I beg to move,
That this House has considered the operation of the UK Emissions Trading Scheme in Wales.
It is a pleasure to serve under your chairmanship, Sir Edward. I commend the co-operative approach taken by the UK and devolved Governments in establishing the emissions trading scheme and in agreeing a common framework that treats each nation as an equal partner in our climate efforts. The scheme has brought coherence to one element of our combined efforts to achieve net zero.
There is, of course, room for improvement. I draw the Minister’s attention to concerns expressed by the Green Finance Observatory:
“The elephant in the room is that offsets are fundamentally not about mitigating climate change, or even about removing past emissions, but about enabling future emissions, about protecting economic growth and corporate profits.”
I hope that the Minister will reflect on those remarks when she sums up the debate. They raise two critical questions. First, how will businesses fundamentally reduce aggregate emissions, and do so rapidly? Secondly, what is the role of Government in facilitating that change?
In order to meet our climate targets, we must not only reduce overall emissions but adopt carbon-negative strategies. The most economical and natural of those is tree planting. I hope to expand on that point today and in doing so make a case for more closely linking the UK emissions trading scheme with a separate and voluntary carbon offset market. Both schemes encourage businesses to reduce overall emissions. They are currently unconnected in policy; they run parallel to each other. I accept the technical and policy challenges associated with directly incorporating carbon offsetting into the UK ETS, but I believe that an association between the two schemes, if established, would bring rigour, scrutiny and additional resources to the offsetting process.
Governmental intervention is urgently required to bring much-needed stability to the voluntary carbon offset market in Wales. My hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards) recently highlighted that large companies are already purchasing vast tracts of agricultural land in the upper Teifi and Tywi valleys for forestry and carbon offsetting and are doing so in a manner that internalises financial gain and externalises the social, economic and cultural costs.
Those costs increasingly pose an existential challenge to Welsh farmers and rural communities and are inimical to efficient land use and a just transition. To echo the National Farmers Union, we urgently need to ensure a system that makes carbon offsetting mean the right tree in the right place. The Government, by acting as a broker and data-backed co-ordinator, can help to ensure appropriate land use for carbon offsetting, support the sufficient scale of planting and empower local farmers and rural communities to make a carbon-negative effort for themselves.
Wales’s forests are a natural economic and national asset at the very heart of our decarbonisation efforts. The lungs of our nation, our forests sequester approximately 1.84 million tonnes of carbon dioxide equivalent annually, while pollution removal by woodland was estimated to have an ecosystem value of more than £385 million back in 2015. Our forests are also essential for our environment and biodiversity. Indeed, of the 542 listed species of principal importance to the Welsh Government, 210 rely wholly or partly on woodland habitats.