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Waste And Emissions Trading Bill [HL]


 

     THESE NOTES REFER TO THE WASTE AND EMISSIONS TRADING BILL [HL]      AS BROUGHT FROM THE HOUSE OF LORDS ON 7TH MARCH 2003 [BILL 66]      

WASTE AND EMISSIONS TRADING BILL [HL]

     


     EXPLANATORY NOTES

INTRODUCTION

     1.     These explanatory notes relate to the Waste and Emissions Trading Bill [Lords] as brought from the House of Lords on 7 March 2003. They have been prepared by the Department for Environment, Food and Rural Affairs in order to assist the reader and help inform debate on it. They do not form part of the Bill and have not been endorsed by Parliament.

2.     The notes need to be read in conjunction with the Bill. They are not, and are not meant to be, a comprehensive description of the Bill. So where a clause or part of a clause does not seem to require any explanation or comment, none is given.

SUMMARY AND BACKGROUND

3.     The Bill extends to the whole of the UK, although some particular provisions have limited territorial extent (see clause 37).

4.     Part 1 of the Bill is intended to give legal effect to the obligations imposed by Article 5(1) and (2) of Council Directive 1999/31/EC 1 ("the Landfill Directive") which was passed on 26 April 1999 and came into effect on 16 July 1999. The Bill also implements a commitment in the White Paper "Waste Strategy 2000: England and Wales" 2 to introduce tradable allowances for local authorities to restrict the amount of biodegradable municipal waste sent to landfills.

         

    1      OJ L 182, 16.7.1999, p.1

         

    2      Waste Strategy 2000: England and Wales, Command Paper 4693

     5.     The aim of Article 5(1) and (2) of the Landfill Directive is to reduce the amount of biodegradable waste that is sent to landfills. Member States are required to establish a national strategy for the reduction of biodegradable waste going to landfills. Such a strategy must ensure that targets for the reduction of the amount of biodegradable municipal waste going to landfills set out in Article 5(2) of the

     [Bill 66-EN]     53/2

     Directive are met. Each EU Member State must reduce the amount of biodegradable municipal waste sent to landfills to 75% of the amount produced by that State in 1995 by 2006, to 50% by 2009 and to 35% by 2016. There is a four year derogation of this target for Member States which send to landfills more than 80% of their collected municipal waste in 1995. The UK qualifies to take advantage of this derogation.

     6.     The Bill seeks to fulfil the requirements of Article 5(1) and (2) of the Landfill Directive by providing for the Secretary of State to set the maximum amounts of biodegradable municipal waste which may be sent to landfills from each country of the UK. The Bill requires a landfill allowance system to be set up under which allocating authorities for each country of the UK must allocate allowances permitting waste disposal authorities in their area to send specified amounts of biodegradable municipal waste to landfills. The Bill also requires the Secretary of State and the appropriate authority for each country of the UK to have a national strategy for the reduction of biodegradable waste sent to landfills.

7.     Part 2 of the Bill amends Schedule 1 to the Pollution Prevention and Control Act 1999. That Act gave legal effect to the obligations imposed by Council Directive 96/61/EC 3 (Integrated Pollution Prevention and Control Directive). The amendment provides for penalties in future emissions trading schemes. This Part of the Bill also provides for the enforceability of penalties, including fixed financial penalties, in the current non-statutory UK Emissions Trading Scheme. The policy framework for the Emissions Trading Scheme was set out in the 'Framework for the Emissions Trading Scheme' published in August 2001. 4

         

    3      OJ L 257, 10.10.96, p. 26.

         

    4      Defra, August 2001, http://www.defra.gov.uk/environment/climatechange/trading/index.htm.

OVERVIEW OF THE BILL

8.     Part 1 of the Bill provides for:

  • the setting of the maximum amount of biodegradable municipal waste which is allowed to be sent to landfills from each country of the UK;

  • the allocation of landfill allowances to waste disposal authorities which may be tradable;

  • the preparation, in each country of the UK, of a strategy for reducing the amount of biodegradable waste going to landfills;

  • the National Assembly of Wales to make regulations requiring local authorities in Wales to have municipal waste management strategies and provide information about waste;

  • an amendment to the Environmental Protection Act 1990 to permit waste disposal authorities to direct waste collection authorities about the separation of waste.

