Carbon units, carbon accounting and the net UK carbon account

Clause 25: UK domestic effort

119.     This clause places a duty on the Secretary of State to ensure that at least 70% of the "effort" required to meet each carbon budget is achieved through domestic emissions reductions and domestic removal by sinks.

120.     Subsection (2) defines "effort" as the difference between the present UK carbon budget and verified emissions in the previous budgetary period.

Clause 26: Carbon units and carbon accounting

121.     In addition to the level of "net UK emissions" (which is defined in clause 29(1)(c)), the "net UK carbon account" (as determined in accordance with clause 27) is affected by the addition and subtraction of "carbon units" through a process of "carbon accounting". This clause, and clause 27, allow the Secretary of State to determine what carbon units should be added to and subtracted from the net UK carbon account and how "carbon accounting" will work.

122.     Subsection (1) allows the Secretary of State to make regulations setting out specifically what "carbon units" can be used for carbon accounting purposes. "Carbon units" in the regulations can only be:

• units representing a reduction in the amount of greenhouse gas emissions;

• units representing the removal of greenhouse gas from the atmosphere; or

• units representing greenhouse gas emissions which are allowed under a scheme or arrangement which limits total emissions of greenhouse gases (for example, under certain kinds of emissions trading scheme).

123.     Subsection (2) allows the Secretary of State to make regulations which contain details of how carbon units should be registered and kept track of, and allowing him to establish and maintain accounts containing carbon units. Carbon units can be moved between accounts. The intention is to establish an accounting system broadly similar to that used to keep track of the UK's assigned amount units (AAUs) and other units issued under the Kyoto Protocol; subsection (2) specifically provides that the Secretary of State can use an existing system as the basis of the carbon accounting system.

124.     Subsection (3) gives more detail of what the regulations can say. The Secretary of State is allowed to appoint a body to operate the accounting scheme, to set up a new body for that purpose, to make provision allowing him to give guidance and directions to the body and to require users of the scheme to pay charges towards the cost of operating the scheme.

125.     Subsection (4) provides that if an existing body is appointed to operate the accounting scheme, then the Secretary of State can make any necessary amendments to relevant enactments.

126.     The procedures relating to the regulations are set out in clause 28.

Clause 27: Net UK carbon account

127.     Subsection (1) defines the term "net UK carbon account" for a budgetary period as net UK emissions (as defined in clause 29(1)(c)) as decreased by a number of carbon units to be credited to the account and increased by a number of carbon units to be debited from the account in accordance with regulations made by the Secretary of State.

128.     Subsection (2) requires the Secretary of State to make regulations setting out the circumstances in which carbon units are to be credited to and debited from the net UK carbon account, and the manner in which it is to be done. For example, the regulations could provide that units purchased through the EU Emissions Trading Scheme can be treated as units to be credited to the net UK carbon account.

129.     Subsection (3) provides that where carbon units are to the credited to the net UK carbon account, then provision must be made so that they are no longer available to offset other greenhouse gases: they must be put beyond use so that they cannot be double-counted.

130.     Subsection (4) provides that the regulations must make specific provision for dealing with the situation where the UK has a cap on emissions under a European or international scheme or arrangement that is less stringent than the carbon budget for a period, for example, where the UK's target under the first commitment period of the Kyoto Protocol (2008-12) is less stringent than the domestic carbon budget for that period. In that situation, the regulations must provide that the excess allowances are not used to offset greenhouse gas emissions in the UK or elsewhere.

Clause 28: Procedure for regulations under section 26 or 27

131.     This clause sets out the procedure that must be followed when carbon accounting regulations are made under clause 26 or clause 27.

132.     Subsection (2) provides that the affirmative resolution procedure must be used in the following cases:

• for the first set of carbon accounting regulations;

• if the regulations specify a new kind of carbon unit;

• if the regulations alter the value of a carbon unit;

• if the regulations modify primary legislation.

133.     Subsection (3) provides that the negative resolution procedure applies in all other situations.

134.     Subsection (4) requires the Secretary of State to consult the devolved administrations before laying or making the regulations (depending on which Parliamentary process is being used).

135.     Subsection (5) requires the Secretary of State to consult the Committee on Climate Change on the first set of regulations and whenever subsequent regulations specify a new kind of carbon unit or alter the value of a carbon unit.

Other supplementary provisions

Clause 29: UK emissions and removals of greenhouse gases

136.     This clause defines the terms "UK emissions", "UK removals" and "net UK emissions" used in Part 1 of the Bill. Subsection (2) provides that UK emissions and UK removals are to be determined by following international protocols, such as the United Nations Framework Convention on Climate Change (UNFCCC) Reporting Guidelines on Annual Inventories. Emissions only count for the purposes of this Bill if they are emissions of greenhouse gases from anthropogenic sources; non-anthropogenic sources of greenhouse gases (for example, emissions from volcanic activity) are not included in the figures (see the definition of "emissions" in clause 89).

