UK businesses have broadly welcomed the draft version of the government's climate change bill with the CBI claiming it strikes the correct balance between "long-term clarity on policy direction and flexibility in its delivery".
However, opinion remains divided on the merits of the government's proposals for five year targets on carbon emission reductions as the Tories and Lib Dems continued to argue that annual targets are required if governments are to be kept properly accountable for reducing emissions.
Under the legislation, which represents the first of its kind anywhere in the world, the UK government will face legally binding targets to reduce carbon emissions by between 26 and 32 percent on 1990 levels by 2020 and by 60 percent by 2050.
An independent committee on climate change will be set up featuring experts from the world's of science, business, technology and economics, which will provide an annual progress report to parliament and advise the government on five year "carbon budgets" that will be set at least fifteen years in advance.
A government that fails to meet the targets or exceeds its five year carbon budget would be open to a judicial review and "be required to take remedial action by order of court".
Environment Secretary David Miliband said that the bill would provide "confidence and certainty" for businesses and individuals about environmental regulations and policies and the role they can play in combating climate change.
He also argued that the new law - which is currently subject to a consultation period and is expected to make it onto the statute book next year - will strengthen the UK's negotiating position when trying to convince developing countries to "develop in a low-carbon way that doesn't make the mistakes that we have made".
While the bill does confirm that a wide range of low carbon legislation and investment programmes is now inevitable, businesses looking for a guidance on exactly how the government will hit the new targets are likely to be disappointed.
However, it does include provisions for the government to effectively fast track new policies designed to tackle climate change, including new trading schemes for sectors not covered by the EU trading scheme. In effect this means the gap between new legislation being proposed and implemented should shorten leaving firms with less time to ensure they are compliant. As such adopting environmental best practices that exceed existing legislation becomes even more advisable.
The government has also published a strategy document alongside the draft bill, which highlights the areas most likely to see investment and legislation, such as solar wind and wave power, carbon capture, on site renewables and energy efficiency.
With opposition parties, environmentalists and businesses all supporting the new legislation in principle criticism has centred on the government's decision to opt for five year targets and annual reports rather than legally binding annual targets.
The government has argued that annual targets would prove impractical as varying weather and economic conditions would make it extremely difficult to hit the target every year. It claims there is a danger that such an approach would force governments to introduce knee jerk measures in a year that had a cold winter or risk spending much of the following year answering questions in court.
Businesses have welcomed the extra stability five year targets should bring with Richard Lambert, CBI Director-General, arguing that "regular reporting to Parliament will keep all players focused on action, without the impractical constraints that annual carbon targets would impose".
However, the Conservatives, Lib Dems and a raft of environmental groups argued that five year targets could give governments too much flexibility, raising the prospect of amendments to the draft bill being tabled.
Peter Ainsworth, Conservative Shadow Secretary of State for Environment, Food and Rural Affairs, suggested that without annual targets set by an independent body there was a danger we could end up with a "system whereby targets are set ten years in advance, ignored up until year eight, and then are quietly dropped in year nine".
Meanwhile, the Lib Dems' Chris Huhne argued that with general elections tending to come every four years there was a real danger that the bill would set "Not in My Term of Office Targets", ensuring that a government that made poor progress towards meeting five year goals would simply hand a poisoned chalice to its successor.
Equally, potentially unpopular carbon reduction policies, such as higher taxes on aviation, could be delayed for electoral rather than environmental purposes, while ministers responsible for exceeding the five year carbon budget could have to wait up to six years after the implementation of an environmentally irresponsible policy for the judicial review that is meant to act as a deterrent for breaching the targets.
Huhne recommends "annual targets which could explicitly allow for economic conditions and the weather" would provide a "sensible" means of overcoming these problems.
In theory, he is correct but he neglects to mention how such flexible targets would be achieved. Would governments seriously be expected to revise targets each quarter based on how cold it was outside? Or should some form of magical algorithm be developed that automatically updates emission targets based on temperature, rainfall, unemployment levels, the rate of GDP growth and the size of the budget deficit?
Faced with these dilemmas the annual reports currently proposed are likely to take on massive importance.
The government is correct to argue that five year targets offer the best compromise between flexibility and stability, but the bill will only prove successful if the independent climate change committee and the annual reports it delivers are powerful enough to ensure that any government attempting to delay climate change initiatives until the tail end of a five year budget period is quickly detected and shamed into more responsible action.
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