HC Deb 27 October 1999 vol 336 cc949-71

11 am

Mr. Tom Brake (Carshalton and Wallington)

Climate change has been discussed many times in the House and we are well versed in the arguments, but I make no apology for returning to the subject and what the UK Government's response to it should be.

The global impact of climate change has never been so apparent. The Red Cross said that last year's natural disasters were the most damaging on record and predicted that catastrophes would become more widespread and devastating as climate change takes hold. Unveiling the organisation's 1999 report, the president of the International Federation of Red Cross and Red Crescent Societies said: Climate change is no longer a doomsday prophecy, it is a reality … Changing climate means changing disaster patterns. According to the report, more natural disasters occurred in 1998 than in any other year on record. The report noted that climate change has made the consequences of disasters more complex.

In 1998, global mean surface temperature was the highest since records began. The Intergovernmental Panel on Climate Change stated that to avert the worst impacts of climate change, cuts of 60 per cent. in carbon dioxide emissions must be achieved by 2050. In the UK, climate change could lead to an increase in the frequency of extreme weather conditions. Average wind speeds could rise, resulting in 30 per cent. more gales in Wales and southern England during the winter, thus increasing the risk of hurricanes.

Global climate change is a reality; its global impact is undeniable. What are we doing about it? We all know that the UK has a legal obligation to reduce by 12.5 per cent. its output of six greenhouse gases between 2008 and 2012—the Kyoto target. However, before the adoption of the Kyoto protocol, the Labour party, in opposition, pledged to reduce domestic carbon dioxide emissions by 20 per cent. from their 1990 levels by 2010. That was a welcome commitment, but it seems as though the Government have lost their momentum on climate change. Perhaps discussion of the climate change levy disguises the real issues and problems that the Government need to address.

The fifth conference of the parties to the climate change convention began this week. The UK must play an important role there, in keeping alive the Kyoto protocol with its binding obligations to reduce greenhouse gases. The Government must act globally. However, action to prevent irreversible change to our climate must also be taken at home, so the Government must act locally.

Mr. Barry Jones (Alyn and Deeside)

I congratulate the hon. Gentleman on securing this important debate. However, I draw his attention to a problem in my industrial constituency. I led a deputation to the Treasury complaining of the severity of its proposed measures. My constituency is based on steel, and steel workers are concerned that the levy will lead to job losses. Since our deputation to the Treasury, British Steel has merged with a Dutch company and the loss of jobs is one of our worries. In that context, will the hon. Gentleman bear in mind the local consequences if Her Majesty's Government impose too great a tax?

Mr. Brake

I thank the right hon. Gentleman for that intervention. I understand his concern. I welcome the fact that the Government are holding consultations on the climate change levy. However, I hope that, at the end of that process, they will not tear the guts out of the climate change levy so that its environmental impact is reduced to nothing. I am sure that the Minister will respond to that point later.

We need to take action locally to prevent climate change. What the Government achieve at home is a key litmus test. A failure to act nationally will affect the UK's international reputation on environmental matters. The Government must maintain the lead in those matters, and the 20 per cent. target must be achieved.

I am not the only Member who is concerned that the Government might fail to achieve their 20 per cent. target commitment. It is interesting to note how the Government's language on this matter has changed since 1997. In 1997, Labour's election manifesto gave a clear commitment to reduce carbon dioxide emissions by 20 per cent. by 2010. That was stated throughout 1997, and repeated to the House by the Prime Minister. By 1998, the 12.5 per cent. Kyoto figure was described as a target; the 20 per cent. target became a domestic aim.

In their consultation paper on climate change, the Government stated that they intended to move beyond the legally binding target towards a 20 per cent. reduction in carbon dioxide emissions. However, they did not state which policies they would implement to achieve that target. Regrettably, the Chancellor failed to mention the 20 per cent. target in his Budget speech, although he did mention the Kyoto target. More recently, the 20 per cent. target was described as a "domestic goal" in the Government's annual report, but it was not listed as one of their 177 commitments.

Unfortunately, in 1999, the situation has worsened. It seems that the Chancellor and the Prime Minister continue to forget the 20 per cent. reduction pledge in their manifesto; they refer only to the Kyoto target. The 20 per cent. target has now been relegated to something that the Government will "move towards". When the Minister responds, I hope that he will reassure us that the Government still intend to hit that 20 per cent. target and that it is not merely something that they will be moving towards.

Mr. David Chaytor (Bury, North)

I too congratulate the hon. Gentleman on securing this debate. Will he pay tribute to the Government for the work that is already being done towards the objective of reducing carbon dioxide emissions? I am thinking especially of the introduction of the fuel duty escalator. Does his party support the fuel duty escalator in all parts of the United Kingdom? My experience is that the Liberal Democrats are in favour of the escalator in certain parts of the country, because they—

Mr. Deputy Speaker (Mr. Michael J. Martin)

Order. When the Deputy Speaker stands, the hon. Gentleman should sit down. He must remain seated because his intervention is far too long.

Mr. Brake

I shall respond briefly to the hon. Gentleman's question. The Liberal Democrats support the fuel duty escalator, which was introduced by the previous Conservative Government and maintained by the Labour Government. However, the hon. Gentleman will surely agree with me about the importance of a clear link between the revenue that is raised from the escalator and the environment. If there is no clear link and the money is seen merely to be going into the Treasury coffers, problems will arise.

Will the Government attempt to achieve the 20 per cent. target? I hope that they will. The Minister for the Environment said that there will be benefits if we achieve the 20 per cent. target, so what measures are the Government implementing to that end? If they drop one of their key manifesto pledges, their environmental rhetoric will be seen as nothing more than greenwash.

Concern about the Government's changing position was highlighted recently in a letter to the Prime Minister from four organisations—Friends of the Earth, the World Wide Fund for Nature, Greenpeace and the Royal Society for the Protection of Birds—which urged the Government to stick to Labour's manifesto pledge. They feared that the 20 per cent. target is becoming merely "an aspirational aim" and that the Government will not deliver on it. I share their fear.

However, to have a target is not enough; we need a strategy to achieve it. We are now more than halfway through this Parliament, and we have seen no climate change strategy with the necessary framework for action. The Government took 17 months to produce the consultation paper on climate change. Now, a year later, in October 1999, we are arguing the case for the protection of the global climate in Bonn. That is good, but we have failed to take substantive action at home, whereas countries such as Germany, Austria and Denmark have not only produced strategies to fight climate change but have implemented those strategies and review them regularly. The Minister for the Environment told the Select Committee on the Environment, Transport and Regional Affairs that he hoped to publish a draft strategy towards the end of this year, but, given the importance of the matter, the Under-Secretary of State should tell us today the deadline for the production of the strategy.

The strategy must list the measures needed to achieve the 12.5 per cent. Kyoto target—

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Keith Hill)

indicated assent.

