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We do not oppose this order, but we consider that it leaves some important questions unanswered. We suggest that, once the agencies have had an opportunity to consider the effects of the fees proposed, the Minister should invite interested parties to a round-table discussion. The practical implications could be explored in much greater detail than is possible across the Floor of the House to see where there is some flexibility, and further representations could be taken on board.
Lord Tomlinson: My Lords, I thank my noble friend for introducing this order, which I very much welcome. I was not going to intervene in this debate, but I feel slightly provoked by the noble Lord, Lord Avebury, who anticipated the regulations about the details of the fees. As he has made so much critical comment about them, I shall welcome part of yesterday’s announcement, particularly the relatively modest increase in fees for overseas students and visitors coming to the United Kingdom. These areas of economic activity are extremely important to this country. The revenue from overseas students is vital to the funding of our higher education system, and the revenue from tourism is a vital income for the national Exchequer. The modesty of those fee increases is to be welcomed. I will cross swords with the noble Lord, Lord Avebury, on one or two of the points that he made when we come to discuss the relative priorities of this legislation.
I shall conclude with a few words of praise for a frequently attacked department of state, the Home Office, and, in particular, the Immigration and Nationality Directorate. The changes in policy, particularly those that come with the programme for managed migration, which will fundamentally change the system by which visas are issued, are essential and need to be introduced with all expedition. Alongside welcoming that programme, I congratulate the Minister’s department and the Immigration and Nationality Directorate on the level of public consultation that they have engaged in, which has made sure that the vast majority of stakeholders have
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Baroness Scotland of Asthal: My Lords, I thank my noble friend for his expressions of gratitude and congratulation and I thank the noble Viscount, Lord Bridgeman, for the brevity and completeness of his support.
My noble friend Lord Tomlinson is right that we are doing two separate things. The noble Lord, Lord Avebury, will be aware that in order to implement a new flexible charging model for in-country immigration and nationality applications, we need to use a combination of secondary legislation to set out the new fees. It is a two-stage process. We need to take a Section 51 order through the affirmative process in both the Commons and the Lords. That is this order, which sets out the principles of a flexible approach and the routes that we intend to apply to the new model. That is the first stage. Only when that first stage is complete in both Houses are we entitled to move to the second stage and to take regulations made under Section 51, in reliance on Section 42, through the affirmative process in both the Commons and the Lords, detailing the new fees where they have been set at levels above simple cost recovery. The dates for the future debates will be set in due course.
The whole purpose of issuing the information as soon as we could with this order was that the House would have the advantage of seeing the principles on which the fees were to be set and of deciding whether they were acceptable—and I am grateful for the indication of the noble Lord, Lord Avebury, that he does accept them. After that, we will have a fuller, detailed debate about all the other issues that the noble Lord has properly raised on fees and citizenship and on how education and other factors are dealt with. I thank him for the fullness of the questions, because it will be enormously helpful in preparing for that second debate to have an opportunity to look at those issues.
There will be a gap between this order and the regulations. I hope, therefore, that when the noble Lord has a moment of more mature reflection, rather than looking at this so quickly—and I commend him for the speed with which he has absorbed all this information to make the critical questions so clear—he will be able to come back so that we can deal with the matter appropriately.
I endorse what my noble friend Lord Tomlinson said. We have spent some time and not inconsiderable trouble in researching this issue comprehensively—more comprehensively perhaps than such issues have ever been researched before—so that we understand it better and can target the fees in a way that makes sense for those who wish to take advantage of the services that we will provide and, we hope, provide ever more efficiently. We very much take into account the worries and concerns of the different sectors, not least about education. I pay credit to my noble friend Lord Tomlinson, who has been of great assistance and who has participated with great energy in this consultation process.
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I hope that, with the assurance that we can come back to all these issues when the regulations come into play, the noble Lord will be content to have that fuller debate at that time. I thank him for his gracious acceptance that this order, which sets out the framework within which the fees will be set, is something with which he and his party can concur.
On Question, Motion agreed to.
Aviation: Emissions Trading Scheme (EUC Report)
4.58 pm
Lord Woolmer of Leeds rose to move, That this House takes note of the Report of the European Union Select Committee on Including the Aviation Sector in the European Union Emissions Trading Scheme. 21st Report, Session 2005—06, HL Paper 107.
