’ journey to the UK from their point of origin.

By maintaining trade and transport as it is, and by adding amendment No. 82, we wish to prevent the system of measurement being skewed in favour of more carbon-intensive methods of transport, which could happen if shipping and aviation were included without reference to other modes of transportation. Let me give some practical examples. If oranges exported from Spain to the UK were sent over on lorries, only the short leg of the journey by ferry would be included in the UK’s carbon allowance. If they were sent by sea, the whole journey would be counted, making the carbon cost much more expensive. We would therefore create a significant incentive for the use of road freight over sea freight, despite its being many times more carbon intensive. If national emissions trading schemes exist in the transit states, then the disincentive to use road freight should be strong enough.

Alan Whitehead (Labour, Southampton, Test)

Has the hon. Gentleman taken into account the fact that even when goods arrive in the UK by sea, there may be a number of circumstances in which that freight is then subject to short sea shipping—one has to say that very carefully—around the UK? That means that a number of other ports are used for the ultimate destination of something that has already arrived in the UK. Therefore, additional measures relating to shipping within the UK have to be taken into account.

Gregory Barker (Conservative, Bexhill and Battle)

I have taken that into account in the amendments, but the hon. Gentleman has made a sensible point. Obviously, if national emissions trading schemes are in existence through the transit states, there would be a disincentive to use freight transport. Effectively, what we are saying is why take that risk and not give clarity when we can close that loophole here and now. If we introduced our system before some or all of our neighbouring European transit states, Britain would be perversely incentivising the movement of goods away from direct shipping and towards a more polluting alternative. Clearly, if we were leading by example, we would not want that perverse impact.

Similarly, if one imports goods from China, the best way, both in terms of cost and the environment, is for the container to be shipped directly to the UK. Yet, if we specifically mention aviation and shipping in the Bill without reference to other means of importing goods, it could make economic sense to ship only as far as Rotterdam and then move the goods by lorry into the UK to minimise the amount of carbon officially being counted. The Conservative party believes that it is correct to stick to the current wording of “international trade and transport”, because it takes in more than aviation and shipping. We are not against aviation and shipping—completely the reverse—but the term should be stretched more broadly. We would prefer our amendment No. 82 to be included, rather than returning to the previous definition of aviation and shipping.

The opt-out in clause 30 should be removed. Although it requires a report from the Government about why they were incapable of preparing the requisite regulations within five years, which would provide an incentive for them to avoid embarrassment, the fact that the alternative to having to find a solution exists at all gives the whole process a degree of uncertainty that should not be present.

My party has said all along that the Bill must give business and the market long-term certainty and clarity. Maintaining the uncertainty about whether trade and transport emissions would be included in five years’ time does not give that clear market signal that the private sector needs and deserves. That is why we have tabled amendment (b) to the Minister’s amendment No. 7. Moreover, I am happy to speak in support of the proposed change in the reporting deadline, as included in new clause 1. It makes good sense to have the new regulations laid out before setting the second five-year budget period, because, depending on the pace towards Royal Assent, if we are to stick to the existing five-year reporting period, the necessary clarity of trade and transport may not be set until 10 months into the second budgeting period. In the interests of common sense and market clarity, resetting the deadline to 1 January 2013 is a wise decision that would be welcomed by the private sector.

Martin Horwood (Liberal Democrat, Cheltenham)

I suppose that I should start by welcoming the progress that has been made. The Government seem to have been taxiing up the runway, but some of the Minister’s remarks suggest that the plane may be stalling before take-off. As well as welcoming the need for the inclusion of aviation and shipping, which we welcome, too, the Minister seemed to be creating a long list of possible excuses and reasons why this is a complex area with various technical stages. Of course, it is complex; nobody is arguing that it is not. Almost all calculations of emissions are complex and there are complexities to be overcome. However, that is what the Government, the National Audit Office and many others are struggling with in terms of finding accurate reporting mechanisms. These are obstacles to be overcome, not excuses not to be prepared.

As the hon. Member for Bexhill and Battle has said, the reasons are clear. Aviation and shipping are important according to the Government’s own figures from 2006. The fuel sold to the aviation and shipping industries produced 42.8 million tonnes of carbon, representing 7.6 per cent. of the UK’s total emissions. Although the hon. Member for Bexhill and Battle has rightly pointed out that, in the long term, if those emissions are rising and all others are stabilising, reducing or being reduced through energy efficiency, the proportion of the whole will be even greater—possibly in excess of 20 per cent.—and even removing 7.6 per cent. of the UK’s current emissions would start to undermine the long-term carbon budgeting process.

That point has been strongly reinforced by a number of Select Committees. For example, the Environmental Audit Committee, on which I am honoured to sit, concluded that,

“While the draft Bill contains provisions that allow these emissions to be included in the future, we recommend that they be included immediately...There already is an internationally agreed methodology for attributing and recording these emissions as memo items to national Kyoto accounts; the Government should simply use this to track these emissions within the UK's carbon budgets.”

I should be grateful if the Minister, in his closing remarks, were to respond to the EAC’s draft report, which made that point. A similar point was made by the Select Committee on Environment, Food and Rural Affairs, which stated:

“these emissions are already reported to the UN as a ‘memo item’...The inclusion of the UK’s share of emissions from international aviation and shipping will have significant implications for the validity of the 2050 target.”

Generally, the rationale for amendments Nos. 6 and 7 was that they were about technical tidying up and rewording where necessary, which we are used to in Government amendments. Most of that looks reasonably innocuous, but I am beginning to be persuaded by the argument advanced by the hon. Member for Bexhill and Battle on terminology. Moving from

“passenger travel and imports or exports of goods”

to specific references to “aviation or international shipping” highlights the precise problem that the Minister has mentioned. Such an approach might exclude road freight and therefore lead to perverse results whereby goods that might have come in by air are transferred by an even less carbon-efficient form of transport—road freight. Perhaps our noble Friends knew what they were doing when they came up with the phraseology in the current text. If the Bill goes back to them, they might want to look at it again.

In Government amendment No. 7, we see the mysterious subsection (3)(b), which I shall describe as the parachute clause because it would enable the Government to get out of the five-year obligation altogether by laying before Parliament

“a report explaining why regulations making such provision have not been made.”

That means not bringing the matter to a vote in Parliament, or amending legislation, but simply laying a report explaining why they have failed to do that. That is not acceptable.

There are clear reasons why aviation and shipping have to be in at the earliest opportunity. Various arguments to the contrary have been put forward, such as that international agreements are ongoing and that we are developing ways of measuring these things at an international level, but that has not stopped the Government from pioneering other well-regarded legislation or policies on climate change. The emissions trading scheme was a UK initiative before it was part of a wider international scheme, and only this week the Government made an announcement on the definition of “carbon capture ready” in terms of new power stations. That is being worked on at the EU level, but we hear that the Government have come up with a definition in advance. It is quite possible for UK Governments to be pioneering in that respect and to lead rather than follow.

Clearly, new clause 1—I shall be interested to hear what the hon. Member for Bury, North says about that measure in the context of the Government’s amendments—would effectively achieve the same thing as the amendments to Government amendment No. 7, so I am inclined to be sympathetic on that.

The Minister has set out some strange arguments against the non-Government amendments. He has said that our forging ahead would somehow give other countries the impression that we were trying not to forge an international agreement, but to force something on those countries. Of course we are trying to forge an international agreement—no one doubts that in the slightest—but we are also trying to step up the pace and lead by example. I cannot see how the construction of a truly comprehensive budget for the UK would in any way undermine the development of international negotiations or agreements. If, as the Minister said in response to my intervention, a truly comprehensive sectoral agreement on aviation and shipping was in place by 2009, which is what he has said he hopes for, I would be completely astonished, but very pleased. However, even if that were the case, it would simply be another factor to take into account when setting our carbon budget.

Timing is quite important, because if we do not bring aviation and shipping in at the earliest stage, let alone if we allow that move to be delayed for longer than five years, the industries that have to be included in the carbon budget will be not be on a level playing field. They will have to make adjustments to their business plans and practices and take account of a new decarbonising economy, while airlines and others will not have to make those adjustments. Those in industries that are subject to quite rigorous international competition, such as the aluminium industry, might justifiably feel aggrieved that one of the most dangerous emitters of all was getting away relatively scot-free.

Michael Weir (Scottish National Party, Angus)

Is the hon. Gentleman aware that industries such as the aluminium industry are already seeking exemptions from the European scheme at the next stage of the EU ETS discussions? Indeed, there has been talk of the German automobile industry looking for such exemptions. If aviation and shipping are not included, will not that send the wrong message and have an effect when we come to discuss the details of that scheme?

Martin Horwood (Liberal Democrat, Cheltenham)

The hon. Gentleman makes an extremely valuable point—that is exactly right. If we send out a signal that it is possible to opt out or to include oneself in the small percentage of industries that will not have to make fundamental changes, we will undermine the UK’s progress towards a decarbonising, low or even zero-carbon economy. In the meantime, of course, it would make a difference to the other sectors covered by budget. Whether aviation and shipping are included makes a difference to the emissions budgeted for in housing, energy generation and so on. If those emissions are included, and there is an international agreement on the methodology by 2009, all well and good, but that will alter the carbon and energy reductions that have to be delivered in housing under the UK budget. It is vital, therefore, that we have a truly comprehensive carbon budget, which is what our amendments are designed to achieve.

Let us imagine the nightmare scenario in which, in five years’ time, the Government have failed to work out how that is to be done, despite all the expertise at their disposal and the fact that they are calculating those emissions already as a memo item for the Kyoto protocol, as pointed out by Select Committees. What will the situation be? Under the Government amendments, the Secretary of State could simply slide a quiet report before Parliament—just before a recess probably—and get away with a few negative media stories, and that would be it! In such a nightmare scenario, we would want the Government to be held fully to account and to amend legislation in the full glare of parliamentary scrutiny and publicity, because they would have let down their overall carbon reduction plan.

David Chaytor (Labour, Bury North)

The Minister and others have set out the context of the serious issues underlying the inclusion of aviation and shipping extremely well. I shall speak briefly, therefore, to new clause 1, and comment also on Government amendment No. 7. Although the arguments have been well rehearsed over the past 12 months, I think that we have moved on considerably from the initial debate on the draft Bill last year, and it is heartening to see such an overwhelming consensus on the inclusion of aviation and shipping.

It is worth stressing the urgency of that inclusion, given the likely increase in aviation and shipping emissions in years to come. The hon. Member for Bexhill and Battle spelled out the figures for aviation and shipping. My understanding is that, as of 2006, they officially represent 7.6 per cent. of our total emissions. Aviation, in particular, is one of the very few areas of the economy where emissions are growing, and growing rapidly. Of course, the official figures understate the reality for two reasons. The calculation for shipping, which is based on fuel purchased in the UK, is an underestimate because ships will tend largely to refuel overseas where fuel is cheaper. Secondly, on aviation, we do not take into account the impact of radiative forcing, which could multiply emissions by anything up to a factor of four.

There is no disputing, however, that the measures before us are very complex, and I still struggle to get my head around many of the measurements, the different formulae that could be adopted and the different impacts that that could have on the UK. I also struggle to understand precisely the way in which the ETS and our climate change legislation will work. However, in a sense, that does not matter, because just as there is consensus on the need to include aviation and shipping, there is consensus on the complexity and a willingness to cut through it.

The value of new clause 1 lies not only in the fact that it is quite explicit about including aviation and shipping, but in the fact that it sets a start date—1 January 2013—in advance of the second carbon budget period, whereas Government amendment No. 7 and the Government’s current commitment do not allow for that. The earliest date on which they would consider the inclusion of aviation and shipping would be after the start of the next carbon budget period. There is, of course, a way around that, as there was a way around the previous contentious issue concerning the choice between 60 per cent. and 80 per cent., which is to adjust the date. However, we will come on to that a little later.

The other advantage of new clause 1 is that it would do away with the provision for the Government to provide a report if they are unable to meet the five-year deadline. The Minister described that as an opt-out; whether it is an opt-out or a cop-out I would not wish to say. There is a growing consensus that that is not the ideal way forward. There is an analogy to be made with the earlier debate about the 60 per cent. or 80 per cent. choice. The Government’s argument is that we cannot push the issue too fast because of the complex interrelationship with international negotiations, and that pushing it too fast would cause problems. We did not make that argument when publishing the Bill in the first place, although the Bill is moving forward the international debate significantly, and nor did we make that argument in recognising that there needed to be a target for 2010 and 2050. If we accept the argument that it is absolutely legitimate for the United Kingdom to be the first country in the world to publish such a Bill, and that that actually advances the cause of international agreement by setting tough targets for 2020 and 2050, it is logical that the argument for including aviation and shipping by a set date, preferably in advance of a second carbon budget period, is perfectly valid and convincing.

