Climate Change: Carbon Budgets

This has been an authoritative debate, and I thought that one or two speeches were particularly good. The noble Lord, Lord Turnbull, mentioned the consumption measurements that we discussed a little in the reply to the Queen’s Speech. I look forward to him supporting my Private Member’s Bill, which is exactly on that subject, if it ever reaches a Second Reading, which I hope it might. Maybe we could postpone the election beyond March, and it might make it. The noble Lord quoted Dieter Helm, who we always seem to quote when we have a debate on energy. There should be a rule that if someone gets quoted so many times, he gets the right to become a Member of this House so he can say what he thinks himself, rather than be quoted all the time. I suspect that many of us quoted the noble Lord, Lord Stern, several thousand times before he became a Member of this House, and now that he is here we are all rather more careful of the quotes that we attribute to him. It is so much better to hear him say what he thinks himself rather than hear various interpretations around the House. I was interested in what the noble Lord, Lord Hunt of Chesterton, had to say. I am very good—we all are—at looking at sustainability indices in the European Union and proving that Britain comes bottom. But with the pig-per-person index from Denmark, perhaps we will come to the top of the league, with Denmark, which is normally the good guy, at the bottom. Maybe that example can be a key performance indicator for the Minister in future. I thank the Minister and the Government for making sure that this debate took place, because it is important. What better place to debate it, as one-third of the membership of the committee comes from your Lordships’ House? I was particularly delighted that two members could contribute today. I was concerned about the noble Lord, Lord Turner, taking up the appointment at the Financial Services Authority so soon after his Committee on Climate Change role. I thought that that would change, but I am pleased that it is not the case. That is excellent. All sides of the House during the passage of the Bill were concerned that the resources of the Committee on Climate Change and its authority should be increased. The reports so far have shown that. In many ways we wanted the committee to be not just a bean counter or an auditor of climate change; it could have been under the draft Bill, but it became much more a way of enforcing and ensuring that the facts came through. It was in some ways a nagging spouse to government—a nanny to the state in many ways, and certainly a friend of Parliament in bringing the Government to account on this important area. The report achieves that very well. I looked back at one of the previous reports on the first carbon budgets, which came out almost a year ago, I think. I started to go through it, but as it is about 480 pages I gave up after about page 5. I then turned to the executive summary, which was 17 pages long, gave up on that and went on to the A5 12-page version, which listed the key messages. That listed—this returns us to the point made by the noble Lord, Lord Giddens—the things that we have to do to solve climate change for the UK. They were dead straightforward. One was to make sure that we made buildings efficient. The second was that we decarbonised transport. The third was that we decarbonised power supply. The next was that we decarbonised another area—I forget which. The last was that we decarbonised industry—concrete producers, and so on. If we did all that, it would cost us between 1 and 2 per cent of GDP. That was very easy to deliver—or so it sounded. It did not mention that there would need to be any change in lifestyle. That comes back to the issue: what does the decarbonised economy look like? Can we actually get away with it for free, or for 1 or 2 per cent of GDP—a cost, but without fundamental lifestyle changes? That is one area in which we in the political classes do not like to delve too much, because at that point it becomes even more difficult in elections and trying to take public opinion with us. At the moment, we have to stay at the level of saying that we can achieve it without fundamental lifestyle changes. I am an optimist on that: I think that maybe we can deliver that, but the jury is still out. That may be part of the work that the Committee on Climate Change will have to do in future. This is the first annual report. The committee does not even have the official carbon production footprint figures for 2008, so it cannot consider them. Its major work is looking more generally at the issues and what the lead indicators might be. We look forward to seeing those next time. It points out strongly the slow progress that has been made to date, which has already been mentioned by several noble Lords. It also mentions that not only has progress been slow, but that most of that progress has been in non-CO2 gases. It is CO2 itself where the big challenge will be from now on. That will be the difficult area, whereas the non-CO2 gases—the nitrous gases, the CFCs, et cetera—are the ones that we have already addressed. The report states that there are two key areas. One concerns power supply and the other concerns