The Environmental Audit Committee’s (EAC) Seventh Report on Carbon Budgets was published this week.

The report backs carbon budgets and praises the government’s decision to set the fourth carbon budget at a level put forward by the Committee on Climate Change (CCC).

However the government, while accepting the CCC’s fourth budget level, also announced a review of the carbon budgets in 2014 that could ease the budget if it is found that the UK’s emissions reduction trajectory is inconsistent with that of the EU Emissions Trading System (EU ETS).

The EAC fears this is causing uncertainty and has called for an impact assessment to see how the plans are affecting UK jobs growth.

Ministers fear the lax EU-wide carbon cap in the 2020s might put unreasonable demands for emissions reductions on the sectors of the economy not covered by the EU ETS.

The report also argues that government needs to be ‘mindful’ of the possibility that action on climate change may result in some production and jobs moving abroad, to countries with less stringent policies or carbon-related taxes.

It states some energy intensive industries have already expressed concerns about the carbon budgets driving production abroad, but says government has given ‘little priority’ to generating hard evidence of such ‘carbon leakage’.

According to the report: “A lack of transparency and information on the risks to energy intensive industries, and how these should be tackled, need to be resolved to allay fears of lobbying dictating policy.

“We recognise the importance of policy measures to help energy intensive industries, but before these are introduced a comprehensive and robust assessment of the actual risk to each sector affected, on a case by case basis, should be made by departments working in concert.

“Measures to help energy intensive industries must be fair and tailored to each sector affected, and should keep a strong incentive to reduce emissions.”

Responding to the report energy and climate change minister, Greg Barker, said: “It’s right we review progress towards the EU emissions goal in 2014 so that we’re not disadvantaging British industry which would simply result in emissions being shipped overseas.

“Getting the rest of Europe to go further and faster in providing certainty to green investors is vital which is why we’re not letting up in pushing the EU to up its emissions reduction target to 30%.”

CBI deputy director-general, Dr Neil Bentley, said: “The committee is right to call for an impact assessment of the carbon budgets on jobs and production, because energy intensive industries are crucial for building the new low-carbon economy.

“We have always backed mandatory carbon reporting, which helps companies monitor and reduce emissions, but to be effective, it should be phased in, simple to follow and avoid duplicating other reporting schemes.”

Green Party leader and MP, Caroline Lucas “David Cameron must not allow the chancellor and other anti-green forces within the coalition to completely derail this country’s energy and climate change ambitions.

“By refusing to heed the advice of the CCC, casting doubt on our climate targets in the years to come and challenging key legislation, the coalition is damaging the UK’s credibility – and sending an inconsistent message to other nations and to the business community that this Government will not prioritise the jobs-rich green industries of the future.”

Luke Walsh

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