APPENDIX 1: CLIMATE CHANGE BILL [HL] —
GOVERNMENT AMENDMENTS
First supplementary memorandum by the Department
for Energy and Climate Change & the Department for Environment,
Food and Rural Affairs
1. This memorandum has been prepared by the Department
of Energy and Climate Change and the Department for Environment,
Food and Rural Affairs and relates to the Commons Amendments to
the Climate Change Bill, as brought from the House of Commons
on 29th October 2008.
2. As an aid to interpreting this memorandum—
a) references to "the Bill" are to
Commons Bill 97, the Bill first printed for the Commons, and references
to clauses are to clauses in that print of the Bill unless otherwise
stated;
b) the majority of references to "the Department"
are to the Department of Energy and Climate Change. But, in relation
to Commons Amendments 43 and 78 (charges for single use carrier
bags), "the Department" means the Department for Environment,
Food and Rural Affairs;
c) references to "the Committee" are
to the Delegated Powers and Regulatory Reform Committee, not to
the Committee on Climate Change;
d) references to "the Main Memorandum"
are to the Delegated Powers Memorandum in relation to the Bill,
submitted to the Committee on 19th November 2007 when the Bill
was introduced and printed in Appendix 4 to the Committees 2nd
Report of Session 2007-2008.
3. This memorandum is split into three Parts.
Part A deals with Commons Amendments which would affect
matters which were in the Bill when it left the House of Lords,
and covers—
- Commons Amendment 4 Power to amend the
target for 2050
- Commons Amendment 6 Power to amend the
target for 2020
- Commons Amendment 16 Base years for
targeted greenhouse gases
- Commons Amendment 18 International aviation
and international shipping
- Commons Amendment 38 Progress reports
on adaptation
- Commons Amendment 47 Duty to exercise
power in Companies Act or explain why not
4. Parts B and C concern Commons Amendments
which would add new matters to the Bill—
- Commons Amendment 43 & 78 Charges
for single use carrier bags
- Commons Amendment 44 & 79 Carbon
emissions reduction targets
PART A: COMMONS AMENDMENTS WHICH WOULD AFFFECT
MATTERS INCLUDED IN THE BILL AS IT LEFT THE HOUSE OF LORDS
Commons Amendment 4 (Amending the Secretary
of State's power under clause 3(1)(a) to amend the target for
2050)
5. Commons Amendment 4 would reduce the practical
scope, for the time being, of the power delegated to the Secretary
of State under clause 3(1)(a) to amend the target for 2050 in
clause 2(1). The delegated power in clause 3(1) was discussed
in paragraphs 34-46 of the Main Memorandum.
6. Commons Amendment 4 would change the reference
point from which assessments are to be made of whether there have
been "significant developments in scientific knowledge about
climate change" from June 2000 (the date of the Royal Commission
on Environmental Pollution's 22nd Report "Energy - the Changing
Climate") to the day the Bill receives Royal Assent. The
basis for the proposed change is that Commons Amendment 2 would
amend clause 2(1) to require an 80% reduction in the net UK carbon
account by 2050 - that new proposed target is based on scientific
developments that have taken place since 2000.
7. Commons Amendment 4 would, in practice, have
the effect of narrowing the Secretary of State's power to amend
the target on the basis of changes in scientific knowledge; without
the amendment, the power could arguably be exercised immediately,
because it is probably reasonable to say that there have already
been significant developments in climate science since 2000. The
power to amend the 2050 target in the light of appropriate significant
developments in European or international law or policy is unaffected.
Commons Amendment 6 (Amending the Secretary
of State's power under clause 7(1) to amend the '2020 target'
in clause 6(1)(a))
Power conferred on: Secretary of State
Power exercisable by: Statutory Instrument
Parliamentary procedure: Affirmative
resolution
8. Commons Amendments 5 and 6 are linked. See
also paragraphs 56 to 60 of the Main Memorandum, in relation to
the power which is now in clause 7(1).
9. Commons amendment 5 would add a new subsection
(4) to clause 6. The new subsection (4) would have the effect
that, in considering whether the test in clause 6(1)(a) has been
met in relation to the budgetary period that includes the year
2020, only carbon dioxide emissions should be taken into account.
The intention behind the amendment is that 'the 2020 target' (as
it is often called) remains a 26% CO2 target - it is
not affected by Commons Amendment 15, which increases the range
of targeted greenhouse gases included in the budgets. The Committee
on Climate Change will provide advice, on 1st December 2008, as
to what it thinks the target should be if it covers all targeted
greenhouse gases.