The noble Lord said: My Lords, before I start my principal remarks, perhaps I may first extend the apologies of the current chairman of Sub-Committee B, the noble Lord, Lord Freeman, who is unable to be here this afternoon. He conveys his deep apologies to the House. This is an unexpected speech because I previously thanked everyone on Sub-Committee B when I spoke in a debate after standing down as chair. I repeat those thanks in relation to this inquiry. Sub-Committee B has again, as always, worked assiduously, with, again as always, the help of the Clerk.
For the purpose of today's debate, I will assume that there is broad agreement, at least in Europe, that climate change is a cause of concern; that manmade greenhouse gas emissions are a causal factor in climate change; and that there should be a major effort to reduce manmade emissions. Not everyone around the world agrees with those assertions, of course, but they provide the context for the European Union Emissions Trading Scheme and for the ongoing debate on whether to include aviation within it.
That was the starting point of Sub-Committee B of the European Union Committee. The Kyoto Protocol to the United Nations Framework Convention on Climate Change, negotiated in December 1998 and entering into force in March 2005, does not include international aviation emissions. It was recognised that aviation is an international, global industry, and the hope was that measures to tackle aviation emissions could be developed through the International Civil Aviation Organisation—the ICAO—itself a United Nations agency.
The European Union's second environmental action programme, in January 2001, called for action to reduce aviation emissions. Little progress was made in the ICAO, although it will again discuss the matter—fully and seriously, I hope—later this year. The United Kingdom Government had already committed themselves in the December 2003 White Paper on air transport to support the inclusion of aviation within the EU's ETS. The White Paper of July 2004 reiterated that position. The European Commission instigated a study of the issues in 2004,
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Matters have moved on since then and I intend to devote many of my remarks to the context as it is now rather than as it was a year and a half ago. The European Council of April 2006 confirmed its view that including aviation in the Emissions Trading Scheme seems the best way forward. The European Parliament took a similar position in July last year. The outcome was the Commission publishing its proposed legislation on 20 December last year—a draft directive to amend the original directive setting up the European Emissions Trading Scheme. It would amend it to include aviation in two stages: on 1 January 2011 to include all internal European flights—perhaps in the European Economic Area—and, from 1 January 2012, all flights into and out of and within the European Union. Monitoring and reporting is to start in 2010—I assume to get the airlines, the aviation industry and the regulatory authorities up to scratch.
The Government issued their Explanatory Memorandum on the Commission's draft directive on 26 January this year. In my remarks today, I will explain some of the issues on which we agree with the Government and the Commission and some of those on which there will be disagreement now, as there was when we considered our report.
Let me first put the matter of aviation emissions in a broader context. Aviation services are both the cause and a consequence of rising global living standards. By their nature, they are international. Global air passenger travel was projected to increase by 5 per cent per annum from 1990 to 2012. Improved aviation fuel efficiency led to projections of about 3 per cent per annum growth in aviation fuel use. Carbon emissions from aviation are closely related to aviation fuel use. All forecasters expect rising demand for aviation services to continue, and to outstrip further improvements in fuel efficiency.
As we reported last year, aviation emissions currently account for some 3 to 4 per cent of the European Union’s carbon emissions. Aviation emissions involving the European Union are now increasing by about 4 per cent per annum—a rate that is expected to reduce slightly to around 3.2 per cent per annum between 2015 and 2020. This growth reflects the fact that the demand for aviation services for both passenger and freight movement is growing as prosperity and globalisation increase. In the wider environmental context, however, European Union policy, supported by the United Kingdom, is for total carbon emissions to reduce substantially by 2050. The committee concluded that, although aviation emissions are not currently a problem, they will be a more significant problem by 2020, and very significant by 2050. If aviation emissions continue to grow by 3 per cent a year for 40 years, they will triple. If the growth is 4 per cent a year, they will increase by
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There is no case for demonising aviation and aviation emissions; they are not a current threat to tackling climate change. However, if total carbon emissions are to be reduced by 2020 and drastically reduced by 2050, aviation emissions will, as I say, be more significant and will grow while other sources are reduced. The case for placing aviation in the Emissions Trading Scheme at an early stage is that it is easier to include it before its size poses a problem compared with other sources of carbon. However, the question of how precisely aviation is incorporated into the Emissions Trading Scheme gives rise to other questions. Get the detail wrong and there could be difficulties ahead.