In drawing to a close—I do not want to delay the Committee—we know that the figures are there because the Government collect the figures for aviation and shipping. First, will my hon. Friend the Minister tell us why those figures cannot be published alongside the first carbon budget: not only the figures for bunker fuels purchased in the aviation and shipping sectors, but figures showing how they relate to the calculation of emissions? What is the argument against doing that? I think that it would generally help the debate along. Secondly, will he comment on the fact that the date that he is proposing—five years from Royal Assent—will almost inevitably be after the start of the second carbon budget period? Could he not consider an alternative before Report?

Thirdly, we understand that it may not be possible to introduce the change by 1 January 2013—there may be overwhelming arguments against and there may be a total failure to move the international agreement process forward. Does he accept, however, that rather than have the opt-out of the Government simply producing a report to say why they had not met the deadline, if we fixed the date in the Bill now, there would still be the possibility of amending it to reflect the stalling of international negotiations in the parliamentary Session of 2012-13?

Michael Weir (Scottish National Party, Angus)

I agree with much of what has been said by the hon. Members for Cheltenham and for Bury, North and I will support the new clause if it is pressed to a Division. Much has been made in Committee about the 60 per cent. target and the views of the Royal Commission for Environmental Pollution, which is the argument for why the target should be included in the Bill. It is worth remembering, however, that that target assumed the inclusion of both aviation and shipping, and that if they are not to be included, the target should be higher. It is the question of the target that really concerns me.

The inclusion of aviation and shipping is, of course, contentious. We are told that the proportion of emissions is relatively small at 7.6 per cent, but it is rising rapidly and, as has already been said, no account is taken of the fact that aircraft release emissions at high altitude. I draw hon. Members’ attention to the Government’s final impact assessment, which states at paragraph 3.2.41:

“Emissions of greenhouse gases from international aviation and shipping represent an increasing proportion of total global greenhouse gas emissions. Emissions from aviation in particular are increasing at a faster rate than emissions from other sectors.”

The point that concerns me, however, is the passage in paragraph 3.2.42 that states:

“If these emissions were to be included, the Government may wish to revisit the level of the targets to ensure they remain both ambitious and achievable, balancing the need to reduce emissions with the need to avoid excessive economic or social cost, and consistent with international progress.”

I would not necessarily argue with that, but it brings me back to a point that I made when speaking to several other clauses: we are in danger of constantly revising the target, whether it be 60 per cent. or 80 per cent. On the basis of that statement, if the Government get more information and decide to include aviation and shipping, they may alter the target.

As I have made clear, my concern is that we are setting a target that is supposed to be for 2050, which is a long way away. It will be the guiding light to where we need to go. I have referred to the need to vary carbon budgets within that period—that is perfectly sensible—but I am concerned that in several places in the Bill there is provision for the long-term target to be altered. We have it again in this clause.

It would seem much more sensible to set a target now that includes aviation and shipping, and that will not need to be altered in the future. If we start to alter the target, we risk alienating the public, who will become cynical if politicians continually change it. The public will think that they are changing it to suit their own ends rather than as a serious attempt to tackle climate change.

I appreciate what the Minister says about the complexities of including aviation and shipping. There is the further complexity of where the ships come from and where they are flagged, which may be another consideration. I do not think that there is any chance in the near future of reaching an international agreement that would be much more preferable. Rather than the UK being seen as pressing ahead and trying to impose something on the international community, I suggest that including aviation and shipping would, in fact, show leadership in pushing forward the issue.

There is a real chance of drift. In four or five years, the Government, whoever they may be, might come back and say, “We cannot quite manage it,” and the target will drift for another few years. It could take a long time for things to come to any sort of fruition, and, again, there is the danger of the overall target being reduced.

I would argue most strongly that we need to deal with the matter quickly and to include aviation and shipping in the target that we set. The hon. Member for Bury, North suggested that we have a report from the Climate Change Committee before Third Reading. I suggest that it be asked to consider this point.

I notice that in the briefs prepared for this Committee, and even in the Government’s final impact assessment, that there are various suggestions on how to calculate the target. I was struck by the fact that the assessment quoted a Department for Transport report that identified the need to increase the 60 per cent. target by 4 per cent. on the assumption that aviation was included in the European Union emission trading scheme. That should be taken into account and, at the very least, added to the initial target.

I echo the point made by the hon. Member for Cheltenham that industry needs a level playing field. Many industries will find it hard to meet the reduction targets that we will ask them to meet. I shall not repeat what I said about the ETS in an intervention, but there is a real danger of slippage if we allow one or two industries not to be included in the long-term, overall target that is an important part of the Bill.

John Gummer (Conservative, Suffolk Coastal)

I shall be brief. First, I declare an interest. My business helps a company that is bringing forward the latest advances in modern ships to operate in an effective and environmental way.

May I suggest that there is a good reason, which has not so far been mentioned, for the content of the new clause? For precisely the reasons that the Minister gave, it would be of huge help if the Government sought to find what would be the best way for them out of the problems that this complex matter creates. In other words, part of the reason why we find it so difficult to get an agreement is because everybody uses precisely the arguments that the Minister used. I use them myself. They are good arguments because they are true—it is not that we are inventing things. This is a complicated matter.

There would thus be a huge advantage if the British set an example by saying what they would do along those lines. Far from embarrassing our colleagues, that would begin to make people able to discuss the real issue, which is not whether, but how. Unless there is a “how” on the table, we shall go on discussing the matter vaguely and saying, “Oh yes, of course we should do this, but it is very difficult.” If we at least create a matrix that gives some basis for discussion about such issues, we will have moved on significantly, and rather than making the problem more difficult, we will have made it easier.

I agree with the amendment, because it puts the Government in the right position and sets an example. If the Minister finds it impossible to accept the amendment and, for reasons that I cannot imagine, the hon. Member for Bury, North does not press the new clause to a Division—that has occasionally happened before, so I must take it into account—it would help the Committee hugely if the Minister committed himself to that preparation and said that even if the Government did not bring it forward, they would bring the facts forward, show the ways in which such a thing might be done, illustrate and present it publicly, and start now so that when they get to the date on which they are forced to do something, at least Britain will have gone down all the alleyways and byways and shown what might be done to bring that together. That would bring us significantly forward from where we are at the moment.

Secondly, I hope that the Minister might be prepared to say that it is important for us to stop treating aviation and shipping as if they were two industries that have a God-given right to be treated separately. The hon. Member for Angus has done the Committee a valuable service by making that key point. I am tired of the aviation industry suggesting that it must somehow be treated separately because the public will not accept the same treatment for aviation as they accept elsewhere. That is not on. We must treat everything from the point of view of climate change and what makes a difference. If aviation is, as it seems, not only increasing but particularly damaging, I am afraid that it must be treated alongside the rest of industry. If, after deciding that, the Government conclude that for a temporary period particular arrangements must pertain, at least they would do so within a proper comparable context. If they never get to the point of considering that, those industries are left out and begin to believe that they will go on being able to defend their being left out.

Thirdly, and briefly, there is a huge amount of movement in the shipping industry. Some of the best shippers want to make the best of a very good case and are thinking seriously about better engines, better fuel, and setting higher standards. The Government could encourage that by showing that they were serious about rewarding people, which is what will happen if shipping is brought within the system. That would help a great deal, and I hope that it would, importantly, enable us to bring forward something else, which I shall set out.

I have always been suspicious about the measurement of steaming time. I know that in Southampton and elsewhere many shipowners talk about the cost of carrying goods further round the coast. It is always cheaper to unload them and carry them by road. If we concentrate on carbon emissions, reduce them and start to charge for them properly, we may find that the old figures change and that it may be more sensible to have two stops because of the reality of the impact of the carbon emissions of sea-going craft. I do not know that, but until the Government do the work, none of us will know.

I commend the new clause to the Committee. I would love it to be put to the Committee because, were it to be pressed by those who proposed it, it would be accepted. If it is not pressed, it will not be accepted, and I hope that, as a secondary course, the Government might be prepared to go down the route that I have suggested.

Phil Woolas (Labour, Oldham East and Saddleworth)

This has been an important debate. I pick up a strong feeling from the Committee that backs up a strong feeling from the other place and, I suspect, the Second Reading debate, about the desirability of including aviation and shipping within the emissions.

Joan Walley (Labour, Stoke-on-Trent North)

I remind my hon. Friend that there was a very strong recommendation from the Environmental Audit Committee on this subject. I hope that he will take that into account.

Phil Woolas (Labour, Oldham East and Saddleworth)

My hon. Friend is a member of that Committee and she is right to remind me about it. Let me bring us more down to earth. We are debating how we can account for aviation and shipping emissions and I will run through the answers to the questions.

First, I will clarify the point made about reporting emissions under UN guidance. The UK, along with all other signatories to the UNFCCC, is required to report on emissions from sales of aviation and shipping bunker fuels—crudely put, that means fuels that are sold or purchased in the UK. On a global level, it does not matter where the fuels are sold. We get a figure of what the global emissions are and that is what matters. Suffice to say, the data are not completely robust. I point no fingers at any particular country, but hon. Members will understand what I mean.

The UNFCCC permits a range of methodologies for calculating those sales on a sliding scale of provision. However, that method of allocating emissions is not totally reliable, as planes and ships routinely tanker fuel from countries with lower fuel prices. That is particularly a problem with respect to shipping. Ships on international routes have a significant degree of choice about where they take on fuel. They will generally do so where the fuel can be obtained for the best price, and that includes tankers that are moored in international waters. Therefore, any attempt to calculate the UK’s shipping emissions on the basis of UK bunker fuel sales will significantly underestimate our contribution and overestimate that of other countries. My point is that I am trying to capture more than I would have to if I took the purest stance.

Similarly, with aviation, it is not apparent how such measures would work alongside the already inclusive nature of aviation in the European Union ETS. It is not clear how two systems could be operated alongside each other, with one system allocating emissions to countries on the basis of fuel sold, and the other allocating emissions and carbon units to airlines on the basis of which country they were based in. There are obvious risks of double counting or a system that is over-complex and burdensome. That is why, when the European Union ETS rules are finalised, we will ask the Committee on Climate Change for its advice on methodology.

The first question asked by my hon. Friend the Member for Bury, North was about why we cannot publish the figures for aviation and shipping emissions alongside the carbon budgets. He makes a good point. We already report those figures to Parliament, and they are published each year, as is required under the Kyoto agreement.

A number of questions were asked by the hon. Member for Bexhill and Battle, who made the valid point that industry needs certainty that emissions will be included within five years. I agree with his premise, but I say that committing now to including emissions as suggested would not provide certainty, but quite the reverse. There would be no certainty about how we would define the UK’s share of emissions or what the implications would be. There would be no certainty about the effect on aviation. Let me repeat that the Bill is not about measures to address emissions, but how we account for them.

Martin Horwood (Liberal Democrat, Cheltenham)

I am puzzled by the Minister’s remarks. As both Select Committees pointed out, there is already a methodology for accounting for international emissions from aviation and shipping. Both Select Committees suggested simply taking the total and using it as the interim measure. The National Audit Office also has a methodology for calculating exact emissions from aircraft on the domestic front that is based on the nature of the aircraft and the pattern of the flight, rather than on trying to work out where every ounce of fuel came from. Is not the Minister making a bit of a meal of it?

Phil Woolas (Labour, Oldham East and Saddleworth)

I am not making a meal of it. I am simply pointing out that of course there are methodologies.

Martin Horwood (Liberal Democrat, Cheltenham)

You are using them already.

Phil Woolas (Labour, Oldham East and Saddleworth)

Yes, but the hon. Gentleman must accept that in the fight to cap global emissions, one has to have a global agreement. Entering into a methodology now would have significant impact on our carbon budgeting, and UK decisions in policy would not be part of an international agreement. We could end up not only cutting off our nose to spite our face, but—if I can extend the metaphor—cutting off the nose of global emissions, to spite that. That is my simple point. I am not trying to wriggle out of this. The hon. Gentleman made that point on Second Reading, from both a standing and a sedentary position. With respect, the UN simply provides a method, not an agreed method. That method is hotly contested by countries around the world.

Martin Horwoodrose—

Phil Woolas (Labour, Oldham East and Saddleworth)

I shall give way to the hon. Gentleman, because he wishes to push that important point.

Martin Horwood (Liberal Democrat, Cheltenham)

The last time that I looked, the Kyoto protocol was an international agreement. Will the Minister tell the Committee whether the methodology that we used to calculate our memo item on Kyoto is significantly different from that of any other country?

