My Lords, I am afraid that I am going to continue the theme that I started with the first amendment. These amendments are designed to make the purpose of the bank unequivocal. The amendments create a duty to assess the impact of the Green Investment Bank’s decisions on the Climate Change Act 2008.
The rationale for this is that, as we just discussed, the stated purposes under Clause 1 can be widely interpreted. That is not to say that they will be, but they can be. We are writing law and we ought to try to make it as future-proof as possible. We believe that, given that at the moment the scope includes a provision that the bank can fund increased efficiency of natural resources, we need something that is much more specific about the impact of the bank as a whole on our climate change targets. It would still be possible for the bank to go down an investment path, which would be taking us out of line with the trajectory of emissions reductions required under the Climate Change Act. That is the purpose for tabling the amendments.
Specifically, Amendment 4 makes an explicit link between the bank and provisions under the Climate Change Act. It sets out the context within which the bank operates. Yes, the Bill already states that one of the purposes is to reduce emissions, but it then goes on to water that down by talking about investment in natural resource efficiency. So for the avoidance of any doubt, we want a link created that makes it absolutely clear that the bank and our climate budgets are linked.
It is very important that we have that wider context because, if you look at this very narrowly, emissions reductions at the scale of a project or single investment are one thing, but then when you look at the totality of what the bank is doing, there ought to be an explicit link to the broader context. That broader context is the need to reduce our emissions; our legally binding targets and carbon budgets.
These are challenging targets and they require government as a whole and all government instruments to work in tandem to deliver them on
time. Making this link with the bank helps fully to align the bank’s purposes with the meeting of those legal objectives.
The specific reference in the amendments requires a link to be taken into account of the advice from the Committee on Climate Change. This is important. Greenhouse gas reduction is a complicated business. It is very technical and we do not want the bank to have to reinvent wheels. There is a body of experts there and it would be wise to create a link between the two. For example, the bank may be thinking of setting itself greenhouse gas reduction targets, as was mentioned in a Guardian article recently. The CEO of the bank, Shaun Kingsbury, was quoted as saying he was going to introduce “transparent” measures for measuring CO2 and the impact that the bank is having on CEO Shaun Kingsbury was quoted as saying he was going to introduce transparent measures for measuring CO2 and the impact that the bank is having on CO2. This is an area which will require quite a lot of technical understanding of various aspects of how you account for greenhouse gas emissions. The Committee on Climate Change is the leading source of advice on this and it would strengthen the bank’s position if it had an explicit link to that committee and had a duty to consider the advice created by the committee.
A specific example might be where we are trying to untangle whether investments are generating emission reductions that are additional or not under the terms of how you account for greenhouse gas reductions. Many of our sectors in the UK are covered by existing caps and existing regulations. Counting of those is not straightforward and we believe that there would be a great deal of merit in the advice that the Committee on Climate Change provides to the Government on these technical and quite complicated issues being made available to the Green Investment Bank and its board. I know that one of the concerns that the Government may have in accepting these amendments is that it might increase the likelihood of judicial review, but we do not believe that it is a genuine concern. Obviously, judicial review on procedural issues can be taken irrespective of these links here, and introducing the requirement for the bank to co-ordinate itself with the Climate Change Act would reduce the risk of JR. It would give the bank a clear procedure that it can follow and should give it good comfort that it is on the right track if it follows this procedure. So we hope that the risk of JR will not be the primary reason why the Government might seek to oppose the amendment. If the Minister does not believe that the amendments are needed, would it not be good to align the Green Investment Bank with the Climate Change Act? Perhaps he could say a bit more about that, because it is at the heart of the matter to align our legislation so that ultimately we achieve our objectives.
4 pm