On the detail, the committee, the Government and the Commission agree that aviation emissions are a global issue, and that continued efforts in the ICAO and elsewhere should be made to include international aviation in a post-2012 climate change regime. They also agree that aviation should in principle be included in the European Union’s Emissions Trading Scheme, that aircraft operators and airlines should be the entities responsible for complying with the obligations of the Emissions Trading Scheme, and that the total level or cap of emissions allowances allocated to airlines should be determined at the overall European Union level, as should the distribution of the total between airlines. The airlines’ involvement in the Emissions Trading Scheme should be administered by member states, and each aircraft operator should be administered by one member state only. The impact of greenhouse emissions other that carbon dioxide arising from aviation should in due course be included in the scheme, although more study is still needed on the issue and on how to incorporate it. Finally, other measures from air traffic control and the use of air space to technological change will also be important in alleviating some of the consequences of growth in air travel and air freight.
We do, however, have concerns. First, which flights should be included in the Emissions Trading Scheme? We deal with this issue in paragraphs 103 to 129 of our report. Airline flights can be divided into those internal to the European Union, international flights taking off from the Union’s airports, and international flights landing at the Union’s airports. There are two problems. Emissions arising from international flights take place largely outside EU airspace. Can the European Union impose emissions allowances, emissions trading and potential penalties in relation to emissions that occur outside its airspace? From evidence given to the committee, there appears to be doubt whether the European Union can unilaterally impose a scheme on airlines covering international air movement, and certainly whether it can impose such a scheme on non-European Union airlines for at least international flights. The European Union can argue that it “causes” international aviation emissions, arising from half the inward and outward flights—the other half presumably being “caused” by
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Subject to the legal doubts mentioned earlier, the committee agreed that a European Emissions Trading Scheme with aviation should include all internal and international flights departing from European Union airports. We did not agree that international flights arriving and departing from the European Union should be included. At the time of our report, the United Kingdom Government and the Commission agreed with the committee’s position. But the Commission has now proposed in the draft directive that all international flights be included, inward as well as outward bound. Your Lordships’ committee rejected that approach as neither desirable nor practical and as going well beyond dealing with carbon dioxide emissions for which the Union could reasonably take responsibility.
The Government’s Explanatory Memorandum of January 2007 on the proposed directive says that they will consider whether to support the Commission’s much wider geographical scope following further analysis. What can be the justification for including all international flights into and out of the European Union within the ETS? Is the Minister aware what legal advice was taken by the Commission before publishing its proposals? In response to our May 2006 report, the Government recognised,
Have the Government taken legal advice on the issues raised? If so, what work has been done on this issue since May of last year?
The second area for concern relates to the total level of allowances allocated to the aviation sector within the ETS. As I remarked previously, aviation accounts for around 3 to 4 per cent of the EU’s carbon emissions. It is a growing industry. The Commission’s latest proposals are that the total allowances to aviation should be based on the average emissions from aviation over the years 2004 to 2006 rather than the base of 1990 which is used for the other trading scheme sectors. I agree that the more recent period is more appropriate for aviation. Will the proposed aviation cap be equal to the 2004-06 average or will it be a proportion of it? Is that a base or the actual figure? Because the next ETS runs only to 2012, and aviation will only enter the scheme in 2011, will the level of the initial carbon allowances cap for aviation remain in place after 2012?
The clear expectation is that air travel will be able to continue to grow because airlines will be able to buy additional carbon allowances from other sectors, implying that other sectors will cut emissions to enable aviation to continue to grow. That must imply additional upward pressure on carbon and prices in the other sectors concerned, such as electricity generation and sectors with high energy use, because aviation is brought into the scheme. Airlines will also effectively be able to buy carbon credits by investing in carbon-reduction schemes such as the joint implementation and clean development mechanisms.