Mr. Brake

I see the Minister nod; I hope he also agrees that the strategy should list the measures needed to achieve the 20 per cent. carbon dioxide reduction target and set out the long-term policies that will set Britain on the path to climate-friendly energy production and use.

We need a huge increase in energy efficiency, a reduction in overall traffic volumes and a substantial shift from fossil fuels to renewables and combined heat and power. Energy efficiency will play a crucial part in our response to climate change. It will reduce fossil fuel use, help to end what the Environmental Audit Committee described as the "continuing national scandal" of fuel poverty and create jobs in employment black spots.

Mr. Adrian Sanders (Torbay)

Does my hon. Friend agree that there is a case for putting greater resources into the renovation of the nation's housing stock, to install double glazing and take other measures to improve fuel efficiency, reduce poverty, contribute to energy saving and prevent needless waste of energy?

Mr. Brake

I do agree, as would hon. Members on both sides of the House. It is noticeable that the Government have failed to address the discrepancy between VAT charged on new homes and VAT charged on renovation works. It is high time that they dealt with that issue.

Many excellent ideas on energy efficiency have been proposed to the House, including cutting VAT on energy-saving materials, involving health authorities and local authorities in the fight against fuel poverty and requiring mortgage surveys to include an energy efficiency survey, but the Government's response has been disappointing. The Government have cut VAT but only on materials bought under Government schemes, rather than on private householder purchases of insulation materials. They promised to seek a further reduction in negotiations with our European Union partners, but when the EU gave us the chance to make a reduction such as has been made in France and Italy, the Government decided against it.

The Government opposed the Health Care and Energy Efficiency Bill promoted by my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir R. Smith), although I am pleased to hear that they have now relented and intend to include my hon. Friend's ideas in their guidance to health authorities. Similarly, the Fuel Poverty and Energy Conservation Bill was opposed, but the Government relented under pressure and will now alter Government advice on that subject. The Government could have done more to ensure that Bills they supported—the Energy Efficiency Bill and the Energy Conservation (Housing) Bill—were enacted. I understand that a requirement for an energy efficiency survey was not referred to in the latest press release on the new system for buying and selling homes; that is an ominous omission.

I am aware of the role played by a small number of Conservative Members in blocking several of those private Members' Bills, but the Government cannot escape all blame. They failed to support amendments to the Local Government Act 1999 which might have implemented some of the proposed energy policies and they failed to accept the Liberal Democrats' offer of a Supply day to consider such matters. The Government must do more than passively support such measures; they must use Government time to force them through. I hope that the Queen's Speech will announce that similar measures are to be included in proposed Government Bills on housing or local government.

Transport policy should form a key part of the Government's strategy to reduce carbon dioxide levels by 20 per cent. by 2010. It is unlikely that that target will be met without reducing the number of car journeys. Both before and after the election, Labour promised to act on that question, but now the Government's commitment appears to be to reduce traffic growth, even though a continuing increase in traffic is likely to lead to higher emissions.

A reduction in the use of fossil fuels and an increase in the energy derived from renewable sources and combined heat and power is also required if the Government are to hit their target. The Government recognise that and are consulting on a climate change levy. Although a carbon tax would have been preferable on environmental grounds and should still be pursued at EU level, a climate change levy will help to reduce fossil fuel use. However, as I said earlier, the Government's consultation process must not be allowed to lead to the emasculation of the levy.

Mr. John Smith (Vale of Glamorgan)

Does the hon. Gentleman agree that those companies that are energy efficient should not be penalised simply because they are high energy users? Dow Corning Ltd. in my constituency has created a heat and power plant and strives to derive maximum energy use from that unit. The company is rightly concerned that the levy will be based on energy use rather than energy efficiency.

Mr. Brake

I thank the hon. Gentleman for that intervention and understand his point. The Government should consider a measure that has been adopted in other countries, whereby if a company can demonstrate that it uses the best possible technology to reduce energy use, the climate change levy might not be applicable to that company. I hope that the Minister will respond to that point.

The Government recognise the importance of renewables and CHP and have ambitious targets for their use: 10 per cent. of UK electricity to be generated using renewable sources and 12 per cent. using CHP to be achieved over the next 10 years. However, Government policies are hurting those sectors. As we know, CHP is not exempt from the climate change levy, nor is electricity generated from renewable sources. Bryan Bateman, the Paper Federation of Great Britain's director of business and environment, says of CHP and the climate change levy: The UK paper industry is very energy intensive. CHP is crucial to the process in maintaining cost effectiveness as well the achievement of our climate change targets. It should, in our view, be exempted from the climate change levy.

The Government are not following the lead provided by other Governments in investing in sunrise energies, providing tax breaks and incentives, developing those technologies and creating export opportunities in a growing overseas market. They are missing opportunities to help developing countries. Dr. Leggett, an expert on solar energy who headed up an industry solar task force supported by the Government and including BP, Eastern Electricity and NatWest, is disappointed with Government progress on solar energy. He said today: It is bewildering how the DTI can stand by watching the Germans and the Japanese race ahead with the development of a market which many now believe will equal, if not exceed, the micro-technology market.

Mr. Alan W. Williams (East Carmarthen and Dinefwr)

The long-term answer to global warming is solar energy, as that is the only infinitely renewable resource. Is it not extremely disappointing that our efforts, both internationally and domestically, over the decades to harness solar energy have been so incredibly feeble?

Mr. Brake

I agree with that helpful intervention, although I would add that wind power is also infinitely renewable. It is true that if we had solar photovoltaic roofs on every house in this country, we would do away with the need for power stations—indeed, an energy surplus would be generated.

Mr. Cynog Dafis (Ceredigion)

All renewables except the tides are solar. That is not a correction but a helpful comment. The source of wind is solar. Does the hon. Gentleman agree that one of the great problems in the expansion of renewables is the planning framework, which is leading time and again to objections and obstacles to their development. The Government will have to address this matter. I hope that the hon. Gentleman agrees with me.

Mr. Brake

I thank the hon. Gentleman for his intervention. I agree that there is an increasing incidence of wind farms coming up against planning objections. We need to sell much harder the environmental benefits of such projects, and compare them with, for example, the proliferation of electricity pylons across the country. More can be done and we need a Government commitment to renewable wind power, whether or not wind power is solar.

Dr. Leggett and other experts in renewables are extremely concerned about the distinct lack of joined-up government between the Department of the Environment, Transport and the Regions and the Department of Trade and Industry. The DETR is actively promoting renewables and solar power, and the DTI is actively pouring cold water on them.

To assist the Minister in responding to the debate, I shall summarise my concerns in a series of brief questions of which he has had notice. I hope that he will give the House an informed and detailed response.

Will the Minister confirm that the Government intend keeping to their 20 per cent. CO2 target? When will the Government be producing the climate change strategy document? Will it contain the measures necessary to hit not only the 12.5 per cent. Kyoto target but the 20 per cent. target? Does the Minister agree with me that the imposition of the climate change levy on electricity from renewables and CHP is completely nonsensical, and what will he do to address that problem?