Phil Woolas (Labour, Oldham East and Saddleworth)

The hon. Gentleman’s point is right. How we report our emissions is agreed under Kyoto. That goes back to the point that, from a global perspective, if we measure bunker fuel sales, we get a global total. That does not amount to an agreement between countries that their share of the emissions calculation should be based on bunker fuels. That, in my view, is naïve. If one goes to Rotterdam, where approximately 30 per cent. of shipping fuels are sold, of course the Dutch Government are prepared to report that, as a report under the UNFCCC agreement. Were there a request to take on the cap consequential on that in the European Union trading system, the Dutch—who, I would argue, along with the UK, are possibly the most environmentally progressive country in the world—would not agree to that.

The hon. Gentleman is right to say that the reporting method is agreed, but I make the simple point that that is not the same as the allocation between countries being agreed. He is going to push his policy anyway, and I respect him for that, but I want him to accept that point. It is analogous to asking Southampton, Felixstowe or Hillingdon to take on board, within local authority caps, the total emissions generated from trade through Southampton, Felixstowe—I will throw in Liverpool and Merseyside, for the benefit of the Liverpool Echo—or Hillingdon. I hope that hon. Members see my point.

David Chaytor (Labour, Bury North)

Just for the sake of clarification, does my hon. Friend accept that nothing in new clause 1 would require the Government to accept irreversibly a particular method for calculating emissions now, and that the purpose of new clause 1 is simply to advance the process of international negotiations? He fully accepts that this is a complex matter and that the current method that the UK uses may not be the one that is finally agreed.

Phil Woolas (Labour, Oldham East and Saddleworth)

New clause 1 is sensibly drafted. By including both international aviation and shipping emissions in the targets and budgets under the Bill from 1 January 2013, if I have read it correctly, the Secretary of State would have to

“have regard to international carbon reporting practice.”

Later on, clause 86 defines the reporting method that I have mentioned. As I say, the Secretary of State would have to have regard to that carbon reporting practice or any other such EU or international agreements as may be specified. So I take my hon. Friend’s point, which that is why it is a more difficult argument for me to put.

Let me finish my argument, if I may. My hon. Friend’s second question was why have a date five years after Royal Assent that falls in the second budget period? I am very keen to emphasise that the Government amendment requires us to include emissions or to report to Parliament within five years, not at the end of five years—we could take a decision earlier. Why have we chosen that phraseology? The answer is that the Lords suggested that date and that framework and we are seeking to work within their amendment. In other words, I am trying to be consensual and once again I am learning that that is not always the easiest policy to pursue.

The hon. Member for Bexhill and Battle asked whether we should use a multiplier for aviation emissions. As I have said, the key point is that there are considerable scientific uncertainties about this issue. The Environmental Audit Committee looked at this issue as part of its scrutiny of the draft Bill and it concluded—I hope that my hon. Friend the Member for Stoke-on-Trent, North will back me on this—that we should not go down that road. In case it is needed, my hon. Friend has a copy of the EAC report in front of her. Therefore, we intend to follow the international practice of not having the multiplier.

The EAC concluded that, due to the significant uncertainties in this area, which are widely accepted by commentators, we should use the internationally agreed methodologies in this area. They do not include any radiative forcing index or multiplier in that regard.

I was specifically asked by the hon. Member for Vale of York about road and rail on the point that was made about the channel tunnel. Of course, there are already clear international rules on how to allocate road and rail emissions to countries, but there is no such international agreement in relation to international air or sea travel.

Let me quote Lord Taylor of Holbeach, the Conservative spokesperson in the other place, who said during the debate on this issue, in this case in relation to shipping:

“If the regulations on shipping are not sophisticated enough...it might prove economical to have goods driven across much larger stretches of land and then simply loaded on to ferries to make the Channel crossing, when a large ship could have delivered the goods to England with a fraction of the carbon footprint.”—[Official Report, House of Lords, 4 March 2008; Vol. 699, c. 1015.]

That was the point that the hon. Member for Bexhill and Battle made, and that is exactly the type of risk that I am talking about. In the case of aviation, we would also need to be clear on how a UK system would fit with aviation’s inclusion in the ETS, which we expect to start in 2012.

Gregory Barker (Conservative, Bexhill and Battle)

That is the very reason why we should have the broader definition of aviation and transport that we have suggested.

Phil Woolas (Labour, Oldham East and Saddleworth)

That was not the conclusion that Lord Taylor of Holbeach came to in the other place. I see the argument, but I believe that there would be a perverse incentive for that.

Let me finish my point on aviation; I think that the hon. Member for Bexhill and Battle will accept the logic of my argument. Once the ETS rules are agreed—and I expect they will be—we will ask our Committee on Climate Change for detailed advice on whether there is a methodology that works and that is compatible with both the EU ETS rules and the wider international context. We will also ask what the impact of adopting that methodology would be. We expect to be in a position to take a decision on whether to include international aviation emissions in our targets ahead of the start of the second budget period in 2013.

My argument is that there is strong agreement—the United Kingdom has pushed this point—to include aviation and shipping. We base our whole policy in the international arena on the idea of cap and trade and that means one has to base emissions on science—on actual emissions, not on some political fix. Our policy and the political pain that I acknowledge that we are going through on this point—I am the recipient of many thousands of communications on this matter—is not based on our desire to avoid the inclusion of aviation and shipping simply because we wish to exempt those sectors. We take our position because we wish to ensure that aviation and shipping are included in a practical, pragmatic way that can include those sectors, that leaves open better possibilities for international agreement and that is fair to the other sectors within our economy. In an appeal to my hon. Friend the Member for Stoke-on-Trent, North, I could mention ceramics, but I could equally appeal to Southampton, Felixstowe or elsewhere. We need to act pragmatically, and I urge the Committee to support that policy.

Clause 16

Gregory Barker (Conservative, Bexhill and Battle)

I beg to move amendment No. 52, in clause 16, page 8, line 44, leave out ‘1%’ and insert ‘0.5%’.

This is a probing amendment. We propose to reduce the amount of carbon units that can be carried back from one budgetary period to the preceding budgetary period—the latter period would be reduced so the previous period could be increased. We propose to reduce the amount that we are allowed to borrow from the future from 1 per cent. to 0.5 per cent. Although we appreciate that external factors, such as the weather, might make this so-called banking and borrowing useful to a degree, we want to ensure that the budgets are robust and not pliable, especially under political pressure.

We are also concerned that too generous a carry-back period might allow any Government of the day to hide their failure to meet the budgets and allow them to pass the buck on to the next Administration. The issue of banking and borrowing is worth probing further, particularly in the light of our earlier discussion about indicative annual ranges. There is a clear link between the width of any indicative annual range and the corresponding width in the banking and borrowing between budgetary periods.

I have already argued that the indicative annual range must not be too broad. I understand that the 1 per cent. banking and borrowing provision under clause 16 only affects the five-year budgetary period. However, we still need further clarity on their relationship. For example, how would banked reductions at the end of a five-year budget affect the next year’s annual range? Would the Government be allowed to count their banked reductions towards meeting the first year’s annual range, or would they have to spread them out over the entire period? Conversely, if a budget period began with 1 per cent. already borrowed from it, would all the annual ranges for that period be adjusted to reflect that?

Spreading out the effect of banked or borrowed reductions across the entirety of the next budget seems to make sense. It might not be possible to recoup the entire borrowed 1 per cent. within the first year of the next budget. Similarly, it would not be appropriate to use banked reductions to make it seem like the annual range for the first year had been achieved when in fact the Government were relying on the success of the previous five-year period—much like the way in which the current Government rely on the success of the previous Administration to achieve their Kyoto target. My right hon. Friend the Member for Suffolk, Coastal played a heroic part in that success.

If the carry-back provision was narrower, that sort of thing would not cause the same problems in the calculations of indicative annual ranges.

John Gummer (Conservative, Suffolk Coastal)

Has my hon. Friend heard any argument other than the weather for all this? The British have a tendency to blame the weather for everything. The truth is that if we consider climate change, the weather should have a less adverse effect than previously. Will he ask the Government whether the weather has become the universal explanation for not tightening this up more effectively?

Gregory Barker (Conservative, Bexhill and Battle)

Once again, my right hon. Friend has put his finger on it. I have not heard of any meaningful explanation other than the weather of why these indicative ranges would have to be changed so materially. Although there may be more violent weather events, we expect the weather to become milder and less severe in our part of the world. Perhaps the Minister can enlighten us.

It is vital to know what a Secretary of State can count towards a given target or range of targets. I am sure that the Minister can clarify the relationship between banking and borrowing and indicative annual ranges, and I would appreciate a detailed explanation. I do not move this amendment to undermine the evident benefits of having a banking and borrowing system, because I fully accept that that is a sensible thing for any Government to have in reserve. I know that the necessity for such a facility is already reflected in the Kyoto protocol, and for some existing national level cap-and-trade schemes, such as the US acid rain scheme, which is mentioned in the Stern report. I also appreciate the importance of banking and borrowing with regard to the carbon price and the cost of mitigation, and I understand the importance of having a carry-back facility in case of adverse weather or other unforeseen circumstances. Notwithstanding those issues, I wish to probe the Minister for more detail about the relationship between the breadth of the indicative annual ranges and the similar breadth of the carry-back facility.

Steve Webb (Liberal Democrat, Northavon)

I wish to make a brief comment on amendment No. 52 in anticipation of a separate clause stand part debate.

The amendment, which is identical to one tabled in the other place, would replace one arbitrary figure with another arbitrary figure, albeit one that is smaller. It would be interesting to know from the Minister the thinking behind 1 per cent. and whether it is anything more than something along the lines of saying, “It’s not very much, is it?”, which is how I think the figure was derived.

As for the magnitude of the figure, it is a percentage of the five-year aggregate carbon budget. That means that it is bigger than it looks because 1 per cent. of the five-year total is equivalent to 5 per cent. of one year’s total—[Interruption.] It took me years to work that one out. This is important. It sounds innocuous, but in the context of 80 per cent. cuts over 50 years, with 1 or 2 per cent. as a typical annual figure, the amount under this provision could be 5 per cent. of the annual figure, which is large.

As I shall explain in the stand part debate, I object to the principle of borrowing. However, if we have to do that, we need the figure to be justified, and we should certainly err on the side of a much smaller figure, given that, in effect, it is five times as big as it looks. If all we can have is a smaller figure, I would rather have that and I would support the amendment, but I prefer not to have the principle at all.

Phil Woolas (Labour, Oldham East and Saddleworth)

I thought that the amendment was one of the cleverest that has been tabled because of the point made by the hon. Member for Northavon. The figure sounds small but, as in all such matters, the devil is in the detail. He is right that the amendment was discussed at some length both in Committee and on Report in the other place, and I refer members of the Committee to the Hansard record of those debates.

The accusation has been made that the figure of 1 per cent. has been plucked out of the air. Nothing is further from the truth. All the figures under the Bill are scientifically based and have been debated robustly. In case the hon. Gentleman mistakes my tone of voice, let me reassure him. Why do we consider that the 1 per cent. borrowing limit is appropriate? Our analysis suggested that allowing up to 1 per cent. of a future budget to be borrowed would be consistent with the rising emissions that might result during odd weather. The right hon. Member for Suffolk, Coastal reminded us of the importance of that to the British—I think that he referred to the English, but I am sure that he meant that it was the British predilection to discuss it. Furthermore, we must bear in mind the uncertainty of emissions data.

There have been three large emission rises due to unexpectedly cold winters since 1990, the coldest of which led to emissions in those years that were between 3 per cent. and 4 per cent. higher than in the year before. Translated into the clause, that means that if 0.8 per cent. of the subsequent budget was borrowed—4 per cent. divided by the five years of the budget period—the shock could be absorbed within a 1 per cent. limit on borrowing and the budget would still be met. That is my methodology. I agree that it is not rocket science, but it makes mathematical sense. It is symmetrical.

A more serious point is that those extremes of climate are, of course, expected to increase with climate change.

Mr. Gummerrose—

Phil Woolas (Labour, Oldham East and Saddleworth)

I knew that I should not have said that.

John Gummer (Conservative, Suffolk Coastal)

According to the Stern report and other reports, the problem is that we shall have a decrease in emissions as a result of cold weather and an increase in emissions as a result of hot weather because of less emissions due to heating and more emissions due to air conditioning.

