Clause
16
Emissions
trading: charges for
allocations
Question
proposed, That the clause stand part of the
Bill.
Mr.
Goodman:
Members of the Committee will have received large
numbers of representations about some clauses as they are of great
interest to outside bodies. As a parliamentarian, one reads some
clauses and finds one’s eyebrows rising. When I read the clause,
I confess that I went to check the definition of a Henry VIII clause. I
will return to that matter in a moment, but before I do, as members of
the Committee will see on reading the clause, it empowers the Treasury
to charge for community tradeable emissions allowances, which is
reasonable enough. It states that the allowances will be allocated by
regulation and the people who allocate them will be appointed by
regulation. The regulations may impose fees, govern the making or
forfeiting of deposits, impose penalties, charge interest on the
recovery of penalties, and confer—and I presume
withhold—rights of appeal relating to the forfeiting of deposits
and the imposition of penalties.
The Financial Secretary is
welcome to correct me if I am wrong, but I am not aware that I have
seen the regulations yet. In summary, although the clause does not meet
the definition of a Henry VIII clause, it does have a certain Tudor
flavour. The breadth of its scope invites some questions.
[
I
nterruption.] I hear a learned, historical
commentary from the Government Whip, but I will not please him by
responding to it and compressing my remarks. Some of the simple
questions surely are these: who will allocate the allowances; how high
will the fees and the deposits be; how large will the penalties be; how
much interest will be charged on recovered payments; and, above all,
will there definitely be a right of
appeal?
I expect the
Financial Secretary to say that the answers will be provided in due
course if the regulations have not already been published, but one
point is clear about any regulations that either have been or will be
published: they will not be amendable. No member of this or any
Committee will be able to propose that the people who allocate the
allowances should be different people or that the levels of fees,
deposits, penalties or interest charged should be raised or lowered.
Nor will any member of this or any Committee be able to debate the
terms of any right of appeal. He or she may simply be faced with the
choice of accepting or rejecting the proposals that
emerge.
I say
“may” be faced rather than “will” be faced
with good reason. I have taken advice and I am told that the wording of
the clause allows the Financial Secretary to choose either the positive
or the negative procedure. That is, as it was put to me, unusual. In
short, the proposals may not be considered by the positive procedure
route, which is highly
questionable.
If the
regulations have not been published, when will they be? Can the
Financial Secretary at least give the Committee an assurance—I
gather that he is usually very reasonable in this regard—that
they will be dealt with under the positive procedure, and can he give a
guarantee that there will be a right of appeal, because that would seem
to be
important?
Julia
Goldsworthy:
All the questions that the hon. Gentleman has
raised are valid. I would like to underline the question of when we
will get a sense of when the regulations will be produced. I note that
the clause is limited in application to “Community tradeable
emissions allowances”, but not specifically EU emissions trading
schemes. That opens up the possibility of it being extended beyond
Europe and beyond greenhouse gases. Given that it has that wider
application, will we have to wait for more comprehensive regulations or
will they be specifically limited to the EU, and when will we see
them?
John
Healey:
Hon. Members have rightly pointed out that this
provision takes us into new territory. It allows us to provide the
basis for auctioning some of the allowances under the European
Union’s emissions trading scheme, but in phase 2, which does not
start until 2008 and runs to 2012. As my right hon. Friend the Chief
Secretary to the Treasury said in a letter to, I think, the hon.
Members for Falmouth and Camborne and for Chipping Barnet yesterday,
the question of regulations cannot precede the detailed design of the
allocations and auctioning scheme. That matter will be
dealt with as the arrangements for phase 2 of the EU ETS are firmed up
across Europe. Once the scheme design is clearer, we will be in a
position to devise the regulations, covering the sort of points that
the hon. Member for Wycombe identified. When we produce the
regulations, we will do so in draft and we will consult as widely as we
need to on them. I can reassure the Committee that the points made this
afternoon will be taken into account in drawing up the
regulations.
I would
not want the Committee to lose sight of the importance of introducing
the possibility of auctioning into the allocation of allowances and
permits under the EU ETS. They will be an important way of toughening
up the trading scheme, hardening the carbon price within it and thus
starting to generate the type of investment in alternative technologies
that we require to reduce emissions and deal with climate
change.
Mr.
Goodman:
The Financial Secretary explained that the scheme
has not been fully devised. Can he explain why it is necessary to
introduce a provision for the regulations before the scheme has been
designed, rather than
afterwards?
John
Healey:
I do not think that the hon. Gentleman would
advocate two Finance Bills a year. It would be another year
before we had the opportunity to put the legislative framework in place
in a Finance Bill, so it seemed sensible to put the
regulation-making power in primary legislation, as we may well need it
before we get the opportunity to return to it in the next Finance
Bill.
Question put
and agreed
to.
Clause 16
ordered to stand part of the
Bill.
Further
consideration adjourned.—[
Kevin
Brennan
.]
Adjourned
accordingly at Four o’clock till Tuesday 15 May at
half-past Ten
o’clock.
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