Subordinate Legislation
Climate Change (Limit on Carbon Units) (Scotland) Order 2011 [Draft]
Welcome to the 12th meeting in 2011 of the Rural Affairs, Climate Change and Environment Committee. Members and the public should turn off mobile phones and BlackBerrys, as leaving them in flight mode or on silent will affect the broadcasting system. I have received apologies from Jim Hume and John Lamont.
Agenda item 1 is subordinate legislation. Members will take evidence from the Minister for Environment and Climate Change on the draft order. As the order has been laid under the affirmative procedure, the Parliament must approve it before the provisions may come into force. Following the evidence session, the committee will be invited to consider the motion to recommend approval of the order under agenda item 2.
I welcome the minister, Stewart Stevenson, and his officials, whom he will introduce. I invite him to introduce the order, too.
Thank you very much. I am accompanied by Liam Kelly and Jim Gilmour, in case Richard Lyle has another episode of diving down to the techie bowels of the issue.
The draft order allows for the use of carbon units for the period 2013 to 2017. The Scottish Government’s preference remains to aim to meet all our annual targets through domestic emissions reductions rather than to offset emissions through the use of carbon units, and we believe that the outcome of the spending review maintains momentum towards achieving our targets.
However, in an uncertain world, it was only prudent for us to accept the advice that the independent United Kingdom Committee on Climate Change provided to us that we should allow for the flexibility to use carbon units for the period 2013 to 2017, up to the 20 per cent limit, which means 20 per cent of our emissions. For clarity, if our target in a year was 3 per cent, we could use carbon units in relation to around 0.5 per cent. The 20 per cent limit was prescribed by the Climate Change (Scotland) Act 2009.
Liam Kelly and Jim Gilmour both work in the Scottish Government’s energy and climate change directorate. I would be happy to take any questions that the committee may have.
Good morning, minister. Thank you for your opening remarks and for what you said about my techie questions.
I refer you to the explanatory note on the order. I understand that the information in question was not provided by the Scottish ministers, as the note states:
“The UKCCC provided advice dated 1st July 2011 which is available at http”—
I will not read out the whole link, because it goes on and on. The techies might be able to handle that, but for the benefit of the ordinary Mr and Mrs Climate Change Worrier, can we ask for the link to be reduced to a more acceptable form, because it is a bit long?
Yes, I could certainly do that. That is quite an interesting point. Perhaps we could use one of the shortening services, such as Bitly, to get it down to around 12 or 14 characters. We will certainly look at that for the future.
The way in which the link is expressed is slightly complicated. Every time “%20” appears in it, that is just a space expressed in ASCII code.
I thought that every time you put in “%20”, it reduced your carbon emissions.
Now that we have resolved that techie point, we will hear from Graeme Dey.
You mentioned a 0.5 per cent limit on what you might purchase. What would that involve cost-wise? Can you reassure us that there is no intention to exercise the option?
For clarity, the 0.5 per cent was an example. The limit would be half a percentage point in a year in which our target was 3 per cent—strictly, the limit would be 0.6 per cent—but it will vary depending on the target for the year.
The cost is somewhat unpredictable. The schedule to the order has a table that shows the maximum number of units that we could purchase in each year. There is little demand for carbon units in the market because of the diminution in economic activity, so worldwide demand is lessening, particularly in the annex I countries—the developed world. The cost of carbon has gone down because economic activity has gone down and it is hovering down around £3 to £5 per tonne. A more realistic figure when one might consider exercising our rights is more likely to be in the range of £10 to £16 per tonne—we hope that it will be higher.
If we were to exercise our rights for all the years to the maximum extent possible and at the level of £16 per tonne—bearing it in mind that the cost is currently £3 to £5 per tonne—the absolute top figure would be just under £30 million. In the present environment, the figure would be a substantial way away from that—it would be less than £10 million at current prices and possibly as little as £6 million. That is good news if you are purchasing units, but it is bad news in that the pricing of units is part of market mechanisms to make people step up to the climate change agenda. We expect and hope to see the price of carbon rise as part of market mechanisms to persuade countries to take the agenda seriously, as we do.
In the current spending review period, we have made no financial provision for the matter. In fairness, that relates to the previous order that we made, which does not allow us to buy any units anyway. We certainly do not wish to spend the money. We will continue to direct our efforts at reducing our CO2 emissions.
