Treasury Committee: Inquiry

CLIMATE CHANGE AND THE STERN REVIEW: THE IMPLICATIONS FOR TREASURY POLICY

 | Report and oral and written evidence | Government Response |

Treasury Committee calls for creation of new ministerial post to champion co-ordinated approach to climate change.

The Treasury Committee on 5 February published its fourth report of Session 2007-08, Climate change and the Stern Review: the implications for Treasury policy (HC 231). The Committee welcomed the Stern Review’s contribution to the debate, in particular its focused on the use of economic tools such as environmental taxes and permit trading schemes as cost-effective ways to cut emissions, which it saw as essential to combating climate change.

Champion of Climate Change:

Many Government departments are involved in climate change programmes and while the Report welcomes the establishment of the Office for Climate Change (OCC), which seeks to promote cross-departmental cooperation, it concludes that there is a need for ministerial accountability in this important area.

Committee chairman, John McFall MP said:

“A coordinated approach to climate change across Government departments is vital to ensure joined-up policy-making. The Office of Climate Change goes some way towards this, but not far enough. It needs to be headed up by a Minister-someone who can become an effective Champion of Climate Change across Government.”

EU Emissions Trading Scheme:

Whilst welcoming the concept of the use of economic tools for environmental aims, the Report criticises the way they have been applied in certain cases. For example, it considers that Phase I of the European Union Emissions Trading Scheme over-allocated permits and stresses the need for the Government to strive for a much tighter  allocation in Phase II.

John McFall said:

“For environmental economic tools to have impact in changing behaviour they must have bite. The potential impact of the EU ETS has been hugely diminished by the over-allocation of permits in Phase I. The Government must do all it can to encourage our European partners towards tighter constraints.”

Environmental Taxation:

This report concludes that, despite its 1997 pledge to discourage environmental damage via the tax system, the Government’s commitment to environmental taxation has faltered.

John McFall said:

“We are very disappointed by the Government’s timid use of environmental taxes. True, they have introduced the climate change levy, and aggregates levy, but these are miniscule in the grand scheme of things. Overall, the Government has failed to match its 1997 commitment to increase the use of green taxes.”

Aviation:

The Report welcomes the Government’s proposal that Air Passenger Duty (APD) be replaced by ‘Per Plane Duty,’ but regrets that the Government has taken so long to do so. APD does not currently differentiate between full and half-empty planes, between flights to Morocco and flights to Australia, or between clean planes and relatively dirty planes. The Report urges the Government to ensure that cargo flights and private planes are included in the new regime and that tax differentials be introduced to encourage investment in cleaner technologies.

John McFall said:

“Air Passenger Duty is a very poorly-targeted tax, as it offers almost no incentive to airlines to improve their environmental record. Taxing flights rather than passengers makes a lot of sense from an environmental point of view, and the Government needs to ensure that a replacement for APD offers the right incentives for investing in cleaner planes.”

The Report also expresses concern that airlines are dragging their feet in cooperating on environmental schemes, and recommends that airlines adopt a system of eco-labelling, so that consumers can compare the environmental footprint of each airline when purchasing their tickets.

John McFall said:

“Aircraft emissions are a fast-growing component of the UK’s emissions, yet the aviation industry seems to be doing little about the problem. Our proposals for an industry-wide eco-labelling scheme would at least provide customers with the environmental information they need to make a choice between providers.”

Adaptation versus Mitigation:

The Report rejects the argument that the UK should focus its attention solely on the monitoring of climate change and adaptation to its effects, at the expense of the mitigation of emissions. It also recognises that many of the

As part of this inquiry, the Committee held the following evidence sessions:

Witnesses


Tuesday 23 January 2007

Professor Paul Ekins, Head of Environment Group, Policy Studies Institute

Mr Roger Wiltshire, secretary General. British Air Transport Association, Mr Andy Kershaw, Senior Manager for Environmental Affairs, Mr Andrew Barker, Planning Director, easyJet, and Mr Barry Humphreys, Director of External Affairs & Route Development, Virgin Atlantic Airways

Ms Kate Hampton, Policy Manager (Advisory), Climate Change Capital, and Mr Simon Roberts, Chief Executive, Centre for Sustainable Energy

Tuesday 6 February 2007

Sir Nicholas Stern, Head of the Government Economic Service, and Ms Lorraine Hamid, member of the Stern Review team

Rt Hon Lawson of Blaby, a Member of the House of Lords, and former Chancellor of the Exchequer

Wednesday 7 February 2007

John Healey MP, Financial Secretary to the Treasury, Ms Beth Russell, Head of Environment and Transport Tax Team, and Ms Rebecca Lawrence, Head of Environment, Food and Rural Affairs Team, HM Treasury

Tuseday 27 February  2007

Mr Rick Haythornthwaite, Chairman, Better Regulation Commission, and Mr Simon Bullock, Economy Campaigner, Friends of the Earth

MrDavid King, Director of Water Management, Mr Chris Hewett, Policy Development Manager, Evironment Agency, and Ms Farhana Yamin, Institue of Development Studies, University of Sussex

Captain Eivind S Vagslid, Technical Officer, Sub-Division for Pollution Prevention, Marine Environment Division, International Maritime Organisation, Mr Mark Brownrigg, Director General, Dr Mel Davies, Director of Development, BMT Ltd, and Mr Stuart Greenfield, Head of Marine & Safety, Carnival UK, Chairman of the Chamber of Shipping Enivronment Committee, Chamber of Shipping

Mr Phillippe Rochat, Director, Aviation Evironment, International Air tansport Association, and Mr Brian Pearce, Chief Economist, International Air Transport Association