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The Commission predicts that by 2020 air ticket prices will rise by an extra £1 to £3 for short-haul flights and between £5 and £27 for long-haul flights. It expects that this will reduce the growth in air travel only very modestly—from 142 per cent to 135 per cent, a reduction of just 7 per cent over nine or 10 years. That clearly implies that aviation will continue to grow and that that growth will be achieved at the consequence of costs to other sectors. How big the impact will be will depend on the overall cap for all sectors and the cap for aviation. So the thinking of the Government and the European Union about the long-term approach to aviation emissions is important not only to aviation itself but to those who buy electricity and those who use it to produce industrial and commercial products.
I turn now to the third matter, which is to address the distribution of these allowances to each airline. The proposal is that some allowances will be allocated free to airlines based on a specified benchmarking basis, while the balance will be auctioned. In the UK, we have so far not auctioned any of the carbon allowances to existing sectors. Can the Minister tell us what benchmark is proposed, and whether he is aware that the specific method chosen for calculating the benchmark criteria could have significant and unbalanced outcomes for different airlines, even among the fuel efficient? Will he look carefully at the precise benchmarking criteria proposed by the Commission and assess the fairness and desirability of what is proposed?
Some carbon allowances will be allocated free of charge. What percentage of allowances do the Government estimate will be auctioned to aviation? If auctioning of some part of the carbon emissions allowances is introduced for aviation, do the Government expect to introduce auctioning of allowances for other sectors as well; and if so, when? As allowances are to be allocated or auctioned at the European Community level, which body—the Commission or member states—will collect and retain the proceeds of the auction? What will the proceeds be used for, and who will decide that?
What is the expected timetable for consideration of the draft directive in the Council of Ministers? What is the Government’s timetable for conducting their own partial impact assessment, and in due course their full impact assessment on the draft directive? Will there be further full consultation with interested parties in the United Kingdom, and will it cover non-European Union airlines flying into and out of the United Kingdom?
Climate change and the policy responses to it are hugely important to us all. All sources of carbon and other greenhouse gas emissions will feel the consequences in the years ahead. Aviation poses particular problems because of its international nature and because air travel is so closely bound up as both a cause and an effect of global prosperity. In my view the direction of the Commission’s proposal is right. But I commend the report of your Lordships’ committee as a reminder that the detail of the policy, as well as its direction, has to be got right. I have been able to touch on just some of the issues today. I look
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Moved, That this House takes note of the Report of the European Union Select Committee on Including the Aviation Sector in the European Union Emissions Trading Scheme. 21st Report, Session 2005-06, HL Paper 107.—(Lord Woolmer of Leeds.)
5.18 pm
Lord Bradshaw: My Lords, I thank the noble Lord, Lord Woolmer of Leeds, for his introduction and I will touch only briefly on some of the points he mentioned because there are other matters which are of great concern. On Monday, in response to a Question asked by the noble Baroness, Lady McIntosh of Hudnall, noble Lords were told that emissions from aviation make a comparatively small contribution to global warming. That begs two questions. The first is that the curve is rising very steeply, as the noble Lord, Lord Woolmer, said, and the second is that we do not really know about the effect of emissions at high levels and what certain emissions other than those of carbon may do. The fact is that aircraft use is growing so quickly that action must be taken urgently. The admission of the aviation sector into the European Union Emissions Trading Scheme is a welcome initiative and I too am glad to see that the International Civil Aviation Organisation has specifically endorsed the concept of an open emissions trading scheme. It is the best way of dealing with the environmental impact of global aviation.
I want to turn to the question of how the initial allowances are created. So far as I understand it, they can only be created by a current emitter ceasing to emit, or at least reducing their emissions, so that by 2045 the EU has stabilised emissions at 450 parts per million. If they succeed in doing so, that will be very good. It is a very ambitious target. The problem is, however, that the aviation industry by itself will have reached that level of emissions. The simple arithmetic is that there will be nothing left over for anyone else, because by 2045, as I understand the report, the aviation sector will have reached a point where it alone will be making, or buying, all the carbon. That sets aside a question that my noble friend Lord Redesdale will return to, about whether there will actually be any fuel for those aeroplanes to burn and how they will manage to fly.
First, we have to reduce the trend line itself. We cannot have an aviation industry that blithely just goes on increasing, regardless of anyone else. The aviation industry and its supporting infrastructure need to think carefully about the level of emissions, both from aircraft and from the various supporting activities of airline travel. I would have liked it if the committee had looked at that, although the noble Lord, Lord Woolmer, might tell us that that is the subject of another inquiry.
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