My Lords, I support Amendments 66, 108, 112, 113 and 317, but noble Lords will be glad to hear that I will not speak to them. However, I would like to speak to Amendment 186 in the name of the noble Lord, Lord Adonis, to which I have added my name. This amendment is something of a change of subject as it is about the EU Emissions Trading Scheme and seeks to keep the UK in the EU ETS. The clean growth strategy says that the Government are considering the UK’s future participation in the EU ETS post Brexit. It would certainly appear possible to stay in the EU ETS. Iceland, Liechtenstein and Norway participate in it. For a range of reasons it certainly appears to be a good idea.
On Friday, the Prime Minister told us that she wants to secure,
“broad energy co-operation with the EU”,
and to protect the single energy market on the island of Ireland and the UK’s participation in the EU internal energy market. This will be easier if we are in the EU ETS. The clean growth plan anticipates increases in electricity imports from Europe via interconnectors. This will be easier and fairer on UK generators if we are in the EU ETS.
The global direction of travel is one of growth in global carbon markets. The larger they are, the more efficient at delivering decarbonisation at least cost. The EU ETS and the Chinese market are the two biggest global markets, so I suggest that we might want to stay in the EU ETS. If the UK continues to
make good progress in reducing emissions compared with our European neighbours, which I sincerely hope it will, we will have credits to sell in the EU ETS as the carbon price rises, bringing income to the Exchequer. That is another good reason to stay in the EU ETS. The accounting for our current carbon budgets is based on the fact that we are members of the EU ETS, so to retain the same level of ambition in emissions reduction, we would need to reset the levels of the fourth and fifth carbon budgets in legislation. It is not a huge challenge to redo the accounting but I think it would just make it slightly easier if we stayed in the EU ETS. I would like to ask the Minister to tell us more about the Government’s intentions. Should we not stay in the EU ETS?
5.45 pm