MPs slam UK Government's decision for carbon budget review

A new report by MPs on the Environmental Audit Committee, released today, welcomes the Government's decision to set the fourth carbon budget – required under the Climate Change Act – at the level recommended by the independent Committee on Climate Change. But it questions the Government's decision to announce a review of this budget in 2014 in response to fears that it could be bad for business.

The MPs warn that the prospect of a review could weaken investor confidence in low carbon industries as it creates uncertainty about the future course of emissions reductions.

Joan Walley MP, chair of the Environmental Audit Committee, said: "The long term carbon-cutting commitments set out in the Climate Change Act are supposed to provide certainty that Britain is determined to reduce emissions by 80 per cent by 2050.

"Unfortunately, the Government's somewhat schizophrenic attitude to climate change seems to be undermining that confidence.

"The Chancellor's comments last week show that five years on from the Stern report the Treasury still doesn’t get climate change – or the risk it poses to global stability and economic prosperity.

"While the Prime Minister is to be commended for not faltering when setting the fourth long-term carbon budget, he risks throwing the UK’s climate targets off-course by instigating a review in just three years time that could overturn the commitment.

"Backtracking on the Government's green promises now would be a big mistake.

"Green investment should be seen as a 'win-win' solution to our economic problems; helping to stimulate growth and rebalance the economy, at the same time as reducing pollution."

In setting the fourth carbon budget, the Government announced that it would bring forward a package of measures to help energy intensive industries most at risk of so-called 'carbon leakage'.

According to today's report, there should be a robust sector-by-sector assessment of whether jobs and production could be displaced by the UK's carbon budgets. Any assistance offered by ministers must be based on hard evidence and retain a strong incentive to reduce emissions, it urges.

The 2014 review could ease the budget if the UK's emissions reduction trajectory is steeper than that required by the EU's Emissions Trading System. However, as the Committee on Climate Change has said, its recommended carbon budgets, should be regarded as an absolute minimum – less ambitious budgets would make the UK's 2050 climate change targets harder and more costly to achieve.

Zac Goldsmith MP, a member of the Environmental Audit Committee, said: "The one risk that all investors highlight when they consider putting funds into clean technology is policy change.

"It is therefore absolutely crucial that policymakers recognise that with the stroke of a pen, they can make a good investment bad.

"Unless they provide real long term certainty, the transition to a low carbon economy will be slower and bumpier than it needs to be."

The MPs strongly support the mandatory emissions reporting by business in order to aid transparency and illustrate the contributions that companies are making, and need to make, to help tackle climate change.

Joan Walley MP, said: "Ministers must not row back from the commitment to introduce mandatory emissions reporting by businesses.

Mandatory emissions reporting will allow companies to make informed choices about where they can make the biggest energy savings and improve efficiency."

Zac Goldsmith MP, added: "95 per cent of FTSE100 companies already report their emissions voluntarily, and a great many other companies are calling for the introduction of mandatory reporting, so I hope ministers will have the confidence they need to introduce this crucial measure."

The report also criticises ministers for dropping plans to require Government departments and local authorities to budget for the carbon emissions produced by their policies and operations.