Clause 30: Emissions from international passenger travel or imports or exports of goods

137.     This clause makes provision about greenhouse gas emissions from international passenger travel and emissions from imports or exports of goods. Subsections (1) and (2) provide that those emissions do not count as UK emissions for the targets and budgeting in Part 1, unless regulations make provision for them to do so. Until such time as regulations are made, clause 15(5) requires the Secretary of State to report the levels of emissions from international passenger travel and imports or exports of goods in his annual statement.

138.     Subsections (3) and (4) give the Secretary of State the power to make regulations that would allow emissions of targeted greenhouse gases (defined in clause 23) from international passenger travel and imports of goods to the UK to count as UK emissions

139.     Subsection (5) places a duty on the Secretary of State to lay before Parliament regulations for the inclusion of emissions from international passenger travel or imports of goods to the United Kingdom (under subsections (3) and (4)) within five years of the Act being passed; or to lay a report before Parliament explaining why this has not been done.

140.     Subsection (6) specifically allows the Secretary of State to make provision in the regulations about which time periods should be used when calculating UK emissions from international passenger travel and imports and exports of goods, and how emissions for the 1990 baseline should be calculated. Subsection (7) allows the Secretary of State to assign a different base year for this purpose (not 1990), or to assign a number of base years. 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.

Clause 31: Procedure for regulations under section 30

141.     This clause sets out the procedures that the Secretary of State must follow before making regulations on emissions from international passenger travel or imports or exports of goods under clause 30.

142.     Subsection (1) places a duty on the Secretary of State to obtain and consider advice from the Committee on Climate Change. Subsection (2) 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.

143.     Subsection (3) places a duty on the Secretary of State, if making regulations in a way that differs from the Committee's recommendations, to publish a statement setting out the reasons for that decision. The statement may be published in any way the Secretary of State thinks is appropriate (subsection (4)).

144.     Subsection (5) provides that regulations made under clause 30 are subject to the affirmative resolution procedure.

Part 2: The Committee on Climate Change

The Committee

Clause 32 and Schedule 1: The Committee on Climate Change

145.     This clause establishes the Committee on Climate Change (in Welsh, y Pwyllgor ar Newid Hinsawdd) and introduces Schedule 1.

Schedule 1: The Committee on Climate Change

146.     Schedule 1 makes further provision about the Committee, including provision on its membership, staff, procedures and other administrative requirements.

147.     Paragraphs 1 and 2 make provision in respect of the membership of the Committee on Climate Change. The Committee will have a chair and between five and eight members (one of whom may be appointed as the deputy chair) who will be appointed jointly by the Secretary of State the Scottish Ministers, the Welsh Ministers and the relevant Northern Ireland department (together, the "national authorities") after consultation with the chair. The Secretary of State may, with the consent of the other national authorities, amend the number of members by negative resolution order. Paragraph 1(3) gives a list, in alphabetical order, of the areas of experience and knowledge that are desirable in the Committee's membership, taken as a whole.

148.     Paragraph 3 provides that a person will be a member of the Committee on the terms which are set upon appointment(which will include terms about the length of time the person is to serve on the Committee). Paragraphs 4 to 7 make provision about how members can resign, the situations in which they can be removed from their posts, and allows the reappointment of members.

149.     Paragraphs 8 to 10 allow the national authorities to pay remuneration and allowances to members, and allow the national authorities to provide pensions for members or to make payments towards the provision of pensions. They also allow payments of compensation to outgoing members in special circumstances.

150.     Paragraphs 11 to 14 relate to the Committee's employees. The Committee must appoint a chief executive who has been approved by the national authorities. It may also appoint other employees. These paragraphs make provision about employees' pay and pensions, and allow employees to be pensionable under the Principal Civil Service Pension Scheme.

151.     Paragraphs 15 to 21 make provision about how the Committee may operate. The Committee can set up sub-committees, which can include people who are not members of the Committee (and they may be paid remuneration and allowances).

152.     Paragraph 16 requires the Committee to establish a sub-committee known as the Climate Change Adaptation Sub-Committee. This will be chaired by a member of the Committee and will consist of non-members. Paragraph 16(3) gives a list of the areas of experience and knowledge that are desirable in the Sub-Committee's membership, taken as a whole.

153.     The Committee is allowed to regulate its own procedure (including quorum) and sub-committee procedures. The Committee is required to publish the minutes of its meetings in any manner it considers appropriate. The Committee may authorise a sub-committee, member or employee to exercise its functions.

