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Introduce
a domestic trading scheme for carbon emissions; to set a national
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ceiling for carbon emissions;
and for connected purposes. |
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Be
it enacted by the Queen’s most Excellent Majesty,
by and with the advice and |
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consent of the Lords Spiritual
and Temporal, and Commons, in this present |
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Parliament assembled, and
by the authority of the same, as follows:— |
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“budget
period” means a five year period for which carbon budgets
are |
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“carbon
budget” means the maximum quantity of greenhouse gas from
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energy
use that may be emitted in a one year period; |
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“carbon
dioxide equivalent” means the mass of a greenhouse gas |
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multiplied
by its global warming potential; |
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“carbon
unit” means an emissions right of one kilogramme of carbon
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“eligible
individual” means a person of 18 years or over who is |
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permanently
resident in the United Kingdom; |
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“eligible
organisation” means an organisation specified in regulations
by |
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the
Secretary of State as eligible to participate in the scheme; |
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“global
warming potential” means a prescribed index which expresses
the |
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warming
effect of a given mass of greenhouse gas in the atmosphere |
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relative
to that of carbon dioxide; |
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“greenhouse
gases” means carbon dioxide, methane and nitrous oxide; |
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“prescribed”
means prescribed in regulations made by the Secretary of |
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“primary
fuels” means fuels obtained directly from natural sources,
for |
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instance,
coal, gas and oil. |
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2 |
The
Domestic Tradable Quotas Scheme |
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(1) |
The Secretary of State shall
establish by regulations a scheme to be known as |
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the Domestic Tradable Quotas
Scheme. |
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(2) |
Regulations
under subsection (1) shall make provision— |
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(a) |
in respect of a code of practice
governing participants in the scheme; |
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(b) |
for the preparation and publication
of an annual report about the |
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operation of the scheme; and |
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(c) |
for the commencement date
of the scheme. |
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3 |
Setting
the carbon budget |
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(1) |
Within a year of the date
of commencement of the scheme the Secretary of State |
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shall by regulations specify
the carbon budget for each year of the first budget |
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(2) |
The first budget period
shall begin one year after the date of commencement of |
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(3) |
In year three of each budget
period the Secretary of State shall consult on the |
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level at which carbon budgets
should be set for the subsequent budget period. |
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(4) |
In year four of each budget
period the Secretary of State shall specify by |
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regulations the carbon budget
for each year of the subsequent budget period. |
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(5) |
In specifying carbon budgets
under this section the Secretary of State shall take |
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into account such greenhouse
gas emission targets as are— |
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(a) |
specified in the document
entitled “Our energy future: creating a low |
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energy economy” published
by the Department of Trade and Industry |
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in February 2003 (Cm 6168), |
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(b) |
agreed to by a resolution
of each House of Parliament, or |
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(c) |
specified in the text of
any International Treaty signed by the United |
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4 |
Allocation
of carbon units |
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(1) |
The Secretary of State shall
by regulations allocate the carbon budget to eligible |
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individuals and eligible
organisations. |
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(2) |
The proportion of the carbon
budget allocated to eligible individuals in each |
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budget year shall be equal
to the proportion of total greenhouse gas emissions |
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from energy use arising from
the prescribed fuels and electricity purchased by |
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eligible individuals in year
one of the scheme. |
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(3) |
The remainder of the carbon
budget shall be allocated to eligible organisations. |
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(4) |
The carbon budget shall be
allocated in the form of carbon units. |
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(5) |
The same number of carbon
units shall be allocated to each eligible individual |
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(6) |
No eligible individual shall
be denied his personal allocation for any reason. |
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(7) |
The Secretary of State shall
by regulations make provision for allocating carbon |
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units to eligible organisations
by means of an auction. |
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(8) |
In respect of any auction
under subsection (7) the regulations shall— |
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(a) |
require
those organisations taking part to specify the amount in cash
that they |
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are
willing to pay the Secretary of State, and |
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(b) |
specify the method of operation
of the auction. |
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(9) |
The
Secretary of State shall by regulations make provision in respect
of carbon |
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(10) |
Regulations under subsection
(9) shall make provision for— |
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(a) |
the operation of carbon unit
accounts; |
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(b) |
each eligible individual
and each eligible organisation to have a carbon |
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(c) |
each carbon unit account
to be accessible by telephone and by the |
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internet, including through
terminals located in post offices and at |
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(11) |
Any
sums paid to the Secretary of State in pursuance of an auction
shall be payable to |
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5 |
Surrender
of carbon units |
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(1) |
The Secretary of State shall
by regulations specify the method of surrendering |
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(2) |
Regulations under subsection
(1) shall provide that— |
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(a) |
whenever prescribed fuel
or electricity is purchased by an eligible |
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individual or an eligible
organisation, the purchaser shall surrender to |
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the vendor the number of carbon
units corresponding to the carbon |
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dioxide equivalent of the
purchase; |
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(b) |
vendors of primary fuels
shall surrender all carbon units which they |
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receive to the Secretary of
State; and |
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(c) |
all eligible individuals
and eligible organisations shall be provided |
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with a prescribed smart card
for the purpose of surrendering carbon |
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6 |
Trading
of carbon units |
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(1) |
The Secretary of State shall
by regulations make provision for eligible |
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individuals and eligible
organisations to transfer carbon units by way of trade |
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(2) |
Regulations under subsection
(1) may— |
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(a) |
make
provision for the establishment of a commission to facilitate
the transfer |
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of
carbon units, including— |
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(i) |
the appointment of its
members, |
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(ii) |
their
payment and allowances, |
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(iii) |
arrangements for an annual
report by the commission to be laid |
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before each House of Parliament,
and |
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(iv) |
a code of practice for
the commission; |
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(b) |
make provision for licensing
and regulating persons engaged as |
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brokers in the transfer of
carbon units; |
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(c) |
make provision for the electronic
transfer of carbon units by telephone |
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and by the internet, including
through terminals located in post offices |
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and at other prescribed sites; |
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(d) |
make provision for the establishment
of offences and penalties in |
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respect of the transfer of
carbon units; and |
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(e) |
make such other provisions
as the Secretary of State considers |
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necessary for the efficient
transfer of carbon units. |
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There
shall be paid out of money provided by Parliament— |
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(a) |
any
expenditure of the Secretary of State in consequence of this Act;
and |
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(b) |
any
increase attributable to this Act in the sums which under any
other Act |
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are
payable out of money so provided. |
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The Secretary of State may not
make any regulations under this Act unless a |
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draft of the regulations has been
laid before, and approved by a resolution of, |
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each House of Parliament. |
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(1) |
This Act may be cited as
the Domestic Tradable Quotas (Carbon Emissions) |
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(2) |
This Act extends to England
and Wales, Northern Ireland and Scotland. |
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