Consumer Emissions (Climate Change) Bill [HL]

My Lords, I thank the noble Lord, Lord Teverson, for bringing forward this Bill, which has generated an interesting and stimulating debate in your Lordships’ House. I also thank all noble Lords who have taken part. The noble Lord, Lord Teverson, will know that, in accordance with normal practice, the Government do not normally support or oppose Private Members’ Bills in this place. We make no exception in this case. I think that he will be able to tell from what I have to say that the Government have some reservations. He will have some indication of how we feel about the Bill, which may not be that far removed from the position of the Official Opposition. We recognise the importance of the impact on emissions of the whole life cycle of the products that we consume. There is great value in working to understand better and to address consumption emissions, as that enables people and companies to recognise where and how greenhouse gases are emitted in the supply chain and thus where and how best to take action to mitigate them. The increasingly global nature of supply chains means that there is a more and more complex picture of where in the life history of a product the emissions actually arise. Some of these life-cycle stages are more accessible to government-led interventions to reduce emissions. Others are very much closer to the way in which individual businesses work within their supply chains. This issue is clearly highly relevant for businesses, which need to identify the impacts of their whole supply chain in whichever part of the world they operate. The Government’s sustainable consumption and production programme is working to identify and to help to reduce life-cycle carbon and other environmental impacts that are associated with UK consumption, wherever in the world those impacts occur. As well as evidence gathering, the programme looks at tackling embedded emissions through product supply chains—for example, through collaborative road mapping with a small number of industry supply chains. This is complicated work, which means engaging with the principal players in a number of sectors to develop new approaches for reducing environmental impacts at the crucial life-cycle stages. Some of the pilot work has been very encouraging—for example, in building up new forms of collaboration across the supply chain for clothing. This sectoral approach is in its early stages, but it offers a potential model for future collaborations along many other global supply chains. Another contribution made by our sustainable consumption and production programme is in helping businesses to develop the technical tools to identify where they need to focus effort. A key example of this is the technique of carbon footprinting, through which a business can measure the greenhouse gas emissions of its products across their whole life cycle. This enables it to address the hot spots of its supply chain, wherever in the world they are identified. The UK has played a leading part in developing these tools. The Government and the Carbon Trust worked with the British Standards Institution to pioneer a methodology for carbon footprinting—PAS 2050—which has attracted international interest. It is now likely that a global standard will be agreed, which will enable the major global supply chains to target greenhouse gas reductions across their operations. Similarly, our work on behaviour change is helping to improve consumers’ understanding of the whole life-cycle impacts of the products and services that they demand and to encourage more sustainable purchasing practices. Examples include DECC’s Low Carbon Communities Challenge, which was announced in the low-carbon transition plan and launched in September 2009, and Defra’s greener living fund and action-based research pilots. In spite of the work that we are already doing to understand better and to address the emissions that are embedded in the products that we consume in the UK, we have a number of fundamental concerns with the approach proposed in the Bill. Indeed, we share many of these concerns with the noble Earl, Lord Cathcart, and I will expand on them further. First, the approach in the Bill of setting a target for emissions on a consumption basis is not consistent with the methodology for measuring and allocating the responsibility for emissions to individual countries that is enshrined in both the international architecture and the Climate Change Act. Under the UN Framework Convention on Climate Change, the Kyoto Protocol and European emissions reduction targets, countries measure and report their emissions on a production basis. All greenhouse gases emitted on the country’s territory are covered, regardless of where the goods and services to which they relate are consumed. UK emissions are published annually on this basis as national statistics and in accordance with international practice. Indeed, a real strength of the Act is that the targets and carbon budgets that it contains operate in a way that is consistent with European and international climate change policy. Our second concern is that measuring and reporting emissions on a consumption basis would require that we take into account emissions embedded in the goods and services that we import into the UK but exclude emissions resulting from the production of goods and services that the UK exports. This would be an extremely complex thing to do and has scope for major inaccuracies. Estimates have been made in the past of UK emissions on a consumption basis—the noble Lord, Lord Teverson, referred to these—including in a government-sponsored study by the Stockholm Environment Institute, which was published in 2008, but we do not currently report our emissions regularly on a consumption basis. It would be extremely difficult to agree internationally a