Will the Minister make it absolutely clear to the Treasury that the climate change levy, in the absence of something like a carbon tax, is key to meeting the Government's CO2 reduction target? Will the Minister confirm that the Government are committed, as part of their strategy, to reducing the overall level of traffic? Will he try to convince the Government and their partners within the EU to ratify the Kyoto protocol early, regardless of what the Americans decide to do? Will the Minister proactively provide technical advice and assistance to developing countries to help them reduce their CO2 emissions? Will he be working with his EU partners to consider the possibility of implementing a Europewide carbon tax?

Finally, will the Minister and the Secretary of State be resigning if they fail to hit their 20 per cent. reduction target? I understand that the Secretary of State for Education and Employment has offered to resign if his targets are not hit. I would expect nothing less from the Minister and his Secretary of State.

Mr. Damian Green (Ashford)

Not only the Secretary of State for Education and Employment but his entire ministerial team have promised to resign if they do not hit their targets. I feel that this is a good example.

Mr. Brake

I thank the hon. Gentleman for his intervention. I am pleased that the whole team will have to resign so that there will be lots of vacancies on the Government Front Bench in a couple of years' time.

The Minister's response will confirm whether the Government are serious about tackling the global impact of climate change or whether they are content to rest on their rhetorical laurels while the earth burns.

11.24 am
Mr. Alan W. Williams (East Carmarthen and Dinefwr)

I congratulate the hon. Member for Carshalton and Wallington (Mr. Brake) on initiating this debate. The topic is infinitely important. On the issue of whether the entire ministerial team should resign if the 20 per cent. target is not achieved, I would point out that the targets are set for 2010. I am glad that the hon. Gentleman is confident about the return and re-return of this extremely environmentally sensitive and aware Labour Government.

I am a scientist by background and I was formerly a lecturer in environmental science. I have spent the past 20 years reviewing environmental problems. I am delighted that progress has been made in many areas, such as acid rain. I am delighted that nuclear power is being phased out. I am delighted also that on genetically modified foods the Government are steering slightly away from their earlier position. However, the problems of global warming are of a dimension that goes beyond those in other areas. It is the most intractable of all environmental problems. In developing countries and in our own pre-history, the use of timber has produced and continues to produce carbon dioxide. The use of timber leads to deforestation. Britain is the least-forested country in the world—only 5 per cent. of our land is covered by woodland.

The march of civilisation makes us increasingly energy intensive. All our energy has come from timber, coal, oil and gas, which all produce carbon dioxide. There is no sink for that carbon dioxide, and it just increases and increases. The amount of CO2 in the atmosphere has increased measurably in the past century. From memory, it has increased from about 280 parts to 340 parts per million. If carbon dioxide was inert in the atmosphere, like nitrogen, perhaps there would be no problem. Unfortunately, it absorbs the infra-red or the radiation out into space from the earth. Increasing carbon dioxide levels therefore mean increased temperatures for the earth. That was a scientific theory in the 1960s and the 1970s, but it has become demonstrably the case in the past 10 or 20 years.

One of the great advances stemming from the Kyoto summit in particular, and from the work that led up to it over the previous 10 or 15 years, is that there is now widespread recognition in all the advanced and developing countries that we have a major environmental problem with carbon dioxide that must be tackled. The only ignorant places are parts of the United States and the OPEC countries. Unfortunately, the solution is politically extremely difficult. It requires political will of a dimension that goes beyond any democracy because of the importance of the motor car, our central heating systems and our standard of living. Everything that we aspire to and ask people to vote us into Parliament for depends on carbon dioxide emissions. In tackling the problem, we are attacking the very foundation or style of our society.

The danger has been and still is that politicians say, "The problem is too difficult to solve. It will not give us any returns over a five-year Parliament or even over 10 or 20 years. The less we do about it, the better it is for us politically." However, the problem is with us, and the evidence accumulates. It is very difficult to say that this year the world climate has been warmer, but there is an accumulation of evidence. Almost every week we hear of horrible floods, a hurricane or forest fires. I read in The Mirror last week about an iceberg that measures 40 miles across that is drifting towards Argentina. I dare say that icebergs have always drifted from the polar caps, but not icebergs of such a size and not with such frequency. Problems involving the north and south poles illustrate how challenging the overall problem is.

There has been no energy production at the poles—problems have been exported to the poles by the rest of the world. The great problem is that the ice cover is diminishing because huge chunks are being knocked off the ice caps and are melting, and the earth's temperature then rises for two reasons. The first is the amount of carbon dioxide that we put into the atmosphere, and the second is that if polar caps melt at a significant rate, the amount of sunlight that they reflect diminishes.

I remember reading in the 1970s about the runaway effect whereby a certain amount of CO2 in the atmosphere causes global warming, which then begins to boil carbon dioxide out of the world's oceans. The amount of CO2 in the oceans is 60 times that in the atmosphere, and as temperatures rise, that carbon dioxide drifts into the atmosphere. The runaway effect will eventually cause our planet to have an atmosphere somewhat like that of Venus, which is shrouded in cloud.

Any damage to the polar caps is even more serious than the weather that afflicts Britain or the United States. The article in The Mirror says: Temperatures in the Antarctic have been steadily rising and are now 2.5C higher than at the end of World War II. I do not vouch for the accuracy of our tabloids, although The Mirror is one of the best, but a rise of 2.5 deg C at the polar caps in the past 50 years is deeply serious.

As I said earlier, the Kyoto summit is an important part of tackling the problem because it gives it worldwide recognition. Our Government, led by my right hon. Friend the Prime Minister at the summits leading up to Kyoto, and by my right hon. Friends the Deputy Prime Minister and the Minister for the Environment at Kyoto, worked towards achieving the first agreement to limit carbon dioxide emissions and cut them by 5.5 per cent. by 2010. That does not solve the problem, but it is an acceptance that there is a big problem, and if we can achieve that target, it will be the first, small step towards a solution. I am proud of the cuts that Britain has achieved. The dash for gas is largely responsible for those—the energy policy that has produced the cuts is not very clever, but we lead the world in limiting carbon dioxide emissions.

The hon. Member for Carshalton and Wallington pointed out that those are just the first steps and that we need cuts of 60 per cent. by the middle of the next century. If we want sustainable development—the key term used by the hon. Member for Ceredigion (Mr. Dafis)—we need carbon dioxide emissions to be in balance with the world's capacity to absorb them. That would require a tenfold cut in present emissions which, politically, we cannot imagine unless we move away from fossil fuels. During the next 50 to 100 years, we must almost completely stop using them, which is why solar energy is so important.

