Climate Change Bill [HL]

My Lords, I begin by declaring an interest as an adviser to Climate Change Capital, which is a business active in renewable energy and carbon emissions trading. Like most other noble Lords who have spoken in the debate, I strongly support the principle of the Bill, and it is important to be clear that this is a major step forward. We should recognise that, whatever our debates may be about the precise details and whatever amendments may be brought forward either here or in another place. The genesis of the Bill lies with the report of the Royal Commission in 2000 which suggested for the first time that the UK would have to cut emissions by something like 60 per cent by 2050 to play our role in limiting atmospheric concentrations to a level compatible with a temperature increase of only 2 degrees centigrade. Since that report, new evidence, both scientific and economic, has reinforced that conclusion and raised the question of whether we need to go further and faster. On the scientific side, the evidence for climate change resulting from man-made emissions of greenhouse gases has relentlessly increased and the credibility of any alternative theories has diminished. But while the probability that climate change is occurring and is man-made has become even closer to a certainty, scientific progress has not enabled the IPCC to be more precise about future possible temperature increase. Indeed, the IPCC fourth assessment widened the range of possible temperature increases compared with the third assessment. That reflects increasing scientific understanding of how complex the climate is and how difficult it is therefore to forecast with any precision. Sceptics attack the IPCC for glossing over uncertainties in the science and thereby exaggerating the dangers. One wonders whether such sceptics have ever read a full IPCC detailed report, because on doing so the danger seems rather the reverse. The scrupulous methodology of the IPCC and its unwillingness to include findings which are not yet peer reviewed and for which there is not yet a significant academic consensus, may at times lead it to underplay the possibility of some of the more extreme self-reinforcing events to which my noble friend Lord Turnbull referred. But as important as changes on the scientific side have been, changes in the economy and industry, and in particular the fact that China and India have, over the first seven years of this century, grown far more rapidly than the Royal Commission or anyone foresaw back in 2000. Almost no one in 2000 was predicting that China would grow at a growth rate of 10 per cent per annum for a decade; almost no one was predicting that the Indian growth rate would accelerate to 8 or 9 per cent. Indeed, even in 2005, in the report presented by this House’s Select Committee on Economic Affairs on the economics of climate change, there was hardly a mention of China and India. Instead the report was still questioning whether the emissions scenarios assumed in the IPCC’s third report might be too high. We now know almost for certain that precisely the reverse is the case. Global economic growth is running more rapidly than stated in the original emission scenarios. At least over the past few years, that growth has been more energy-intensive than was predicted because of the take-off of Chinese heavy industry. Energy production has become on average more carbon-intensive than predicted because of the resurgence of the use of coal within the energy mix, in China in particular. As a result, emissions since 2001 have increased more rapidly than in any of the IPCC’s six scenarios, and concentrations of CO2 in the atmosphere are rising more rapidly than was then assumed. All of this, sadly, raises the question of whether it is still possible to limit temperature increase to only two degrees centigrade. This reinforces the need for action now. That need has been reflected in a rising tide of concern across the world and a regular flow of high-level commitments, including quantitative commitments such as California’s aspiration to an 80 per cent cut by 2050 and the EU’s commitment of 20 per cent unilaterally by 2020 and 30 per cent if other countries also commit. But the blunt fact is that, in the words used by the International Energy Agency in its 2007 World Energy Outlook, there has until now been ““more talk than action””. The IEA notes that, "““the number and strength of policies under consideration continues to grow faster than the number and strength of policies actually adopted””." Allowing for the policies which have been adopted—the cap and trade systems in place, taxes imposed, energy efficiency regulations passed into law—the IEA’s reference scenario suggests that global emissions will rise by 57 per cent between now and 2030. This will leave us on a path more likely to lead to a 5 or 6 degree centigrade temperature increase than to a 2 degree centigrade increase. While allowing for the policies under consideration, and even assuming that the talk is translated into action, its alternative scenario still has emissions at 27 per cent higher in 2030 than today, with a best guess of a 3 degree centigrade rise against pre-industrial levels. Globally, despite the talk, limited action has resulted so far. In the UK, while we are on target to hit our Kyoto commitment as a result of the shift to gas in electricity generation in the 1990s and considerable success on the non-CO2 greenhouse gases, progress has slowed or, indeed, reversed over the past few years. Against that background, it might be possible to see the Bill as yet more talk rather than action. I believe that would be a great mistake. The Bill will create a strong discipline on government to take the necessary action. By establishing clear carbon budgets and an independent committee to advise on those budgets and to report on whether they are being met, the Bill will put pressure on government to propose and implement the measures necessary to stay within budget. It will provide a strong message to business that the effective price penalty of emitting carbon will inevitably increase over time. Of course there are details of objective which will need to be debated and details of operation which will need to be got right. Given the new scientific evidence and the economic trends, there is an issue of whether the target should be higher than 60 per cent—perhaps 80 per cent—and that issue was clearly put on the table by the Prime Minister last Monday. The extent to which the UK meets its targets by cutting emissions itself versus buying carbon credits from overseas is crucial. The theoretical case for international carbon trading to achieve lowest-cost emission reductions is a very strong, good case—but it is only a good case if we are confident that emission reductions truly are additional and permanent. At the moment, there are considerable doubts on that issue and it cannot be an alternative to putting the UK on a clear path towards a low-carbon economy. Finally, within each budget period, government will need to ensure steady annual progress towards the budget target, rather than leaving action until too late and then borrowing from the next budget period. It is important for us to debate how we are going to ensure that that occurs, and how the committee in its annual report will assess government progress in that regard. There are important issues and concerns, but those concerns should not lead us to undervalue the Bill’s overall thrust. It will be the first Bill in the world that commits a national Government to specific legally entrenched targets and to creating an independent committee to tell the Government, if necessary, that they are off target. This debate raises questions of what legal targets mean in the absence of a clear set of defined sanctions, but the political reality is that, whatever the legal position, this will create a strong political pressure on the Government to deliver. It will be much more difficult for them to avoid their responsibility to bring forward and implement the measures required to meet the budgets. The Bill creates an external discipline on the Government and at times that will be uncomfortable for them, but it makes it more likely that we will stick to the required path. I therefore think that we should strongly welcome the Bill.