9.     The details of the landfill allowances scheme will be established in subordinate legislation made by the appropriate authority in each country of the UK.

     10.     Part 2 of the Bill provides for:

  • the development of the statutory framework for wider emission trading by amending the Pollution Prevention and Control Act 1999 to include the power to provide penalties (including automatic financial penalties) for non-compliance with future schemes;

  • the enforceability of penalties for non-compliance with the current UK Emissions Trading Scheme (including automatic financial penalties).

TERRITORIAL APPLICATION: WALES

11.     The Bill requires the National Assembly for Wales to have a national strategy for reducing the amount of biodegradable waste sent to landfills from Wales (clause 19). Also, as the "allocating authority" for Wales, the Assembly is required to allocate allowances to waste disposal authorities in Wales (clause 4) and, under Chapter 1 of Part 1 of the Bill, has power to make regulations setting out the detailed requirements of how the landfill allowances scheme will operate in Wales. In England, Scotland and Northern Ireland, the functions of "allocating authority" are given, respectively, to the Secretary of State, the Scottish Ministers and the Department of the Environment for Northern Ireland.

12.     Clauses 29 and 30 apply to Wales only and provide the National Assembly of Wales with powers to require local authorities to have a strategy for the management of waste and to supply it with information about waste.

13.     All clauses in Part 1 of the Bill affect the functions of the National Assembly of Wales. The National Assembly of Wales has a separate power of commencement for clauses 4, 5, 9, 10 and 19 (see clause 36).

14.     The clauses in Part 2 of the Bill do not affect the powers of the National Assembly: the effect of clause 34 is to extend regulation-making powers which have not been transferred to the National Assembly and clause 35 relates to the existing non-statutory UK Emissions Trading Scheme which is administered by the Secretary of State in respect of the whole of the UK.

COMMENTARY ON CLAUSES

15.     Clause 1 requires the Secretary of State to specify the maximum amount by weight of biodegradable municipal waste permitted to be sent to landfills in target years (as defined in clause 23(1)) from the whole of, and from each country of, the United Kingdom. The Secretary of State must consult the appropriate authority for each country of the UK before its target is set.

16.     Clause 2 permits the Secretary State to set the maximum amount by weight of biodegradable municipal waste that may be sent to landfills in a scheme year that is not a target year. The Secretary of State must agree a target with the appropriate authority for each country of the UK before its target is set.

17.     As the regulations under clauses 1 and 2 will sub-divide the national target amongst the countries of the UK, such regulations will be subject to the affirmative resolution procedure in both Houses of Parliament (see clause 28).

18.     Clause 3 provides default rules for setting the maximum for a non-target year in the event that the Secretary of State does not set a maximum under clause 2, for example because agreement cannot be reached. The maximum amounts calculated under the default rules represent the rate of progress needed to meet the Landfill Directive targets in equal annual steps from the last target year or the last year for which agreement is reached, whichever is the latest.

19.     Clause 4 obligates each allocating authority to allocate allowances to waste disposal authorities in its area. An allowance authorises a waste disposal authority to send to landfills, in the year for which the allowance is allocated, the amount of biodegradable municipal waste covered by the allowance.

20.     The allocating authorities are (clause 24(1)):

  • for England, the Secretary of State;

  • for Scotland, the Scottish Ministers;

  • for Wales, the National Assembly for Wales;

  • for Northern Ireland, the Department of the Environment for Northern Ireland.

21.     An allocation of allowances must be made before the beginning of the year to which the allowances relate. An allocating authority must ensure that the total amount of allowances allocated by it for a year does not exceed the maximum amount allowed to be sent to landfills in that year from its country, as specified under clauses 1 or 2.

22.     Clause 5 allows an allocating authority to alter allocations of allowances to a waste disposal authority, but not to withdraw an allowance that has already been utilised by a waste disposal authority. "Utilised" is not defined in the Bill but a power is conferred by clause 11 for regulations to make provision about what amounts to utilisation for the purposes of the Bill.