I return now to the present target of a 20 per cent. cut in emissions. The Government have a series of policies, several of which have already been implemented, that will help to tackle the problem. I shall review each of them briefly, but critically. We have made good progress on energy efficiency. An extra £150 million has been allocated to the home energy efficiency scheme, and young, unemployed people are being recruited to the environmental task force to work on the homes of the elderly and the poorest people. The scheme cares for the elderly and provides employment and it is good socialism—[Interruption.] Yes, I used the word "socialism". If hon. Members prefer, I will say that it is good social justice. I do not think that they would disagree with that, even if they puff at the term "socialism". I am delighted that we are allocating substantially higher sums to the scheme.

Our combined heat and power targets for 2010 are sensible and, I hope, achievable. We aim for CHP to provide 12 per cent. of our electricity by 2010.

Mr. Brake

How helpful in achieving the 12 per cent. target does the hon. Gentleman think that applying the climate change levy to CHP will be?

Mr. Williams

It will be not at all helpful, but I point out in passing that in Wales the Baglan bay energy park scheme for energy generation will, when it is completed in three to five years, be an outstanding example of the efficient use of CHP energy by industry in this country.

On renewable energy, I said earlier that I am very disappointed by Britain's record over the past 30 years. In the 1970s, we realised that oil prices were a problem and that we needed to develop more sophisticated energy sources, and renewable energy suddenly acquired importance. However, over the past 20 years, we have always had a target of achieving 10 per cent. of power from renewable sources by the end of each decade, so the present target is 10 per cent. by 2010.

The record of achievement on renewable energy in the European Union reveals that we are 15th out of 15—a sorry bottom of the league. Yet our potential to harness wind, wave and tidal energy is greater than that of any European country. It makes no sense that Germany produces three times as much wind electricity as Britain. We have high environmental standards and planning regulations, but we are timid in our work on renewable energy.

Solar energy has to be the long-term answer. Britain is not sunny, compared to California, Italy or Spain, but in 100 years we will have to be producing most of our power from solar energy. The countries that are doing the basic scientific groundwork and adapting technologies to harness those energy sources are those that will have the industries to export that energy in 20 or 30 years. Our efforts to harness solar energy should be dramatically greater than they are.

The fuel duty escalator obviously is a politically difficult policy. Sadly, we need cross-party co-operation on difficult policies for environmentally achievable goals. We are not getting as much support as is needed—certainly not from the Conservative party, which introduced the fuel duty escalator and has now made a complete U-turn and is hostile to that policy.

I turn now to the climate change levy. I support a carbon tax or energy tax, and I always have done. The price of coal, gas and oil has dropped over the past 15 years. The price of oil is now $22 a barrel and has peaked at between $35 and $40. Coal prices have collapsed and gas is getting cheaper, so I cannot understand industry squealing about the introduction of an energy tax.

I attended the debate on the climate change levy last July. The levy should raise £1.7 billion, which will be reimbursed in national insurance contributions, so it is revenue neutral and will create employment. However, it will save only 1.5 million tonnes of carbon a year, which, frankly, is trivial. That works out at £1,000 per tonne of carbon saved, when coal is about £50 a tonne. The punishment does not fit the crime; it is at least 10 times the cost of the energy. Therefore, the levy is very inefficient. Although I support it—the broad-brush approach of any punitive tax will act as a disincentive to use energy and so will surely have some effect—if all that it will save is 1.5 million tonnes, perhaps we should consider it a little further.

Finally, on tree planting, there was some discussion at Kyoto about emissions trading between countries, which has to be a large part of the long-term answer. Australia suggested plantations. It has large areas of land on which it wants to plant trees, which would help to absorb carbon dioxide. If it did, should it not get privileged treatment because it can set off its carbon dioxide emissions against those plantations?

The same goes for Britain. Let us consider the problems in our agricultural industry which, given the price of lamb, beef, milk and so forth, faces a real crisis. We must ask ourselves whether we are making the best use of our land. We want to use it for tourism and for environmental purposes as well as for food production. Originally, the land was covered in trees, which absorbed carbon dioxide. As the going rate—the climate change levy rate—is £1,000 per tonne, if we paid every farmer that sum for all the carbon that his trees can absorb, we would have millionaire farmers throughout Britain.

Tree planting must form a part of our carbon dioxide strategy. The highlands of Scotland and the mountains of north Wales used to be covered by trees. I read yesterday that Sussex was 95 per cent. woodland in Tudor times. We must consider tree planting as part of our rural and agricultural diversification policy.

Several hon. Members

rose—

Mr. Deputy Speaker

Order. Before I call the next speaker, I propose to take the winding-up speeches at 12.10 pm. Four Back Benchers still want to speak, so hon. Members can do their own calculations. I call the hon. Member for Ceredigion (Mr. Dafis).

11.42 am
Mr. Cynog Dafis (Ceredigion)

First, there is no more important issue than the impact of climate change, and the fact that we again have time to consider it is welcome.

Secondly, I repeat what I said earlier about the planning framework, which is vital—and not merely for wind generation. There have been planning objections to important biomass proposals. In one case in Wales, the Newbridge-on-Wye combined sawmill and biomass plant was turned down on planning grounds. We must overcome that sort of obstacle to get the growth that we want, and to allow the redistribution of economic activity on a dispersed basis that goes with it. Such redistribution is an important side effect of moving into renewables. We are talking about decentralisation, embedded generation, small-scale power stations and so forth.

Briefly, on the climate change levy, there is no doubt that to reach the sustainability that we need, we have to use economic instruments to create a dynamic towards that goal. There is no doubt that if one uses such a policy, its effects will be far reaching, and there will be winners and losers. Overall, the planet must be the winner, but some sectors will certainly decline and there will be losers in the process.

A fundamental principle of the shift towards sustainable development is what is called the internalisation of external costs—of environmental costs. That process must happen gradually if we are to create the dynamic towards sustainability that is essential, and it implies a shift in the burden of taxation. To their credit, the Government have begun to embark upon the shift from what are popularly called environmental bads to environmental goods. We must tax those things that are harmful and reward those that are beneficial, which implies a significant change in the pattern of taxation.

The climate change levy is one example of that change and, on that basis, there is no way that it can be opposed in principle, although I agree with the spokesman for the Liberal Democrats, the hon. Member for Carshalton and Wallington (Mr. Brake), who said that he would have preferred a carbon tax, which would target carbon more effectively. I add one plea: we must be aware when imposing such a levy of its distributional effects. I hope that I do not sound guilty of special pleading, but the reality is that there is a great danger that the levy, if bluntly applied, will redistribute resources in the United Kingdom from areas that are suffering economic decline to those that are enjoying enormous economic growth—I mean the south-east of England, where there are high concentrations of service-based industries with proportionately low energy costs.

Such a redistribution must be a consideration, and we certainly need compensatory mechanisms. Bluntly applied, the levy could damage the economy of large parts of Wales and the rest of the United Kingdom. It could damage manufacturing—steel has been mentioned—and energy-intensive sectors as well as agriculture, which is under enormous pressure and could be further harmed. It should not be beyond the wit of man to design a system to redistribute the revenue from the climate change levy to favour the areas that need support and that are being disadvantaged.

