Debate on the Address

My Lords, I, too, join the noble Baroness, Lady Noakes, in congratulating the noble Lord, Lord Truscott, on his appointment and on his speech today, and in saying how much we are looking forward to the maiden speeches of the noble Lords, Lord Bilimoria and Lord Rowe-Beddoe. It is a depressing Queen’s Speech, particularly in proposing yet another raft of legislation on security measures when all the evidence suggests that implementation is lacking, not lack of legislative cover. It really is a holding statement until the new Prime Minister is in place. However, the Queen’s Speech includes a proposal for a ground-breaking Bill on climate change. Although I do not intend to discuss the contents of the Bill, I do wish to concentrate on climate change. I believe that it is appropriate to do so in a debate on economics and trade because of its fundamental threat to economic activity as we know it. As the Stern report concluded, climate change is the greatest long-term threat facing humanity. It could cause more human and financial suffering than the two world wars and the Great Depression put together. Therefore, at one level the Stern report is extremely gloomy reading. It demonstrates that we are on course for a degree of manmade global warming which is unprecedented in scale and potentially devastating in outcome. Business as usual could lead to a reduction in global GDP of between 5 per cent and 20 per cent per annum. Although the noble Lord, Lord Truscott, mentioned 5 per cent, Sir Nicholas Stern suggested that the 20 per cent figure might be nearer the mark. The costs would be unevenly spread, with the poorest nations, as usual, set to be the hardest hit. The report also demonstrates that the window of opportunity to reverse the rise in global emissions is narrowing and that to avoid catastrophic climate change carbon emissions must peak in the next 10 to 15 years. This is at a time when carbon emissions in much of the developed world are still increasing and those of the large developing countries, notably China and India, are racing ahead. Just to take one statistic out of many: the use of coal in China is set to double between 2000 and 2020. Against those pessimistic trends Stern demonstrates that if we take action now it should be possible to stabilise carbon dioxide concentrations in the atmosphere at a less than catastrophic level and at a manageable economic cost. He suggests that it could be the equivalent of 1 per cent of GDP. I shall assume that the analysis in the Stern report is broadly correct—both as to the science and the economics. I believe that to be the case. Despite the misgivings of some Members of your Lordships’ House—the noble Lord, Lord Lawson, springs to mind—I believe that there is a growing consensus domestically and internationally to this effect. If so, we face a moral and economic imperative to take action and to do it without delay. Is it, however, even vaguely conceivable that mankind is far sighted enough to take action now although the benefits will be seen mainly by our grandchildren and their children? In coming down on the side of the optimists, I have been greatly assisted by reading the book Collapse by Jared Diamond, in which he charts the histories of societies which have either succeeded or failed, depending largely on their ability to manage their natural resources in a sustainable way. The principal message of the book is that societies are capable of taking and implementing conscious decisions to change their way of life in order to protect their long-term future. He gives the example of the reforestation of Japan which started in the 17th century. Equally, if they behave in an unsustainable way, they can face total collapse. His examples include the Mayans, the Greenland Norse and the Easter Islanders. So we have a choice, and we have the chance to get it right. The Government seem to share my optimism, in that they have accepted the conclusions of the Stern report. The lack of any coherent strategy to date, however, suggests that a sea-change in approach will be needed if the UK is to take the lead in combating climate change, as the Chancellor has now said he wishes to do. I will not weary the House with a catalogue of the Government’s failure or perversity in their policies on mitigating and adapting to climate change, but, just to show how far they have still to go, I shall mention three. First, environmental taxes have fallen as a proportion of GDP from 3.6 per to 2.9 per cent. Now they are at their lowest level for 18 years. Secondly, the Government are currently facing EU infraction proceedings because of their failure to implement the Energy Performance of Buildings Directive, because of an interdepartmental dispute about what constitutes a public building. Thirdly, in the Thames Gateway over 90 per cent of the land targeted for development lies in the flood plain. It is therefore hardly surprising that the Government’s credibility in this area is pretty low. Let us be charitable, however, and assume that the Government mean it when they say they want to take a lead in this area. What should they do? They must obviously start by taking a lead at the international level, for it is widely accepted that international action is critical if we are to achieve a sustainable level of CO2 emissions. All major economies will have to curb their emission levels significantly. Because the greatest growth in emissions will be taking place in the developed world where resources are limited, financial and technological support will be needed to enable them to make the necessary changes. Stern sets out an intellectual framework for achieving that. It begins by setting out a target sustainable level of CO2 concentrations, and although his proposed level of 550 parts per million may be somewhat high for the purist, it seems to be a pragmatic compromise. He then suggests that a price be established for carbon, and a market in emissions established by the use of tradable permits. He also proposes mechanisms for developing low-carbon transport fuels for reforestation and other technology transfers from the developed to the developing world. There are of course formidable political and practical problems in getting such international mechanisms up and running. The attitudes of the US and Australian Governments have, until now, been major constraints. There are, however, encouraging signs of movement in both those countries. In the United States, California has taken a lead that has been matched by a number of other cities and states, and the White House looks increasingly isolated. Australia has an even bigger incentive to see effective international action, because global warming is set to have an even more devastating effect on the Australian economy, especially its agricultural sector, than on any of the other developed nations. That realisation now seems to be dawning as well. In the short term there are three areas where the UK can lead international action. The first is at EU level. Manuel Barroso claims that the Stern report has forced him to change his mind and accept for the first time the importance of climate