Does the Minister accept that it would be rather good for the nation if it knew that it had to face the fact that the Government were going to stick to the targets? The nation would react much better if, rather than the Government’s saying, more or less, every time one of these things happened, “When it is particularly bad, we have this stuff in our back pocket that we can bring out”, they said, “We are not going to change this because we are stuck with targets that are fixed not because of our ability to meet them but because of the reality of the threat.” That is why I would be much happier with a smaller figure and a greater degree of straightforwardness from the Government.

Phil Woolas (Labour, Oldham East and Saddleworth)

I hesitate to argue this point on common sense because when Ministers or Front-Bench spokesmen start using that argument, it shows that they are on weak ground.

Steve Webb (Liberal Democrat, Northavon)

Desperate.

Phil Woolas (Labour, Oldham East and Saddleworth)

Not desperate, but on weak ground. I counter with the opposite argument and say that the British public would not understand if we were not able to have that point of view. Again, we are not trying to wriggle out of this.

Let me complete my argument about the emissions data. All of us in the world of politics and Parliament talk about emissions data as if it were a pure measurement of geometry: it is not, I am afraid, although hopefully it will be in future. Provisional figures for emissions in the final year of the budget period will be available shortly after the period ends—such figures are generally accurate to within a few per cent.—but the final confirmed emission figures are not available until later. That is part of the frustration of the job. As the budget period would already have ended, if the emissions for the last year of the budget period were to be revised upward by the amount proposed, the Government’s options would be limited. The 1 per cent. limit is therefore considered the most appropriate approach to providing a small degree of flexibility because it meets the five-year point that the hon. Member for Northavon mentioned—I am talking about the end of the period, of course—without undermining the clarity and certainty that the budget system as a whole provides, which are crucial.

It is important for the United Kingdom and UK plc that we have ensured that a robust system of accountability is in place, in that the UK Government must seek and take into account the advice of the Committee on Climate Change and consult the devolved Administrations before using either the banking or borrowing powers in the clause. That will mean that any decision to bank or borrow emissions will be based on robust independent analysis. Further to that, analysis suggests that allowing up to 1 per cent. of a future budget to be borrowed would be consistent with the rise in emissions that might result from these two factors. We have followed the advice of the other place and provided a credible argument for 1 per cent. I confess that it is not scientific and can be challenged, as it has been.

I am grateful to the hon. Member for Bexhill and Battle for moving his amendment to question why that 1 per cent. figure was chosen, because he has rightly forced the Government to outline their methodology and rationale; that is the raison d’être of Committees. I am sure that the hon. Gentleman will hold me, or my successors, to account on this point.

Gregory Barker (Conservative, Bexhill and Battle)

I am grateful to the Minister for that explanation. I am certainly more informed. This is a probing amendment and I do not intend to press it to a Division. I beg to ask leave to withdraw the amendment.

Steve Webb (Liberal Democrat, Northavon)

We have considered the specific number, but there is a wider principle about the banking and borrowing idea. Do we need this power at all? If there is a problem with hitting the carbon budget in any period, a facility is available to buy in credits, because this is the UK carbon account, not UK carbon emissions. Assuming that we do not get to 31 December at the end of the fifth year and suddenly think, “Ooh ‘eck, we’re in trouble”, and assuming that things will be very closely monitored by experts, scientists, forecasters, meteorologists and all manner of people, presumably it should not come as a total shock if we are on course to miss the target. If there is any prospect of missing the target, mechanisms other than those in the clause are available to deal with it—for example, we could buy in credits.

A facility for injecting savings into the current period appears unnecessary, therefore, but the opposite provision of pushing savings into the next period is, if anything, more worrying. It suggests that, if we do really well in the first period, we could give ourselves a few weeks off in the next five-year period. It is almost like working overtime and then having a vacation, which is fine in working life, but does not represent a sane or desirable carbon strategy. The clause will allow us to say, “Not only will we hit our targets, but we will have some slack and carbon savings to spare, so we will push a few into the next period, which means that we will not have to try so hard.”

Given everything that we discussed at the start of our proceedings—about this being a global challenge, of which the UK is a small point, and about how we need to do as much as we can—if we over-achieve, we should literally bank that and continue to be adventurous by maintaining the trajectory, but from a new starting point. We should not simply pat ourselves on the back and say, “We have done quite well. We consider ourselves to have achieved our goals already, even if we don’t do very well in the next five-year period, because it is already in the bank.” That is not the mindset with which we should approach this issue.

I would be very worried if we were skating so close to the upper limit of the five-year target that provisions would be necessary in case we breached it. After all, we are dealing with ranges, so I hope that we would aim to meet the targets comfortably, but fail-safe mechanisms are in place if it looks as though we are going to exceed them. On the other side of the coin, if we are over-performing and doing really well, which gives us breathing space, we should not just relax, but say, “That’s great. We’ve achieved good things, so let us press on from a new starting point, rather than have a few weeks, months or years off.” I cannot see any reason for clause 16 to stand part of the Bill.

John Gummer (Conservative, Suffolk Coastal)

I disagree with everything that was just said. If we are to run this thing sensibly, we should provide for the ability at either end to sort things out. As anyone who knows anything about writing books knows, before starting, one must say, for example, “I’ve got to write 10,000 words a day”. However, on completing those 10,000 words, it is a great mistake to do another 5,000, because the next 10,000 never get done the next day. It is necessary to keep to an organised system. There is a great deal to be said for tough targets run sensibly and a Government who stand by their word, but who have the necessary opportunity at the end of each of those otherwise artificial periods to carry over amounts.

Phil Woolas (Labour, Oldham East and Saddleworth)

I am worried about what book the right hon. Gentleman is writing and when it will be delivered. A draft copy for review would be dealt with in strictest confidence. I remind him that the incentives for early action and over-achievement are recognised by the Kyoto protocol, for the reasons that he gives.

John Gummer (Conservative, Suffolk Coastal)

We must be tough with ourselves and do this properly. Furthermore, we must not let ourselves down by being pusillanimous over the targets and carbon budget or get into the position of the iron maiden.

Phil Woolas (Labour, Oldham East and Saddleworth)

The right hon. Gentleman makes some very good arguments. In addition, I use the example of the evidence cited in the Stern review about the United States acid rain programme, which the right hon. Gentleman and others will recall. Allowing for banking between phases of that programme helped to deliver early reductions and improved participants’ efficiency. The evidence suggests that, because of the ability to bank from the first phase into the second phase, the emissions reduced in phase 1 were twice that required to meet the cap.

I take the arguments of the hon. Member for Northavon. They are slightly purist, but I do not criticise him for that. He is right to press the issue, but in practice it makes sense, from experience and from analysis, that we allow some give and take.

Clause 18

Martin Horwood (Liberal Democrat, Cheltenham)

I beg to move amendment No. 35, in clause 18, page 10, line 6, at end insert

‘and any sanctions proposed against those responsible for budget excesses’.

What happens if we fail? Taken collectively, globally, the consequences are unthinkable. The cost of failure is famine, poverty, disease and death on an unprecedented scale. However, what happens specifically if we, the British political class, fail to meet the objectives being discussed in the Bill? I am saying “we” because I am not assuming that the Labour Government will still be around in 2012-13. It could be any of us, any combination of us or any of our successors who are in government at the time.

At the moment, the great sanction present in the Bill is a report on proposals and policies. In a sense, that is appropriate. If the budget target is missed, action must be taken. It is a greater threat—but only just—than the letter that has to be written by the Governor of the Bank of England on behalf of the Monetary Policy Committee to the Chancellor for exceeding the inflation target. I suspect that, as more and more inflation targets are missed and more and more letters are written, familiarity might even breed contempt for that sanction as well. I can see the Treasury quaking in its boots at the receipt of another letter. Likewise, I do not see Parliament shaken to its foundations by the need to produce a report. Yet in most cases when Governments break the law, which in a sense is what we are talking about when the targets are missed, some consequences normally follow.

There have been various suggestions as to what those sanctions might be. In another place, Lord Teverson suggested that the Secretary of State might one day be dragged away to the Tower of London because the targets had not been met. I do not think that he spoke in all seriousness but, given the consequences of failure, we must think seriously about what should happen to Secretaries of State who preside over the missing of such targets. We as the British Parliament could think collectively about a financial penalty—the Treasury could buy the carbon credits, perhaps at a premium, to make up for the lost target. However, that rather undermines the arguments about trying to minimise the proportion of targets met by purchasing credits, rather than by a genuine domestic effort to decarbonise the economy. If, at some stage, the Treasury could be persuaded to say that that was an affordable route, the sanction would clearly have been counter-productive, as it would have encouraged the Government to think about buying their way out of the problem.

We tried to table an amendment that would have caused an automatic reduction in Cabinet salaries equivalent to the excess by which the target had been missed. I thought that it was an exciting amendment; it would have led to an interesting debate that could have extended into the general area of performance-related pay for Ministers and Governments. Sadly, it was ruled out of order on the grounds that there are, apparently, already existing processes for setting Cabinet salaries, and this was not one of them.

Michael Weir (Scottish National Party, Angus)

I sense a slight problem with the amendment. Under the clause, a report must be laid before Parliament. Subsection (2) refers to

“proposals and policies of the Scottish Ministers, the Welsh Ministers or a Northern Ireland department, it must be prepared for consultation with that authority.”

Does the hon. Gentleman propose that the UK Parliament takes powers to impose financial penalties on the devolved Administrations? That might be a step too far for the powers of this Parliament.

Martin Horwood (Liberal Democrat, Cheltenham)

I would hesitate to suggest any such thing, not simply because I am afraid of the hon. Gentleman, but because I am afraid of some of my Scottish colleagues. However, on careful reading, I think that we are amending only subsection (1), so I am not sure that the criticism is correct. However, it is an important matter and I take the hon. Gentleman’s point.

Having had those slightly more exciting and interesting options ruled out, we are left with the less exciting amendment No. 35, which opens the debate about what sanctions, if any, will be proposed against those responsible for budget excesses. I hope that the tabling of the amendment starts to stimulate that debate both inside and outside Parliament. I have often drawn an analogy between the challenge and threat that we as a society face now with that faced in war time. In that sense, it is carbon criminals, rather than war criminals, who we seek to hold to account. Given the consequences of failure, it is important that we address this matter and that the Government and the official Opposition give us their perceptions of what sanctions will apply that will really incentivise the meeting of targets in a serious way.

Gregory Barker (Conservative, Bexhill and Battle)

Amendment No. 35 opens a new chapter in the story and direction of the Bill. It proposes that the Secretary of State report to Parliament on the reasons why, and solutions for, having exceeded a budgetary limit. The report should include a list of

“sanctions against those responsible for budget excesses.”

We cannot support the amendment for a number of reasons. First, it goes against what I like to call the opportunity agenda around climate change. My party likes to make both business and the public realise that, in the climate challenge, there also lies an enormous economic opportunity and the chance to live more fulfilling lives. We believe in the power of “can do”, not the dour politics of “cannot” that the Liberal Democrats are so fond of.

The Bill currently sets a long-term framework and clear road map within which business can work with confidence towards developing new technologies, growing new markets and processing the challenge of decarbonising our economy. The vehicle for getting there can be found in policies outside the Bill. My party has announced incentives such as feed-in tariffs for microgeneration, an emissions performance standard for electricity that is generated in the UK and a new green exchange market to kick-start investment in our low-carbon economy. There is plenty more where that came from, but the place to legislate for such policies is not in the Bill, which should remain a lean, focused framework document.

To include a list of sanctions on any group that breaches its budget, as the Liberal Democrats propose in the amendment, is beyond the remit of the Bill. Who would decide those sanctions—the Secretary of State or the Committee on Climate Change? Under which legislation would they be empowered to lay those sanctions? Presumably, the sanctions would take the shape of either a monetary fine or additional legislation.

John Gummer (Conservative, Suffolk Coastal)

Is not this a manifestation of the Praise-God Barebones approach to life, in which the only way to solve these problems is to be thoroughly miserable and to punish people who get it wrong? Surely, we ought to be doing exactly the opposite, which is to be thoroughly cheerful about the fact that we are going to get through and win, and to encourage people who do things right. Those people should profit rather than have to wear hair shirts of the liberal variety.

Gregory Barker (Conservative, Bexhill and Battle)

By hair shirts of the liberal variety, I presume that my right hon. Friend means short-sleeved hair shirts. He is absolutely right. The Conservatives are passionately wedded to adopting a can-do, hopeful and optimistic agenda.

