Climate Change Bill [HL]

My Lords, in order to understand the implications of the amendment and others in relation to carbon budgets, we need to remind ourselves what we mean by the ““net UK carbon account”” because that is another phrase meaning the budgets. The noble Lord, Lord Teverson, in a couple of interesting papers that he has not referred to—I am sure that he will—makes a useful point, although I am not entirely in agreement with the rest of his analysis, which is that sectors within the EU Emissions Trading Scheme cannot possibly exceed their net carbon account, because that is the allocation given to sectors that can make up for that allocation by buying credits or, if they exceed targets, by selling credits. So the net carbon account for sectors in the UK that trade in the European trading scheme have a net carbon account that is set in discussions with the European Commission and the European trading scheme. Therefore, when we are considering whether there is a shortfall or an excess of a net carbon account, we are talking about sectors that do not come under the EU Emissions Trading Scheme; we are not talking about all sectors. My noble friend may correct me on that, either now or later, but it is an important matter. Noble Lords may think that this might apply to the energy production industry—electricity, gas, nuclear or whatever—but by definition it cannot, nor will aviation, once it is included in the EU Emissions Trading Scheme. The net carbon account figure cannot be exceeded because it is simply the amount emitted minus or plus the amount of credits borrowed. It is important that noble Lords recognise that they are not talking about the whole economy, but certain selected sectors—for example, I imagine, the automobile industry and emissions from vehicles or emissions from households. We are talking about a particular part of the economy. When noble Lords talk about remedial action, we are talking not about the whole economy but about the sectors that do not fall within the EU Emissions Trading Scheme. If, as I hope—I am sure other noble Lords do too—over the next 50 years the EU ETS is expanded and other countries agree to join, the net carbon account will become less and less, if the UK Government do something about it once they have negotiated agreed targets. The implication is that over time it would diminish as trading schemes expanded.