mechanism for allocating consumption emissions to different countries. We accept that the Stockholm Environment Institute’s estimates give an indication of a trend in carbon dioxide emissions relating to UK consumption, as they are in line with other similar studies, are based on accredited national and international sources and have been subject to a range of sensitivity tests. However, they can be viewed only as indicative, as the emission factors used are disaggregated to just four broad world regions and a limited number of product categories. The Stockholm Environment Institute has separately made estimates of the UK’s total carbon footprint, including estimates of other greenhouse gas emissions besides carbon dioxide, such as methane and nitrous oxide, which are the main types of other greenhouse gases. These estimates are generally regarded as being much less reliable and they need to be treated with caution. In addition, the Stockholm Environment Institute’s calculations give only a very broad indication of the UK’s consumption share of a region’s production emissions. Efforts made by individual trading partners to improve the emissions intensity in a particular supply chain of importance to the UK will not show in the estimates unless they are significant enough to affect the average for the region as a whole. In this sense we do not consider that the estimates are sufficiently reliable for use in monitoring performance or setting targets, as proposed in the Bill. Analysis of consumer-based emissions shows the importance of agreeing an effective international treaty that includes the main developing countries. This stands the best chance of achieving the reductions of greenhouse gases needed to limit the global temperature increase to 2 degrees Celsius. As my noble friend Lord Hunt of Kings Heath explained in his Statement to this House last week on the Copenhagen conference, and as he repeated in our excellent debate yesterday, the Government consider that the outcome of Copenhagen was disappointing in a number of respects. We share the view of my noble friend Lord Puttnam in that regard. However, it is also our view that the accord agreed at Copenhagen represents significant progress on which we can build. In response to the question about the Government’s position on consumer emissions in the international context, we consider that it would almost certainly be impossible to agree internationally on a mechanism for allocating consumption emissions to different countries and there might well be challenges under the international trade regime. Offers of mitigation targets currently announced are all on a production basis. To give the impression of moving to a consumption basis could be very damaging while we are working with developed and developing countries to encourage them to table high-ambition mitigation offers by the end of January and while we are continuing to work through 2010 to turn the Copenhagen accord into a legally binding treaty. Establishing an international consumer-based mechanism would be impossible because of the lack of a political agreement on this approach and the lack of agreed methodologies to make the necessary estimates. No countries or trading blocs currently measure and report along those lines. The additional uncertainty introduced in the negotiations would be very damaging to the prospects for achieving a legally binding agreement and there might well be challenges under the international trade regime. In our view, the best way to provide an accurate account of all greenhouse gases, globally, is to reach a broad international agreement on a production basis with commitments for developing as well as developed countries to reduce emissions, according to their capabilities. For the first time, the Copenhagen accord will see developing as well as developed countries subject to measurement, reporting and verification of their mitigation actions through submission of their national communications every two years. A further concern is that our ability to introduce policy measures to address consumer emissions—emissions from the production of goods outside the UK—is limited when compared to our ability to develop policy responses for reducing the emissions that occur within the UK. Perhaps that is why the Bill introduced by the noble Lord, Lord Teverson, does not include a duty to report on progress towards meeting the target, in contrast to the duty in the Climate Change Act for the Government to produce a report setting out the proposals and policies that will be used to meet the carbon budgets. It is also why our sustainable consumption and production programme is focused on changing patterns of consumer behaviour and on collaborative working with industry supply chains rather than on setting what could be seen as potentially inaccurate and misleading targets. The noble Lord, Lord Teverson, raised the question whether it would be possible to ask the Committee on Climate Change to look at the issue of embedded emissions. Our view is that the committee has more than enough work to do in the next year to keep it busy. This includes the next annual progress report, which is due in June, and its advice by the end of the year on the level of the fourth carbon budget, as well as a report on low-carbon research and development and advice to the devolved Administrations. As I have explained, measuring and reporting emissions on a consumption basis would clearly be an extremely complex, time-consuming thing to do, with scope for major inaccuracies. I hope that this has clearly established why we are concerned about proposals for legally binding consumer emissions targets. None the less, I thank all noble Lords for their speeches and I thank the noble Lord, Lord Teverson, for introducing his Bill. No doubt we shall be hearing more on this subject in the future.