House of Commons - Explanatory Note

Climate Change Bill [HL] - continued	House of Commons

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Clause 8: Consultation on order setting or amending target percentages

51. This clause sets out the procedures that the Secretary of State must follow before amending the 2020 target percentage or a target percentage or percentage range for a year after 2050.

52. Subsection (1) places a duty on the Secretary of State to obtain and consider advice from the Committee on Climate Change. The Secretary of State also has to consider any views of the devolved administrations.

53. Subsections (2) to (7) set out the stages of the process:

Subsection (2) places a duty on the Committee on Climate Change to send a copy of its advice to each of the devolved administrations.

Subsection (3) requires the Committee on Climate Change, as soon as is reasonably practicable after giving its advice to the Secretary of State, to publish that advice in any way it thinks is appropriate.

Subsection (4) provides that the devolved administrations have three months to send the Secretary of State their views. If they send their views before the three month period has expired, the Secretary of State can lay a draft order before Parliament immediately after he has considered them; otherwise, he can only lay the draft order after the three month period has expired.

Subsection (5) places a duty on the Secretary of State, at the same time as he lays the draft order, to publish a statement that sets out whether and how he has taken account of the devolved administrations' views.

Subsection (6) places a duty on the Secretary of State, if amending the 2020 target or any post-2050 target or range in a way that differs from the Committee's recommendations, to publish a statement setting out the reasons for that decision.

Subsection (7) allows the Secretary of State to publish a statement under subsection (5) or (6) (on taking account of the devolved administrations' views or on any deviation from the Committee's advice) in any way he thinks is appropriate.

Clause 9: Setting of carbon budgets for budgetary periods

54. Subsections (1) and (3) require the Secretary of State to set carbon budgets using affirmative resolution orders.

55. Subsection (2) provides that every carbon budget must be set with a view to meeting the 2050 target, the 2020 target and any percentage target or percentage range for a year after 2050. Budgets must also be set with a view to complying with the UK's European Community and international obligations (any international treaties to which the UK is a signatory).

Clause 10: Consultation on carbon budgets

56. This clause sets out the procedures that the Secretary of State must follow before setting a carbon budget.

57. Subsection (1) places a duty on the Secretary of State to take into account advice from the Committee on Climate Change (as provided for in clause 34). The Secretary of State also has to consider any views of the devolved administrations.

58. Subsections (2) to (5) set out the stages of the process:

Subsection (2) provides that the devolved administrations have three months to send the Secretary of State their views. If they send their views within the three month period, the Secretary of State can lay a draft order before Parliament immediately after he has considered them; otherwise, he may lay the draft order only after the three month period has expired.

Subsections (3) to (5) place a duty on the Secretary of State to publish a statement that sets out whether and how he has taken account of the devolved administrations' views. If the budget is not set at the level recommended by the Committee, the Secretary of State must publish a statement explaining why not. The Secretary of State must publish the statements when he lays the order, in any way he thinks is appropriate.

Clause 11: Matters to be taken into account in connection with carbon budgets

59. This clause sets out matters that the Secretary of State must take into account when making decisions about carbon budgets and which the Committee on Climate Change must take into account in advising the Secretary of State on those decisions.

60. Subsection (2) sets out the list of matters to be taken into account. This is intended to give examples of the broad range of relevant factors that will inform any decision relating to carbon budgeting. The matters are not listed in any particular order; the order of the matters has no legal significance. Subsection (3) makes it explicit that this clause does not prevent the Secretary of State or the Committee on Climate Change from taking other matters into account; nor does it limit the general requirement for the Secretary of State and the Committee to take all relevant matters into account.

Clause 12: Duty to provide indicative annual ranges for net UK carbon account

61. This clause places a duty on the Secretary of State to lay a report before Parliament setting out an "indicative annual range" for the net UK carbon account for each year of a budgetary period. This clause aims to enhance the transparency regarding progress within each budgetary period, so that Parliament is clear about performance towards meeting the budget each year.

62. Subsection (2) defines an "indicative annual range" as the range within which the Secretary of State expects the amount of the net UK carbon account for the year in question to fall.

63. Subsection (3) places the Secretary of State under a duty to consult the Scottish Ministers, the Welsh Ministers and the relevant Northern Ireland department in relation to the indicative annual ranges set out in the report. Subsection (4) requires the Secretary of State to send a copy of the report to each of the devolved administrations.

Clause 13: Duty to prepare proposals and policies for meeting carbon budgets

64. This clause places a duty on the Secretary of State to prepare such proposals and policies as the Secretary of State considers will enable carbon budgets that have been set to be met. The proposals and policies must also be prepared with a view to meeting the target for 2050 (under clause 2) and any target set for later years (under clause 6(1)(c)).

