§ 8. Mr. Alan Simpson (Nottingham, South)What plans he has for the regulation of the trading of carbon credits. [68271]
§ The Secretary of State for the Environment, Transport and the Regions (Mr. John Prescott)Developed countries took an historic step by agreeing legally binding targets for greenhouse gas emissions in Kyoto. The agreement provides for emissions trading to help countries to meet their commitments. We are working to ensure that the international rules for trading promote an effective system that combines real environmental benefits with the flexibility for business to reduce emissions at least cost. That is a good example of the virtuous circle resulting in a win-win outcome.
§ Mr. SimpsonI congratulate my right hon. Friend on his contribution to that agreement, but I wonder whether he is aware that major polluters in the United States have already found a way of subverting the trading of carbon credits, so that the public subsidise a transfer of payments to the polluter with no reduction in overall pollution. When he considers the regulations, will he take into account specifically what is being done by the Tennessee Valley authority in getting carbon credit transfers with neighbouring Wisconsin? Two rules may be usefully introduced, one precluding internal trading between or within industrial nations, and one introducing conditionality to carbon credits, requiring the polluter to demonstrate a major programme of pollution reduction before getting any trading entitlements.
§ Mr. PrescottI think that the House would like to congratulate my hon. Friend, who recently received the Green Ribbon award after being voted the best environmental politician of the year—especially as both I 113 and my right hon. Friend the Member for Oldham, West and Royton (Mr. Meacher) have also received that award. That is a good example of how hon. Members on both Front and Back Benches are walking in step, to the benefit of the environment.
However, my hon. Friend raises an extremely good point that is at the heart of the discussions taking place in the international negotiations. That is the requirement that emissions trading must be governed by a strong compliance regime. At Buenos Aires, we agreed that there should be discussions between the technical groups. They have still not been concluded, but we are well aware of the general environmental concern that some developed countries may be tempted to trade in carbon in that way while not doing much about their domestic circumstances. In those negotiations, and in the final conclusion to the strong compliance requirement, the European Union has made it clear that there must be some form of ceiling to prevent such trading, and a commitment from countries to deal with their domestic economies.
§ Dr. Vincent Cable (Twickenham)Does the Deputy Prime Minister accept that the underlying logic of carbon credits is to reduce the use of carbon-intensive fuels such as coal and to increase the use of less carbon-intensive fuels such as gas? Does not the Government's present energy policy do precisely the opposite?
§ Mr. PrescottWe are certainly not pursuing the policy on coal adopted by the previous Administration. That policy completely obliterated many communities, and I announced the coalfield community programme to assist them with the difficulties that they face. The Government have made it clear that we are prepared to look at coal energy policy, and we have announced that our aim is to achieve a proper balance between coal and gas.
There are always problems, whichever fuel is used. We take them into account, but our goal is to maintain progress through a properly balanced energy policy.
§ Mr. Simon Burns (West Chelmsford)May I genuinely congratulate the Deputy Prime Minister on the way in which he has carried forward the work of my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) in this important area? Does he share my disappointment that certain organisations characterised the Buenos Aires conference as an agenda for inaction? In the context of the question asked by the hon. Member for Nottingham, South (Mr. Simpson), how can certain developed countries be prevented from escaping their obligations through some clever footwork? It is clearly important that the developed world provides a proper and sincere lead for the developing world to ensure that we can get to grips with environmental problems.
§ Mr. PrescottI am grateful for the kind remarks made by hon. Gentleman. Those are very real problems and, starting from the first day that I took on my ministerial responsibilities, I have said many times at this Dispatch Box that I am grateful for the work done by the right hon. Member for Suffolk, Coastal. He led the way in some of those matters, although the targets were largely voluntary. At Kyoto, we were working to achieve legal targets, and the right hon. Gentleman was a member of the delegation that I took there. The agreement between hon. Members on both sides of the House is very welcome.
114 I do not agree that the Buenos Aires conference was an agenda for inaction.
§ Mr. PrescottI take the point, but that criticism has been made. We won a good victory at Kyoto in achieving the legal targets but, given all the flexibilities involved, it takes more than 12 months to reach agreement. Britain led the way yet again: it was our formula that suggested that a period longer than 12 months was needed to get right the flexibilities on the matter of carbon trading. The issues involved are extremely difficult, and we shall bear in mind the importance of ensuring that the responsibilities are borne fairly by the developed countries that signed up to the agreement. If we do not ensure that, eventually the developing countries will refuse to co-operate and there will be no global agreement. We are well aware of the difficulties, and I am grateful for the hon. Gentleman's support.