154.     Paragraphs 22 to 25 require the Committee to prepare annual reports and annual statements of accounts; reports and accounts must be laid before Parliament, the Scottish Parliament, the National Assembly for Wales and the Northern Ireland Assembly. The Committee's accounts will be audited by the National Audit Office. The Committee is placed under a duty to keep proper records, and must provide information to the national authorities on request.

155.     Paragraph 26 provides that the Committee is not required to publish anything it is prohibited from publishing or that it would not be required to publish under the Freedom of Information Act 2000 (c.36) or the Environmental Information Regulations 2004 (S.I. 2004/3391).

156.     Paragraph 27 provides that the Committee is not a Crown body. It will be a statutory non-departmental public body, and its employees will not be civil servants.

157.      Paragraphs 28 to 35 make amendments to, and provision in relation to, several enactments relating to public bodies; these have several effects, including that the body is subject to freedom of information laws, that the chair and members cannot be members of Parliament, and that the Committee's activities can be subject to investigation by the Scottish Parliament and the appropriate Parliamentary ombudsman.

Functions of the Committee

Clause 33: Advice on level of 2050 target

158.     This clause places a duty on the Committee on Climate Change to advise the Secretary of State on whether the 2050 target in clause 2 should be amended and if so what the amended percentage should be. Subsection (2) requires the Committee to provide the reasons for its advice under this section, and subsection (3) requires the Committee to provide its advice by 1st December 2008.

159.     Subsection (4) requires the Committee to send a copy of the report to each of the devolved administrations. Subsection (5) 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.

Clause 34: Advice in connection with carbon budgets

160.     This clause sets out the Committee on Climate Change's advisory duties in relation to carbon budgets, and the timing of the advice that must be given.

161.     Subsection (1) requires the Committee to give advice on carbon budgets. The Committee must advise on the levels at which carbon budgets should be and on the extent to which budgets should be met by reducing the level of net UK emissions or by the use of carbon units credited to the net UK carbon account. The Committee must advise on the contributions towards meeting carbon budgets that should be made by sectors of the economy covered by trading schemes (taken as a whole) and by other sectors (taken as a whole). The Committee is also required to advise on sectors of the economy in which there are particular opportunities for contributions to be made towards meeting carbon budgets through reductions in emissions of targeted greenhouse gases.

162.     Subsection (2) gives the Committee an advisory duty that only applies to the 2008-2012 budget period. The Committee is required to advise the Secretary of State on whether its advice on the level of the 2008-2012 budget is consistent with meeting a separate target of reducing emissions to an annual equivalent (as defined in clause 6(2)) of 20% below the 1990 baseline, and to set out what the costs and benefits would be of setting a budget consistent with that target.

163.     Subsection (3) requires the Committee to set out the reasons for its advice and subsection (4) makes provision on the timing of the advice.

164.     Subsection (5) requires the Committee, acting through the Adaptation Sub-Committee, to provide advice on: the preparation and adequacy of any programme under clause 56 which addresses the risks identified in the report under clause 55; the contribution of the objectives, policies and proposals to sustainable development; any assessment made in the second and subsequent programme of progress made towards implementing the objectives, proposals and policies set out in earlier programmes; and the need for directions to a reporting authority under clause 60.

165.     Subsection (6) imposes upon the Committee a duty to send copies of the advice to the devolved administrations at the same time as it gives its advice to the Secretary of State. Subsection (7) gives the Committee a duty to publish its advice in any manner it considers appropriate.

Clause 35: Reports on progress

166.     Subsection (1) requires the Committee on Climate Change to make an annual report to Parliament, the Scottish Parliament, the National Assembly for Wales and the Northern Ireland Assembly containing its assessment of the progress that has been made towards meeting the carbon budgets already set and the 2050 target (that is, unless amended, to reduce the net UK carbon account to at least 60% below 1990 levels); the further progress that is needed to meet the budgets and that target; and whether the budgets and that target are likely to be met.

167.     Subsection (2) applies to progress reports in the second year after the end of each budget period (for example, for the 2008-2012 budget period, in 2014; the final figures for a budget period are not available until the second year after it ends). In those reports, the Committee is required to give its views on the manner in which the budget was or was not met, and its views on the action taken to reduce net UK emissions during the budgetary period.

168.     Subsection (3) requires the Committee's report to include its assessment of the programme for adaptation to climate changed (published pursuant to clause 56) and its implementation, and any further action required as part of the programme.

169.     Subsection (4) provides that the first report under this section must be laid by 30th September 2009, to take into account the fact that the Secretary of State is required to set the first three budgets by 1st June 2009 (see clause 5(2)). Subsection (5) provides that each subsequent report under this clause, other than the one in the second year after the end of a budgetary period, must be laid by 30th June in the year in which it is made.

170.     Subsection (6) requires that each report in the second year after the end of a budgetary period must be laid by 15th July in the year in which it is made.

171.     Subsections (7) to (9) allow the Secretary of State to amend the timing of the report by negative resolution order after consulting the devolved administrations.