     23.     Clause 6 allows an allocating authority to make regulations permitting waste disposal authorities in its area to bank allowances for future use or borrow allowances allocated for later years. Regulations may not permit the banking and borrowing of landfill allowances across target years. Regulations may provide that any breach of the provisions of any regulations made under this clause will be an offence.

     24.     Clause 7 allows an allocating authority to make regulations to permit waste disposal authorities within its area to transfer allowances, whether by trade or otherwise. These regulations may permit cross-border trading of allowances allocated by another allocating authority, although such trading would be dependent on each allocating authority involved making enabling regulations. The regulations may provide that any breach of the provisions of any regulations made under this clause will be an offence.

25.     Clause 8 sets out the maximum penalties which may be provided where regulations under clause 6 or 7 provide for an offence. The maximum penalties are consistent with the maximum penalties that may be set by regulations under section 2(2) of the European Communities Act 1972. 5

         

    5 See paragraph 1(1) of Schedule 2 to the European Communities Act 1972.

26.     Clause 9 imposes a duty on a waste disposal authority not to send more biodegradable municipal waste to landfills than it is permitted to do by the allowances that it holds (including allowances which it has banked from an earlier scheme year, which it has borrowed from a later scheme year or which have been transferred to it from another waste disposal authority). If a waste disposal authority breaches this duty, it will be subject to a penalty. If a waste disposal authority breaches this duty in a target year and the UK as a whole exceeds its target under clause 1 in respect of that year, the waste disposal authority will also be liable to a supplementary penalty. A waste disposal authority will also be liable to a supplementary penalty in scheme years between target years if it breaches its duty in that year and the amount of biodegradable municipal waste sent to landfill in the UK in that year exceeds the amount specified under clause 1(1)(a) for the last target year.

27.     Clause 10 requires each allocating authority to appoint a monitoring authority in its area. This clause sets out the functions of the monitoring authority. Additional functions may be imposed or conferred on the monitoring authority by regulations under clause 11.

28.     Clauses 12 and 13 enable an allocating authority to make regulations in relation to waste disposal authorities and landfill operators respectively for purposes connected with the sending of biodegradable municipal waste to landfills. These regulations may require the waste disposal authority or landfill operator to maintain certain records, gather specific information by carrying out operations on waste and make returns to the monitoring authority.

29.     Regulations may authorise the monitoring authority to require waste disposal authorities or landfill operators to produce records for inspection and to supply information and evidence connected with the sending of biodegradable municipal waste to landfills. Regulations may enable the monitoring authority to enter onto premises to find and inspect records relating to the operation of a landfill.

30.     A waste disposal authority that fails to comply with a requirement of regulations under clause 12 will be liable to a penalty (see clause 26). A landfill operator will be guilty of an offence if he fails to comply with the requirements of regulations under clause 13(1) or (3) or if he intentionally obstructs a person exercising a power conferred under clause 13(3). The penalties for such offences are set out in clause 13(5) and (6) and are consistent with the penalties for similar offences under section 110 of the Environment Act 1995.

     31.     Clause 14 makes provision for the disclosure of monitoring information held by a monitoring authority to other monitoring authorities or to any allocating authority and for the disclosure of monitoring information held by an allocating authority to other allocating authorities.

32.     Clauses 15 and 16 make provision about registers. Clause 15 enables an allocating authority to make regulations requiring a monitoring authority to maintain a register of certain information acquired in the exercise of its functions under Chapter 1 of Part 1 of the Bill. Regulations under clause 16 may make provision for public access to such a register. Some of the information in such a register may also be publicly accessible under the Environmental Information Regulations 1992. 6

         

    6 S.I. 1992/3240

33.     Clauses 17 to 20 require the appropriate authority for each country of the UK to have a strategy for reducing both the amount of biodegradable waste from its country that goes to landfills and the amount of biodegradable waste from outside its country that goes to landfills in its country. These new duties are additional to the duties under sections 44A and 44B of the Environmental Protection Act 1990 (inserted by section 92 of the Environment Act 1995), and under article 19 of the Waste and Contaminated Land (Northern Ireland) Order 1997, 7 to prepare national waste strategies. It is envisaged that national waste strategies and landfill strategies could be combined.

