Climate Change Bill [HL] - continued          House of Lords

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Part 2: The Committee on Climate Change

The Committee

Clause 26 and Schedule 1: The Committee on Climate Change

120.     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

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

122.     Paragraphs 1 and 2 make provision in respect of the membership of the Committee on Climate Change. The Committee will have a chairperson and between 5 and 8 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 chairperson. 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.

123.     Paragraph 3 provides that a person will be a member of the Committee on the terms which are set when he is appointed (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.

124.     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.

125.     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.

126.     Paragraphs 15 to 20 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). 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, but that does not require it 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). The Committee can authorise a sub-committee, member or employee to exercise its functions.

127.     Paragraphs 21 to 24 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.

128.     Paragraph 25 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.

129.      Paragraphs 26 to 33 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 27: Advice in connection with carbon budgets

130.     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.

131.     Subsection (1)(a) provides that the Committee must advise on the levels at which carbon budgets should be set. Subsection (1)(b) requires the Committee to advise 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. Subsection (1)(c) gives the Committee a duty to 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).

132.     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 5(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.

133.     Subsection (3) requires the Committee to set out the reasons for its advice and subsection (4) makes provision on the timing of the advice. Subsection (5) gives 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.

134.     Subsection (6) gives the Committee a duty to publish its advice in any manner it considers appropriate. Subsection (7) qualifies this by providing that the Committee is not required to publish any information that it is not allowed to disclose or information that it could choose not to disclose if it was asked to do so under the Freedom of Information Act 2000 (c. 36) or under the Environmental Information Regulations 2004 (S.I. 2004/3391).

Clause 28: Reports on progress

135.     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 which is being made towards meeting the carbon budgets already set and the 2050 target (i.e. unless amended, to reduce the net UK carbon account to at least 60% below 1990 levels).

136.     Subsection (2) applies to progress reports in the second year after the end of each budget period (e.g. 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.

137.     Subsection (3) provides that reports under this clause must be made by 30th June each year. Subsections (4) to (6) allow the Secretary of State to amend the timing of the report by negative resolution order after consulting the devolved administrations.

Clause 29: Response to Committee's reports on progress

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

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

140.     Subsections (4) and (5) allow the Secretary of State to change the deadline by negative resolution order. This provision is to allow flexibility (e.g. it might 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).

141.     See also clause 58, which repeals a similar reporting requirement under section 2(a) of the Climate Change and Sustainable Energy Act 2006 (c.19).

Clause 30: Duty to provide advice or other assistance on request

142.     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.

143.     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.

144.     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 31: General ancillary powers

145.     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. Subsection (2) sets out examples to illustrate the scope of the power. Ancillary powers are not freestanding; they can only be used to facilitate the exercise of formal functions.

Clause 32: Grants to the Committee

146.     This clause enables each national authority (i.e. 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 33: Powers to give guidance

147.     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 67(2)).

  • Subsection (2) provides that any guidance given on the Committee's functions under Part 1 of the Bill (e.g. the function of advising on an amendment of the 2050 target), on its advice on carbon budgets under clause 27 or on its duty to make progress reports under clause 28 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 and other assistance under clause 30 or on trading schemes under clause 40 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 34: Powers to give directions

148.     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 directions 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 directions given on the Committee's functions under Part 1 of the Bill (e.g. the function of advising on an amendment of the 2050 target), on its advice on carbon budgets under clause 27 or on its duty to make progress reports under clause 28 is to be given by the Secretary of State, but only after he has consulted the devolved administrations.

  • Subsection (3) provides that any directions given on the Committee's duty to provide advice and other assistance under clause 30 or on trading schemes under clause 40 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.

Part 3: Trading Schemes

Trading schemes

Clause 36: Trading schemes

149.     This clause provides the relevant national authority (defined in clause 39 as the Secretary of State, the Scottish Ministers, the Welsh Ministers or the relevant Northern Ireland department) with the power to set up trading schemes relating to greenhouse gas emissions using secondary legislation.

150.     Subsection (2)(a) provides for trading schemes which limit activities that consist of the emission of greenhouse gases, or that directly or indirectly lead to such emissions (for example, "cap and trade schemes" which cap emissions from a particular set of activities and allow trading of emissions within the cap). Subsection (2)(b) provides for trading schemes which encourage activities that directly or indirectly lead to a reduction in greenhouse gas emissions or the removal of greenhouse gases from the atmosphere.

