My Lords, I beg to move that this order, which was laid before the House on 13 May 2021, be approved.
The question of how we act on climate change is perhaps one of the most pressing issues of our time. Climate change is here—this Government absolutely accept that and are determined that the UK play its part in upholding the Paris Agreement and driving down our own greenhouse gas emissions. This Government are committed to decarbonising the UK economy while of course, at the same time, driving economic growth, and to meeting our ambitious targets for net zero emissions by 2050. We were the first major economy in the world to set a legally binding target to reach net zero carbon emissions across our economy by 2050, and we have shown that rapid progress on decarbonisation is possible alongside a thriving economy. Our emissions are down by almost 44% across the last 30 years and our economy has grown by 78% during the same period. We are currently in the process of reaching a significant milestone in approving legislation to enshrine the UK’s sixth carbon budget in law, proposing a target that would reduce greenhouse gas emissions by 78% by 2035, compared to 1990 levels. This is a huge commitment and one which the Government are working flat out to achieve.
Turning to the topic of today’s debate, under the Climate Change Act 2008 the Government must set a limit on the number of international carbon units that can be credited to the net UK carbon account for each budgetary period. These carbon credits represent the reduction or removal of greenhouse gas emissions overseas. The legislation we are debating today sets a limit on the net number of international carbon credits that may be used to meet the fourth carbon budget, which runs from 2023 to 2027. The Climate Change Act, passed with near unanimous support in this House, allows for the flexibility of using carbon credits to meet a carbon budget. The order will set the credit limit for the fourth carbon budget at 55 million tonnes of carbon dioxide equivalent, which is about 2.8% of the total carbon budget. This is the same amount of flexibility as the House agreed for the second and third carbon budget credit limit orders. However, I highlight that this legislation does not commit the UK Government to buying international credits: as we have witnessed with previous carbon budgets, the Government have a strong track record of delivering clean growth and have not used any of our allowances on other budgets to date.
We continue to put forward ambitious plans to meet future carbon budgets, including through our bold sector strategies, and are committed to meeting our world-leading targets through domestic action. Noble Lords should be aware that the credit limit set through this legislation excludes any net use of credits that result from the operation of the European Union Emissions Trading Scheme. The exclusion is required because, while the UK Emissions Trading Scheme replaced the UK’s participation in the EU ETS on 1 January 2021, Northern Ireland electricity generators continue to participate in the EU ETS and will therefore receive EU ETS allowances within the fourth budgetary period.
The role of the Climate Change Committee in providing independent expert advice to government on climate change mitigation and adaptation is widely accepted as global best practice. The Government’s net zero target covers the whole of the UK, and all four parts of the union have an integral role to play in delivering the Government’s carbon budgets leading up to 2050. As such, we of course also work closely with our partners in the devolved Administrations in order to achieve our climate goals.
In determining the appropriate credit limit for the fourth carbon budget, which is the subject of the present discussion, the Government have considered the advice of the Climate Change Committee and the views of the devolved Administrations. All parties agree that the purchase of international credits should not replace domestic abatement when delivering our net zero target. While the Climate Change Committee and the devolved Administrations recommended a zero-credit limit, the Government have concluded that it is best to maintain a small amount of flexibility over the fourth carbon budget period.
As a Government, we have undertaken our own robust analysis to validate our position and have considered the range of factors required by the Act, including the economic, fiscal, social, scientific and international circumstances. We judge that this flexibility
will continue to ensure that the Government can best deliver our carbon targets more effectively and be resilient to unexpected changes in future emissions.
We are extremely grateful to our independent advisers for their expert analysis and advice, and to the devolved Administrations for their valuable ongoing engagement. We look forward to working closely on the fundamental decisions that we will need to take over the coming years in order to drive forward this progress.
The Government recognise the significant advantages that the net zero transition can bring, in addition to the essential benefits of ending our contribution to global warming. Now is the time to double down and decrease our emissions further and faster. Ahead of COP 26, we will bring forward further bold proposals, including our net zero strategy, to cut emissions and create new jobs and industries across the whole country, going further and faster towards building a stronger, more resilient future and protecting our planet for this generation and those to come.
As for the legislation for debate today, the Government’s sustained drive ensures that we are on track for the fourth carbon budget. However, as we have outlined, in our view it is still prudent to allow ourselves a small amount of flexibility in the future in order to manage the uncertainty in emissions projections and to continue to deliver emissions reductions in the most prudent and fair manner for the whole of the UK. I therefore commend this order to the House.
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