Climate Change Bill [HL] - continued          House of Lords

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Clause 8: Setting of carbon budgets for budgetary periods

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

51.     Subsection (2) provides that every carbon budget must be set with a view to meeting the 2050 target, the target percentage range for 2020 and any target 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 (e.g. any international treaties to which the UK is a signatory).

Clause 9: Consultation on carbon budgets

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

53.     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.

54.     Subsections (2) to (6) 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) 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 can only lay the draft order after the three month period has expired.

  • Subsections (4) to (6) 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 also publish a statement explaining why not. The Secretary of State can publish the statements in any way he thinks is appropriate, but they must be published when he lays the draft order.

Clause 10: Matters to be taken into account in connection with carbon budgets

55.     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.

56.     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 limit the general requirement for the Secretary of State and the Committee on Climate Change to take all relevant matters into account.

Clause 11: Duty to report on proposals and policies for meeting carbon budgets

57.     This clause places a duty on the Secretary of State 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.

58.     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.

Determination whether objectives met

Clause 12: Annual statement of UK emissions

59.     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 (9) 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 (i.e. the report for 2008 must be laid by 31st March 2010).

60.     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 24; 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 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 58, which repeals a similar reporting requirement under section 2(b) of the Climate Change and Sustainable Energy Act 2006 (c.19).

61.     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.

62.     Subsection (5) requires the Secretary of State to report the levels of emissions from international aviation or international shipping 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 aviation or international shipping will be included in the figures reported under subsection (2) if regulations are made under clause 25 which have that effect; the commentary on clause 25 gives more detail on the circumstances in which that can happen.

63.     Subsection (6) specifies that the report must set out the cumulative total of carbon units (as defined in clause 21) credited to or debited from the net UK carbon account up to the date of the report, 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 relevant budgetary period. The amounts stated under subsections (6) and (7) must be stated as at the latest date that is as reasonably practicable before the publication of the report (subsection (8)).

64.     Subsection (9) gives the date by which the statement must be laid before Parliament and subsection (10) requires the Secretary of State to send a copy of the statement to each of the devolved administrations.

Clause 13: Powers to carry amounts from one budgetary period to another

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

66.     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.

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

68.     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.

69.     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, i.e. before banking or borrowing. The Secretary of State is also obliged to consult the devolved administrations before banking or borrowing.

70.     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 (e.g. 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 14).

Clause 14: Final statement for budgetary period

71.     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.

72.     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 (i.e each of the gases included in the target - see clause 19). 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 13(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 13 and any alternation of the budget under clause 16.

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

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

75.     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 (e.g. 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 15: Final statement for 2050

76.     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.

77.     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.

78.     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.

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

80.     Subsection (7) 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 2050 (i.e. by 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 16: Alteration of carbon budgets

81.     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.

82.     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 4(2).

83.     Subsection (2) gives the Secretary of State the power to amend budgets, but limits the circumstances in which such an order can be made. A budget may only be amended 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.

84.     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 only be amended 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.

85.     Subsection (4) requires any order amending budgets to follow the affirmative resolution order procedure.

Clause 17: Consultation on alteration of carbon budgets

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

87.     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.

88.     Subsections (2) to (6) 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) and (4) 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 only lay the draft order after the relevant period has expired.

  • Subsection (5) 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. The Secretary of State can publish the statement in any way he thinks is appropriate, but it must be published when he lays the draft order (subsection (6)).

Clause 18: Alteration of budgetary periods

89.     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.

90.     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.

91.     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.

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

Targeted greenhouse gases

Clause 19: Targeted greenhouse gases

93.     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.

94.     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 64 by reference to a list of gases. Subsection (5) provides that the order must be made using the affirmative resolution procedure.

95.     Subsection (2) provides that an order adding a new gas or gases to the list can only take effect from the start of a future budgetary period. This is intended to prevent the addition of new gases to the targets in the middle of a budget. Subsection (3) allows the Secretary of State to make any necessary consequential amendments when he makes the order.

96.     Subsection (4) 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.

Clause 20: Base years for targeted greenhouse gases other than CO2

97.     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 (i.e. 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.

98.     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.

99.     Subsection (2) specifically allows the Secretary of State to assign a different base year to a gas (i.e. 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.

100.     Subsections (3) and (4) provide that an order under subsection (1) can only take effect from the beginning of a future budget period, and that the order must be made using the affirmative resolution procedure.

Carbon units, carbon accounting and the net UK carbon account

Clause 21: Carbon units and carbon accounting

101.     In addition to the level of "net UK emissions" (which is defined in clause 24(1)(c)), the "net UK carbon account" (as determined in accordance with clause 22) is affected by the addition and subtraction of "carbon units" through a process of "carbon accounting". This clause, and clause 22, 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.

102.     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 (e.g. under certain kinds of emissions trading scheme).

103.     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.

104.     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.

105.     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.

106.     The procedures relating to the regulations are set out in clause 23.

Clause 22: Net UK carbon account

107.     Subsection (1) defines the term "net UK carbon account" for a budgetary period as net UK emissions (as defined in clause 24(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.

108.     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.

109.     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, i.e. they must be put beyond use so that they cannot be double-counted.

110.     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, e.g. 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 23: Consultation and parliamentary procedure for regulations

111.     This clause sets out the procedure that must be followed when carbon accounting regulations are made under clause 21 or clause 22.

112.     Subsection (2) provides that the affirmative resolution procedure must be used for the first set of regulations and for any regulations that amend or repeal primary legislation. Subsection (3) provides that the negative resolution procedure applies in all other situations.

113.     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).

114.     Subsection (5) requires the Secretary of State to consult the Committee on Climate Change before making the first regulations.

Other supplementary provisions

Clause 24: UK emissions and removals of greenhouse gases

115.     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 (e.g. emissions from volcanic activity) are not included in the figures (see the definition of "emissions" in clause 69).

Clause 25: Emissions from international aviation or international shipping

116.     This clause makes provision about greenhouse gas emissions from international aviation or international shipping. Subsection (1) provides 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 12(5) requires the Secretary of State to report the levels of emissions from international aviation and international shipping in his annual statement.

117.     Subsection (2) allows the Secretary of State to define in more detail what is meant by "international aviation or shipping" by negative resolution order.

118.     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 19) from international aviation or shipping to count as UK emissions. This power may only be exercised if there is a change in European Community or international law or policy that relates to emissions from international aviation or shipping. Subsection (7) provides that regulations must be made using the affirmative resolution procedure.

119.     Subsection (5) 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 aviation or shipping, and how emissions for the 1990 baseline should be calculated. Subsection (6) allows the Secretary of State to assign a different base year for this purpose (i.e. 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.

 
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Prepared: 15 November 2007