         

    7 S.I. 1997/2778

34.     Landfill strategies must include measures to achieve the targets set out in clauses 1 and 2, in particular, measures such as recycling, composting, biogas production, materials recovery or energy recovery.

35.     The scope of these strategies is wider than the targets set under clause 1 as they apply to all biodegradable waste and not just to biodegradable waste which is also municipal waste (see clause 21 for the relevant definitions).

     36.     Clause 17, which relates to England, additionally places a duty on waste disposal authorities and waste collection authorities to produce and publish a joint municipal waste strategy (see subsections (4) and (5)).

37.     Clauses 21 to 24 define terms used in Chapter 1 of Part 1 of the Bill. In particular, clause 23 defines "target years" as scheme years ending with 16 July in 2010, 2013 or 2020. These deadlines incorporate the 4 year derogation for the achievement of the Landfill Directive's targets which the UK is entitled to take advantage of under Article 5(2) of the Landfill Directive.

38.     A power is taken in clause 23 for the Secretary of State, subject to a requirement to consult the appropriate authority for each country of the UK, to change the target years, to add or omit target years and to add scheme years. This would enable the Secretary of State to set target years that are either the underogated target years, or any year up to and including the latest date allowable under the Landfill Directive. Article 5(2) of the Landfill Directive provides that the European Council shall re-examine and may amend the final target set out in the Directive and it is intended that clause 23 would allow the Secretary of State to extend the scheme beyond 2020 should that prove necessary or appropriate.

39.     Clause 25 identifies certain activities which are excluded from the scope of the Bill. These reflect activities which are excluded from the scope of the Landfill Directive by Article 3(2) of the Directive. 8

         

    8 Clause 25 refers to Council Directive 91/689/EEC ("the hazardous waste directive") OJ L 377,      31/12/1991, p.20.

40.     Clause 26 permits allocating authorities to make regulations setting the levels of penalties under clauses 6(3)(g), 7(3)(i), 9(2), 11(3) and 12(3) and supplementary penalties under clause 9(3) and (4). Penalties will be automatic but allocating authorities may extend the time for paying any penalty (including interest) or relieve a waste disposal authority, whether or not subject to conditions, from liability to the whole or any part of penalty (including interest).

41.     Clause 27 requires each allocating authority to consult representatives of waste disposal authorities, landfill operators and others who may be affected before making regulations under Chapter 1 of the Bill. These consultation requirements do not apply to regulations made under clauses 1, 2, 3 and 23 of the Bill for which specific consultation requirements apply.

42.      Clause 28 provides for regulations under clauses 1 and 2 and the first regulations made under each of clauses 6, 7 and 11 by each of the Secretary of State, Scottish Ministers and the Department of the Environment to be subject to affirmative procedure. Where regulations are made under a mixture of powers and some of the regulations are subject to affirmative procedure, the regulations would be subject to affirmative procedure as a whole.

43.     Clauses 29 and 30 apply to Wales only. These clauses permit the National Assembly for Wales to require local authorities in Wales to have a waste management strategy and to provide the National Assembly with specified data relating to waste. The National Assembly intends to use this power to require local authorities to have municipal waste management plans. These are currently not compulsory, although authorities are expected to prepare them. The commitment to make these statutory was made in "Waste Strategy 2000" 9 and "Wise about Waste - National Strategy for Wales" . 10

         

    9      See footnote 2, above.

         

    10      June 2002. ISBN 07504 27604

     44.      Clause 31 amends sections 48 and 51 of the Environmental Protection Act 1990. It provides that directions given by a waste disposal authority in England (which is not also a waste collection authority) to a collection authority under section 51(4)(a) of that Act may include requirements about the separation of waste as delivered to the waste disposal authority. This power may only be exercised where a waste disposal authority considers that such directions are necessary for assisting it to comply with any obligation imposed on it by or under any enactment. This would include its obligations under this Bill and obligations to meet performance standards on recycling and composting specified under the Local Government Act 1999. This will assist a waste disposal authority in complying with its duty under clause 9 by permitting it to require waste to be delivered to it in a form which can be recycled.