Clause 37: Activities to which trading schemes may apply

151.     This clause sets out what activities are regarded as indirectly causing or contributing to greenhouse gas emissions or reductions in greenhouse gas emissions. It also makes provision in relation to the location of activities and emissions covered by this Part.

152.     Subsection (1) sets out the types of activity which are considered to be indirect causes of, or contributors to, greenhouse gas emissions, such as activities which involve the use of energy or those involving the supply of something the use of which would lead to greenhouse gas emissions. For example the supply of a heating fuel would be regarded as indirectly causing emissions because it leads to emissions at the point of use by the consumer. Subsection (2) provides that reductions in the level of those activities are to be regarded as indirectly causing or contributing to reductions in greenhouse gas emissions.

153.     Subsection (3) provides that Part 3 of the Bill applies to activities carried out in the United Kingdom, regardless of where emissions, or reductions in emissions, actually occur.

Clause 38 and Schedule 2: Matters that may or must be provided for in trading schemes

154.     Subsections (1) and (2) introduce Schedule 2 to the Bill, which gives further details about regulations establishing trading schemes. Subsection (3) provides that regulations may also contain provision about their application to the Crown.

Schedule 2: Trading schemes

155.     Schedule 2 makes specific provision on what must or may be included in regulations establishing trading schemes. Parts 1 and 2 make provision, respectively, in relation to trading schemes operating to achieve different results; but it is possible to make trading schemes that operate to achieve both types of results by combining different elements of those Parts.

156.     Part 1 of Schedule 2 contains details of what can or must be included in a trading scheme which operates by limiting, or encouraging the limitation of, activities that consist of or lead to emissions of greenhouse gases. For example, the Carbon Reduction Commitment would be a scheme under Part 1 of Schedule 2.

157.     A trading scheme under Part 1 must operate by having trading periods (paragraph 2), by defining the activities covered by the scheme (paragraph 3(1)) and by specifying scheme "units" (which may be specified by reference to the activities themselves, things consumed or used for their purposes, things produced by the activities or other consequences of the activities) (paragraph 3(3) and (4)). The scheme must define the participants covered by it; participants can be defined by reference to criteria (paragraph 4).

158.     A scheme under Part 1 may provide for allowances to be allocated to participants; allowances represent the right to carry out a specified amount of the activity covered by the scheme. But the regulations cannot provide for allowances to be allocated in return for payment (paragraph 5). Any provisions for auctioning allowances would be contained in different legislation (e.g. a Finance Act).

159.     The scheme rules may require a participant to have or acquire a certain number of allowances to cover his activities in a trading period (paragraph 6). A scheme may also allow or require the participant to purchase defined credits to offset his activities, but the regulations can also place limits on the use of credits (paragraph 7). A scheme might also operate by requiring payments to be made if the participant does not hold a sufficient number of allowances or credits (paragraph 8).

160.     A scheme under Part 1 must allow trading in allowances or credits under the scheme, and the scheme must set out the circumstances in which trading will operate. Third parties (who would not otherwise be participants) may also be allowed to trade (paragraph 9). A trading scheme may also specify that activities can only be carried out if the participant holds a permit (paragraph 10) and may allow recognition of allowances, credits, certificates or other units issued under other trading schemes (paragraph 11).

161.     Part 2 of Schedule 2 contains details of what can or must be included in a trading scheme which operates by encouraging activities that consist of, or that cause or contribute (directly or indirectly) to reductions in greenhouse gas emissions or the removal of greenhouse gases from the atmosphere.

162.     A trading scheme under Part 2 must operate by having trading periods (paragraph 13), by defining the activities covered by the scheme (paragraph 14(1)) and by specifying scheme "units" (which may be specified by reference to the activities themselves, things consumed or used for their purposes, things produced by the activities or other consequences of the activities) (paragraph 14(3) and (4)). The scheme must define the participants covered by it; participants can be defined by reference to criteria (paragraph 15).