change for the EU economy. We should therefore seize this moment to press forward at EU level, not least by tightening up the allocations under the existing EU emissions trading system, but also by expanding the system to include aviation. We have an economic interest in doing so. The City of London is home to the world’s most active trade and emissions exchange. It already has over twice the volume of its nearest competitor, and looks well set to press home that advantage. Secondly, we can take the lead in assisting developing countries to adopt more sustainable levels of energy use, and, indeed, to adopt more sustainable levels of energy generation for the world at large. Reports in today’s papers demonstrate how concentrated solar power, for example, has the theoretical potential to generate enough energy for the entire world’s needs from an area covering just 0.5 per cent of the world’s hot deserts. That is the kind of new technology we should be championing. Thirdly, Stern is particularly clear about the value of trees in the overall carbon balance, the benefits of avoiding further deforestation and the relatively low costs of doing so. The British timber industry is willing and eager to assist in international work in this area and the Government should support it in doing so. Domestically, the Government must accept that they cannot deal with the problem of climate change without the broadest possible support from the public and the business sector. They must therefore begin by making the case for taking decisive action on greenhouse gas emissions with passion and conviction. Frankly, if Ministers spent a small fraction of the time on this issue that they do on foreign adventures and macho posturing on anti-social behaviour, it would be time better spent. I have two simple suggestions to help to get the overall message across. First, the Government should produce an edited version of the Stern report. The full version is not terribly digestible for a general audience, but an edited version could be. Secondly, they should distribute copies of Al Gore’s film ““An Inconvenient Truth”” to all secondary schools and make sure that all pupils see it. Galvanising public support, not least from young people, is the best guarantee that the Government will actually have the courage to take the lead on climate change. The Government should then spell out that being a leader in this area need not harm the British economy. There are voices in the business community which are arguing that the UK should take action only as other industrialised countries do so. Some of their comments are childishly strident and should be vigorously rebutted. Stern himself convincingly argues that the competitiveness threat arising if some countries move quicker than others in mitigating greenhouse gases is, for most countries, not a macroeconomic one. Some industries will indeed face additional costs; others will have extraordinary growth opportunities. The easiest way for government to directly affect greenhouse gas emissions in the short term is to change the way in which the public sector itself operates. The sector accounts for 11 per cent of all greenhouse gas emissions in the UK, and government at national and local levels have been extraordinarily complacent about reducing this level. For a Government who set literally hundreds of targets for public sector bodies, it is extraordinary that the performance measures for publicly funded organisations do not include performance targets to reduce greenhouse gas emissions. That should change. It is not as though there is no good practice on which the public sector as a whole can build. Woking council has led the way with its climate change strategy, and that has led to reduction in energy use in its own buildings over the period 1991 to 2005 by more than 50 per cent. Every council in the country should be doing the same. The same general principle should apply to schools and hospitals. Although I accept that it may be difficult to improve the performance of many existing buildings, the Government should be setting higher standards in the current public sector building programme. The Comprehensive Spending Review also gives a major opportunity for the Government to embed reduced carbon emissions through expenditure policies at national, regional and local levels. They should influence the sub-national review of economic development and regeneration, because a number of regions have nascent sustainability strategies that need further active government encouragement. As I said, it is widely accepted that technological change must play a determining part in moving the globe to a carbon-neutral future. I believe that my noble friend Lord Vallance will have more to say on that later. But despite the recent creation of the Energy Technologies Institute, the Government are often too slow and inadequate in promoting technological change at home. It is, for example, widely acknowledged that cleaner coal technology has a major part to play because, even on the most optimistic scenarios, coal will continue to play a major role in energy production in the decades to come. For coal-fired power stations in the UK, the first step is to install super-critical boilers. One of the largest power stations in Yorkshire is prepared to invest £100 million in a carbon-capture-ready super-critical boiler and is looking for £30 million support from the DTI, yet there appears to be a delay because bids from the relevant budget have been delayed from this autumn to later next year. A new sense of urgency is needed. It is hardly surprising that in a recent poll of energy experts, more than 70 per cent believed that the Government’s energy review would have no impact on achieving the UK’s 2012 Kyoto targets. The Government can also affect behaviour by appropriate tax and regulatory change. On tax, these Benches have set out specific proposals for taxing higher polluting vehicles and for air transport, both passengers and freight. In Richmond, our council has put policy into practice by pricing car parking permits in line with vehicles’ levels of emissions. The Chancellor is suggesting that he might follow suit. We hope that he does. But we hope that when he does, he uses the revenues raised to ease the tax burdens of the poorest taxpayers rather than simply using the additional cash to reduce the budget deficit. On regulation, clearly a number of changes need to be made from tightening up the building regulations—frankly, how pathetic it is that in recent decades we have constructed buildings which are less energy efficient than those built by the Tudors—to better energy labelling of domestic appliances and simplifying planning rules for microgeneration. For the first time the Stern report brings together science and economics, sets a framework to help policy makers decide how much action to take and with what policy instruments, and quite simply helps people understand this most critical issue. The Government say that they want to carry forward Stern’s principal recommendations. For all our sakes, I hope that they do so. For the future of humanity, there is no time to lose.