Committee
Environment, Climate Change and Land Reform Committee 01 September 2020
01 Sep 2020 · S5 · Environment, Climate Change and Land Reform Committee
Item of business
Climate Change Act 2008
Greenhouse Gas Emissions Trading Scheme Order 2020 [Draft]
The tax proposal removes all flexibility, because a single way of managing the issue would be applied across the board. An ETS works on a much more flexible basis. Fundamentally, the tax proposal creates a big problem. The level of emissions reduction is less certain with the tax. It is totally dependent on the right rate being set, and we do not have any proposals so far on what that rate would be. The ETS has an overall emissions cap, so it provides certainty on emissions reductions. It allows the market to discover the best way of doing that, and it encourages decarbonisation, whereas, as I have said, a static carbon tax, with rates set in legislation, would not ensure cost-effective decarbonisation. 11:15 It also would not link to the EU ETS market, which has been a big part of the discussion about the setting up of a UK ETS. In the EU ETS market, the carbon price changes daily in response to supply and demand, so the tax could lead to carbon leakage between the UK and the EU, which would be an extremely unfortunate outcome. As Stewart Stevenson indicated, participants can trade excess emission allowances in the ETS, creating a stronger financial incentive to decarbonise. There are a lot of areas in which the ETS is a far better mechanism, and it is the mechanism that BEIS is pursuing. However, we appear to have a UK Government that is pursuing two separate policy lines at the moment. In addition to the point that Stewart Stevenson made, there are other big differences between the two processes. I can be asked questions in the Parliament chamber about the operation of an ETS, but decisions about a carbon tax taken by the Treasury will remove that from us. It is an example of the removal of power from the Scottish Parliament.
In the same item of business
The Convener
SNP
I welcome everyone back, and I thank Roseanna Cunningham, the Cabinet Secretary for Environment, Climate Change and Land Reform, for staying with us. She is ...
Roseanna Cunningham
SNP
Emissions trading is a devolved function—what is in effect covered by the ETS is devolved. A carbon emissions tax would be Treasury led, which would immediat...
The Convener
SNP
We scrutinise the ETS, but we have not scrutinised any proposed carbon tax.
Stewart Stevenson
SNP
I want to move away from matters of process, which is what we have been talking about, to how the two alternatives compare against each other. If a tax appro...
Roseanna Cunningham
SNP
The tax proposal removes all flexibility, because a single way of managing the issue would be applied across the board. An ETS works on a much more flexible ...
Finlay Carson
Con
Given that there is a four-Administrations policy set out in the Government response on a UK ETS, I must admit that I am a bit disappointed that we are still...
Roseanna Cunningham
SNP
I can well understand why Finlay Carson wants to put a rosy glow on what is in front of him, but, unfortunately, he has not been the one involved in all our ...
Finlay Carson
Con
Let me get this right. You played your part in putting together the order for the UK ETS to align as closely as possible to the EU ETS. That should be welcom...
Roseanna Cunningham
SNP
I am confident that it will allow the UK carbon market to function as successfully as it can, but we can all agree that the wider the carbon market, the more...
Mark Ruskell
Green
I will move the questioning on from the constitution to the climate. At the moment, there is a big gap between the emissions that were produced by large indu...
Roseanna Cunningham
SNP
I am as comfortable as I can be. The proposed 5 per cent cap is tighter than it would have been in the EU ETS—I remind everyone that it is an interim cap. I ...
Claudia Beamish
Lab
I would like to pursue that a little bit further with you, in relation to the revised climate change plan. Will there be challenges in relation to Scotland’s...
Roseanna Cunningham
SNP
We will obviously have to look at it all very carefully. The UK ETS works on the basis of a UK-wide cap for a UK-wide market, and the UK targets are somewhat...
Mark Ruskell
Green
In all honesty, will it not set us back if we wait until 2024 to adjust the cap and get the right level in place? In effect, will it not mean that the rest o...
Roseanna Cunningham
SNP
If Mark Ruskell can come up with a solution that involves getting the UK Government to do what we want it to do, and to do it now, I will be pleased to hear ...
The Convener
SNP
I have one final question before we move on to the next item on the agenda. It is about the public-facing concordat among ministers from all four Administrat...
Roseanna Cunningham
SNP
Are you talking about the framework outline agreement?
The Convener
SNP
Yes.
Roseanna Cunningham
SNP
I think that you may have already been sent a letter on that. I suspect that it is sitting in your inbox, because something was shared yesterday in that rega...
The Convener
SNP
It does. Thank you. We move to the next agenda item. I invite the cabinet secretary to move motion S5M-22351. Motion moved, That the Environment, Climate ...
The Convener
SNP
If members have no comments, I will put the question, which is that motion S5M-22351 be agreed. If anyone does not agree, please type “No” in the chat box. ...