Good morning, minister. I note that the primary legislation facilitated a cap of 20 per cent. Was any thought given to setting a lower percentage, between zero and 19.999?
Yes. The order before us is covered by section 21(2)(b) of the 2009 act and there are various subsections for periods right up to 2046. Section 22 gives ministers the power by order—it is therefore subject to parliamentary scrutiny—to change the dates and the figures; really, to change all these things. At this stage we are not minded to act on that and in any event, we would want the UK Committee on Climate Change’s advice if we were to do such things. There are constraints under section 22 on how and when we can do that. They boil down to saying that there must be a material change in circumstance before we can change any of the parameters that the orders permitted under section 22 allow for.
Thank you. That is most helpful.
My concern is very similar to Annabelle Ewing’s. I was not quite sure, and I am still a bit confused, about why we have an order that says the same thing as the 2009 act and why we have not given a signal about the undesirability of using carbon units by setting a lower limit. From your response to Annabelle, I am a bit confused about why we need an order at all if we have no flexibility to do anything.
We require an order. Section 21(2)(b) of the 2009 act requires that an order be approved by the Parliament by 31 December 2011. The act does not require the numbers in such an order, but it requires that the order be approved. There are saving provisions—if we do not approve the order by that date, that must be done as soon as is reasonably practical thereafter—but we aim to make the order by the end of this calendar year.
The period in which the effects of the order would apply covers 2013 to 2017. The reporting on years runs in the order of two years in arrears, so we will not know the outcome for 2017 until 2019. Therefore, the order is permissive and allows us to exercise in 2019 the rights to use carbon units that could be exercised if the 2017 figures are not in alignment with the targets. The advice that the UK Committee on Climate Change gave us is that we should have that option available to us. However, given that that costs real money—actual cash out of the Government’s coffers—we are directing our efforts and our spending towards ensuring that we meet the targets in the previous orders, the most recent of which was laid in October and relates to the period up to 2027. Our efforts are focused on not having to spend that money.
Lynne Ross, representing Scotland’s 2020 climate group, said to us that the Government and the Parliament should recognise that
“ambitious, long-term and unambiguous signals are necessary to underpin and further build confidence in the low-carbon transition on which we are embarked.”—[Official Report, Rural Affairs, Climate Change and Environment Committee, 21 September 2011; c 152.]
Do you think that approving the order in any way undermines that ambition?
When I took the Climate Change (Scotland) Bill through Parliament in 2009, I said that we, as politicians, should not second-guess the science. At every stage in the process—first, with primary legislation and, subsequently, with the orders that flow from that—we have taken the advice of the UK Committee on Climate Change, which is our adviser on the matter. For that, we pay 8.4 per cent of its costs, which in the most recent year was £294,000. We have advisers who are looking at the picture and who are simultaneously telling us that we are on course to meet our targets and that, as I said to Dr Murray, there are sufficient uncertainties looking to 2019 that we should allow an order to be there to be exploited later. If the Government were to spend the money, there would need to be a budgetary provision for that, requiring a debate and Parliament’s approval that the money be spent in that way. So, this is not necessarily the end of the story; this relates merely to section 21(2)(b) of the 2009 act, which requires that the order—whatever its contents—be approved by the end of the current calendar year.
Thank you, minister. There are no further questions from committee members.
Agenda item 2 is consideration of motion S4M-01313, calling for the committee to recommend approval of the affirmative instrument. The motion will be moved and there will be an opportunity for a formal debate. The debate can last up to 90 minutes but, in practice, most of the issues will have been covered in the evidence session with the minister, so the debate should not last as long as that. It should be noted that Scottish Government officials cannot take part in the formal debate. I invite the minister to speak to and move the motion.
I suspect that our previous debate has covered the substantive issues.
I move,
That the Rural Affairs, Climate Change and Environment Committee recommends that the Climate Change (Limits on Carbon Units) (Scotland) Order 2011 [draft] be approved.
Motion agreed to.
I thank the minister and his officials for being with us.
Thank you, convener.
I suspend the meeting until our next witnesses are seated.
10:15
Meeting suspended.
10:20
On resuming—