Domestic Tradable Quotas (Carbon Emissions) (Hansard, 7 July 2004)

§ Mr. Colin Challen (Morley and Rothwell) (Lab)

I beg to move,

That leave be given to bring in a Bill to introduce a domestic trading scheme for carbon emissions; to set a national ceiling for carbon emissions; and for connected purposes.

The principle that underpins domestic tradable quotas—DTQs—has—been largely accepted internationally and nationally. Everyone who has taken a keen interest in combating climate change will be aware of the principles of emissions trading.

Many know that the United Kingdom has been a leader in such matters, that we have already established a limited emissions trading scheme and that it is augmented by similar action at European level, as well as by our national allocation plan, which is due to be operational next year. Emissions trading schemes generally work partly on the principle of what is known as contraction and convergence—we set a target to reduce or contract our emissions each year, and eventually our emissions are no greater than anybody else's. The concept of convergence means that we have a right to use only our fair share of carbon-emitting resources.

The Bill would extend those principles to the domestic market—that is, to members of the population at large. To date, the vast majority of schemes that any Government have introduced to address the terrible and overriding problem of global warming have relied on getting industry or organisations to adjust their ways. For individual citizens, there has been little more than encouragement, piecemeal energy efficiency grants or other forms of cajoling designed to inspire voluntary activity. However, that does not go far enough, fast enough.

There are too many opposite influences, which seem counter-intuitive to the ordinary consumer when it comes to doing something about global warming. The first of those influences is, frankly, cheap energy prices. The market has successfully driven down the price of energy in the past few years. At times, it has seemed as though that has been the energy regulator's only policy. Consequently, many people have come to believe that their energy is and always will be cheap. That means that any major investment, either in the grid, in combined heat and power or in renewables is perceived as some sort of imposition, which if pressed with any sense of urgency will lead to unacceptably high energy bills.

That is the worst form of short-termism, the implication being that, provided that the other costs of climate change do not hit us too hard—as happened, for example, with higher insurance premiums—we can dither on as before without worrying too much about the day after tomorrow, to coin a phrase. There is also an all-pervasive influence on the way in which individuals react to questions such as those posed in recent years by the Department for Environment, Food and Rural Affairs, namely, "Are you doing your bit for the environment? Are you turning off your light switches, TV and computer stand-bys? Are you recycling, composting and so on?"

842 The trouble is that when somebody who does all those things discovers that most people are not doing their bit—as indeed most people are not—it is incredibly depressing. People end up feeling that their little bit will not make the slightest jot of difference to the environment. Getting people—all 60 million of us—to act collectively is never easy, and it is even less easy, I acknowledge, when we feel it will cost us more, especially if a privileged few are seen to benefit.

Increased fuel duties have had a disproportionate impact on the worse off, as better-off people will always be able to afford higher petrol costs or electricity bills. In what we do to protect the environment, we should always seek to avoid giving an apparent benefit to one group as opposed to another just because they can afford it. So I am not keen on carbon taxation, which would have precisely that effect. The environment is something that we all share and enjoy, and Government policy should ensure that today's generations have equal opportunities to do so fairly and with respect to future generations.

The Bill stems from an idea that has been worked on by the Tyndall centre for climate change research, and I would like to pay homage especially to the work of Dr. Kevin Anderson and Dr. Richard Starkey on this subject. They are part of a group of people who are exploring ideas and methods for tackling climate change and seeking solutions through changing the way we run things, rather than simply pursuing the technological route—although the two are, of course, not mutually exclusive, and indeed in this case are highly complementary.

Domestic tradable quotas would extend the principle of emissions trading to individual citizens. All of us would be issued with our own equal share of the national carbon emissions cake. In the early years of the scheme, the allocation for most of us would be more than we required. For others it would be less. Between the two, a market in surplus carbon units would be established. The market would determine the price, and those who used less energy would obviously stand to make a gain. Carbon units would expire as the consumer used energy, so their opening allocation would reduce as they went along. Energy utilities would automatically deduct units from the individual's carbon allocation account each time they calculated a consumer's invoice.

Consumers would also have a transaction card—a smart card—that they could, for example, present at petrol stations, just as they now present their reward points cards to get air miles, free cutlery, the collected works of Elvis, or whatever. The technology needed to support the carbon emissions market is no longer a barrier. Those already familiar with reward cards would have no difficulty with this scheme, and the reward in this case would be incalculable. The technology for issuing these smart transaction cards could be combined with that used for another card currently under consideration by the Government, which could make that card even more popular than I think it will be.

In these 10 minutes it would be impossible to address all the detailed issues that arise from the Bill, and I would not deny that more work is needed on it. But as the realisation continues to sink in that global warming is no longer just a threat but a dangerous reality, we will certainly have to extend our response to it beyond the merely voluntary. To do that, we must have a scheme 843 that is equitable, fair and efficient. This is not rocket science; it is common sense. More people will do their bit for the environment if they know that it will make a difference, and understand that by the strength of our common endeavour we achieve more than we achieve alone.

I am not suggesting that we print those words—fine though they are—on the back of our smart cards, but when our Prime Minister takes the chair of the G8 summit next year, and indeed the presidency of the European Union, it would be the most serious challenge imaginable to his fellow leaders if he were able to say that the 60 million citizens of the UK were doing their bit for the environment, because that commitment alone would demonstrate that we had understood our uncompromising responsibility to face this challenge urgently and equally. In commending the Bill to the House, I urge hon. Members to take a look at the Tyndall centre's website, where they will find recent material explaining more fully how domestic tradable quotas might work.