Climate Change Bill [HL]

The noble Baroness made a point about the impact assessment. I have had a note to that effect. I will obviously do as much as I can to assist in the next stage anyway, so if issues arise I will do my best to answer them. But the impact assessment did not say that we would reduce UK emissions only by 40 per cent. It simply looked at the cost of preventing the use of international credits. As an illustration, it estimated that allowing some international trading could significantly reduce the costs of meeting the target. These were indicative estimates, not a statement of government policy. I am now bewildered because, for all practical purposes, the responses I have for Amendments Nos. 6 and 8 are the same. Contrary to what the noble Lord, Lord Teverson, has just said, the practical effect of the amendments would be so significant that it would remove our ability to count the purchase of carbon units, whether through the emissions trading system or Kyoto Protocol, towards the 2050 target. So it would mean vastly increasing the cost of meeting that target. The idea that we carry on as we are and stop trading in 2050 is not practical. I am prepared to have the lawyers look at this, but I am talking about the effect of the amendment. I know that we are in Committee and one wants to probe the issue, but it would kill trading stone dead. That is the issue, and it would not wait until 2050 to happen. It would increase the cost of meeting the target by removing the option to trade. As we have already announced, the Committee on Climate Change is going to review that target, so we would prevent the UK from using any international credits and make that target more costly, which would be a real problem. As I have said before, our objective is to meet the targets under the Bill through both the action to reduce the UK emissions and supporting other countries in reducing theirs. We want that commitment of international supplementarity to be a reality. This is not a get out. I know that it has been said before, but it is worth making the point: environmentally, it does not matter where on the planet the reductions take place, so long as they are proper reductions—that goes without saying. International reductions must be quite legitimate. It does not matter where they are, because a tonne of CO2 emitted anywhere is still going to be damaging. Emissions trading will work by allowing emissions to be reduced in the most cost-effective way. As I have said, our analysis of the costs of meeting the 2050 target concluded that emissions trading would allow us to meet our targets, and with the same environmental benefit, for £5 billion—not £3 billion—less than otherwise. The analysis published by the European Commission on meeting Kyoto targets confirmed this, finding that the costs could be reduced by a third through emissions trading. Done properly, emissions trading is of course an important source of income for developing countries. That is internationally accepted and I have other figures that support that case. If the idea is to stop anything that does not work in the UK—and that rules out the European Union as well—then we must clearly say so in the amendment. If it is thought morally wrong to go trading, then it must be dealt with in another way altogether rather than making a case, as the noble Baroness did, of which the practical consequences are to rule out emissions trading full stop. That effect would not wait until 2050; that is my point and the advice I have got. It may be looked at again in later stages of the Bill, but that is the practical consequence of the amendment, or anything similar to it, being carried.