10. Commons Amendment 6 would expand the scope
of the power under clause 7(1) by expressly providing that the
Secretary of State may amend or repeal the new subsection which
would be added to clause 6 by amendment 5. This means that the
amendment would introduce a Henry VIII power, albeit a very specific
one.
11. The Department considers that it is appropriate
to delegate this power to the Secretary of State. A decision on
the level of the 2020 target is intrinsically linked to a decision
on the range of gases covered by the target. If the power to amend
the target is to be delegated, then the power to amend the range
of gases it covers should also be delegated. That will allow both
interrelated decisions to be considered at the same time, using
the same process and for any changes to come into effect at the
same time.
12. The Department does not think that a decision
to create what amounts to a new delegated power to amend the range
of gases covered by the 2020 target requires a reconsideration
of whether the power to amend the 2020 target should be delegated.
The justifications in paragraphs 56 to 60 of the Main Memorandum
apply to both decisions. And the procedural safeguard attached
to the power are very strong and would apply equally to both aspects
of the decision.
13. The new power that would be introduced by
Commons Amendment 6 can only be exercised at the same time as
the power in clause 7(1). It is subject to the affirmative resolution
(see clause 7(4)). The exercise of the power under clause 7(1)
is limited by the restrictions in clause 7(2) and is also subject
to the consultation duties, and duties to give reasons, in clause
8. The Department considers that these provide appropriate safeguards
to ensure that all the arguments behind a decision to exercise
the power will be out in the open and can be properly scrutinised.
Commons Amendment 16 (Power to specify and
amend base years for targeted greenhouse gases)
Power conferred on: Secretary of State
Power exercisable by: Statutory Instrument
Parliamentary procedure: Affirmative
resolution
14. Commons Amendment 16 would delete subsections
(1) and (2) of clause 24 and replace them with four new subsections.
The amendment would have no very substantial effect on the power
in clause 24(1), but the amendment would introduce a new, specific,
Henry VIII power.
15. Clause 24(1) currently allows the Secretary
of State to set base years for gases other than CO2
that might be introduced by order under clause 23. Commons Amendment
15 would introduce new greenhouse gases to the range of targeted
greenhouse gases in clause 23, which would be stated on the face
of the Bill.
16. New subsection (1) in Commons Amendment 16
would make provision setting out the base years for the new targeted
greenhouse gases in Commons Amendment 15. New subsection (1A)(b)
would provide a Henry VIII power to amend those base years, but
only if there are significant developments in European or international
law or policy that make it appropriate to do so (see new subsection
(1C)). New subsection (1A)(a) would replicate the power currently
in clause 24(1). New subsection (1B) would replicate the provision
currently in clause 24(2).
17. The Department considers that the justifications
in paragraphs 88 to 97 of the Main Memorandum (what is now clause
24 was then clause 20) continue to apply to the provisions in
Commons Amendment 16, albeit in circumstances where Commons Amendment
15 would add all the other greenhouse gases to the range of targeted
greenhouse gases. The Department considers that the affirmative
resolution procedure provides an appropriate level of scrutiny
for a decision of this kind.
Commons Amendment 18 (Power to define what
is to be regarded as "international aviation" or "international
shipping")
Power conferred on: Secretary of State
Power exercisable by: Statutory Instrument
Parliamentary procedure: Affirmative
resolution
18. Commons Amendment 18 would make a number
of changes to clause 30 of the Bill. Amongst other things (see
the further discussion of Commons Amendment 18 below) the amendment
would reintroduce a delegated power to define what is to be regarded
as "international aviation" and "international
shipping" (see subsection (2)).
19. Clause 30 was clause 25 when the Bill was
Introduced. At that stage, the power in subsection (2) was subject
to the negative resolution procedure. The Department provided
a justification in paragraphs 125 to 130 of the Main Memorandum.
The Committee considered the issue and recommended, at paragraphs
15 and 16 of its 2nd Report of Session 2007-2008, that the power
should be subject to the affirmative resolution procedure.
20. Commons Amendment 18 would follow this recommendation,
because it provides that an order under subsection (2) is subject
to the affirmative resolution procedure.