For example, it would be ironic if areas of Wales that have been allocated objective 1 funding, because they are performing badly economically and have very low average gross domestic product with all the associated problems, received European money—we hope that they will receive it—to provide the opportunity for sustainable economic development, but at the same time the climate change levy was sucking resources out of those areas.

I appeal to the Government to bear that in mind. One way to ensure that the effect of the levy is mitigated is to ensure that European funds for objective 1 and other structural fund programmes are additional. At the moment, there is no indication that they are likely to be additional to the existing Welsh block. I appeal for that additionality and sensitivity to the effects of the levy.

11.48 am
Mr. David Chaytor (Bury, North)

I congratulate the hon. Member for Carshalton and Wallington (Mr. Brake) on securing this debate. He raised several important points and put forward a coherent argument to assist the Government in preparing their climate change programme later this year.

I think that this is the third Adjournment debate on climate change in the past 15 months, which is a measure of the growing interest in the subject among all Members of the House. It should also be a sign that it is time for the Government to arrange a debate on climate change in their time. The launch of the climate change strategy document towards the end of 1999 will, hopefully, be the time for such a debate.

It is interesting to see how the discussion has moved on during those debates—I have been present for all three—from the principle and the broad-brush arguments about climate change, and even whether it exists, to the detail. During the first debate, some Opposition Members made a significant attempt to deny the existence of climate change. During the second debate, they made a slightly less vociferous attempt to do so. Today, I do not hear anyone denying its existence. We are now focusing on what to do about it, and particularly on the details of the climate change levy. There are many details that need to be resolved quickly, if the Government have not already taken decisions on them.

There are serious issues concerning, as the hon. Member for Ceredigion (Mr. Dafis) said, the distributional effects from manufacturing to services, and from the north of the country to the south. It should be within the bounds of possibility to construct a scheme allowing for that. Another issue is the impact on renewables and combined heat and power, and it is critical that they should be exempt. It would be utterly self-defeating if the levy were introduced without such exemptions.

I recently visited two companies in my constituency, which I shall not name for reasons of confidentiality. It is interesting to observe the way in which some companies have responded to the proposed introduction of the levy. These two companies are traditional, well-established and well-managed companies, operating in old premises. They have calculated that they will be between £20,000 and £50,000 a year worse off as a result of the climate levy as currently proposed.

It struck me that the management of the companies accepted the need for the levy, and certainly accepted the existence of climate change. Management's concern was about the immediate impact on the company, and the broader impact on manufacturing. In my discussions with the two companies, it occurred to me, first, that they were the only two companies in my constituency that had contacted me, which is a significant indication that the principle is broadly established. Three years ago, that was not the case, so opinion within industry seems to have shifted substantially.

I was struck, secondly, by the two companies' apparent lack of appreciation of the extra help that they could get, both from the £50 million allocated under the levy, and through other sources, for energy efficiency. The Government must do a great deal more work to publicise and promote the assistance that is available for energy efficiency, especially to small and medium-sized enterprises. The larger companies know what is available, because they have the specialist staff to do the necessary work, or if they do not have the expertise in-house, they know how to buy it in. For small and medium-sized companies, there is much work to be done to promote the concept of energy efficiency and provide advice to them.

We should not focus entirely on the climate change levy. The Government have a much broader programme for responding to climate change. The fuel duty escalator is part of that, and I hope that the Government will stick by the escalator as the years go by—not necessarily at exactly the same percentage, but as an important principle. It should be emphasised that the fuel duty escalator is a fair and progressive tax, because by and large, distance travelled by car closely equates to level of affluence. The Government have already made major strides in tackling fuel poverty, and have significantly increased the investment in assistance for energy efficiency.

If we focus entirely on the details, we are in danger of missing the big picture. My hon. Friend the Member for East Carmarthen and Dinefwr (Mr. Williams) accurately painted the big picture, which we cannot ignore. In all our efforts to construct a climate change levy that is workable and that does not damage manufacturing industry excessively, we must realise that if we do not act, and if the levy and other policies are not introduced, in 20 or 30 years it will be extremely difficult to sustain any kind of manufacturing industry. The latest information suggests that we should not aim for reductions in CO2 of only 12.5 per cent. or even 20 per cent., but that within a generation, reductions of 50 per cent. will be necessary.

The strongest argument for the Government to act now is not just that it was a manifesto commitment to move to a 20 per cent. reduction, and not simply that our environmental leadership is part of our international credibility—we cannot over-emphasise the prestige that the United Kingdom has gained on the international stage because of its willingness to lead from the front in the Kyoto negotiations and on environmental policy generally—but that if we do not act now, in 10, 20 or 30 years the challenges facing us will be even greater.

Our future choice is represented by one of two scenarios. Either we must move as quickly as possible to an economy based largely on renewable forms of energy, and a reduction in the burning of hydrocarbon fuels is an essential stage towards that, or in the early years of the next century, we and other western nations will be engaged in an almost permanent series of wars with countries in the middle east that control the last remaining oil reserves. The prospect of permanent war with Iraq over the dwindling oil reserves on the planet is not a viable scenario or one that many people in this country want to envisage.

There is, therefore, an urgent need to tackle climate change and to reduce our dependency on fossil fuels. The climate change levy is an important part of that. I hope that the Government will stick not only to our legally binding target of 12.5 per cent., but to our manifesto commitment of 20 per cent.

11.56 am
Mr. Matthew Taylor (Truro and St. Austell)

I echo the closing comments of the hon. Member for Bury, North (Mr. Chaytor) and appeal to the Government to stick to their 20 per cent. target.

I shall not rehearse the arguments for tackling climate change or the evidence for the process of catastrophic climate change that we face. Time is short, so I shall concentrate on practicalities, not least for the reason mentioned by the hon. Member for Bury, North—the reality of climate change is widely accepted, except by a tiny minority in the House and outside.

I shall focus on the process of introducing environmental taxes, and the series of mistakes made by Governments that have brought that process into question politically. The hon. Member for East Carmarthen and Dinefwr (Mr. Williams) highlighted the political difficulties in tackling the issue. We must change ways of life and ways of doing things, though perhaps not as much as people imagine. There are alternative ways that need not make us poorer, but may protect our environment. Nevertheless, these are politically contentious issues.

The way in which Governments have gone about introducing the three significant environmental tax changes that have been introduced during my time in the House has considerably undermined the process. The first was the claim by the previous Conservative Government that VAT on fuel, which they introduced contrary to the promises in their general election manifesto, was an environmental tax measure. That caused serious problems in making the case.

First, the tax was not well directed at the issue, and it was not a carbon tax—it applied to all fuel and was particularly burdensome on the domestic sector. Secondly, it was contrary to a manifesto promise, so no attempt had been made to establish the basis for it. Thirdly and most significantly, it was a means of raising tax, and was never intended as an environmental tax. By dressing up a tax grab as an environmental tax change, the Conservative Government undermined the case for environmental taxes.