163.     A scheme under Part 2 must set targets for participants to achieve in the trading period (paragraph 16). They must provide for the issue of certificates to participants; certificates act as evidence of the amount of the activity that has carried on, but can also be used as evidence of the activity of another person. The scheme must require each participant to have, at the end of a trading scheme, enough certificates to meet his target (paragraph 17), and may provide that a participant who does not have enough certificates should have to make payments (paragraph 18).

164.     A scheme under Part 2 must allow trading in certificates under the scheme, and the scheme must set out the circumstances in which trading will operate. Third parties (who would not otherwise be participants) may also be allowed to trade (paragraph 19). A trading scheme may allow recognition of allowances, credits, certificates or other units issued under other trading schemes (paragraph 20).

165.     Part 3 of Schedule 2 makes provision on the administration and enforcement of trading schemes.

166.     The regulations may appoint an administrator of the scheme and impose functions on him; the administrator must be one of the national authorities or a public body, or a combination of any of these (paragraph 21). The administrator of a trading scheme is the body which operates the scheme on a day-to-day basis.

167.     The regulations can require the disclosure of information to the administrator, national authorities or participants (paragraph 22). A scheme may provide for the creation and maintenance of registers to keep track of participants, their obligations, trading and other information in the scheme (paragraph 23). The regulations can allow certain information to be published (paragraph 24); for example, they might provide for the publication of a list showing participants' performance in the scheme.

168.     The scheme can allow the administrator to buy trading units in other schemes, which may be schemes made under the Bill or other similar schemes such as the EU Emissions trading scheme (paragraph 25). The scheme may also require the payment by participants of charges covering all or part of the costs of the scheme (paragraph 26).

169.     The scheme can include provision setting out how compliance with the scheme is to be monitored and on the keeping of records by participants, the provision of information, audit and the inspection of premises (paragraph 27). The scheme can also make further provision for enforcement of the scheme where it is reasonably believed that there has been a failure to comply with the scheme's requirements (paragraph 28).

170.     The scheme can make provision on the imposition of civil financial penalties or other types of penalty for failure to comply with the scheme rules (paragraph 29) and creating criminal offences relating to the scheme (paragraph 30). A scheme can also make provision on appeals against decisions and enforcement action, and allow those appeals to be heard by independent appointed persons (paragraph 31).

Supplementary provisions

Clause 39: Authorities and regulations

171.     This clause defines who is the "relevant national authority" in relation to trading schemes, and in doing so sets out the scope of the powers available to each national authority.

  • Subsection (2) allows the Scottish Ministers to make trading schemes within the scope of the legislative competence of the Scottish Parliament (i.e. to the extent that the Scottish Parliament would have been able to make a trading scheme of its own accord).

  • Subsection (3) allows the Welsh Ministers to make trading schemes in relation to matters that relate to limiting, or encouraging the limiting of, activities in Wales that consist of the emission of greenhouse gases, with the exception of activities in connection with offshore oil and gas exploration and exploitation. If the National Assembly for Wales gains legislative competence that would enable it to make trading schemes of its own accord, the power of the Welsh Ministers to make trading schemes under this Part will extend to match the scope of that legislative competence. Subsection (4) defines "offshore oil and gas exploration and exploitation" to have the same meaning it has in the National Assembly for Wales (Transfer of Functions) Order 2005 (S.I. 2005/1958) and defines "Wales", for the purpose of subsection (3), by reference to section 158(1) of the Government of Wales Act 2006 (c.32). This definition includes the sea adjacent to Wales out as far as the seaward boundary of the territorial sea.

  • Subsection (5) allows the Secretary of State or the relevant Northern Ireland department to make trading schemes in relation to reserved matters under the Northern Ireland Act 1998 (c.47); the relevant Northern Ireland department can only make trading schemes covering reserved matters with the Secretary of State's consent (see clause 40(5)).

  • Subsection (6) allows the relevant Northern Ireland department to make trading schemes in relation to all other matters within the scope of the legislative competence of the Northern Ireland Assembly (i.e. to the extent that the Northern Ireland Assembly would have been able to make a trading scheme of its own accord on "transferred matters" under the Northern Ireland Act 1998).

  • Subsection (7) provides that the Secretary of State has the power to make trading schemes in relation to all other matters.

 
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Prepared: 15 November 2007