Commons Amendment 18 (Power to make regulations
providing for international aviation and international shipping
to be treated as emissions from sources in the United Kingdom)
Power conferred on: Secretary of State
Power exercisable by: Statutory Instrument
Parliamentary procedure: Affirmative
resolution
21. Commons Amendment 18 would delete subsections
(1) to (5) of clause 30, so amending the power of the Secretary
of State to make regulations under clause 30. Although the drafting
of the delegated power would be substantially altered, the Department
does not consider that the changes would be very significant in
practice. The principal aspects of the amendment are as follows—
a) subsection (3) preserves the 'make regulations
or explain why not' approach in clause 30(5), albeit with a different
compliance date - 31st December 2012, rather than within five
years of Royal Assent;
b) the language used in the power is changed.
Clause 30(3) and (4) currently give the Secretary of State the
power to make regulations in respect of the treatment of "emissions
from international passenger travel" and "emissions
from the imports of goods" respectively. New subsection (3)
of Commons Amendment 18 would allow the regulations to be made
in respect of "emissions from international aviation and
international shipping", but subsection (5)(b) expressly
provides that the power may be exercised by making provision in
relation to "transport of passengers or goods to or from
the United Kingdom";
c) clause 30(6) and (7), and clause 31 (procedure)
are unaffected by the amendments.
22. The Department considers that the justifications
for the power and the procedure (affirmative resolution) set out
in paragraphs 117 to 124 of the Main Memorandum continue to apply.
An additional safeguard was added to the Bill at Report Stage
in the House of Lords, which now forms part of clause 31 - the
Secretary of State must obtain and take account of advice from
the Committee on Climate Change before exercising his power under
clause 30.
Commons Amendment 38 (New clause on reporting
of progress by the Committee on Climate Change in relation to
adaptation. Power to move from biennial reporting to annual reporting)
Power conferred on: Secretary of State
Power exercisable by: Statutory Instrument
Parliamentary procedure: Negative resolution
23. Commons Amendment 38 would introduce a new
clause placing a duty on the Secretary of State to lay before
Parliament biennial reports setting out its views on the implementation
of the Government's adaptation programmes under clause 56. The
progress reports would be laid before Parliament at the same as
the Committee on Climate Change's progress reports in relation
to climate change mitigation (see clause 35), but only once every
two years.
24. Subsection (4) of the new clause would give
a power to the Secretary of State to provide that such reports
must be made annually. While biennial progress reporting is currently
considered to be a proportionate level of reporting in relation
to adaptation, there is a possibility that more urgency may be
desirable in the future. The Department considers that it is appropriate
for the Secretary of State to be given a power to require annual
reporting if, say, it becomes clear that not enough progress is
being made to adapt or the timescales for action become more urgent.
25. The Department considers that the negative
resolution procedure provides a suitable level of parliamentary
scrutiny for a relatively minor power such as this, on which it
may not be appropriate to take up Parliament's time with scheduled
debates unless parliamentarians wish to have them. The Department
would, of course, be required to set out the policy justification
behind any such order in an Explanatory Memorandum, and the Merits
of Statutory Instruments Committee could report the measure to
the House if that was considered appropriate.
Commons Amendment 47 (Duty to make regulations
under section 416(4) of the Companies Act 2006, or explain why
not)
Power conferred on: Secretary of State
Power exercisable by: Statutory Instrument
Parliamentary procedure: Affirmative
resolution
26. Commons Amendment 47 would require the Secretary
of State, by 6th April 2012, to make regulations under section
416(4) of the Companies Act to require companies' directors' reports
to contain information about emissions of greenhouse gas or to
lay before Parliament a report explaining why he has not done
so.
27. The Department does not consider that this
should be treated as a new delegated power. Any regulations made
in compliance with the duty would be made under the existing delegated
power in section 416(4) of the Companies Act 2006. It may be of
interest to the Committee that regulations made in compliance
with the duty would be subject to the affirmative resolution procedure
(see section 473(3)(b) of the Companies Act 2006).
PART B: COMMONS AMENDMENTS 43 AND 78
Introduction
28. This Part of the memorandum has been prepared
by the Department for Environment, Food and Rural Affairs and
relates to Commons Amendments 43 and 78. Those amendments would
add a new clause to the Bill (Commons Amendment 43) which would
introduce a new Schedule to the Bill (Commons Amendment 78) relating
to charges for single use carrier bags. For the purposes of this
Part of the memorandum, it is convenient to refer to "the
new clause" and "the new Schedule".
29. Some of the provisions introduced by the
new clause and the new schedule would "bolt on" to existing
provisions in the Bill. Where this occurs and in order to avoid
repeating points that have already been made to the Committee,
this memorandum refers to the relevant parts of the Main Memorandum.
Summary of the provisions
30. The new clause and the new Schedule would
allow for the making of regulations about charges for single use
carrier bags.