65. Subsection (3) imposes a requirement that the proposals and policies, taken as a whole, must contribute to sustainable development. Subsection (4) allows the Secretary of State to take into account proposals and policies which he considers may be prepared by the other national authorities.

Clause 14: Duty to report on proposals and policies for meeting carbon budgets

66. This clause places a duty on the Prime Minister to lay a report before Parliament setting out proposals and policies for meeting the current and future carbon budgets. This clause aims to enshrine transparency in the system, so that Parliament is clear about how the Government intends to meet its new obligations.

67. Subsection (2) requires the report to set out the Secretary of State's current proposals and policies for meeting carbon budgets (which must be prepared under clause 13). The report must also explain how the proposals and policies affect different sectors of the economy.

68. Subsection (4) places the Prime Minister under a duty to consult the Scottish Ministers, the Welsh Ministers and the relevant Northern Ireland department in relation to any part of the report covering their proposals and policies. Subsection (5) requires the Prime Minister to send a copy of the report to each of the devolved administrations.

Determination whether objectives met

Clause 15: Annual statement of UK emissions

69. This clause places a duty on the Secretary of State to lay a statement before Parliament on UK emissions in respect of every year from 2008 onwards. Finalised figures for UK emissions, including a full inventory report, are currently produced, and submitted to the EU by the Government on 15th March each year, 141/2 months after the end of calendar year in question. Subsection (10) therefore provides that the report under this clause must be laid no later than the 31st March in the second year after the year to which it relates (the report for 2008 must be laid by 31st March 2010).

70. Subsections (2) and (3) specify that the statement must set out UK emissions, UK removals and net UK emissions. These terms are defined in clause 29; they include emissions of all greenhouse gases (whether or not they are "targeted greenhouse gases" included in the 2050 and other targets), and the statement must show the total figures for emissions of each gas and also aggregate figures. The statement must also explain how the figures were measured or calculated, and must say whether they represent an increase or decrease when compared with the figures for the previous year. See, also, clause 77, which repeals a similar reporting requirement under section 2(b) of the Climate Change and Sustainable Energy Act 2006 (c.19).

71. Subsection (4) provides that where there has been a change in the international method of calculating emissions levels that requires the adjustment of emissions levels in earlier years in the budgetary period, then the report should set out the adjusted figures.

72. Subsection (5) requires the Secretary of State to report the levels of emissions from international passenger travel and imports or exports of goods in the statement, calculated in the same way as is required under international carbon reporting practice, unless those emissions are already included in the figures required by subsection (2). Emissions from international passenger travel and imports or exports of goods will be included in the figures reported under subsection (2) if regulations are made under clause 30 which have that effect; the commentary on clause 30 gives more detail on the circumstances in which that can happen.

73. Subsection (6) specifies that the report must set out the cumulative total of carbon units (as defined in clause 26(1)) credited to or debited from the net UK carbon account for the year, and give details of the number and type of those carbon units. Subsection (7) provides that the report must also state the net UK carbon account for the year.

74. Subsection (8) specifies that the statement must set out the amount of net UK emissions of each targeted greenhouse gas for the year 1990, as well as baseline amounts for other greenhouse gases (determined as the Secretary of State considers appropriate). For greenhouse gases which are not "targeted", the baseline amount may be equal to emissions of the gas in 1990 or another year, or average net UK emissions for a number of years (subsection (9)).

75. Subsection (10) gives the date by which the statement must be laid before Parliament and subsection (11) requires the Secretary of State to send a copy of the statement to each of the devolved administrations.

Clause 16: Powers to carry amounts from one budgetary period to another

76. This clause provides a power for the Secretary of State to "bank" and "borrow" emissions between budgetary periods.

77. Subsection (1) allows the Secretary of State to "borrow" part of the next budget. In the language of the Bill, an amount from the next budget is "carried back" to the budget preceding it. Where this power is used, the next budget (which will already have been set by order) is reduced by the amount that has been borrowed.

78. Subsection (2) limits the amount that can be borrowed under subsection (1) to no more than 1% of the next budget.

79. Subsection (3) allows the Secretary of State to carry forward any part of the carbon budget that exceeds the net UK carbon account for that period (i.e. to "bank" a budget surplus, but not necessarily all of it). The banked amount is added to the next budget.

80. Subsection (4) requires the Secretary of State to obtain the advice of the Committee on Climate Change, and take this advice into account, before exercising powers under this clause (that is, before banking or borrowing). The Secretary of State is also obliged to consult the devolved administrations before banking or borrowing.

