Climate Change Bill [HL]

My Lords, I should declare an interest in that I advise HSBC and the IDEAglobal Group on emissions reductions and carbon markets. I should also apologise to the House because I have not been able to intervene on this subject before. It is difficult to find moments when one can give a maiden speech. My noble friend Lady Afshar and I found such a moment about three weeks ago with a debate on inequality, on an interesting Motion tabled by the noble and right reverend Lord, Lord Harries, but it was promptly bumped by the Northern Rock legislation and we were part of the collateral damage. I see the role of all the arrangements we are discussing as a crucial part of a global deal. We have to ask about our relationships with other countries and how we will promote a decent global deal as a result of our own actions. In that context, I fully respect the motivation for this amendment. We have to show that strong low-carbon growth is possible. Without that demonstration, we and other rich countries will not bring India, China, Indonesia, Brazil and other countries with us, and you can understand why we would not. I have been very involved in policy discussions in a number of countries, particularly in India, and my friends in India tell me, ““Look, Nick, just as soon as that carbon capture and storage for coal plant is working on a commercial scale in the UK, you’ve got my cell phone number—give me a call. I’ll come over and have a look and we can discuss its role in India””. We have to demonstrate, clearly and here, what is possible. We also have to recognise that there are very powerful arguments on trading—not only on lowering cost, although that is important, but on creating a flow of carbon finance and greenhouse gas finance that can help other countries in making their own roads towards a low-carbon economy, and I think here particularly of India, Indonesia, Brazil, China and so on. It is not simply a cost-cutting mechanism; it is also a crucial element—a crucial bit of the glue, if you will—in a global deal. Carbon trading has a very powerful role not only through cost but in that much broader and deeper context of putting a global deal together. As we think about trading, the verification and regulation side of carbon markets is—just as in financial markets more generally—crucial. We have to think hard about how to improve that. My concern is that the amendment as expressed is, for the reasons which my noble friend Lord Turner described, likely to constrain ambition, when ambition is of the essence here. As he argued, it could result in the setting of overall targets that are too low. In the context of a global deal and the negotiations towards the end of a global deal, it could constrain us in upping the kind of percentage reduction we are looking for because we would understand that a particular reduction domestically would be just too difficult for to us make over the next five or 10 years. So we might not be able to go, say, to 40 per cent reductions by 2020 in the negotiation, aware of the constraint that this percentage would put on us and the amount we could actually do ourselves. It could—not necessarily would—constrain us in our ambition and in putting together what is crucial, the big prize: the global deal. This issue requires careful technical analysis of the kind that, as I understand it, the climate change committee has been established to do. I recommend that instead of imposing a particular form of constraint now, we ask the Government to refer this to the climate change committee, as is indeed included in Clause 27. I do so in the confidence that the climate change committee under my noble friend Lord Turner will give clear and strong answers on the role of trading. I trust that the committee will give those answers in the context of making 2020 recommendations that are consistent with a minimum of 80 per cent reductions by 2050. I hope that the House can follow the advice of my noble friend Lord Turner, but do it in the context of looking for strong ambition—80 per cent reductions by 2050—and in the context of enabling what is fundamental: a good, strong, equitable global deal.