Existing market mechanisms, such as the EU ETS and the carbon reduction commitment programme, should have sufficient sanctions if the targets are not met. If they do not, those mechanisms should be tightened, rather than additional costs and regulations being placed on business. We can be sure that any final increase in cost will be passed on to consumers, and the law of unintended consequences should be considered. Policy makers should remain acutely aware of that at this time of increased energy costs and heightened energy poverty. In the interests of optimism and ambition—

Steve Webbrose—

Gregory Barker (Conservative, Bexhill and Battle)

I cannot say, “In the interests of optimism and ambition, I give way,” but perhaps we could have a semi-colon before “I give way.”

Steve Webb (Liberal Democrat, Northavon)

I heard the hon. Gentleman’s semi-colon.

Is he saying that we should lay all those duties on the Government and Secretaries of State and that, if they fail to achieve them, so what?

Gregory Barker (Conservative, Bexhill and Battle)

Let me restate that the Bill is not the place for harsh penalties. The message that we, as legislators, must send out to the public, the electorate and the wider world is that we are focused on finding solutions and funding a road map to a sustainable low-carbon economy. We have an inherent belief in that mission, and we do not believe that we should start things by clobbering people with fines, regulations and tokenistic measures for taking the pay of Ministers. The agenda is much bigger than that.

Martin Horwood (Liberal Democrat, Cheltenham)

I am listening with interest to this hug-a-hoodie approach to Ministers who break the law. Does not the Conservative party believe in there being consequences for Ministers who break the law?

Gregory Barker (Conservative, Bexhill and Battle)

Talking about carbon criminals and Government Ministers breaking the law takes the debate in a thoroughly different direction. We have to get back to common sense, which is to rely on Ministers and the good judgment of the British electorate to elect a Government—in future—who will be good to their word and who will provide an ambitious route forward, rather than relying on silly mechanisms in the Bill. For those reasons, I cannot support the amendment.

Michael Weir (Scottish National Party, Angus)

I did not intend to speak to the amendment, but I have been spurred into action by some of the remarks made by the hon. Member for Cheltenham. His response to my intervention was quite wrong. In the few years left in which Scotland will be part of the UK, we will be part of a net UK carbon budget, which covers all parts of the UK, and the report will be on the UK carbon budget. I am sure that Scottish Ministers will well exceed their part of things, but if one of the devolved Administrations did not do so, under his amendment, the UK Parliament would fine or act against Ministers over whom they have no authority because they are part of a devolved Administration. There has been a good bit of party political knockabout between the other two parties, but the amendment is inept and would introduce something that would only cause division and confusion. I oppose the amendment.

Phil Woolas (Labour, Oldham East and Saddleworth)

I am sorry to intervene in this tremendous disagreement between the opposition parties. I want to put on record something that we believe is important in relation to the clause and amendment No. 35. We are discussing a serious requirement on the Secretary of State to lay a report before Parliament setting out proposals and policies to compensate for the excess emissions if a budget were not met. The Secretary of State must lay that report before Parliament, because clause 5 will establish that responsibility.

Our view of the amendment and its relationship with clause 5 is that, given the statutory basis of the targets and budgets in the Bill, any failure to meet a target or budget carries the risk for the Government of judicial review, like most legal duties on the Government. In such a case, the remedy would be at the discretion of the court. In most circumstances when a Government have failed to comply with a duty, courts do no more than issue a declaration, but we cannot rule out completely the possibility of a court making a more stringent order, such as ordering them to purchase credit. No Government would take that risk lightly.

Phil Woolas (Labour, Oldham East and Saddleworth)

I was drawing my remarks on amendment No. 35 to a close. I want to add that schedule 2 provides powers to establish trading schemes and that includes, of course, provisions for penalties. In that case, for example, within the context of the new carbon reduction commitment, we are looking to develop a compliance regime that provides a transparent and proportionate deterrent against non-compliance.

The sanctions relate to the level of the individual trading scheme or policy, and that is because they are tied to the obligations that fall upon the individual participants in the scheme. In the same way, the framework of sanctions set out in clause 18 falls upon the Secretary of State, because that is where the obligations are placed. I hope that those reassurances about the transparency of the provisions will allow the amendment to be withdrawn.

Martin Horwood (Liberal Democrat, Cheltenham)

The Minister has made some serious criticisms of the amendment. He says that there is a risk of judicial review, and that therefore sanctions will be imposed at the discretion of the courts. That is an extraordinary admission in respect of a Bill of this seriousness. We are saying that we will leave whatever sanctions emerge against Governments, specific Ministers or Secretaries of State to unelected judges and that we will refrain from ever specifying sanctions in the Bill or in any legislation that comes before the House. That does not seem to be very democratic.

The Minister suggests that one of the possible sanctions might involve forcing the purchase of credits and that that might be imposed by the courts. That is one of the scenarios that I described in my opening remarks. As I said, it runs the risk—especially if it is not done at a premium but simply involves buying more credits outside the planned regime—of allowing the Government to buy their way out of a situation, with all the problems around domestic effort and purchasing of credits that we will probably discuss later this evening.

Finally, the Minister said that if we take the model of things such as the carbon reduction commitment, there will be sanctions for certain sections of the economy. In a sense, he is saying that participants in such schemes—in other words, business—will face severe sanctions but politicians will not. That is not a very positive signal for this Parliament to send out.

Most of the Conservative criticisms of the amendment seem to relate to our dress sense, with references to dour, short-sleeved Liberal hair shirts. I seem to remember similar criticisms coming from the Conservatives in the 1980s and 1990s, when we were accused of being sandal-wearing bearded hippies, but those were the days when the Conservative party thought that carbon reduction meant closing down coal mines. We were ahead of our time then, and we are ahead of our time now.

In the light of political reality and some genuine criticisms from the hon. Member for Angus, I beg to ask leave to withdraw the amendment.

Martin Horwood (Liberal Democrat, Cheltenham)

I beg to move amendment No. 34, in clause 18, page 10, line 10, at end add—

‘(4) The Secretary of State shall certify that the Committee on Climate Change agrees the factual content of any report laid in accordance with this section.’.

My comments will be reasonably brief. We propose the amendment because distrust has been expressed in Committee, mainly of the Daily Mail and The Guardian, but also of potential successors to this Minister and other Ministers. At some level, we share some of that distrust. We see the need for some gold-plating in parts of the Bill, and this is one of them.

The amendment would ensure that when action plans and reports were presented to Parliament as the means to remedy the excess over the carbon reduction targets in the budget, they were not simply a strategy or a report as described by the hon. Member for Bexhill and Battle, but were rigorously based on sound science and analysis. For that reason, the amendment would ensure that the Committee on Climate Change had agreed the factual content of any such report and that its authority was attached to the assumptions underlying it.

Gregory Barker (Conservative, Bexhill and Battle)

In the interests of balance and fairness, I assure the Liberals that we are happy to support the amendment on the grounds that it would enhance the authority of the Committee on Climate Change and improve the transparency of Government reporting on proposals and policies for meeting future budgets.

The report provided for in the clause will outline what proposals the Government would bring forward in the event of an excess of emissions in a given budget period, and it will be issued as a result of Government failure. Transparency and accountability are key themes of the Bill and it is important that we improve it in that direction wherever possible, so I am happy to lend my support to this measure.

Phil Woolas (Labour, Oldham East and Saddleworth)

One word comes to mind—shocking. It is shocking that the allegation should be made that the committee would be required to check the factual content of a ministerial report. On a serious point, people have asked what is the statutory enforcement of the Bill. One thing that the Bill does is put in statute the relationship between the civil service and Ministers regarding advice. It will be illegal for civil servants to advise Ministers contrary to the Bill. That is an important point, although it may not be seen by the outside world.

Let me give some reassurances to counter what I see as the undue scepticism—not cynicism—of the hon. Member for Cheltenham. Under the clause, the Government proposals will be a statement of fact to the extent that they will represent facts about what the Government intend to do. The report will be a statement of the policies that the Government intend to implement, so it does not seem entirely logical that an independent committee should be called on to verify the factual content of the report.

More importantly, it is crucial that the committee should remain completely independent from the Government—that is a debate that we have had before. It is Parliament that will hold the Government to account for the progress that we are making towards our 2050 target and it is important that I emphasise that. That is why, although I understand the intent in relation to subsection (3), requiring that the Secretary of State’s report be sent to the authorities listed, I cannot envisage circumstances where the report will not be based on fact. If it were to be so, Parliament would hold us to account through due process.

Martin Horwood (Liberal Democrat, Cheltenham)

The Minister has perhaps an unduly optimistic view of the integrity of all Government proceedings, but perhaps that is reassuring in someone who is serving as a Minister. There is a need for the amendment, but in the light of the hour and the lack of support for it on the Government side, I beg to ask leave to withdraw the amendment.

Clause 23

Martin Horwood (Liberal Democrat, Cheltenham)

I beg to move amendment No. 75, in clause 23, page 12, line 15, after ‘dioxide’, insert—

‘( ) methane (CH4),

( ) nitrous oxide (N2O),

( ) hydrofluorocarbons (HFCs),

( ) perfluorocarbons (PFCs),

( ) sulphur hexafluoride (SF6).’.

This is an important amendment and one that is, in its way, just as important on a similar set of principles as the inclusion of aviation and shipping that the Government have already conceded. It has been subject to a substantial campaign outside Parliament from people who are concerned that the plans and policies we adopt in this place are representative of a genuine and comprehensive effort to tackle climate change. It is pretty difficult to see how that can be done by legislating for only one greenhouse gas—carbon dioxide.

Various arguments have been put against the inclusion in the Bill of the other greenhouse gases that make up the Kyoto basket of greenhouse gases. It has been said that carbon dioxide is the most important gas and that, in any case, it represents 85 per cent. of greenhouse gas emissions. That is certainly true. It is obviously important that we focus a large part of our effort on carbon dioxide, but there are other potent greenhouse gases. The short-term impact of methane—CH4—is much more serious than that of carbon dioxide. It captures heat 20 times more efficiently than carbon dioxide, so, in its way, it is a much more potent gas, even though it is present in the atmosphere in a less persistent way.

In the same way in which aviation and shipping should not be allowed to escape the provisions of the Bill, we need to ensure that greenhouse gases such as methane are tackled. Otherwise, we could be in the ludicrous situation in which if the other greenhouse gases that only represent 15 per cent. of emissions now are allowed to proliferate and we make huge efforts to reduce carbon dioxide, the percentage of other greenhouse gases might rise on a much faster scale. We could end up with 20, 30 or 40 per cent. of our emissions coming from those remaining greenhouse gases, if they are allowed to increase.

In Committee in the other place, Lord Rooker argued:

“We have a good understanding of the costs and benefits of reducing CO2 emissions, whereas there is much less understanding about the cost-effective potential of reducing other greenhouse gas emissions, particularly in the long-term.”—[Official Report, House of Lords, 8 January 2008; Vol. 697, c. 841.]

In one sense, that is an argument against us participating in the Kyoto protocol, which, of course, demands that we accurately measure and account for the whole basket of greenhouse gas emissions. If we were to include other greenhouse gases in the Bill, it would be a good incentive for developing better measurement systems for the other greenhouse gases. Perhaps we have been lax in developing a better understanding of those other greenhouse gases.

Our understanding is not quite as bad as Lord Rooker suggests. The National Audit Office’s report, “UK greenhouse gas emissions: measurement and reporting”, goes into some detail about the methodology used to look at the whole basket of greenhouse gases. It talks about the intergovernmental panel on climate change guidelines on greenhouse gases, which specify in detail what methodologies to use for calculating emissions, and how trade-offs between precision, accuracy and resources should be approached. The report states that emissions should be estimated

“using a bottom up approach. Using the economic activity data supplied by government departments, trade associations and businesses, AEA and sector specialists the Centre for Ecology and Hydrology (CEH) and the Institute of Grassland and Environmental Research (IGER) model emissions of all known anthropogenic sources of greenhouse gases in the UK within the following five specific source sectors: energy, industrial processes, agriculture, land use, land use change and forestry, waste.”

It goes on to state:

“These broad areas are then broken down into activity types, subtypes, and activities. The emission-producing activities include the combustion of fuels such as coal in power stations, the use of petrol and diesel in road transport, industrial processes such as cement manufacture, agricultural sources such as enteric fermentation in cattle, and sources and sinks of CO2 caused from changes in the way land is used.”

In case hon. Members are in any doubt about the meaning of enteric fermentation, I can tell them, courtesy of Wikipedia, that it means fermentation within the digestive systems of ruminant cattle. I am trying to avoid using any unparliamentary language, but I was interested to discover that most of that fermentation is belched rather than emitted in any other way. Half of Australian methane emissions are created in that way, which has been a serious incentive to the Australian Government to support research into the vaccination of cattle to try to reduce flatulence—[Laughter.] Although that is making hon. Members laugh and smile, that is a serious result of Australia measuring and recognising the seriousness of reducing methane emissions. I understand that other research on that is under way in Japan and Germany.