Clause 36: Response to Committee's reports on progress

172.     This clause places a duty on the Secretary of State to lay before Parliament a response to the points raised by each of the Committee on Climate Change's annual progress reports.

173.     Subsection (2) requires the Secretary of State to consult the devolved administrations on a draft of the response. Subsection (3) provides that the response to the Committee's first report must be laid no later than 15th January 2010. Subsection (4) provides that each subsequent report must be laid by 15th October in the year the Committee's report was made.

174.     Subsections (5) and (6) allow the Secretary of State to change the deadline by negative resolution order. This provision is to allow flexibility (it might, for example, be used to allow for the consequences of future international treaties on climate change necessitating a change to the date when the Committee makes its report).

175.     See also clause 78, which repeals a similar reporting requirement under section 2(a) of the Climate Change and Sustainable Energy Act 2006 (c.19).

Clause 37: Duty to provide advice or other assistance on request

176.     Subsection (1) requires the Committee on Climate Change to provide advice, analysis, information or other assistance, when requested to do so, to the Secretary of State, the Scottish Ministers, the Welsh Ministers or the relevant Northern Ireland department (together, the "national authorities"). Any request can be made if it relates to an authority's functions under the Bill, the progress that is being made towards meeting objectives set under the Bill or if it relates to climate change generally.

177.     Subsection (2) gives specific examples of what may be required of the Committee, including advice on caps on activities under trading schemes or assistance in the preparation of statistics.

178.     Subsection (3) gives the Committee a duty to provide a devolved administration (not the Secretary of State), when requested to do so, with advice, analysis, information or other assistance on a target, budget or similar requirement it has adopted (whether or not the target, budget or similar requirement is contained in legislation) or which has been imposed on it. For example, the Committee would, if requested to do so, be required to advise the Scottish Ministers in relation to any target adopted under an Act of the Scottish Parliament.

Supplementary provisions

Clause 38: General ancillary powers

179.     Subsection (1) gives the Committee on Climate Change the power to do anything that appears to it necessary or appropriate for the purpose of, or in connection with, the carrying out of its functions. Subsections (2) and (3) set out examples to illustrate the scope of the power. Ancillary powers are not freestanding; they may be used only to facilitate the exercise of formal functions. Subsection (4) requires the Committee to have regard to the desirability of involving the public in the exercise of its functions.

Clause 39: Grants to the Committee

180.     This clause enables each national authority (the Secretary of State, the Scottish Ministers, the Welsh Ministers and the relevant Northern Ireland department) to fund the Committee on Climate Change. National authorities may impose conditions when giving a grant (for example, a condition requiring the Committee to supply a financial memorandum or enter into a management agreement).

Section 40: Powers to give guidance

181.     This clause makes provision on how the Committee on Climate Change can be given guidance on how to carry out its functions. The Committee is required to "have regard" to guidance (see subsection (5)) - this means that the Committee must take the guidance into account when exercising the function.

• Subsection (1) provides that any guidance on the Committee's functions generally or its functions under Schedule 1 is to be given by the national authorities (and this means that such guidance must be given jointly by all the national authorities: see clause 87(2)).

• Subsection (2) provides that any guidance given on the Committee's functions under Part 1 of the Bill (for example, the function of advising on an amendment of the 2050 target), on its advice on the level of the 2050 target and on carbon budgets under clause 33 and 34 or on its duty to make progress reports under clause 35 is to be given by the Secretary of State, but only after he has consulted the devolved administrations.

• Subsection (3) provides that any guidance given on the Committee's duty to provide advice or other assistance under clause 37 or on trading schemes under clause 47 is to be given by the national authority seeking the advice or other assistance. If two or more national authorities are seeking the advice or other assistance, then the guidance must be given jointly.

Clause 41: Powers to give directions

182.     This clause makes provision on how the Committee on Climate Change can be given directions on how to carry out its functions. The Committee is required to comply with the directions (see subsection (6)), but the Committee cannot be given directions as to the content of any advice or report (see subsection (4)).

• Subsection (1) provides that any direction on the Committee's functions generally or its functions under Schedule 1 is to be given (jointly) by the national authorities.

• Subsection (2) provides that any direction given on the Committee's functions under Part 1 of the Bill (for example, the function of advising on an amendment of the 2050 target), on its advice on the level of the 2050 target and on carbon budgets under clauses 33 and 34 or on its duty to make progress reports under clause 35 is to be given by the Secretary of State, but only after he has consulted the devolved administrations.

• Subsection (3) provides that any direction given on the Committee's duty to provide advice and other assistance under clause 37 or on trading schemes under clause 47 is to be given by the national authority seeking the advice or other assistance. If two or more national authorities are seeking the advice or other assistance, then the directions must be given jointly.