Thank you very much, Mr. Chairman.
I just want, first of all, to thank you for inviting me to set out the action being taken by the U.K. to tackle greenhouse gas emissions.
I'd like to start by briefly outlining the U.K.'s goals for emission reductions and its current progress, and then I'll briefly outline how it has made those reductions and mention some of the policies and measures in place.
The key message I want to convey in my presentation is that the U.K. is on track to surpass and perhaps nearly double our Kyoto commitment. We have set ourselves more challenging domestic goals, notably our 2010 goal, and we recognize the need to go further still, which is why the climate change bill will ensure that future governments are legally bound to meet our domestic budgets.
I'll begin just by clarifying the U.K.'s performance against its goals, which can be a source of confusion. The U.K.'s Kyoto Protocol target is to reduce its greenhouse emissions by 12.5% below the 1990 level over the period 2008-2012. Our self-imposed domestic goals are more demanding: to reduce the emissions of carbon dioxide by 20% below 1990 levels by 2010, then by 26% to 32% by 2020, and by at least 60% by 2050. The U.K. climate change bill that is currently being debated by our Parliament would make the carbon dioxide emission goals for 2020 and 2050 legally binding. The bill would require the government to set five-year carbon budgets for three periods ahead, and it would create a committee on climate change to advise on what the level of the budget should be. The committee has also been asked to review the U.K.'s long-term target to see whether it should be increased up to 80% by 2050.
On January 31, 2007, the U.K. published its final figures for greenhouse gas emissions in 2006. These confirm that greenhouse gas emissions have fallen by 20.7% compared with the base year, including trading, and by 16.4% if we exclude trading. In other words, our firms were net purchasers of emissions credits from their EU counterparts.
We forecast that greenhouse gas emissions will fall by over 23% by 2010, but we have not been as successful in cutting carbon dioxide emissions. In 2006 they were 12.1% lower than the base year and 6.4% lower, excluding trading. They're forecast to fall by at least 16% by 2010.
To recount, the U.K. is already below its Kyoto target and it's set to almost double it, but meeting its self-imposed domestic goal for CO2 is likely to be challenging.
How have we managed to reduce our emissions while growing our economy? There is an element of truth in the “dash for gas” explanation in the nineties, but our economic analysis shows this accounts for a small percentage of the overall reduction. In fact, the reductions in greenhouse gas emissions are, in large part, the result of energy efficiency.
Energy efficiency has been driven by a wide range of policies, including the climate change levy, which is an energy tax to encourage greater energy efficiency in business and the public sector; climate change agreements, which are voluntary agreements where the operators pay a reduced rate of climate change levy in return for meeting challenging energy efficiency targets over a 10-year period; and the carbon trust, which is an organization that gives guidance and support to companies trying to reduce emissions.
In the domestic sector the energy efficiency commitment, which is the requirement on electricity and gas suppliers to achieve targets for the promotion of energy efficiency improvements, has been very successful in delivering energy efficiency in the household sector. The introduction of competitive markets in production and supply in the electricity supply sector such that commercial pressures ensure companies strive at all times to improve their efficiency have driven a large reduction in the U.K.'s greenhouse gas emissions since the early 1990s.
But this is not the only factor in the U.K. seeing a reduction in the emission of CO2 per unit of energy produced. The U.K. renewables obligation has delivered savings, as has the higher diesel penetration in the transport fleet, the increasing use of biofuels in transport, and the EU emissions trading scheme. These savings are expected to continue to increase.
The other area where we've seen a difference is in our emissions of methane and nitrous oxide, which have reduced by 53% and 40%, respectively. Reductions from industry have come via regulation, enforced emission controls, and reductions from waste have come from reducing the amount of waste going into landfill and from incentives to collect and burn landfill gas. The modern landfill site in the U.K. collects and utilizes at least 90% of the methane produced as waste decomposes.
Overall, our analysis suggests that in round terms in 2006, emission reductions since 1990 due to energy efficiency, lower carbon fuels, and reductions in emissions of greenhouse gases other than CO2 amounted to some 265 million tonnes of carbon dioxide per year, of which improvements in energy efficiency contributed about 40%, lower carbon fuels about 30%--made up of 20% from the so-called dust-free gas and about 10% from renewables and other low carbon fuels--and 30% due to lower emissions of greenhouse gases other than CO2.
Along with having various other policies and measures, the U.K. aims to reduce its emissions further in order to meet the targets it's setting itself in the climate change bill. Its current policies and measures are set out in the 2006 climate change program and the 2007 energy white paper.
I hope that's a helpful summary, and I'd be happy to take questions.
Thank you.