Finally, there is the possible excuse that the Government are following the recommendation of the joint scrutiny Committee, which was divided over the issue of other greenhouse gases and said:

“Expanding the Bill in this way might therefore jeopardise its coherence and the extent of support which it might command.”

Just in case the Government are inclined to quote that Committee in support of their position, I shall cite some of its other conclusions:

“We agree with the Government on balance that it is reasonable for the Bill to focus on reducing emissions of carbon dioxide, and we therefore accept its overall architecture. However, this in no way relieves the Government of its responsibility to continue to reduce other greenhouse gases”.

It is difficult to see how we are going to follow that instruction with no policy tools at our disposal that even look at those other greenhouse gases.

The amendment is, in its way, as important as the measures on reducing aviation and shipping emissions. The logic for the Government’s acceptance that we cannot exclude any large section of the economy from greenhouse gas measurement and reduction policies applies just as much to the other greenhouse gases.

Gregory Barker (Conservative, Bexhill and Battle)

I have much sympathy with the spirit of the amendment, about which the hon. Member for Cheltenham spoke fluently. It would be foolish to consider the science of heat-trapping gas emissions on a global scale without taking due consideration of the full basket of greenhouses gases. It is well known that, as the hon. Gentleman said, methane has 22 times the heat-trapping potency of carbon dioxide. It is less well known, although it causes considerably more concern to learn, that nitrous oxide is 310 times more powerful than carbon dioxide as a heat-trapping gas. Any agreement that moves to deal with greenhouse gases globally must therefore include the full basket of the six major gases. However, we should remind ourselves that the Bill legislates for only the UK, as the Government were at great pains to remind us during the discussion over their principal aim.

The evidence presented in the DEFRA report on national statistics in relation to UK greenhouse gases shows that carbon dioxide, standing at 85 per cent. in 2006, accounts for the vast majority of UK emissions. Importantly, the remaining 15 per cent. of emissions, which comprise the more potent greenhouse gases, are, I am pleased to say, in steady decline in this country, whereas the UK’s carbon dioxide emissions have risen substantially since 1997. That is why the primary focus of the legislation should, at least for the time being, be on reducing carbon dioxide emissions.

To back up my argument with some figures, UK emissions in 1997 were 548.1 million tonnes CO2 and, in 2006, they were 554.5 million tonnes CO2. That is an increase of 6.4 million tonnes. DEFRA statistics show that UK CO2 emissions have risen in five of the past 10 years. The UK will meet its Kyoto reduction targets only because of the dash for gas under the last Conservative Administration, which resulted in a reduction of the UK’s CO2 emissions from more than 590 million tonnes in 1991 to a low of 540 million tonnes in 1999.

In March 2006, the Government dropped their manifesto commitment, which was repeated in three successive manifestos, to cut carbon emissions by 20 per cent. by 2010. The 2010 target was set independently by the Royal Commission on Environmental Pollution. It was replaced in 2006 by the climate change programme review, which pledged to cut emissions by 15 per cent. by 2010. Despite Labour’s three manifesto promises to slash emissions by 20 per cent., carbon emissions have clearly risen since 1997. In 2006, CO2 emissions fell by just 0.1 per cent. The Bill must focus on reducing carbon dioxide emissions.

Allow me to contrast the figures on carbon with our national emissions of other greenhouse gases. According to DEFRA, in 2006, methane accounted for 7.5 per cent. of the UK’s emissions, but that was a reduction of 53 per cent. below 1990 levels. In 2006, the main source of methane emissions were landfill sites and agriculture, but emissions from landfill and agriculture have reduced by 61 per cent. and 13 per cent. respectively since 1990. Again, according to DEFRA, emissions of nitrous oxide, which is a particularly nasty gas, fell, thankfully, by 40 per cent. between 1990 and 2006, with a year-on-year reduction from 2005-06 of 3.7 per cent. If only we could repeat that level of performance on carbon dioxide we would be in a far better position to meet our 2050 targets in good time.

Given the drop in emissions of the basket of greenhouse gases and, by contrast, our poor national record of reducing CO2, which constitutes 85 per cent. of our emissions, the focus of the Bill should remain on carbon dioxide only. We might find that emissions of other greenhouse gases rise in future. Fortunately, there is sufficient flexibility in the Bill to allow the Secretary of State to redefine the scope of the Bill when and if it is seen to be fit to include the other heat-trapping gases.

We should remain mindful of the challenges ahead in reducing our carbon dioxide emissions. The Government’s willingness to build a new and unabated coal-burning power station at Kingsnorth springs to mind. That power station alone would emit more than 7 million tonnes of CO2 into our atmosphere if the emissions were not captured and stored from some point in the future.

I note that the Government’s consultation on the definition of “carbon capture ready” was discreetly announced last night. We should bear in mind the implications of that definition as we debate that further in this Bill.

Phil Woolas (Labour, Oldham East and Saddleworth)

I was expecting a debate about science on this sensible amendment; I am now drawn into politics. My reaction to the comments by the hon. Member for Bexhill and Battle is “double shocking”.

A number of allegations have been made. Let me address the content of the amendment, rather than my party’s manifestos. There are very strong arguments indeed for including the other greenhouse gases in the Bill’s targets and budgets, particularly scientific arguments, which are, of course, the strongest. Also, including those gases would ensure consistency with the international approach. The European and international approach is for targets that cover all greenhouse gases rather than just CO2 and we recognise that our current targets are not consistent with that approach. Therefore, we said in the other place—I repeat it here—that we will include other greenhouse gases in our targets if that is what the committee advises; I suspect that it will do so.

There is a very important point that I ask the hon. Member for Bexhill and Battle to consider. In including the other greenhouse gases, one must, of course, have strategies for reducing them. While we concentrate on the CO2 element, on which there are strategies and policies in place and there is expectation of progress in the future, that is not necessarily the case for all the other greenhouse gases. That is not a reason for not including them, though.

Gregory Barker (Conservative, Bexhill and Battle)

Surely the Minister will accept that a reduction in CO2-equivalent emissions of methane or one of the other greenhouse gases has exactly the same impact in terms of global warming as a reduction in CO2? Therefore, the priority must surely be to develop those reduction strategies.

Phil Woolas (Labour, Oldham East and Saddleworth)

Indeed. I agree with the hon. Gentleman that that point is important and is often missed from the debate. We tend to interchange “CO2” with “greenhouse gases” in the public debate, as if they were the same thing.

We genuinely seek advice from the committee on the scope to reduce the other greenhouse gas emissions. The hon. Member for Cheltenham used some examples of emissions from agriculture. However, it is not obvious what the scope to reduce them is.

Anne McIntosh (Conservative, Vale of York)

When I listed the other greenhouse gases that could fall within the definition, I understood the Minister to be saying that he was minded to introduce them at a later stage and that the Government had not excluded their introduction, but were not doing so at this stage. Is that correct?

Phil Woolas (Labour, Oldham East and Saddleworth)

We are minded to include them, we want to include them, and we want the advice of the committee as to what the scope for reducing them is. We want to include them for two reasons. The first is the science, as the hon. Member for Cheltenham has said, and the second is international compatibility. It is important that we do include them for those reasons.

I want to challenge the arguments about the figures made by the hon. Member for Bexhill and Battle. He claimed that the United Kingdom’s progress against its Kyoto target was a result “entirely”—if he did not say “entirely”, at least “substantially”—of the dash to gas. That is not fair. There have been a huge number of energy-efficient measures in the country that have contributed towards a decline in the emissions: the climate change levy; the climate change agreements, and the Carbon Trust in the business sector and the energy efficiency commitment in the household sector, which are independently audited, as are the measurements of emissions. In the energy supply sector, the introduction of competitive markets in production and supply has driven a large reduction in the UK greenhouse gas emissions since the early 1990s. Further savings in CO2 per unit of energy have come from the renewables obligation from higher diesel penetration in the transport fleet and from the European emissions trading scheme.

If the Government were cynical, we would simply accept the amendment on the basis that we could show that the total basket of non-CO2 gases has fallen by 38 per cent. since 1997. That would be a “stick it in your pipe and smoke it” piece of propaganda on behalf of the Government, but because we have integrity, we will not fall into that trap, although it would be easy for me to do so. The figures on the reduction in emissions show that the UK has made significant progress against the 1990 and 1997 baselines.

Since 1990, UK emissions of all greenhouse gases were 18 per cent. below the baseline year. For CO2 only, UK emissions were 8 per cent. below the baseline year. Therefore, the provisional UK emission figures for 2007 were 1 per cent. lower than in 1997 for CO2, and 9 per cent. lower for all greenhouse gases. Taking emissions trading into account, the most recent figures were 5 per cent. lower and 12 per cent. lower for all greenhouse gases. That shows that economic growth can be decoupled from a growth in emissions. That is far from the picture that the hon. Member for Bexhill and Battle mischievously tried to piggyback on to the back of the genuine and improving amendment tabled by the hon. Member for Cheltenham. I ask for the amendment to be withdrawn.

Martin Horwood (Liberal Democrat, Cheltenham)

I am grateful to the Minister for his comments. He made some serious criticisms of the amendment, including the one that we should not attempt to introduce too many policy measures relating to greenhouse gases for which there is limited or uncertain scope for reduction. Sadly, if that is true, we are all in trouble. If reductions to 15 per cent. of our greenhouse gas emissions are not going to be attempted or are going to be outside the scope of policy, we are in deep trouble, especially as that percentage is set to rise dramatically if carbon reductions are achieved. If I tell the Minister that significant efforts are being made in other countries to reduce such emissions, he might take the matter more seriously. I mentioned Japan in my opening remarks. According to the team from Obihiro university of agriculture and veterinary medicine, a few simple food additives costing about 50p each day per cow might be able to remove virtually all methane from a herd’s daily output of greenhouse-gas enriched belches. Given that there are something like 1.5 billion cows on the planet, that would provide significant scope for reduction in methane emissions. In the same way that renewable energy can be stimulated by feed-in tariffs and other policy measures, energy efficiency can be stimulated by policy measures, and carbon trading stimulates business and industry to reduce its carbon footprint. There is political business potential to reduce methane and other greenhouse gas emissions, but we need the policy tools. We need the policy framework in place to achieve that, and that is why we support this amendment. However, I acknowledge that if we do not have the support that I had hoped for from Conservative Members, it is unlikely that the amendment will be agreed to. On those grounds, I beg to ask leave to withdraw the amendment.

Clause 25

David Maclean (Conservative, Penrith and The Border)

I beg to move amendment No. 83, in clause 25, page 13, line 22, at end add—

‘(3) In this section “sinks” mean land-based carbon sinks which have been assessed by the Committee on Climate Change as being, or likely to be permanent.’.

Frank Cook (Labour, Stockton North)

With this it will be convenient to discuss the following: Clause stand part.

Government new clause 2—Duty to have regard to need for UK domestic action on climate change.

David Maclean (Conservative, Penrith and The Border)

Where I am coming from is my belief that carbon sinks have a vital role to play in the United Kingdom, and certainly internationally. This is not the point at which we should talk about the vital role that carbon sinks can play in the rain forest, but I hope that the Government will encourage companies to invest heavily in them. However, in the United Kingdom, too, there is a great role for carbon sinks in our forests, peat lands and bogs. I do not want them discredited because of some inappropriate carbon-sink trading that might be going on, or some inappropriate or dodgy dealing that does not stack up.

As I read about carbon sinks, discovering the wonderful role that our forests and peat lands could perform, I came across more and more stuff on the internet from environmental groups that had been rubbishing carbon sinks on the basis that the schemes could be a bit dodgy or the solution was not permanent. The groups suggested that if the world warms up, our forests in this country could get warmer and that rather than our peat bogs and carbon sinks retaining carbon, they could be releasing it, so let us not touch them. Some of the criticism had a rather puritanical and misguided streak, saying, “Yes, carbon sinks may be good, but they do not cause enough pain, and what we really ought to be doing in the United Kingdom is making sure that we are closing down industry and making people and businesses suffer, so let us not pay attention to the trees and the forests and the land that we have and let us not exploit it to the full.” That is barking. If we are to be successful in meeting our climate change targets and are to do genuine good, yes, we must have targets for industry to reduce the amount of carbon emissions and for the rest of us to drive less or to have a cleaner or lower carbon lifestyle. However, for goodness’ sake, let us exploit some of the things that we have in this country and expand them.

