RT HON HILARY BENN MP, MS SUSANNA MAY AND MR PAUL CHAMBERS

20 FEBRUARY 2008

  Q100  Miss McIntosh: I think you felt, Secretary of State, that the Bali Summit was a success. Would you like to explain why you believe it was a success?

  Hilary Benn: Why? Because if five years previously someone had said, "What do you reckon the chances are of getting every country in the world: one, to recognise the urgency of the need to act on climate change, the need for deep cuts in emissions; and two, that they will commit themselves, the United States, the developing countries to negotiate over the subsequent two years a new treaty to try and achieve that?" you would have found very, very few people in the world who would have said it was possible, but that was what was achieved at Bali. Having said that, the difficult bit begins now; that was, relatively speaking, easy. It was not very easy over the course of the five days and certainly not the last couple of hours, but it provides a foundation. Why did it happen? Because, frankly, in my view, all the countries read the science, see the reports, they understand the change that is taking place and the need to act and we do now have a process. Everyone has marched through the door together and committed themselves to this negotiation over the next two years and now we have to get on with it, and there are some very difficult things that we need to address in the course of that. So it was for that reason that I described the outcome of the Bali Summit in that way and there were plenty of people even during the course of the year who said, "We do not think you are going to get an agreement," and we did.

  Q101  Miss McIntosh: I understand that emissions from international shipping and aviation were not included and therefore are likely to remain outside a post-2012 agreement; is that correct?

  Hilary Benn: Yes. Whilst we were not able to get explicit agreement on that the Bali decision does not rule it out and it is one of the issues which the negotiations are going to have to look at. By definition those two sources of emissions are international and you can only deal with them on an international basis. In relation to aviation, the best hope and the most progress we have currently is the EU Emission Trading Scheme and the agreement that we reached at the Environment Council in December, which was a big step forward. Shipping, as I think everybody recognises, is more complicated not just because of the movement of the ships and the bunkering of fuel in the high seas, flags of convenience, but if it came to a divvying up mechanism who is going to take responsibility for the emissions? That is quite a complex set of things to deal with. As a world we have not made enough progress on that at all. On aviation the ICAO really ought to be in the lead but, if I may say so, it has done not a lot in depth—hardly anything at all—and Europe has been taking the lead on that.

  Q102  Miss McIntosh: I do not disagree with you that aviation, I believe, should be included in the European Emissions Trading Scheme, but do you not think it is unfair on European carriers that they are going to be included, whereas the very airlines that they are competing with will not be included?

  Hilary Benn: As a number of the questions you have asked this afternoon make the point, we have to get on with it, we have to start somewhere. If we fall prey to "after you" syndrome—because it would be dead easy in the negotiations to say, "I am not because you have not moved yet"—we are not going to make any progress, and this is an area in which Europe is providing leadership and that was certainly evident in the course of the negotiations in Bali, because the fact that Europe was speaking with one clear voice about a target, what the elements of an agreement need to be, we made some progress in talking about carbon trading, emissions trading, mitigation, adaptation funding and so on. The agreement on deforestation, people have been campaigning for 20 years to get an agreement on deforestation and we got the outline of one when we were in Bali. So someone has to take the lead and my view is that Europe has provided leadership.

  Q103  Miss McIntosh: The Prime Minister mentioned for the first time, as the Chairman alluded to earlier, the issue of food security. From the reading I have done China is probably posing the biggest threat in this area to our own producers and to the impact on food prices in this country. Is this something that both the 2008 conference and the 2009 conference at Copenhagen that you wish to pursue as part of the government agenda? The whole issue of food security in the context of climate change?

  Hilary Benn: The impact of climate change on crop yields of course is something about which we need to be concerned.

  Q104  Miss McIntosh: And water use and more efficiency.

  Hilary Benn: Absolutely, but that is not going to be central to negotiations because the things we have to get agreement on are what are we trying to achieve; because having got Bali the first question to ask is, "What is your goal?" Europe has a view to try and limit the temperature increase to two degrees. When you ask other countries sometimes you get the answer, "We do not have one." I think in some cases maybe some countries do not want to have an answer because as soon as you have an answer you can then tot up all of the commitments there are in the international system currently, look at what the science says about the scale of the problem and you can see that you are way short. So the first thing is to try and get agreement on what a goal is going to be. The really difficult part of the negotiation is going to be the divvying up mechanism because even if the rich countries were to go zero carbon, for the sake of argument, in ten years' time—or say we could do it tomorrow—we will still be left facing dangerous climate change because of the rising emissions problem with countries like China, India and others to which you have alluded. That is the uncomfortable truth and therefore it seems to me that the task is that developing countries are not one undifferentiated mass and it is clearly not sensible to say, "China, your contribution is going to be the same as that of Burkina Faso," and what we have to agree is a way of saying that for a given stage of economic development, "This is the contribution you are going to make." Can I just say on food security more generally, actually I do not think China presents a threat because the increase, for example, in dairy prices that we have seen of late is in part because of the rising prosperity in countries like China and India; people become better off and they eat more meat, they drink more milk, they eat more yogurt, and that has helped to push up the prices. But we do have to have regard to the impact of a changing climate on our own ability to produce food. We are more self-sufficient than we were before the Second World War and after, so we need to look at it in an historic context; but we are less self-sufficient than we were at the height of the Common Agricultural Policy, but I do not know many people who would say let us go back and do that.