To win the case for environmental taxes, there must be a tax shift, not a tax increase. Why should people accept the need to pay ever more tax by the back door, simply because it is dressed up in a green way? That is no more likely to be popular than any other tax increase. However, if there is a tax shift—if there is a clear cut in other taxes—it can be popular.

The second environmental tax that was introduced, the fuel escalator, had greater success in its early life, partly because the need for it was better understood and, more importantly, because it had broad cross-party support in the House. Both the then Labour Opposition and we Liberal Democrats had the opportunity to stir up opposition to it, because it was a tax increase and failed on that score again, but that opportunity was not taken. Of course, we had points of disagreement on the basis on which it was introduced.

We believe that the fuel duty escalator should have been used to cut other taxes directly, most significantly by abolishing vehicle excise duty—the annual car tax—for most car owners. Something should have come back to people, which would have left many poorer drivers, including those in rural areas, better off as a result. Nevertheless, it was introduced as a necessary measure without coming under the sort of attacks that the Conservative party is making in opposition. Those attacks are particularly disreputable, because it is seeking to wipe out history—it introduced the measure in the first place—even though the escalator was introduced for important environmental reasons which have since become more important.

The fuel duty escalator was not an easy tax to introduce, and it had a more direct impact at the petrol pump and became a significant political issue when oil prices rose. I would have understood if Conservative spokespersons had wanted to review it in the circumstances, but they effectively deny their part in the process. However, the fundamental problem has been that people have received nothing in return: taxes have not been cut, at least not explicitly, nor has there been direct investment in improved public transport, which people might have considered to be an alternative.

Mr. Brake

Does my hon. Friend agree that it is incumbent on any political party that proposes abolition of the fuel duty escalator to say where it will get the extra tax take from?

Mr. Taylor

That will certainly come up in the Budget should such a move be made. It could be one use for the election war chest, but I would rather see investment in education and health.

The climate change levy succeeds in one key area in which the other two measures did not: there is an explicit link to a tax cut—national insurance. We will reduce taxes on a good—jobs—and instead put a tax on a bad—pollution. Although the Treasury has accepted that argument, the problem is that the tax is not well tuned to environmental issues because the process has been Treasury rather than environment led. The measure is undermining its own case once again and, therefore, the case for other environmental taxes.

The climate change levy is not a carbon tax and goes across the board on fuels, including renewable energy and combined heat and power schemes. As long as that is the case, it cannot credibly be argued that it is an effective environmental tax because we will be taxing the very things to which we want people to switch. If we simply wanted people to use less energy, that would be correct, but we do not want that. There is nothing wrong with using energy and the goods it provides; the use of carbon fuels is the problem.

The measure is being introduced in one go, but the Liberal Democrats propose that a carbon tax should be introduced gradually at about 1 per cent. per annum to stabilise the fall in fuel prices and to give a clear indication that, in the long term, there will be a gradual pick-up. That would be a signal to business to change its capital investment priorities so that higher priority was given to fuel saving, and it would allow it to engage in a process of change. Introducing the measure in one go simply tells business that it will be paying for its past decisions and that there will be no way out until that process of capital renewal takes place over the longer term. That has fundamentally undermined the tax with industry.

As a result, industry is mounting a campaign effectively to emasculate the tax so that it will have no real impact where it could be of most use in reducing energy consumption and is asking for all sorts of cuts, discounts and exemptions. The measure was badly designed for the purpose it was meant to serve and, if recent newspaper reports are to be believed, the fear is that that may lead to the virtual emasculation of the levy. If that were to happen, for the third time in a row, bad tax design would have undermined the principle of environmental taxes, which I very strongly support.

12.4 pm

Mr. Mark Fisher (Stoke-on-Trent, Central)

I congratulate the hon. Member for Carshalton and Wallington (Mr. Brake) on initiating a further debate on this important issue. Like other hon. Members, I welcome the general intention behind the climate change levy and what the Government are seeking to achieve, but can my hon. Friend the Minister ensure that the way in which the Government put these proposals into practice does not inadvertently discriminate against manufacturing industry in general and those manufacturers who have invested heavily in recent years in reducing emissions in particular? The Government's stated aim of achieving revenue neutrality across the economy could, I fear, inadvertently lead to precisely such discrimination and imbalance.

The hon. Member for Ceredigion (Mr. Dafis) highlighted exactly that point and considered the measure geographically, from area to area. I agree with what he said, but I am sure that he agrees that we must also consider its impact from sector to sector. It could mean—and, if crudely interpreted, it will mean—that service industries such as banks, insurance companies, shops, hotels and offices in general will benefit in relation to manufacturing industry. That cannot be the Government's intention and is surely the wrong approach. Indeed, it would damage manufacturing industry, and so jobs and exporters, all over the country.

Unlike my hon. Friend the Member for Bury, North (Mr. Chaytor), I have been approached by companies in my constituency—almost every ceramics company, for example, and other large manufacturers such as Michelin. That may not come as a surprise to him, but, like him, I have been impressed that companies have recognised that the overall intention is virtuous. I have also been impressed by the way in which so many companies—famous names such as Wedgwood, Royal Doulton, Spode, Dudsons, Steelite, Portmeirion, H. and R. Johnson and Gerald Tams, which are the cream of our ceramics industry—have made huge efforts to invest in energy-saving techniques over the past 10 years. They have done so for their own benefit and for their own profits, but also to try to save jobs and ensure the continuity of their industry, so it would be perverse if their good work was not taken into account.

However, precisely because those companies invested in the past, the easy pickings of savings over the next few years will not be available to them as they will be to less responsible manufacturers, who will easily be able to achieve substantial savings when the levy is introduced. I cannot believe that the Government want to introduce a levy that would benefit irresponsible manufacturers over responsible manufacturers who have so invested.

There are further hidden problems. How will companies such as Acme Marls in Stoke-on-Trent, which makes kiln furniture, be treated? It has been developing a new generation of kiln furniture that will conduct energy more efficiently and reduce the energy needs of its customers. Producing that furniture is more energy expensive and, perversely, it will be increasing its energy costs in order to pass on to its customers techniques that will reduce energy consumption considerably. What it is achieving overall is virtuous, but there is a danger that it will be penalised because its energy costs will increase in order for it to save energy for other people.

Those examples show that implementing the measure will be a great deal more difficult than it appears to be at first, and I welcome the discussions that the Government have been having with manufacturing industry in general, in which the British Ceramic Confederation has been taking part. I hope that that suggests that they recognise the importance of manufacturing industry. We are not a service industry economy; manufacturing industry employs more than 4 million people and still accounts for 60 per cent. of our exports. We must listen to its concerns, particularly the concerns of responsible manufacturers.

I hope that the Government will take those points on board when the discussions with manufacturing industry come to fruition and that they find a way of implementing this important levy in a way that benefits manufacturing and encourages it to invest in energy-saving techniques. They should not penalise the most responsible manufacturers.