Carbon dioxide emissions from soils totalled 13.69 million tonnes in 2005. By comparison, carbon dioxide emissions from domestic aviation were 2.47 million tonnes. There used to be an old gardener on the television years ago—was he a Yorkshire gardener?—who said, “The answer lies in the soil.” The answer in some part does lie in the soil. If we maintain it and keep it properly, we will be locking carbon in for evermore. All the peat lands in England and Wales would absorb around 41,000 tonnes of carbon a year if they were kept in a pristine condition. However, they could emit up to 381,000 tonnes of carbon a year if they were damaged by practices such as excessive burning, drainage and overgrazing. The restoration and enhancement of peat lands could save 400,000 tonnes a year, which is the equivalent to the greenhouse gas emissions from 1.1 billion car miles or 84,000 family-sized cars. In addition to that, not only do we lock in the carbon, but we would safeguard the habitats of 5,000 different species of plants and animals.

I am sure, Mr. Cook, that it will be at the forefront of your mind that Natural England held a conference headlined “Better Bogs Create Carbon Sinks”. The “better bogs” conference, which was officially entitled “Moors for the Future”, in the Peak district, said:

“We must protect and enhance our upland peat bogs—they are the UK’s most important and vulnerable carbon store.”

That was the message from Natural England. Sir Martin Doughty, the chair of Natural England, said:

“Evidence shows that the degradation of soils through over-grazing, fires, drainage and erosion is releasing five times more carbon dioxide into the atmosphere every year than from all domestic flights in the UK.”

Peat soils contain a huge amount of carbon. If it is locked in, it is okay, but if there is degradation and the peat land is not looked after properly, it becomes a major source of emissions.

I see the Minister nodding—I have rabbited on about so many different things that he was bound to have nodded at something. If the Government accept the analysis that our carbon sinks are legitimate and good, and that we ought to enhance them, I do not want anyone rubbishing them in the next few years and deterring businesses from investing in them. I am happy to have businesses in my constituency that might be emitting carbon doing a carbon-trading deal and investing in peat bogs, new forest—or woodlands—and in trees that, hopefully, will not catch fire accidentally or be cut down. We must distinguish between that sort of forestry and planting trees for 20 or 30 years that might soak up carbon while they are growing, but which are then cut down regularly. That is not what I have in mind.

The only way in which we can make the approach completely legitimate and stop some of the misguided environmental groups from attacking our carbon sinks and the planting of trees is to make sure that the Committee on Climate Change has the role of approving carbon sinks. It is no good me or anyone else coming along and saying, “I am just going to have a carbon sink there. I am investing in this and buying a bit of hillside, which has good grouse shooting and a lot of peat. I am therefore doing my bit as a carbon sink, so can I please have that accredited against me?”

If we are to have legitimate and kosher carbon sinks, the Committee on Climate Change should accredit them or have an assessment system for saying, “Yes, this is a good carbon sink and, as far as we can say, it has the possibility of remaining permanent, so Natural England and others can put conditions on it to make sure that the peat is not eroded and not dug up, drained and released.” We want a legitimate verification system that keeps our carbon sinks as a valuable resource for reducing carbon and locking it in, and that does not allow people to discredit the whole concept.

I conclude with those words because I am worried that some people want to discredit the concept of carbon sinks for their own ends. Yes, the UK should be doing a lot. Yes, our industry should be producing less carbon, but let us not rubbish carbon sinks as a natural and perfectly acceptable form of locking in carbon that should be expanded and increased, and that should not only help British industry, but contribute to the world’s reduction of carbon in the atmosphere.

Anne McIntosh (Conservative, Vale of York)

I congratulate my right hon. Friend on speaking to the amendment so eloquently and with such knowledge. I wish to restrict my remarks to clause stand part and Government new clause 2. I place on record how firmly we are wedded to the wording and the principle of clause 25. In my humble view, it goes to the heart of what the Government and all of us want to achieve in support of a climate change strategy. Our aim is obviously not only to come forward with a Bill that is groundbreaking in its own way, but to create a low-carbon economy. By being one of the first movers in that regard, it is important to aim primarily at reducing pollution in this country, and not to export the problem through the use of more than 30 per cent. of credits, but to reduce emissions and, for want of a better term, to reduce pollution in this country.

There are few more important clauses than clause 25. It puts the responsibility firmly on the Secretary of State to ensure that at least 70 per cent. of the effort undertaken to reduce emissions to meet our carbon budget is achieved domestically. The original Bill—indeed, this is the case for the Bill without the clause—would have contained no such clarity. I pay tribute to Conservative Members of the other place who eventually won the argument for including clause 25 in the Bill, with the help of Liberal Democrat peers, which was much appreciated. The Conservative party considers that the removal of the clause would seriously weaken the Bill.

We have received strong support for keeping clause 25 in the Bill in a joint statement from the WWF-UK, Scottish and Southern Energy, Christian Aid and the Royal Society for the Protection of Birds. In their briefing, they go right to the heart of the matter when they say:

“Removing clause 25 from the Bill would undermine a key objective of the Bill—that of establishing a framework which provides UK companies with the long-term certainty that they need to incentivise sustainable and low carbon investments. It would also leave unanswered the question—to what extent will the UK rely on buying credits or emission allowances from other countries to meet its targets? Without a requirement for clear and strong domestic action, the UK could in theory meet its targets under the Bill without any action to decarbonise the UK economy—an outcome that would do little to promote UK leadership in the international climate negotiations.”

If one accepts that the point of the Bill is, as has been said, to provide the market and companies operating within it with the long-term clarity and certainty that they need to compete and be the best in the world, the clause should be retained.

The clause says that the Secretary of State must ensure that at least 70 per cent. of the efforts undertaken are achieved by

“domestic emissions reductions and domestic removal by sinks.”

It goes on to define “effort” as

“the difference between the present UK carbon budget and the verified emissions for the previous budgetary period.”

Having compared the clause with new clause 2, I humbly submit—I hope that the Minister will respond positively to this plea—that the wording completely misses the point of seeking to obtain the highest reduction. Clause 25 writes into the Bill a provision in relation to 70 per cent. of domestic action and will thereby reduce pollution at home; it will not just export the problem. That will still leave a 30 per cent. allowance for international credits and will fit and be compatible with the EU ETS.

I commend clause 25 to the Committee and make a plea to the Minister to keep it in the Bill. Perhaps he will also withdraw new clause 2.

Steve Webb (Liberal Democrat, Northavon)

I agree with the hon. Lady that the clause is fundamental, and I would like to address the clause stand part issue. In my short contribution, I shall address some misunderstandings or myths that have surrounded the debate, which we heard on Second Reading.

The first such myth, which is often quoted, is that a tonne of carbon is a tonne of carbon, and that it is of no great consequence, as far as the planet is concerned, where it is saved, as it will have the same adverse effect wherever it goes up. It is interesting that the person whom the Government have asked to supervise the process, Lord Turner, does not take that view. In discussions in another place he has said that

“it is not absolutely the case that a tonne of carbon saved in every country of the world is precisely the same. There is a value in hard emission reductions targets in developed countries because they will drive the changes in behaviour, energy efficiency and technology which will then be required across the whole world.”—[Official Report, House of Lords, 11 March 2008; Vol. 699, c. 1412.]

So the argument that it is all the same whether we do it ourselves or buy it in is not accepted by Lord Turner. Given that he has been charged with advising the Government, it seems a shame to pre-empt what he will say by taking out some sort of assumption about the importance of domestic effort.

There are two conflicting arguments, one of which is that we just want to save the stuff. The other says that there is a leadership role both from the point of view of British industry, as Conservative Members have said, and—I hesitate to use the “M” word at this point—from a moral dimension. That moral dimension says that because, to a greater or lesser extent, we caused the problem, we have a responsibility to make the first moves in clearing it up. That means that we should play our part and make the adjustments sooner.

If we accept the long-term goal, whether that is described as a zero-carbon Britain or a low-carbon economy, the sooner we get on with it the better. Clause 25 allows us to put off the evil day—or it might be a good day, depending on how we look at it—by getting savings elsewhere. Our argument for retaining clause 25 is that there is a strong case on moral, practical and even self-interested grounds for doing far more of this ourselves than might otherwise be the case.

The second principal argument used against any restriction of the sort contained in clause 25 is that it messes up emissions trading. The point about emissions trading is that it is an elegant, market-based solution and people will get the cheapest savings possible. People who find it hard to make emissions savings do not have to spend huge amounts of money as they can pay somebody who finds it easy to make those savings and the aggregate costs are minimised.

As an economist, I can see the attraction of that, but the working of the European emissions trading scheme means that there is no conflict between having some sort of cap on the extent to which we can opt out of domestic effort and the ETS. That is because the ETS is operated at an individual business location level. In other words, Governments agree a national allocation and that is subdivided between individual operators in the market. Once that has been done, businesses either meet their carbon emissions cap or they under-emit and sell their credits or over-emit and buy them in. That is true whatever we do in Committee this afternoon. It does not matter whether it involves 100, 0, 30 or 70 credits and so on. Whatever it is, businesses still have their caps and permits and they still buy and sell credits.

Nothing in the Bill will change the duties of businesses to comply with their emissions caps, so the existence of a cap and an emissions trading scheme has no bearing on that—it is totally unaffected by clause 25. On Second Reading, at least one Minister said that we should not do this as it would interfere with emissions trading, but it has no bearing on that whatever.

If we delete clause 25, there could be wholesale import, export and crediting schemes and so on. However, we would get a perverse result. Half our national emissions are covered by the emissions trading scheme. That means that the total of emissions from that source is given. Therefore, if every credit that we buy in is a saving on the national account and anything that we sell is a debit, there is no benefit from Government policies that incentivise industries within the scope of the ETS to cut their emissions, as that has no impact on the national carbon account.

For example, within the scope of the ETS, the Government have a policy that might get a particular industry to reduce its carbon emissions, which is great, but the cap has already been fixed, so it comes in under the total, the business sells its surplus credits abroad and that comes through on the national carbon account. We already know what the figure will be for that half of the economy.

A worse problem is that the half of the economy with the cap and trade will probably reduce its carbon emissions more slowly than we want to be consistent with the rest of the Bill. Because that section of the economy is fixed because 100 per cent. trading is allowed, the other half of the economy potentially has to do a lot more of the legwork, and that is inefficient. It is the opposite of the flexibility that the Minister talked about—it creates artificial divisions between the half of the economy that is in the ETS and the other half that is not. Government activity to incentivise business within the ETS to do better on carbon is a waste of time from the point of view of targets. If the Government want to hit their targets, they must do far more with the other half of the economy, and that is profoundly distorting.

Cutting the story short, there is no incompatibility between clause 25 and emissions trading, which does not undermine or affect it in any way. Deleting clause 25 would mean that everything that that half the economy did was already predetermined in terms of the national carbon account, so the other half would have to make most of the effort, which seems wrong.

Fundamentally, there is a strong, self-interested case for national leadership, as well as a strong moral one, of the sort embodied in clause 25. If the Minister wants to return with a different number, we would be happy to debate it—he could say that our 30 per cent. is as arbitrary as his 1 per cent. It is a case of more so than not: 70 per cent. represents more domestic effort than not, but we could have a sensible debate about the figures.

Although new clause 2 is a token nod in the right direction, just “having regard to” the merits of domestic effort does not really do the job, so I hope that the Committee will resist new clause 2 and retain clause 25.

Nick Hurd (Conservative, Ruislip - Northwood)

We on the Joint Committee on the Draft Climate Change Bill spent much time on this issue, because as previous speakers have said it is incredibly important. Our conclusions will have significant economic consequences for British taxpayers and shareholders in British companies.

I know that the Minister understands all the arguments involved, and new clause 2 is wholly inadequate—it does not mean anything and sends a dangerous signal to British businesses that we want now to commit to the long-term investment decisions that will make the difference. In that context, they would need to receive a strong signal about the commitment to reduce domestic emissions. We must not just buy our way out of the problem in international markets.

We do not only want British companies to reduce carbon emissions—this is not just a carbon issue—but, as my hon. Friend the Member for Vale of York said from the Front Bench, we want British companies and institutes to get ahead in the journey towards a low-carbon economy, because that is in our long-term economic interests.

The Minister has spoken about striking a balance, and he knows, as does everybody who has considered the issue, that important relevant tensions and currents run against each other: on the one hand, the responsibility of any Government and Parliament to ensure that our route to reducing carbon emissions is as cost-effective as possible—the same goes for anyone running a British company in terms of their responsibilities to shareholders —and, on the other, our moral responsibility to take a lead as a developed nation in reducing emissions and our long-term economic interests in being at the vanguard of a low-carbon economy. Those tensions must be reconciled.

