Climate Change Bill [HL]

My Lords, I do not mean to suggest that in moving his amendments, the noble Lord is seeking to undermine the integrity of the EU ETS. Our fear is that that might be an unintended consequence—I put it that way—or certainly in relation to how it might be seen internationally. We are worried about the impact in terms of UK support for the EU ETS. We might disagree, but I would not want to suggest that the noble Lord himself in his amendments is seeking to undermine the EU ETS, and indeed I have taken on board his comments about ways in which the scheme should be regulated more rigorously. I hope that I have clarified the issue up to a point. We do not want to penalise companies which decide that it is more cost-effective to generate energy in the UK than in other EU countries, resulting in UK emissions going up, but EU-wide emissions coming down. I want also to address a very important point made by noble Lords. The use of uncapped credits by the EU ETS needs to be carefully controlled. We are in the middle of negotiations on phase 3, but my understanding is that the Commission is proposing that there should be no new access to the clean development mechanism credits in this phase. Although we do not want to legislate in an area that we fear might be seen to undermine our support for the EU ETS, we recognise that additional measures are needed in the traded sector. I understand the points made by noble Lords about the probity, if you like, of the trading scheme. The noble Lord, Lord Taylor, asked how EU ETS credits will be accounted for after 2012, and reflected that we have already acknowledged that the accounting process will become more complex in phase 3; that is, post-2012. The way to consider how best to link the Bill to phase 3 is once the EU negotiations have concluded, but it is a matter to which we will need to pay close attention. Having expressed his support for the noble Lord, Lord Teverson, the noble Lord, Lord Lawson, has not stayed to develop the theme he introduced in his speech at the beginning of our debate. However, it is clear that we need to do all we can to ensure the integrity of the credits used. We want to do all we can to ensure that the process is transparent and robust. To that end, we will need to keep on monitoring and working internationally to ensure that that is so. In answer to the noble Lord, Lord Taylor, on what the carbon units will be, in the consultation we are currently undertaking on carbon accounting regulations, it states: "““We propose to count the following as carbon units: assigned amount units, certified emission reductions for the clean development mechanism, removal units, emission reduction units and the European unit allowances for the EU ETS””." I am happy to provide further information on this if the noble Lord requires it. We then come to the substance of the debate. The noble Lord, Lord Teverson, tempted me down to the pub to witness two thinnish men observing two fat men drinking. He thought that it simply is not acceptable that even though the fat of the nation had reduced by the relevant amount, one of the fat chaps had said he was going to reduce his weight, but in the end did not do so. The noble Lord found that to be a problem. He knew that my response would be that collectively it is all right because the overall fat of the nation was coming down, and he knows that I will answer by saying that ultimately what counts is reducing emissions generally worldwide. We believe that through the enactment of this Bill and through the hugely challenging 80 per cent target, we are demonstrating the kind of leadership that both he and my noble friend Lord Puttnam require. It is also fair to point out, and it has been acknowledged, that the last thing the Government want to do is say, ““It’ll be all right because we can simply trade away the issues we need to tackle in this country””. I think that the Government have clearly signalled that they have done and will continue to do all they can to reduce emissions in this country. The amendments I have tabled articulate that aim and make it clear that the Committee on Climate Change will ensure that these matters are brought to the attention of the public and Parliament. However, in the end we worry about the impact of the amendments tabled by noble Lords on the EU ETS, and that is why we think, after a great deal of consideration and debate in the other place, along with the amendments being brought forward, that we have achieved the right balance that allows the necessary flexibility within the context of an utter determination for us overall to meet the 80 per cent target. On Question, Motion agreed to