First, I thank all noble Lords for their extremely valuable contributions to this debate.
This year, we in the UK find ourselves in the privileged position of being the president of the G7 and the host of COP 26. We are determined to use these key international moments, as noble Lords saw at the G7 earlier this week, to promote ambitious action to deliver the transformational change required by the Paris Agreement. In line with this, it is imperative that we continue to be bold and ambitious in not only our commitments but our actions, as the noble Lord, Lord Oates, pointed out, to deliver progress against climate change.
To reiterate what I said earlier, our position remains that the Government intend to meet all our targets through domestic abatement. International credits merely afford us a potential flexibility to ensure a cost-effective approach to reducing carbon emissions when managing uncertainty in historic and future emissions.
As usual, we have had a very interesting debate. I will pick up on some of the points raised. We acknowledge the progress pointed to by the noble Lord, Lord Bradshaw, and other noble Lords, including my noble friend Lord Bourne, and the success we have had so far in decarbonising the UK economy to date. Many developing countries plan to sell credits in future, but my noble friend is absolutely right that these must be of the very highest quality. We are using our international climate finance to ensure that developing countries have the capacity to meet this bar and access finance through the carbon market.
On the action that the Government are taking to decarbonise transport, which my noble friend Lord Bourne also asked about, we recently announced that the UK is embarking on a comprehensive transport decarbonisation plan. This will be a bold, ambitious programme of the co-ordinated action needed to end the UK’s transport greenhouse gas emissions by 2030 and, at the same time, ensure that the transport sector plays its part in delivering our legally binding carbon budgets. The plan will think in terms of not only modes of transport but technology and places. Part 1 of the plan was published in March 2020, with part 2, containing policies and proposals, expected to be published shortly.
We will also commit to communicating our public engagement approach to our net-zero strategy to generate widespread awareness, and, hopefully, acceptance, across the UK, because achieving the net-zero target will be a shared endeavour requiring action from everyone in society—people, businesses and government. Therefore, we are increasing our work on public engagement on net zero, both in communicating the challenge and in giving people a say on shaping future policies.
I have addressed a number of my noble friend Lord Bourne’s questions, but I am sorry to tell him that he missed the debate on the most recent carbon budget. It was debated in this House last week; the noble Lords, Lord Oates and Lord Grantchester, were present, with a couple of other Peers. It still has to go to the House of Commons, but I am afraid that my noble friend has missed his opportunity to contribute to that one.
On Northern Ireland and the emissions trading scheme, Northern Ireland power plants have remained in the ETS under the Northern Ireland protocol, but all other emissions in Northern Ireland remain under the UK Government’s coverage.
The noble Baroness, Lady Jones, asked why we chose not to set a credit limit at zero tonnes, as was recommended by the Climate Change Committee. I can tell her that the Government intend to meet our net-zero target and our interim carbon budgets through cutting our domestic carbon emissions. As I said earlier, we are simply choosing to maintain the limited tools that we already have under the Climate Change Act to ensure that we can deliver on our carbon targets at the lowest possible cost, including the option of using international credits. Our internal analysis reaffirmed that this level is suitable to account for any potential uncertainties.
The noble Lord, Lord Oates, implied that we could have sought to deliver a lower level for the credit limit order. Again, I remind him that our analysis indicates that any lower level might not provide sufficient flexibility to manage the uncertainty associated with the inventory using only credits.
The noble Lords, Lord Oates and Lord Grantchester, asked whether the Government are on track to meet carbon budgets 4 and 5. We are taking decisive action to ensure that we deliver on both. Ahead of COP 26, we will set out our ambitious plans across key sectors of the economy, such as the energy White Paper and the industrial decarbonisation strategy. These will build on the strong recent progress that we set out in the 10-point plan and will culminate with the net-zero strategy later in the year.
The noble Lord, Lord Grantchester, asked about future carbon budgets. I remind him that this current legislation only concerns carbon budget 4, of course. We will consider the limit for carbon budgets 5 and 6 at the appropriate times in the future, using analysis that is relevant to the context at the time.
The noble Lord also raised the use of other flexibilities in the Climate Change Act 2008. In response, I want to make it clear that we have no intention of using any other flexibilities afforded to us through the Act and we intend to meet our ambitious targets purely through domestic action.
I conclude by saying that, as I mentioned in my opening speech, this statutory instrument effectively continues the status quo, setting the same credit limit that we have held but not used for carbon budgets 1 to 3. This status quo has allowed the Government to deliver world-leading emissions reductions and encourage similar ambition in other countries across the world. I therefore commend this draft order to the Committee.