Climate Change Bill [HL]

moved Amendment No. 11: 11: Schedule 2, page 55, line 24, at end insert— ““(c) may identify the activities by reference to the objectives to be achieved by them”” The noble Duke said: My Lords, I shall speak also to Amendments Nos. 12 to 14 in this group. Having read carefully the Minister’s reply to my amendments on the final day of Report stage, I am left with the impression that those who were advising him were unable to shake off their predilection for the top-down approach where the Government define the area of the economy to which each scheme applies. As such, several of the answers appeared to be a bit wide of the mark. As we have just heard, we are back to the question that runs through all our minds. Just how urgent is the saving of carbon emissions to our future? Opinions vary from those who propose the Gaia theory, where the problem is so serious that it is too late for us to do anything about it, to those who think that the current ideas are all far too theoretical and are influenced by forces so far beyond our control that what we are doing is a waste of time. My impression is that the Government find themselves in a dilemma because they would like to appear to be green by taking action but realise that an over-reaction might put the British economy at a disadvantage. So their enthusiasm has to be tempered. As the Minister pointed out during the previous discussion on this subject, the nearest approach that the Government have made to what my amendments seek to achieve was the first UK Emissions Trading Scheme. It was certainly admirable in its way and it exceeded its targets by some considerable amount, but again it was taken up by only 32 fairly large businesses. As the Minister will be aware this scheme has now closed for new entrants and continues only for those for whom it has a little longer to run. Part 2 of Schedule 2 would allow the Government to bring forward a similar scheme, but that is unlikely as they will be concentrating on their auctioning of allowances, in a scheme such as the carbon reduction commitment, to targeted industries rather than seeking to provide another £215 million or whatever to subsidise a new scheme. If we are anxious to pursue every meaningful opportunity to save carbon emissions and take account of the urgency that most of us feel, I am left rather quizzical about the Government’s rejection of the mechanisms required to participate in the whole project-based mechanisms offered under joint implementation. At Report stage I asked the Minister if he could explain the Government’s reasoning. If the Minister is unable to do that now, I would be most grateful to receive an explanation in writing. This group of amendments would allow the climate change committee or the Government to consider an opt-in scheme for project-based enterprises within the UK. It would dovetail in with the tradable allowance concept in much the same way as the project-based schemes that are approved under joint implementation can dovetail in with the national allowances and credits generated under CDM for those who are meeting their Kyoto targets. Amendment No. 11 proposes that meaningful enterprises from any sector of the economy can put forward schemes that provide the necessary savings defined by the objectives to be achieved. At the earlier stage, the Minister expressed some concern that my amendments would leave out the obligation for a consultation process as required by Clause 40. In a project-based mechanism, the Government will not be laying down enterprises to which they want a scheme to apply, so the need for that obligation would be at the most formal, or even unnecessary. There would be plenty of opportunity for the Government to determine whether applicants are aware of the requirements placed on them once the application has been received. In response to my amendment regarding carbon credits at that earlier stage, the Minister said that paragraph 17 would provide for the issue of credits. But my understanding is that the Government’s approach to the issuing of credits is that it will be totally their decision. My Amendment No. 12 highlights the possibility that projects first proposed and then approved can generate a right to certificates which would be issued as part of a UK trading scheme. Amendment No. 12 recognises the fact that the definition of credits is contained only in Part 1 of Schedule 2, as it is important that this ability is seen to apply equally to schemes encouraging activities. One of the objections the Minister was trying to flag up about those earlier amendments was that the existing paragraphs in the Bill, "““will enable suitable safeguards to be put in place to ensure that participants and activities are controlled appropriately””.—[Official Report, 18/3/08; col. 158.]" But this is a hint of all the uncertainties that the top-down approach contains—such as what should be the level of allowances foreseen for each enterprise? What level of reductions in emissions can be envisaged without making areas of British industry uncompetitive in the global economy? I understand that the renewables obligation is taken to be adding about 15 per cent to our energy prices. At what level should the price of the allowances issued be set before the market has stabilised? Does the Minister accept that the project-based approach contains its own regulator? If the price of carbon in the main scheme of allowances starts to become too dear, more enterprises will be attracted into the scheme and will help to contain the price. But if the price of carbon begins to be too cheap, no proposals will come forward to aggravate the position and so will considerably reduce an existing area of uncertainty. In the present proposals, anything of this nature could require government intervention. Amendments Nos. 13 and 14 would give the limited element of official control to the scheme that would be necessary. I beg to move.