31. Subsections (1) and (2) of the new clause
would introduce the new Schedule. The new Schedule is divided
into 3 parts as follows—
- Part 1 contains enabling powers to make
regulations about charges for single use carrier bags
- Part 2 contains enabling powers to create
civil sanctions for breaches of regulations made under Part 1
- Part 3 makes provision about the procedures
to be followed when making regulations about charges for single
use carrier bags.
General provision on regulations and orders
32. The new clause and the new Schedule would
be subject to the general provisions in relation to orders and
regulations in clause 82 of the Bill. To that extent, the Committee
is referred to paragraphs 18 to 26 of the Main Memorandum.
33. Clause 83 would not apply to the power to
make regulations under the new Schedule, as this is a delegated
power which is available to the devolved administrations in Wales
and Northern Ireland as well as to the Secretary of State. It
is appropriate that where the Secretary of State exercises this
power, it should be subject to scrutiny in both Houses of Parliament
in the usual way. Where it is exercised by any of the devolved
administrations it is appropriate that it should be subject to
scrutiny in the relevant devolved legislature. Part 3 of the new
Schedule makes such provision and is described in greater detail
in paragraphs 78 to 85 of this memorandum.
The new clause - charges for single use carrier
bags
34. The new clause introduces the new Schedule.
The new Schedule contains the detailed provisions relating to
charges for single use carrier bags. These provisions in the new
Schedule are considered in detail in paragraphs 43 to 85 of this
memorandum.
35. Subsection (3) of the new clause defines
who is the relevant national authority for the purposes of making
regulations under the new Schedule: this is the Secretary of State
in relation to England, the Welsh Ministers in relation to Wales
and the Department of the Environment in Northern Ireland.
36. Subsection (4) of the new clause sets out
the circumstances in which any regulations under the new Schedule
must be made using the affirmative resolution procedure. These
circumstances are as follows—
· the first regulations made by the relevant
national authority under the new Schedule;
· any regulations containing provision imposing
or providing for the imposition of new civil sanctions
· any regulations amending or repealing
primary legislation
37. Otherwise regulations made under the new
Schedule are subject to the negative resolution procedure (subsection
(5) of the new clause).
38. The Department expects that the first regulations
made by the relevant national authority under the new Schedule
will contain the following provisions—
· definition of sellers of goods (i.e. who
is required to charge)
· minimum amount of the charge or the method
by which it is to be calculated
· description of bags subject to the charge
· appointment of administrators and their
powers and duties
· records and information to be kept relating
to charges and requirements relating to publication and supply
of records
· civil sanctions to apply in cases where
the regulation are breached
· provisions relating to civil sanctions
such as guidance and publication of reports on the use of civil
sanctions
39. The Department recognises that it is clearly
appropriate to make the first regulations subject to the affirmative
procedure and for the relevant legislature to be given an opportunity
to debate the proposed provisions in question.
40. It also recognises that where regulations
propose new civil sanctions, or amend primary legislation, these
should be subject to the higher level of scrutiny afforded by
the affirmative procedure resolution.
41. There are however likely to be situations
where the Department considers that it would be disproportionate
to use the affirmative resolution procedure. For example, once
the first regulations are made, relatively small technical amendments
are likely to be necessary, such as the characteristics of a bag
falling within the scope of the regulations. The Department considers
that it would be disproportionate to require amendments of this
nature to be subject to the affirmative resolution procedure.
42. Insofar as future regulatory amendments are
the result of changes in policy, then the Department would expect
to carry out a full consultation in accordance with Cabinet Office
guidance before making the amendments.
Part 1 of the new Schedule (Powers to make
regulations about charges)
Powers conferred on: Relevant national
authority
Powers exercisable by: Statutory Instrument
Parliamentary procedure: Affirmative
resolution for first regulations, if amending or repealing any
primary legislation, or introducing new civil sanctions otherwise
negative resolution
43. Part 1 of the new Schedule contains enabling
powers for the relevant national authorities to make regulations
about charges for single use carrier bags.
44. In accordance with clause 82, the powers
are exercisable by statutory instrument.
45. As set out in paragraph 36 and 37 of this
memorandum, subsections (4) and (5) of the new clause set out
the circumstances in which any regulations under the new Schedule
must be made using the affirmative resolution procedure and when
the negative resolution procedure applies.
General power to make regulations - paragraph
1
46. Paragraph 1 provides a general power for
the relevant national authority to make regulations about charging
by sellers of goods for the supply of single use carrier bags.