  Q105  Chairman: I want to briefly explore a little bit of the politics of this. I think it is apparent to all of us that with something as big and global as this that the position in the United States remains a central issue and the indications are that those contending to be the candidates in the American presidential election are sounding more positive about recognising the problem and wanting to do something about it. Would we be right in saying that we could have a very interesting conversation this side of the elections but not make much progress, but that real world progress will happen if you have a president who is more disposed than the current administration to (a) recognise the problem and (b) something about it.

  Hilary Benn: Yes. We are not going to deal with the problem of dangerous climate change if the largest economy in the world is not playing its part. That is the first point. Secondly, the politics in lots of countries is changing—that is why we were able to get a deal at Bali. The politics have changed in our own country; it has changed in countries like China and India. You look around the United States, look at state level—what Governor Schwarzenegger is up to in California and Governor Christ in Florida, what the east coast states are doing—it is obviously for the American people to decide who their next president is going to be but if you look at what the candidates are saying I think at Bali it was recognised that that political change is taking place in a number of countries, including America, and that was in the back of people's minds in reaching an agreement in December.

  Q106  Chairman: I am aware that at the end of January in Honolulu there was a Major Economies' Meeting to follow up on what had happened with Bali. Bearing in mind that in the United States, if you like, there is the top of the office but a lot of officials can see what is coming up the track, even at this relatively early stage in the process is there any sign that the United States is adopting perhaps a more flexible position to reflect some of the state-level activity to which you rightly refer and, if you like looking into the future, the likely change in the political configuration in America on this matter?

  Hilary Benn: I think there is no doubt that the approach of the administration has changed. We do not have to go back that many years to a time when the administration was saying, "We do not think this is a problem, we do not recognise this science, we are going to get on and do what we were doing anyway." That is not the position of the administration currently. The fact that there is a major economies' process that they have initiated, the fact that they were party to the agreement that was reached at Heiligendamm demonstrates that the politics is moving there. But we all have much further to go, I would simply say—because I am on public record as having said it—that to get a carbon market really working, and because this is going to be a very significant source of finance for the developing world, the two big issues are; the one I alluded to, which is a dividing up mechanism for the contribution, and the oil that will unlock this—to mix my metaphors—flows of finance. Because developing countries will say and indeed are saying, "If you want us to invest in low carbon development; if you want us to fit, for example, carbon capture and storage on to the power stations that we are building week after week"—and China is of course the world leader in that—"this is going to cost us money; where is the flow of finance going to come from?" In order to make that happen you need the largest economy of the world to be committing to binding reductions in emissions and to being part of a growing carbon trading market, which has the consequence of both raising the price of carbon, which is bad for climate change, and encouraging investment in things that are good—leading to the flow of finance to developing countries for that, and to avoid deforestation because we know that deforestation every year results in more emissions than come from the largest economy in the world, ie the United States of America.

  Chairman: Paddy Tipping, do you want to follow up on that point on deforestation whilst we have just alighted upon it?

  Q107  Paddy Tipping: I just want to say that it was a significant agreement and in fact acknowledge that, Secretary of State, but the detail still needs to be worked through. This is not going to be easy to do. There are a number of developing countries who want to ensure that the carbon market works properly. How confident are you that the proposals that the developing countries are putting forward are going to be acceptable?

  Hilary Benn: The honest answer is that that remains to be seen in the course of the negotiations. In the end, on that final Saturday morning, it came down to the wording relating to the commitments that developing countries were prepared to take on. It actually came down to three words and a comma, for those who are interested in the history. It is a difficult issue for developing countries. I went to India three weeks before Bali and met a range of ministers, including the Energy Minister, who said, "I have 45 per cent of the population with no electricity; my job is to bring them electricity. Therefore, more expensive ways of generating energy, in the sense I have a budget, I am not terribly wild about." Yet India and China and other countries also look at the consequences of climate change for their ability to feed a population. India will have another 400-500 billion people by the middle of the century—the world population is going to grow from 6.5 to nine, 9.5 billion people. In the end it will be about political will; it will have to be based on a deal; and ultimately it is about whether people think that this finite resource that we have now discovered is finite, which is the earth's capacity to accommodate CO₂, is being shared out on a fair and equitable basis. That, in essence, is the task that negotiation faces.