12.10 pm
Mr. Damian Green (Ashford)

I join other hon. Members in congratulating the hon. Member for Carshalton and Wallington (Mr. Brake), who deserves our thanks for allowing us to debate the important issue of climate change. I am also happy to assure hon. Members, such as the hon. Member for Bury, North (Mr. Chaytor), that Conservative Members take climate change seriously. Although there is still some scientific controversy about whether climate change is caused entirely by human activity or by a curious cyclical pattern that we do not yet understand, I certainly feel that the precautionary principle should apply, and that we should not take the risk with our planet of not doing something about such change.

The hon. Member for Carshalton and Wallington said that the Government have more to do at Bonn, and I entirely agree with him. Moreover, quite apart from Ministers' own activities—which I shall deal with in a moment—one might wish that they would be more persuasive than they have been to date in persuading the United States Government to sign up to the international commitments on climate change, as that would send the most important signal in persuading other countries to fall into line.

Many hon. Members have dealt with the fuel duty escalator. It is absurd for Liberal Democrat Members to advance the proposition that, once a tax has been introduced, it should not only continue for ever, but be increased for ever. That seemed to be the position that they were expressing in this debate. I remind the House that the tax was introduced as an escalator. What does one do when reaching the top of an escalator? One gets off it. One does not say, "We are staying on the escalator, and we shall make it even steeper."

We have all read leaked reports that the Chancellor has listened to focus groups and is planning either to drop the escalator entirely or to modify it. I therefore caution those Labour Members who have spoken so strongly in favour of the escalator that they may be going off message.

Mr. Brake

The hon. Gentleman did not hear me or my hon. Friend the Member for Truro and St. Austell (Mr. Taylor) express the view on taxes that he attributed to Liberal Democrat Members. The fuel duty escalator can, of course, be revisited. The official Opposition should perhaps also revisit their own budgetary figures, which still include the fuel duty escalator.

Mr. Green

I am happy to receive the usual confirmation that the Liberal Democrats are capable of changing policy in the course of a one and a half hour debate.

The hon. Member for East Carmarthen and Dinefwr (Mr. Williams) made a very important point on forestry and the use of trees as a counter-balance to CO2 emissions. I entirely support him on that important initiative, and urge him and other hon. Members to act strongly against the type of planning proposals made in the past few weeks by planning inspectors, particularly in the south-east of England, which would entail concreting over large green areas and, inevitably, the loss of much tree cover. Giving effect to such proposals would be extremely dangerous.

The hon. Member for East Carmarthen and Dinefwr specifically mentioned various parts of the country that once had many trees. Our remaining areas covered by trees are precisely those that the Department's own planning inspectors are advising should be concreted over. [Interruption.] I am fascinated that Labour Members find that amusing, but suspect that their constituents might take a different view on the matter.

At Bonn, Ministers will have to defend their record. Before the general election, they set their sights very high, claiming to be the first truly green Government whom Britain had ever had. Only Labour Members who are very deluded or very desperate for office could believe that that promise is being met. However, those who are most concerned about the environment in the United Kingdom certainly do not believe that it is being met.

The head of policy at the Royal Society for the Protection of Birds has said that the Prime Minister

is not interested in the environment and he has surrounded himself with advisers who are not interested either.

Friends of the Earth, commenting on the so-called green taxes in the most recent Budget, said that the Chancellor's

so-called 'green' Budget measures are just tokenistic. They will not combat climate change.

Rebellion is mounting even inside the Labour camp. In the past couple of weeks, the general secretary of the Fabian Society—which is possibly not often quoted by Conservative spokesmen—has published a pamphlet stating: It's evident that new Labour is not comfortable on this territory. Labour does not perceive environmental issues to be major priorities for ordinary voters. In fact they tend to see them as positively anti-voter. I could not have put that better. The Fabian Society believes that the Government are not interested in environmental measures, but actively hostile to many environmental policies.

Before the general election, the Government not only wished to sign up to the Kyoto commitments, as they eventually emerged, but set themselves an extra, voluntary hurdle. Subsequently, we have seen the Government consistently slithering around on the issue, consistently softening their language, so that a commitment has become an "aim", a "target" and a "goal". One thing that the Minister could do today is to give the House a firm assurance that the Government's commitment on the more stringent target is not being watered down.

I shall not enter a debate on whether and how many Ministers should resign if the commitment has not been met because, as has already been observed today, it is not due to be met until 2010, and, very possibly, we may all be occupying different Benches by then. Nevertheless, the commitment is important, and I hope that the Government will stick to it.

What have Ministers done to combat climate change? The answer is, not much. Their first act was to change the planning system for power generation, to make it easier to build coal-fired power stations and to impose a moratorium on the use of gas, which is much cleaner. Although we all know the political reasons why the Government made the change, it would be hypocritical for any Government to make such a change and still to claim environmental credentials. Such a policy is simply not consonant with good environmental practice.

The Government's record on renewable energy has been equally bad. Solar energy has been mentioned often today, but hon. Members should be aware that solar energy is taken much more seriously in other countries. The German Government, for example, have established an explicit target of fitting 100,000 homes with solar panels. Japan's target is 70,000 homes. However, the British Government—who came to power claiming that they would be the greenest Government in history—have established a target of precisely 100 homes. I hope that the Minister will be able to express some contrition about that.

Environmental groups have noticed the Government's record on renewable energy. The RSPB has said that the Government's renewable electricity generation target is not clear and unambiguous—which, perhaps, it should be.

One thing that the Government can do is to set an example—which, in words, they certainly do. There is a fascinating document, entitled the "DETR Greening Operations Policy Statement", which is available on the DETR website and includes as part of the Department's own targets the reduction

of greenhouse gas emissions by controlling, where feasible, other gaseous and non-gaseous pollutants which contribute to climate change. For example by switching where possible from HFCs used as refrigerants and in fire extinguishing systems to environmentally preferable substitutes".

In July, in a parliamentary question, I asked a previous DETR Minister what percentage of the Department's refrigerators used hydrofluorocarbons, to which he replied: Decisions on the purchase of refrigerators are for the Department's local property centres and details are not recorded centrally."—[Official Report, 12 July 1999; Vol. 335, c. 12.] The Government have set their Departments a specific target on how to deal with what they acknowledge to be a very important matter, but they do not collect centrally details on achieving that target. Perhaps the Government's target was, appropriately enough, simply hot air. If they will not set themselves targets or collect information on them, they are simply not taking the matter seriously.

I cannot improve on the arguments that have been made against the climate levy by hon. Members on both sides of the House. If the Government think that the levy is an appropriate green tax, they are simply wrong. As the hon. Member for Ceredigion (Mr. Dafis) said, the levy would be perversely redistributive. Subsequently, some hon. Members discussed how to establish new and complex distributive mechanisms, whereby the tax would be taken from companies in one part of the United Kingdom, distributed to companies in another area—where they may not deserve it—but then taken back by the Government, to be redistributed to more deserving areas. The levy will not be an effective brake on carbon emissions and the need to devise elaborate redistribution mechanisms shows that the Government should do more than the softening that one assumes that they will announce next week. They should scrap the levy so that they can start again with something more appropriate.