homes and efficiency. The key messages to me from this report, which have been mentioned by many noble Lords, are about the real risk that during this recession we take our eye off the ball. It lays down two challenges to the Government on which I would be interested to hear from the Minister. The first is that the Government will not take the existing targets as given, but will stretch them and make them more difficult—I will be interested to hear whether the Government will listen to that message. The second is that any gains or savings made above budget in the first period should not be able to be banked in the second period. I would be interested to know whether the Government share that view. This has been mentioned, but the report also says that the carbon price by 2020 will probably be only about €20, rather than the €50 that it should be—although I notice on my weekly update by e-mail that the carbon price has risen to €15 from €13 in the past week. I do not know whether that is a good sign going up from Copenhagen. The other point is investment, which partly comes down to carbon price but also involves the credit crunch, which the Minister mentioned in his opening remarks. The report states very clearly—this is analysis that I have not seen before in any detail—that unless we change the way that pricing structures work, business risk requires that the investment will go towards conventional, understood, low-risk carbon technologies, not renewables or even, probably, nuclear means. There has to be a way in which we give greater certainty, through tax, feed-in tariffs or carbon price, to ensure that those investment decisions are right. On transport, the thing that perhaps took me back most in the report’s statistics was that it was expecting a quarter of a million electric vehicles by 2015—five years away—when we do not even have an electric car infrastructure that I could use if I purchased one such car now, although I do not think that many are available. By 2020, that is supposed to rise to 1.7 million. I do not understand how that is going to be delivered. It is a major lifestyle change in our motoring habits, and I do not understand how it will work. On neighbourhoods, the report makes it very clear that what we are doing at the moment on energy-saving is not working. There was a lovely phrase, damning by a certain amount of praise, about the CERT programme being particularly successful in distributing low-energy light bulbs—it pretty well said that that was all that it had achieved. Whether or not that is true, if there is anything on which we need a step change, it is the message of street-by-street, neighbourhood-by-neighbourhood investment in replacing the 12 million non-condensing boilers, and insulating the 10 million roof spaces and 7.5 million cavity-wall dwellings. That is one of the big challenges that the report lays down. I am not saying that the finances or the accounting of that is easy, but that must be one area where a major change takes place. The other message—and the last one that I want to mention from the report—concerns carbon capture and storage. Again, from these Benches, I strongly recommend that the Government move into energy performance rules for power stations. Although we are heavily committed to the CCS programme, it is extremely slow in moving forward and in companies willing to come forward to take the financial risks. Yet our coal-based economy, which will still be an important feature of energy generation, is an issue that we need to address. The climate change committee has today also brought out the air traffic report which my noble friend Lord Redesdale mentioned. It is staggering. It is really just a matter of arithmetic and the Government’s own targets that if aviation emission levels remain the same in 2050 as they were in 2005, they will comprise 25 per cent of the total. I wonder whether that is the right balance for the economy, but perhaps that debate is for another time. I am delighted that a Member of this House, the noble Lord, Lord Stern, will be at the centre of the Copenhagen negotiations alongside President Barroso and others. It is a very good thing to hear. However, we should not underestimate what needs to happen at Copenhagen. Some 119 nations are there, whereas Kyoto involved only 47. At Kyoto they were looking for reductions in the developing world of 5 to 7 per cent, whereas we are now looking for reductions of 50 per cent globally in a period which is not much longer and with global emissions peaking in 2020. That is a huge agenda. Britain has its part to play in this, and with Europe it is part of the integrated European climate change negotiations. That is difficult to deliver. Unlike some of my colleagues, I think that it is right to approach this by negotiating on 20 or 30 per cent. I think that negotiations are the right way forward. However, it is a tremendous challenge. The climate change committee should be thanked for this report, which lays out the issues well. I particularly look forward to next year’s report when we have a few more data. The challenge is there. Exactly as has been said, Copenhagen is probably the most important international conference since Bretton Woods and Yalta at the end of the Second World War.