  Q108  Mr Drew: The decision which is currently that the situation whereby possible use of the rain forests, from deforestation and so on, has been excluded from the European Commission's Trading Scheme, firstly what is the British Government's position on that? Secondly, how much of an argument is there to try and get it in? I gather it is coming in in 2020 but that is rather a long time in the future. What are the dynamics of this?

  Hilary Benn: I think on deforestation a number of things have to change. One is the fundamental problem of governance because if you look at the extent of the problem of illegal logging you have people who are just going in and chopping things down and the governance of countries is not able to deal with that. So if you are going to have a system that is going to be effective then you need to address the question of governance. The second thing is about changing the incentive structure because, frankly, if you have standing timber and you are going to make money by chopping it down and selling it, if the incentive structure changes and you are going to make more money by not chopping it down and selling it that is going to help to move the economics. The funding that we are prepared to make available through the international window of the Environmental Transformation Fund—and we are looking at three windows through the World Bank, one on clean technology which the Americans are particularly keen on, one on deforestation and one on adaptation—it is saying that there is money available to support this process taking place; and the commitment of £50 million that we are prepared to spend in the Congo Forest Basin is conditional of course on having the right governance structure to make sure that it works, and knowing the Congo quite well the fundamental problem there is governance, as history teaches us.

  Q109  Sir Peter Soulsby: You have talked about the uncomfortable truth of increased emissions from developing countries and obviously we have a legacy of historic greenhouse gas emissions and the impact that is going to come from them. Therefore, the focus on adaptation is particularly depressing. I think there are probably four parts here. First of all, perhaps some reflections on how you see it as a component of future international agreements; the necessity or otherwise for there to be binding targets for funding adaptation; and two related things, the relationship to existing aid budgets and its relationship to the wider sustainable development goals. For convenience we can table the four together really.

  Hilary Benn: The first problem is that from developing countries' point of view they will look at this question of flow of finance and some of them will say, "I remember commitments being made by you group of countries in the past. Look at the commitments made at Monterrey and development assistance." And then they would say, "And how are you all getting on in actually doing what you promised?" From the UK's point of view we have a rising aid budget and we have the commitment which is not all that many years old historically, and the date to achieve a 0.7 per cent target we are on our way; we are going to do it. We cannot say that for every rich country that has promised on that front. So there is an issue of credibility and trust, frankly, because developing countries will put the question in exactly the way that you have—how do we know that the money is going to flow; where are the guarantees? Engendering a sufficient sense of confidence that this is going to happen, it seems to me, is crucial to unlocking a deal in return for commitments of whatever nature on mitigation. The second question will be, "Are you going to badge the money that was coming as aid before as aid adaptation?" That is the second worry. So how do you demonstrate additionality? That can be quite difficult because it is additional to what? Is it to what you were getting last year or is it to what you promised would be coming over the next three years? In my view part of the aid budget is going to be used to adapt because developing countries have to live with the consequences of the climate change that they are already experiencing. Therefore, in terms of the decisions they make about where they are going to spend the money, in the end to the extent that they have control about what happens to the money they will decide from among competing priorities within their own country. The key is additional flows of finance and that is why things like the Environmental Transformation Fund, the Clean Energy Investment Framework, those three windows in the World Bank and flows of finance through the carbon market are, in my view, the building blocks and the routes by which the finance will get there.

  Q110  Lynne Jones: Can I ask if there was any discussion about international agreement on carbon counting, how you actually account for carbon saved?

  Hilary Benn: Not in the bits in which I was taking part. If you think of something like obviously the Clean Development Mechanism, the system has to be built on confidence that you are counting accurately and if you are putting money in for a tonne of carbon saved you do absolutely get a tonne of carbon saved. So there is that issue. Then there is the very, very complex one of where do you do the counting? It is an issue for us domestically, the whole question of embedded carbon, how do you count? There is no question that we will need to get as much international agreement as we can on counting systems because we are going to have to know that we are all measuring the same thing in the same way and on the same basis.

  Q111  Lynne Jones: Is that work that is being taken forward as part of this process?

  Hilary Benn: I am sure that it will be, but if I could provide you with a note on that you might find it helpful.

  Lynne Jones: Thank you.

  Q112  Chairman: Secretary of State, we have covered a lot of ground. We have been round the world; we have looked at the United Kingdom. You have answered a lot of questions for which we are genuinely very grateful; thank you for being able to spare as much time as you have for the Committee. These are important matters and they are ones I am sure that we will continue to return to. We look forward to some further input from the things that we have mentioned where you have kindly said that you will follow up. Thank you very much indeed for coming and making yourself available to follow up this line of questioning.

  Hilary Benn: Thank you very much indeed, Mr Chairman. I cannot remember if I said this when I first appeared before the Committee, but if it would be helpful at any time I am more than happy, in addition to the formal evidence sessions, to meet informally with the Committee, if that would be useful to you?

  Chairman: I am sure the Committee will be delighted to take up your offer; thank you very much indeed.