Debate on the Address

My Lords, I should like to take this opportunity to talk particularly about the issue of climate change. In the late 1970s I had the privilege of being a corporate economist for a very large freight company that used an awful lot of diesel and oil. I was paid at that time—it was an excellent job—to be a futurologist: to think about what would happen in the future and how as an organisation we should adapt to it. There was a great debate at that time about how long our energy resources would last. I presented to the main board of the company a very erudite paper that I wrote predicting that, without fail or hesitation, oil would probably run out within 15 years. I made that prediction in the late 1970s, and I was wrong. One of the nice things about being an economist is that people usually do not look back at your previous predictions but pay attention to your present ones. Although many other economists and I were wrong in that prediction, does that mean that we should take no notice of such signals? I agree that we have to show some humility. However, if we had taken greater notice of the signals then and, rather than taking advantage of cheap oil, started to take action, we would not be facing the very large gap in our energy needs over the next 10 years that has been clearly identified in the Government’s recent energy White Paper, nor would the whole of Europe be facing an energy security crisis. For those reasons, I very much welcome the fact that we have a Climate Change Bill, although, if I am honest about it, I am rather cautious about that legislation. Why? Because there is always a risk that legislation is somehow a substitute for real action; maybe I will come on to that later. There is also the record that we have at the moment. We already have, bravely, put in past Labour manifestos carbon targets for the future, but over the past three years we have had an increase in carbon emissions in the UK economy. In terms of environmental and carbon taxation, we have taxation from an environmental side becoming a smaller proportion of the tax take, not a larger one. In those ways, we have already been moving in the wrong direction. I am also cautious about the likely contents of the Bill. It is difficult to understand completely what they are, but as I understand it, the Bill will include targets, an independent commission, enabling future legislation and better monitoring arrangements. That gives us aspirations in terms of those targets and in terms of future legislation. It also gives us assessment, in a carbon commission, and better monitoring of those emissions. However, it does not give us action. I do not see where the action is in the potential Bill. In fact, that action is fairly straightforward to consider one way or the other. There are only a relatively limited number of things in the environmental—global warming, climate change—toolkit. We can change things by regulation, which, for instance, would be technical specifications on appliances or on domestic homes. Or we could deregulate planning permission, which noble Lords have already mentioned. That would mean farmers being able to put up wind generators or our having domestic wind generators with less interference from planning than we have at the moment. There is that area. There is the potential area in the toolkit of research, whether on carbon capture or biofuels or, much further into the future, hydrogen cells. We can put forward budgets and make sure that that research is happening. One of the key areas for action has to be carbon pricing. We have two main ways in which that can be done: through emission trading systems—the European one has started and is moving into its second phase—or through carbon and environmental taxation. There is also another way, which is adaptation. If we get this all wrong, we start building sea walls and try to keep out the problem that we have already caused ourselves. It is salutary to remember from the Stern report and from other reports that, even if all emissions stop now, we would still have that rise in temperature for at least another 50 years. Carbon does not go away for as long as two centuries—those are the lags and the leads that we are talking about in this area. I say to the Government that it is excellent to have this legislation to enable change, but the real test will not be this Bill but the Finance Bill and Budgets in which we have to grasp the nettle of taking carbon and environmental taxation forward. The way that this will all really work, and move away from just good intentions for households and for industry, is by making real signals in pricing and markets that would change behaviour. That is the challenge. As my noble friend Lord Redesdale said, at the moment there is a large degree of public goodwill towards this process. However, opinion surveys have shown—and we would understand this—that the public out there are extremely sceptical. Why are they sceptical? They see potential future environmental taxation as an excuse to raise the total take of taxation rather than as something that is done for environmental reasons. We need a strong undertaking that environmental taxation will be fiscally neutral. It is only through such an undertaking, which the Government have not given, that we will keep the goodwill of the citizens and of the public to make sure that this type of taxation is allowed, can pass, and is welcomed by the electorate. We have heard already that the United Kingdom emits some 2 per cent of carbon emissions globally. The United States is at 23 per cent. We think of China as being a smaller economy than ours, but that is no longer the case. We are now the fifth largest economy in the world. China already has some 15 per cent of emissions in comparison with our 2 per cent. That shows the strength of the Chinese economy and its effect on the issues that we are talking about today. We need not be negative about that. The European Union as a whole, of which we are a key and leading member, accounts for some 13 per cent of emissions. Clearly—I am sure that the Government entirely agree with this—we have to make sure that, whatever we deliver here in the United Kingdom, we take our colleagues and fellow member states in the European Union along with us. Following the hectoring and the evangelism, particularly of our Chancellor of the Exchequer, on how Europe should manage its own economies over the years, we ran out of a certain amount of goodwill—we told our European neighbours and the rest of the member states that we were ahead and that they should follow where we go. Clearly, that is important here, but we have to do it in the right way. Last year, perhaps, we had an example or simulation of what the future might be like. Towards the end of the summer, a Government had been told very strongly that a disaster was coming, that defences needed to be made, and that things had to change. It was a call for adaptation to do with the city of New Orleans. Like all Governments, they did not want to have that expenditure and they did not want to listen to the warnings, so nothing was done. The result of that, as we know, was the inundation of a major city in North America. The cost of that inundation will be something like $35 billion by the time it is put right. We had the example of a population of about 500,000 made homeless, and the greatest state that there has ever been was completely unable to cope with the outcomes of that storm and that damage. In 15 or 25 years’ time, it will no longer be New Orleans, and it probably will not be us. It probably will be a third of Bangladesh. Instead of half a million people, something like 50 million people will be affected if we are unable to make the right decisions today. I welcome this Bill. I may have been completely inaccurate in forecasting energy and oil resources for the future, but we must take action now. If we are a leader here, we do not need to be afraid of that, because we will generate businesses that are environmental leaders globally. We will secure our energy for the future. All those positives will come. At the end of the day, even if we question or are not 100 per cent certain on the climate change science, which is still new, we knew in the 1970s that in oil we were using a finite source unsustainably. We know now that we are polluting our atmosphere at a rate of several billion tonnes of carbon per annum. That cannot be right; and it cannot be right for the future, for us, or for this planet.