81. Subsection (5) places a back-stop on when the banking and borrowing powers can be used. A decision to bank or borrow must be taken no later than 31st May in the second year after the earlier budget period ends (so, for the 2008-2012 budget, no later than 31st May 2014). This is also the date on which a assessment is made of whether the budget has been met (see clause 17).

Clause 17: Final statement for budgetary period

82. This clause places a duty on the Secretary of State to report the final figures for the net UK carbon account during a budgetary period; these figures are used to determine whether a budget has been met.

83. Subsections (2) to (6) place a duty on the Secretary of State to report:

under subsection (2), the final amounts of UK emissions, UK removals and net UK emissions for each targeted greenhouse gas (each of the gases included in the target - see clause 23). The final amounts may differ slightly from the sum of the emissions figures in the annual reports for the budgetary period because this statement will take account of any changes in the international methodology used to work out the 1990 baseline and emissions for each year;

under subsection (3), the final amount of carbon units that have been credited to or debited from the UK carbon account in that budgetary period, and details of the number and type of those units;

under subsection (4), the final amount of the net UK carbon account for the budgetary period;

under subsection (5), whether the Secretary of State has decided to borrow from the next budget (using the power in clause 16(1)) and, if so, the amount borrowed; and

under subsection (6), the amount of the budget for the period, which will be the level of the budget as originally set, subject to any banking or borrowing under clause 16 and any alteration of the budget under clause 20.

84. Subsection (7) provides that the determination of whether the budget has been met should be made by reference to the figures in the statement.

85. Subsection (8) provides that if the budget has not been met, then the statement must include an explanation of the reasons why not.

86. Subsection (9) sets a back-stop, requiring the Secretary of State to lay the statement before Parliament no later than the 31st May in the second year after the end of a budgetary period (so, for the 2008-2012 budget, no later than 31st May 2014). Subsection (10) requires the Secretary of State to send a copy of the statement to the devolved administrations.

Clause 18: Duty to report on proposals and policies for compensating for budget excess

87. This clause places a duty on the Secretary of State to lay a report before Parliament setting out proposals and policies to compensate in future periods for excess emissions, if a report under clause 17 shows that the net UK carbon account has exceeded the carbon budget for a period.

88. Subsection (2) places the Secretary of State under a duty to consult the Scottish Ministers, the Welsh Ministers and the relevant Northern Ireland department in relation to any part of the report covering their proposals and policies. Subsection (3) requires the Secretary of State to send a copy of the report to each of the devolved administrations.

Clause 19: Final statement for 2050

89. This clause places a duty on the Secretary of State to report to Parliament the final figures for the net UK carbon account in 2050.

90. Subsections (2) to (4) place a duty on the Secretary of State to report:

under subsection (2), the final amounts of UK emissions, UK removals and net UK emissions for 2050 for each targeted greenhouse gas;

under subsection (3), the amount of carbon units that have been credited to and debited from the net UK carbon account, and details of the number and type of those units;

under subsection (4), the amount of the net UK carbon account for 2050.

91. Subsection (5) provides that the question of whether the 2050 target has been met is to be answered by referring to the figures in the statement.

92. Subsection (6) provides that if the budget has not been met, the statement must explain the reasons why not.

93. Subsection (7) sets a back-stop, requiring the Secretary of State to lay the statement before Parliament no later than 31st May 2052. Subsection (8) requires the Secretary of State to send a copy of the statement to the devolved administrations.

Alteration of budgets or budgetary periods

Clause 20: Alteration of carbon budgets

94. This clause gives the Secretary of State a power, using an affirmative resolution statutory instrument, to amend the level of carbon budgets in certain circumstances. The clause also limits the conditions in which orders setting carbon budgets can be revoked.

95. Subsection (1) prevents an order setting a carbon budget being revoked after the final date by which it had to be set in accordance with clause 5(2).

96. Subsection (2) gives the Secretary of State the power to amend budgets, but limits the circumstances in which such an order may be made. A budget may be amended only if there have been significant changes in the factors on the basis of which the decision to set, or previously amend, the budget was made.

97. Subsection (3) limits the circumstances in which an order amending a budget after the start of the relevant budgetary period can be made. A budget may be amended only after the start of the budgetary period if there have been significant changes, since the budget period began, in the factors on the basis of which the decision to set or previously amend the budget was made. This is a more stringent test than in subsection (2) because there will typically have been less time for a significant change to happen.

98. Subsection (4) stipulates that the level of a carbon budget may not be amended after the budgetary period has ended.

99. Subsection (5) requires any order amending budgets to follow the affirmative resolution order procedure.

Clause 21: Consultation on alteration of carbon budgets

100. This clause sets out the procedures that the Secretary of State must follow before altering a carbon budget.

101. Subsection (1) places a duty on the Secretary of State to obtain and consider advice from the Committee on Climate Change. The Secretary of State also has to consider any views of the devolved administrations.