Powers to define what is meant by "seller" and by "single
use carrier bags" are set out in paragraphs 3 and 5 of the
new Schedule.
47. The Department's intention is that the powers
to make regulations will only be exercised if retailers do not
offer to make sufficient reductions on a voluntary basis.
48. The Department's view is that by allowing
provisions relating to charging for single use carrier bags to
be set out in secondary legislation, this allows a flexible and
responsive approach to reducing the number of single use carrier
bags supplied.
49. It will be necessary to include in the legislation
a number of technical elements relating to charges, such as the
physical characteristics of the bags to which the charge applies.
The Department considers that these sorts of technical elements
are more appropriately included in secondary legislation.
50. The legislation will have to define who is
required to apply the charge and under what circumstances. The
Department expects that it is likely to be necessary to provide
for exemptions from the charges. Given that there is potentially
a wide and changing range of situations which require an exemption,
the Department considers it appropriate to make provision for
this in secondary legislation
Power to require sellers to charge for single
use carrier bags - paragraph 2
51. Paragraph 2 provides that the regulations
may require sellers of goods to charge for single use carrier
bags supplied either at the place where the goods are sold or
for the purpose of delivering the goods. This provides the flexibility
for the regulations to cover not only the physical supply of carrier
bags over the shop counter, but also bags supplied as part of
a distance selling transaction.
52. The Department considers that the inclusion
of such provisions in secondary legislation will enable a more
flexible and expedient means of ensuring that the legislation
is properly targeted and that it can more easily keep up with
changes in the retail industry, such as the growth in online shopping.
Power to define "sellers" of goods and
"single use carrier bags" - paragraphs 3 & 5
53. Paragraph 3 provides that "sellers"
of goods are to be defined in the regulations by reference to
one or more of the following: a person's involvement in selling
goods or a person's interest the goods or in the premises at or
from which the goods are sold. It provides that the regulations
may apply to a range of different sellers, including all sellers
of goods, sellers named in the regulations and sellers identified
by reference to factors specified in the regulations. The factors
that may be specified in the regulations may include the place
from which the goods are sold, the type and value of goods supplied
and the seller's turnover.
54. By providing the power to define "sellers"
(in effect, the person to whom the duty to charge applies) in
secondary legislation, the Department considers that this ensures
the necessary flexibility to create legislation which is properly
targeted in a large and diverse industry.
55. Paragraph 5 of the new Schedule provides
that 'single-use carrier bag' is to be defined in the regulations
by reference to technical specifications such as a bag's size,
thickness or composition and/or its intended use.
56. As stated in paragraph 48 of this memorandum,
the Department considers that such technical elements, such as
the characteristics of bags that are subject to the charge, are
more appropriately included in secondary legislation. This will
permit amendments to the technical specifications to be made relatively
quickly and will means that the regulations can be kept up-to-date
with changes in the technology or manufacturing of bags (e.g.
new materials for making bags), as well possible changes in retail
practices.
Power to specify the amount of the charge - paragraph
4
57. Setting a minimum charge for single use carrier
bags is perhaps the most significant element of the legislative
framework aimed at reducing the number of bags supplied. As such,
the Department recognises that there are strong arguments in favour
of having a high level of scrutiny over any legislative provisions
which set the level of the charge.
58. The Department also recognises that there
is likely to be a need to revise the charge, or the means by which
it set, on a fairly regular basis to ensure that the charge is
effective in terms of the behaviours it is intended to influence
(i.e. encouraging consumers not to "buy" a bag but instead
to bring their own) by reference to the wider social and economic
situation.
59. The Department therefore considers that it
is appropriate for the minimum charge to be set in secondary legislation.
Paragraph 4 of the new Schedule gives effect to this by providing
that the regulations may specify the minimum amount that a seller
must charge for each single use bag or provide for that amount
to be determined in accordance with the regulations.
60. The Department considers that it has provided
for adequate Parliamentary scrutiny and debate on the question
of the minimum charge by requiring that the first set of regulations
made by the relevant national authority are subject to the affirmative
procedure.
61. The Department does not consider it necessary
to provide a power to set a maximum charge. It believes that sellers
will seek to be as competitive as possible using the minimum charge
as the baseline.
Powers to appoint administrators and to may confer
powers and duties on the administrators in order to enforce the
regulations - paragraphs 6 & 8
62. The Department anticipates that the administration
and enforcement of the provisions relating to charges for single
use carrier bags will be carried out by local trading standards
authorities. However it wishes to retain the flexibility to cater
for different situations in the different devolved administrations
and, if necessary, to enable the relevant national authorities
to tailor the administrator's powers and duties that are appropriate
to the local situation. In the circumstances, the Department considers
that such provisions should be set out in secondary legislation.