45.     Clause 33 defines "waste" for the purposes of the Bill. Article 2(a) of the Landfill Directive provides that waste means any substance or object which is covered by Council Directive 75/442/EEC 11 ("the Waste Directive"). Clause 32(1) therefore defines waste as anything which is waste for the purposes of the Waste Directive and is not excluded from the scope of the Waste Directive by Article 2 of that Directive.

         

    11      OJ L 194, 25.7.1975, p.39 as amended by Council Directive 91/156/EEC, OJ L 78, 26.3.1991, p.32; Council Directive 91/692/EEC, OJ L 377, 31.12.1991, p.48 and Commission Decision 96/350/EC, OJ L 135, 6.6.1996, p.32

  • Article 1 of the Waste Directive defines "waste" as follows:

    —     "any substance or object in the categories set out in Annex I which the holder discards or intends or is required to discard" (Article 1(a)).

  • "Holder" is defined as:

    —     "the producer of the waste or the natural or legal person who is in possession of it" (Article 1(c)).

  • "Producer" is defined as:

    —     "anyone whose activities produce waste ('original producer') and/or anyone who carries out pre-processing, mixing or other operations resulting in a change in the nature or composition of the waste" (Article 1(b)).

46.     Annex I to the Waste Directive lists categories of waste. Article 2 of the Waste Directive excludes certain types of waste from the scope of the Directive. 12

         

    12 The Waste Directive and the Landfill Directive can be viewed on the Europa website      (http://europa.eu.int/eur-lex/en/index.html).

47.      Clause 34 amends the Pollution Prevention and Control Act 1999 by authorising the imposition of penalties (including automatic financial penalties) upon persons contravening the rules of future statutory emissions quota trading schemes under that Act.

     48.     Clause 35 provides a statutory basis for the provisions of the UK Emissions Trading Scheme which provide penalties for non-compliance with the Scheme, including those requiring participants to pay automatic financial penalties for failure to comply with their annual commitment to limit emissions of greenhouse gases. The Scheme, and the agreements which participants have entered into, expressly envisage legislation being made to provide a statutory basis for the penalties.

FINANCIAL EFFECTS OF THE BILL

49.     The Bill will require small additional public expenditure:

  • by the allocating authorities in setting the landfill allowance scheme in place;

  • by the monitoring authorities in monitoring the scheme;

  • by waste disposal authorities in maintaining records of their compliance with the scheme and of their trading of landfill allowances;

  • by local authorities in Wales in preparing strategies under clause 29 (although most authorities already prepare such strategies) and providing information under clause 30.

EFFECTS OF THE BILL OF PUBLIC SERVICE MANPOWER

50.     The effects of the Bill on public sector manpower will be marginal. However, under Chapter 1 of Part 1 of the Bill, some additional staff will be needed to deal with the allocation of landfill allowances and to monitor the operation of the landfill allowances scheme.

SUMMARY OF THE REGULATORY APPRAISAL

51.      The Bill will help to share the burden of meeting the targets in Article 5(2) of the Landfill Directive. It will help secure the result which is the most cost effective and efficient way for the whole of the UK. The administrative burden will be marginal.

52.     The UK Emissions Trading Scheme is voluntary and the Bill puts in place the penalties framework for those companies that miss their emissions reduction targets. Companies are expecting a measure along the lines of clause 34 and the bringing forward of such a measure is expressly referred to in their existing contracts with the Secretary of State.

EUROPEAN CONVENTION ON HUMAN RIGHTS

53.     The Secretary of State for Environment, Food and Rural Affairs, the Rt. Hon. Margaret Beckett MP, has made the following statement:

      "In my view the provisions of the Waste and Emissions Trading Bill are compatible with the Convention rights."

COMMENCEMENT

54.     Clauses 1 to 3, 17, 31 and 35 will come into force on a day appointed by the Secretary of State. Clauses 4, 5, 9, and 10 will come into force on a date to be appointed by the Secretary of State in relation to England, the National Assembly for Wales in relation to Wales, the Scottish Ministers in relation to Scotland and the Department of the Environment for Northern Ireland in relation to Northern Ireland. Clauses 18, 19 and 20 will come into force on a day appointed by the Scottish Ministers, the National Assembly for Wales and the Department of the Environment for Northern Ireland respectively. The remaining clauses of the Bill will come into force on Royal Assent.

 
 
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