102. Subsections (2) to (8) set out the stages of the process:

Subsection (2) places a duty on the Committee on Climate Change to send a copy of its advice to each of the devolved administrations.

Subsection (3) requires the Committee on Climate Change, as soon as is reasonably practicable after giving its advice to the Secretary of State, to publish that advice in any way it thinks is appropriate.

Subsection (4) and (5) provide that the devolved administrations have one month to send the Secretary of State their views if the budget period has already begun, and three months if the budget period has not started yet. If the devolved administrations send their views within the relevant period, the Secretary of State can lay a draft order before Parliament immediately after he has considered them; otherwise, he can lay the draft order only after the relevant period has expired.

Subsection (6) places a duty on the Secretary of State to publish a statement that sets out whether and how he has taken account of the devolved administrations' views.

Subsection (7) places a duty on the Secretary of State, if altering a carbon budget in a way that differs from the Committee's recommendations, to publish a statement setting out the reasons for that decision.

Subsection (8) allows the Secretary of State to publish a statement under subsection (6) or (7) (on taking account of the devolved administrations' views or on any deviation from the Committee's advice) in any way he thinks is appropriate.

Clause 22: Alteration of budgetary periods

103. This clause allows, in certain circumstances, the duration of budgetary periods and their start and end dates to be changed by affirmative resolution statutory instrument.

104. Subsection (2) prescribes the circumstances when this power can be exercised. These are when a change to the budgetary periods is needed to keep them in line with similar periods under European or international agreements to which the UK is a party. Subsection (3) prevents alterations that would leave a period of time outside the carbon budget system.

105. Subsection (4) allows an order under subsection (1) to make consequential amendments to other parts of the Bill in order to ensure coherence of the provisions.

106. Subsection (5) requires the Secretary of State to consult the devolved administrations before making such an order.

Targeted greenhouse gases

Clause 23: Targeted greenhouse gases

107. This clause defines the term "targeted greenhouse gas", which is the term used to describe the gases covered by the targets and budgets in the Bill.

108. Subsection (1) defines the term "targeted greenhouse gas" as meaning carbon dioxide and any other greenhouse gas added later by the Secretary of State by order. The term "greenhouse gas" is defined in clause 84 by reference to a list of gases. Subsection (7) provides that the order must be made using the affirmative resolution procedure. Subsection (2) allows the Secretary of State to make any necessary consequential amendments when he makes the order.

109. Subsection (3) requires the Secretary of State to consult the devolved administrations, and also to obtain and consider advice from the Committee on Climate Change, before adding a new gas or gases to the list.

110. Subsection (4) requires the Committee on Climate Change, as soon as is reasonably practicable after giving its advice to the Secretary of State, to publish that advice in any way it thinks is appropriate.

111. Subsection (5) places a duty on the Secretary of State, if amending the list of targeted greenhouse gases in a way that differs from the Committee's recommendations, to publish a statement setting out the reasons for that decision. Subsection (6) allows the Secretary of State to publish this statement in any way he thinks is appropriate.

Clause 24: Base years for targeted greenhouse gases other than CO2

112. This clause allows the Secretary of State to make provision to deal with the situation where he wants to add a gas to the list of targeted greenhouse gases but, under international carbon reporting practice, the base year for measuring emissions of the gas is not 1990 (so where the base year used for the gas is different from the base year used for the percentage targets in the Bill). For example, the UK has chosen a base year of 1995 for emissions of hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride for the purposes of the Kyoto Protocol.

113. Subsection (1) gives the Secretary of State a power to make provision, by affirmative resolution order, setting out how to calculate what the emissions of a non-CO2 greenhouse gas were in 1990.

114. Subsection (2) specifically allows the Secretary of State to assign a different base year to a gas (not 1990), or to assign a number of base years to a gas. Having assigned a base year (or base years), the Secretary of State is allowed to treat the emissions in that year (or the average for the years) as though they were emissions in 1990.

115. Subsection (3) requires the Secretary of State to consult the devolved administrations, and also to obtain and consider advice from the Committee on Climate Change, before making an order designating a base year or years.

116. Subsection (4) requires the Committee on Climate Change, as soon as is reasonably practicable after giving its advice to the Secretary of State, to publish that advice in any way it thinks is appropriate.

117. Subsection (5) places a duty on the Secretary of State, if setting a base year in a way that differs from the Committee's recommendations, to publish a statement setting out the reasons for that decision. Subsection (6) allows the Secretary of State to publish this statement in any way he thinks is appropriate.

118. Subsection (7) provides that an order under subsection (1) must be made using the affirmative resolution procedure.

Prepared: 2 April 2008