Climate Change Bill [HL]

moved Amendment No. 72: 72: Clause 13, page 7, line 24, leave out ““1%”” and insert ““0.5%”” The noble Earl said: My Lords, you might be surprised that we bring this amendment back on Report, but we do so in the light of some of the changes that have been made to the Bill thus far and because we do not feel that all our questions about banking and borrowing have quite been answered. We understand some of the benefits of having a banking and borrowing system. We recognise that the provisions for overachievement are reflected in the Kyoto Protocol, and we appreciate that the United States’ acid rain programme, cited in the Stern review and by the Minister in Committee, has shown the advantages of such a system. We appreciate that banking can also help with the cost of mitigation. Further still, we appreciate the function of banking and borrowing mechanisms with regard to the price of carbon. We certainly would not want to see price hikes or sharp declines towards the end of the budget periods if there were some way of easing the transition to the next period. The Minister agreed in his response that the 1 per cent figure reflects the likely situation when an unexpected shock occurs towards the end of the budget period. He mentioned the, "““borrowing of emissions from the next budget, but only in strictly limited circumstances””," and the weather, population growth and the uncertainty of timing in delivering policies. However, he went on to say that, "““the current limit of 1 per cent in the Bill is not a number plucked from thin air. It reflects the likely situation when an unexpected shock towards the end of a budget period would otherwise lead to a risk of missing the budget””." In other words, he said that it provides, "““flexibility to smooth emissions across budget periods””.—[Official Report, 8/1/08; col. 826.]" Surely the whole point of the five-year period was to take into account the fact that unexpected shocks happen throughout the period and that we should be going into the last year with enough leeway to absorb that shock, should it come. This leads me to my next point, which is linked to Amendment No. 16 in the name of my noble friend Lord Taylor, which was moved on the first day of Report and dealt with annual rolling targets, and the government amendment on indicative annual ranges, which won the day. Does the Minister think that the new addition of indicative annual ranges relates to banking and borrowing? If the Government are happy to bank or borrow 1 per cent of the emissions for a budget period, could this be used as a sort of template for the indicative annual ranges? I expect the Minister to tell me that the two things are not as closely related as I might think, but I would like to press this issue further. The noble Lord, Lord Puttnam, argued that, "““the term ‘indicative annual range’ is a little broad. It would help enormously if that range could be narrowed to a point where people could have some confidence””.—[Official Report, 25/2/08; col. 495.]" However, the Minister did not want to put a definitive figure on how wide that range would need to be. But if 1 per cent is the right figure for the end of the five-year budgetary period—as the noble Lord said, it is not a number plucked from thin air—surely, 1 per cent might be appropriate for his indicative annual range. In a sense, the indicative annual range is operated in a manner similar to banking and borrowing; that is, if I understood it correctly, an appropriate amount by which we can fall short or go beyond a certain target would be specified. I understand that there is no precise target per se in the indicative annual ranges, but the maximum and minimum bounds operate in a manner similar to the 1 per cent above or below that can be carried over from one budget period to the next. Should the indicative annual targets have some relation to the banking and borrowing range? I beg to move.