With your indulgence, Mr. Cook, I wish to make a simple point about transparency. As has been said, the 70:30 figure is arbitrary. There is no science to it—to some degree, it has been plucked out of the air to generate debate and to make an important point, which is that we need to reach an agreement on where to strike this balance.

Up until now, the Government have not been transparent on that issue. In the Environmental Audit Committee, we tracked the progress of the 2010 carbon target. When that target was published, there was no mention of buying international credits. It was understood that it would be all about UK domestic emission reductions. It was only when the revised climate change programme was published in 2006 that the Government began to count the use of carbon credits purchased from abroad.

The Environmental Audit Committee was quite shocked by a review of the European emissions trading scheme. Our report states that

“without the expected contribution of Phase II of the EU ETS, UK carbon emissions in 2010 are projected to be only just over halfway to the 20% target, a very significant shortfall.”

There has been no transparency up until now about the degree to which we meet our international agreements through the purchase of international credits. That issue needs to be brought out of the darkness and into the light.

I do not know whether 70:30 is the right balance—I do not know whether the Minister even knows what the right balance is—but we need a transparent number, a limit and a threshold around which we can build a consensus. New clause 2 is too vague and will not do.

Tony Baldry (Conservative, Banbury)

I think that every member of the Committee will have received a copy of the joint statement by the World Wide Fund for Nature, Scottish and Southern Energy, Christian Aid and the Royal Society for the Protection of Birds—an unusual combination bringing together development non-governmental organisations, wildlife NGOs and business. Two paragraphs from that statement are worth putting on the record:

“These organisations support the amendment as a necessary requirement to ensure that the UK becomes a low carbon economy and does not rely too heavily on carbon credits. A major benefit of the amendment is that it would bolster the UK’s leadership on climate change by ensuring significant reduction efforts are made at home. Financial flows to developing countries should come on top of these actions and not instead. Finally, the amendment would not conflict with the UK’s participation in the EU Emissions Trading Scheme.

The Government’s proposed replacement amendment (New Clause 2) that ‘the Secretary of State must have regard to the need for UK domestic action on climate change’ would provide next to no clarity or certainty on this issue. Indeed, in WWF’s opinion the amendment is almost meaningless in addressing the key issue of whether the UK sets itself on the path to becoming a low carbon economy and avoids locking itself into new high carbon and long-lived infrastructure.”

The Minister can ignore the Committee and he can ignore the House of Lords, but I caution him that it is not necessarily sensible to ignore the combined postcard-writing power of the WWF and the RSPB.

Phil Woolas (Labour, Oldham East and Saddleworth)

I ignore those organisations at my peril, and spend many late nights signing letters to hon. Members who have forwarded those postcards. I am grateful to people who write in.

May I deal with amendment No. 83 first? The debate has been important and perhaps the important points made by the right hon. Member for Penrith and The Border have been forgotten. He asked for an assurance that we take account of the carbon sinks in the United Kingdom. As the Member for Oldham, East and Saddleworth, I understand the point, because much of the measurement of moorland peat is done in my constituency, and I have been following that for some 10 years.

I can assure the right hon. Gentleman that the carbon sinks are included in the targets. The Bill relates to net UK emissions—emissions less removals by UK carbon sinks. That provides an important incentive to promote carbon sinks in the United Kingdom. Indeed, the Forestry Commission is one of the most successful organisations in the world at increasing forestation in percentage terms, but not in total acreage, and has responded to that very point. It relates to the subsequent debate about the balance between overseas and domestic emissions. The net emissions are there.

I can provide further reassurance. There are already well-established mechanisms in place to ensure that removals from sinks are properly assessed. Information must be compiled in accordance with the same systems and international methods as for the annual emissions inventory which the UK is already required to submit to the United Nations framework convention on climate change. The UK emissions inventory follows such guidance from the intergovernmental panel on climate change which is reviewed every year by the United Nations—that is, by international experts—to ensure that such practice is followed. We intend to follow exactly the same guidance in compiling the emissions statement, including information on removal by sinks under clause 15. In fact, clause 29(2) requires that the amount of UK emissions and UK removal of greenhouse gases must be determined consistently with international carbon reporting practice, which is defined subsequently in clause 86.

For those reasons, the right hon. Gentleman’s amendment is unnecessary, but I entirely agree that it backs up the point about basing our net emissions measurements on science and not on a political fix. It also, conveniently, helps me with my argument against subsequent speakers, and I shall explain why.

This is the heart of the debate and hon. Members on both sides made their arguments strongly and passionately. Let me try to explain the Government’s argument. We have discussed Government amendments to clause 14 on the balance between UK emissions, action within the EU, and international action. That was a key issue, as has been said, when the Bill was debated in the other place, and the Government have given it significant consideration since then. In the debates on the Bill there has sometimes seemed to be a mistaken idea that this Government, or a future Government, will do anything they can to buy their way out of reducing UK emissions, by purchasing international credits instead. However, we all recognise that the world as a whole will only tackle climate change if developed countries such as ours reduce their emissions significantly. That is why we have tabled new clause 2. If accepted, it will place into legislation for the first time the need for UK domestic action on climate change. The new clause is intended to set out plainly the belief of Government and, we hope, Parliament that we need to reduce our domestic emissions if we are going to meet our targets and encourage others to reduce their emissions as well.

However, we also must not lose sight of the reality that climate change is a global challenge. We need global emissions to halve by 2050, based on the 2 deg C increase that we talked about at clause 1. The international carbon market will be the key to achieving the scale of investment flows necessary to achieve that, which are estimated to be in the hundreds of billions of dollars, over and above the additional public money—additional to official development assistance—that is required. We need action at European Union and international level, as well as at domestic level, if the world is to tackle climate change. We do not believe that the policy outlined in clause 25 is the right one. Apart from the point that clause 25 is inflexible—I do not want to debate that as it is helpful to specify a figure—the 70:30 limit is arbitrary.

Anne McIntosh (Conservative, Vale of York)

The Minister will be familiar with the conclusions of the Environment, Food and Rural Affairs Committee. It positively recommended that the provision to allow for international credits should be strictly limited to a quantifiable amount, to be advised by the Committee on Climate Change for each budgetary period. What is absent from the new clause is the recognition that although we want to contribute, as my hon. Friend the Member for Ruislip-Northwood said, in the original budget for 2010 there was no mention of any part being allocated to international credits.

Phil Woolas (Labour, Oldham East and Saddleworth)

Indeed, we looked at the Select Committee report and other recommendations when considering the new clause and I hope that the hon. Lady expects an honest disagreement. Let me explain why there are problems with the idea of setting a fixed limit in the way in which clause 25 suggests. The UK’s policy in this regard is firmly rooted within a joint-European Union effort. That is one of the most successful, if not the most successful, area of European Union solidarity in terms of world leadership. As it stands, clause 25 fails to recognise the crucial role of action at the European Union level.

The hon. Member for Northavon made some important points about the construct of the ETS. If one looks at clause 25 in the context of the ETS, it creates an artificial distinction between domestic action and other action in the European context. That would create a significant risk of cutting across the ability of the United Kingdom’s companies to participate freely in the EU ETS. The EU ETS is a stepping stone to the ultimate prize—a global carbon market that sets an absolute cap on emissions. The rest of the world is not only watching the EU very carefully, but in some cases, including within the United States, is now following it. Under the EU ETS rules, it does not matter if UK companies reduce their own emissions or buy allowances from another EU country, where the same emissions reductions might be made more cheaply. However, under clause 25, emissions credits bought under ETS, even from another developed country such as Germany or France, would count as being overseas action and would be counted against the 30 per cent. limit or any other limit that we would set. That would create huge uncertainty and would risk increasing costs as well, as the Government have little or no control over the commercial decisions in the ETS.

Let me quote what Lord Turner of Ecchinswell said on this issue when he appeared before the Select Committee on Environment, Food and Rural Affairs, which the hon. Member for Vale of York mentioned:

“Of course, it is important within the European Emissions Trading Scheme to realise that we cannot actually in advance define the maximum amount of buy-in which will occur from the rest of Europe to the UK. That is not a policy variable which the UK Government or any other government”

within the EU—actually, he did not say “within the EU”, but that was the context—

“can pre-fix within the scheme. The amount of buy-in will be whatever the market determines and will only become clear as we move towards the end of a budget period.”

Yet clause 25 invites us to do the exact opposite, defining now, in 2008, what the maximum amount of credits will be, as bought in from within Europe and from the rest of the world, all the way to 2050 and beyond.

Let me further back up my argument by mentioning what Lord Taylor of Holbeach, the Opposition spokesman, said in the other place, when discussing the amendment:

“A fixed percentage in the Bill may not be the best way of going about that.

that is, addressing decarbonisation—

“We understand the difficulties in placing such a precise figure in the Bill, which range from the constraints of the international negotiation tables to the fact that the carbon market will look a lot different in 42 years.”—[Official Report, House of Lords11 March 2008; Vol. 699, c. 1407.]

There is a difficulty, first, in the context of the ETS.

Steve Webb (Liberal Democrat, Northavon)

The Minister is answering the point thoughtfully and seriously, but he is saying essentially that the UK Government are indifferent about domestic emission cuts and that those bought in from, say, Germany—a country like ours—or Poland, or a much poorer country. However, our argument is that it is not a matter of indifference. Surely, there are strong arguments why the UK would want, as a positive policy goal, to favour domestic cuts, as even new clause 2 says. His argument that we should just be neutral within the ETS is inconsistent with his own new clause 2.

Phil Woolas (Labour, Oldham East and Saddleworth)

I have so far advanced the argument about the ETS. I have another argument that I wish to develop, which encompasses the hon. Gentleman’s point.

Of course, we recognise how important it is that the Bill demonstrates the need for domestic action to reduce UK emissions and—to address the point that the hon. Member for Ruislip-Northwood made—to ensure the maximum possible transparency about our plans for meeting targets and moving the UK to a low-carbon economy. That is why we have tabled Government amendment No. 8, which we have already discussed, and new clause 2, which we are debating now.

New clause 2 would place the Secretary of State under a legal duty to consider the need to reduce UK emissions of greenhouse gases when considering how to meet the targets and budgets. That important step forward represents a constructive response to the concerns expressed in Parliament. It will, if agreed to, set out unequivocally Parliament’s desire that the UK should move to a low-carbon economy. New clause 2 will mean that, when developing policies to meet carbon budgets, the Secretary of State must keep in mind the need to reduce UK emissions and the positive benefits in doing so, including improved energy efficiency, which will of course reduce energy bills; demonstrating our commitment to take action on climate change to international partners; helping to meet our international obligations; helping to meet other policy objectives, such as improving air quality; and addressing the advantages to UK competitiveness of developing the technologies and industries that can achieve low carbon. We agree that there needs to be a balance. It is up to developed countries to show the way.

The global low-carbon energy market is already worth $38 billion and employs 1.7 million people. Within the UK, the environmental goods and services market is likely to grow from £25 billion in 2005 to nearly double that by 2015. We believe that, taken together, the Government amendments will ensure that decisions on the appropriate balance between action at domestic, EU and international level are first, based on independent and expert advice from the Committee on Climate Change, secondly, transparent, thirdly, sufficiently flexible to take account of changes to the international context between now and 2050, and fourthly, guided by the need for UK domestic action on climate change.

The accusation is made or the implication is drawn that the United Kingdom Government want the policy to pay off our conscience—so we can pay someone else to reduce emissions. That is the proposition that is made; I will not use the word allegation. That allegation misses two fundamental points. [Interruption.] Sorry, I meant to say proposition. The hour is late, Mr. Cook and I, like you, am bored with my voice. The proposition misses two fundamental points. First, the United Kingdom’s CO2 emissions within our borders are 2 per cent., but the emissions from United Kingdom’s world economic activity are around 15 per cent. Our carbon footprint goes way beyond our shores. The mechanisms that we believe that we must have to address global emissions must take that point on board. The 15 per cent. carbon footprint is our goal, not just the 2 per cent. Of course the credibility of the clean development mechanism and the other mechanisms is crucial, but one should not confuse problems with the CDM with arguments against the need for offsetting.

Secondly, on the whole, developing countries in the G77 welcome and support this approach, because it provides them with a flow of finance in addition to overseas development aid that can help to ensure that their prosperity can grow through low-carbon technology. When one debates in the international forums on 30:70 or another figure, one hears a plea from the developing to the developed countries to allow maximum flexibility, so that the carbon markets can provide a flow of finance to develop economic prosperity in those countries. I ask colleagues to consider those two points when they make their decision.

The rest of the debate is in Hansard.