The Minister should go to Bonn with a deep sense of humility. Britain's contribution to combating global warming under this Government has been profoundly inadequate. Hon. Members on both sides must hope that Ministers will do better on that vital issue in the second half of this Parliament.

12.20 pm
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Keith Hill)

I congratulate the hon. Member for Carshalton and Wallington (Mr. Brake) on securing a debate on one of the most important environmental challenges facing the world. He raised several important issues during his interesting speech. I shall deal with them at various points in my reply. I thank him for his courtesy in having given me notice of his main areas of concern.

The debate has been notable for the high level of participation by representatives of the Principality. My right hon. Friend the Member for Alyn and Deeside (Mr. Jones) is always a powerful advocate of the steel industry. He referred to the climate change levy, as did my hon. Friends the Members for Vale of Glamorgan (Mr. Smith) and for Stoke-on-Trent, Central (Mr. Fisher), and the hon. Member for Ceredigion (Mr. Dafis). We have also heard exceptionally well-informed speeches from my hon. Friends the Members for East Carmarthen and Dinefwr (Mr. Williams) and for Bury, North (Mr. Chaytor), as well as a thought-provoking contribution from the hon. Member for Truro and St. Austell (Mr. Taylor). I am also grateful for the highly environmental contribution of the hon. Member for Ashford (Mr. Green), who represents, if I may say so, the green wing of the Conservative Front-Bench environment and transport team. I hope that he is not too isolated there.

The debate is timely, coinciding with the fifth conference of the parties to the UN framework convention of climate change in Bonn. If climate change is allowed to proceed in the absence of policies to limit greenhouse gas emissions, serious damage is expected, threatening global food production, leading to the loss of ecosystems and forcing millions of people to move from our coastal communities. To improve our understanding of such dangerous levels of climate change, last week we published a report on the global impacts of climate change. Compiled by the Hadley centre and other researchers, the report explores the impacts that we might expect if levels of carbon dioxide in the atmosphere were stabilised at 550 parts per million and 750 parts per million—in other words at about twice pre-industrial and present day levels respectively. To reach those levels, global emissions of greenhouse gases would have to be cut significantly. This is the first time that climate predictions from such action have been used to assess global impacts and vulnerability.

The results make worrying reading. Without limits on emissions of greenhouse gases, many parts of the world will suffer severe consequences during the next century. As is often the case, the poorest and least developed countries will be the most vulnerable and the least able to respond. Climate change will add to the problems that many countries already face, such as flooding, hunger and water shortages.

Despite those stark projections, the research shows that there is still time to act. If we can limit emissions, we can slow the rate of change and minimise many of the worst impacts. By stabilising carbon dioxide at 550 parts per million—the level proposed by the European Union to guide emissions reduction efforts—we can limit future temperature rise to an additional 2 deg C, avoid the loss of tropical forests in northern Brazil, prevent 2 billion people experiencing increased water shortages by the 2080s and reduce by about 75 million the number of people flooded each year.

The message from the research is clear: we must take early action if we are to avoid the worst effects of climate change and buy time to adapt. However, without early action to limit emissions of greenhouse gases, the rate of change will increase throughout the next century. Those changes will impact on society in unprecedented ways. Fortunately, the international community has begun to respond to the threats.

The UK has been at the forefront of international negotiations on climate change. We were instrumental in securing the deal at Kyoto in 1997. That was a truly historic step, when, for the first time, developed countries committed themselves to reducing their combined greenhouse gas emissions by an average of 5.2 per cent. below 1990 levels by 2008–12. The European Union agreed to reduce emissions by 8 per cent. and the subsequent redistribution of the Kyoto target in the EU was agreed under the UK's presidency. Under that agreement, the UK's target is a 12.5 per cent. cut. We have gone further by setting ourselves a challenging domestic goal of a 20 per cent. cut in CO2 emissions by 2010.

Our immediate priority is to make Kyoto work. Last year in Buenos Aires, we agreed an ambitious work programme that set the sixth conference of the parties—COP 6—as the deadline for reaching decisions on many of the outstanding issues including the Kyoto mechanisms. COP 6 is not far away. It will be held at the end of 2000 or early in 2001. There is still a lot of work to be completed if we are to meet the deadline.

Over the next week or so, COP 5 will concentrate on making as much technical progress as possible. My right hon. Friends the Deputy Prime Minister and the Minister for the Environment are attending the ministerial segment in the middle of COP 5, which is intended to review progress and help give a renewed political impetus to negotiations.

The Government remain committed to ensuring that the UK meets its climate change targets. We are developing a new climate change programme that will set out how we plan to meet our Kyoto target and move towards our domestic goal. We aim to publish our draft programme for consultation around the turn of the year and to have a final programme in place by mid-2000. The climate change levy will be one of the key elements of our draft programme. Details of the design of the levy are still under consideration following a period of consultation. My right hon. Friend the Chancellor will make further announcements in the pre-Budget statement on 9 November. However, the House will be aware that the Government made it clear that we intend to negotiate agreements with energy-intensive sectors for reduced rates of the levy. At the same time we have said that an additional £50 million will be recycled from the proceeds of the levy to support renewables and energy efficiency.

Mr. Win Griffiths (Bridgend)

Will my hon. Friend give way?

Mr. Hill

I regret that I cannot because I am so pressed for time.

I hope that the House agrees that we have adopted a properly balanced approach. We have been keen to stress that action to tackle climate change can bring gain, not pain. A more energy-efficient industry will be more competitive. A better transport system will be good for the economy and for society. Better insulated homes will be more comfortable and cheaper to live in. There are tremendous opportunities for business and for jobs in the traditional and emerging environmental technologies.

Actions speak louder than words. Policies already introduced show that we mean business. Our new integrated transport policy provides a framework for a range of measures that will deliver a better-quality transport system with lower CO2 emissions. Changes announced by my right hon. Friend the Chancellor to transport taxation will cut emissions. The new climate change levy will encourage businesses to use energy more efficiently. In March this year, we published a consultation paper on "New and Renewable Energy: Prospects for the 21st Century", which outlines the options for providing 10 per cent. of UK electricity supplies from renewable sources as soon as possible. We are working with business to develop a domestic emissions trading scheme which will give UK firms valuable experience in advance of the launch of an international scheme. We are committed to publishing our first report on whether to set a national road traffic reduction programme target by the end of this year.

Climate change is a multi-disciplinary issue which will impinge on all regions and sectors. It is a global problem which will ultimately require substantial global action to reduce emissions. However, we all have a part to play in raising awareness about climate change and tackling its causes. I thank hon. Members for their contributions to this instructive and interesting debate.