63. Paragraphs 6 and 8 of the new Schedule give
effect to this by conferring powers on the relevant national authority
to appoint an "administrator" to administer the provisions
made by the regulations.
64. Paragraph 6 provides that the regulations
may confer powers and duties on the administrator to enable it
to carry out its functions. In doing so, it gives the relevant
national authorities a "Henry VIII" power to make modifications
to any enactment applying to the administrator or for such enactment
to apply with or without modifications. This power is being sought
in order to be allow the regulations to refer to existing legislation
(including primary legislation) setting out powers and duties
for the intended administrators (e.g. trading standards authorities)
but with the flexibility to make modifications to that legislation
in order to tailor those powers and duties to the administration
and enforcement of the regulations relating to charges for carrier
bags. The procedural limitations discussed at paragraph 36 of
this memorandum will apply to any provisions which have the effect
of modifying an enactment or its application. In particular, provisions
of this kind must be made using the affirmative resolution procedure.
65. Paragraph 8 contains supplementary powers
to confer powers and duties on administrators in order to enforce
the regulations and in particular, to enable the administrator
to obtain relevant documents and information from those applying
the charge where the administrator reasonably believes that there
has been a breach of the regulations.
Power to require records to be kept and published
- paragraph 7
66. In order to ensure that sellers apply charges
in accordance with the legal requirements, the Department considers
that it is necessary to require sellers to keep records relating
to charges made, including the amounts received by the seller
by way of charges and the uses to which the proceeds of the charge
are put.
67. The Department considers that provisions
relating to the keeping and supply of records and information
are appropriate for secondary legislation, as provided for in
paragraph 7 of the new Schedule, for the following reasons—
· such provisions are not usually the types
of provisions which require a high degree of Parliamentary scrutiny
and debate; and
· the provisions may require amendment on
a fairly regular basis to ensure that they are suitable for the
different types of sellers within the scope of the regulations.
Part 2 of the new Schedule (Civil Sanctions)
Powers conferred on: Relevant national
authority
Powers exercisable by: Statutory Instrument
Parliamentary procedure: Affirmative
resolution for first regulations, if amending or repealing any
primary legislation, or introducing new civil sanctions otherwise
negative resolution
Powers for relevant national authorities to make
regulations providing for civil sanctions - paragraph 9 to 20
68. Paragraphs 9 to 20 of Part 2 of the new Schedule
confer powers on relevant national authorities to include in the
regulations provisions relating to civil sanctions in order to
deal with breaches of the requirements imposed by the regulations.
69. The powers in these paragraphs are exercisable
by statutory instrument. Subsection (4) of the new clause sets
out the circumstances in which the affirmative resolution applies
to the exercise of these powers (see paragraph 36 above). Otherwise
the negative resolution procedure applies.
70. The powers in these paragraphs have been
modelled on the approach taken to the creation of civil sanctions
as set out in Part 3 of the Regulatory Enforcement and Sanctions
Act 2008 ("RES Act").
71. The powers are limited in the sense that
they prescribe the type civil sanction that can be introduced,
the applicable standard of proof, procedural requirements applicable
to each type of sanction and the procedures for appeals. They
also deal with matters related to the imposition of civil sanctions
such as early payment discounts, interest for late payments and
costs recovery.
72. There are specific limits within the powers
to create civil sanctions. For example, paragraph 10 provides
that fixed monetary penalties may not exceed £5,000 and paragraph
15 provides that an administrator cannot be granted power to impose
both a fixed monetary penalty and a discretionary requirement
in relation to the same breach.
73. The Department considers that the particular
requirements and limits contained within the enabling powers will
ensure an appropriate balance between enabling relevant national
authorities to create civil sanctions that are flexible and proportionate
while ensuring that there is consistency across the different
administrations in terms of sanctions for breaches of the regulations
and more widely, with the civil sanctions to be introduced under
the RES Act.
74. The Department recognises that any provisions
introducing new sanctions, whether civil or criminal, should be
subject to a high level of Parliamentary scrutiny and debate.
For these reasons, any regulations introducing or imposing new
civil sanctions are subject to the affirmative resolution procedure.
75. Paragraphs 21 to 24 of the new Schedule impose
further requirements and limits on the enabling powers relating
to civil sanctions. These include the publication of guidance
and reports on the use of civil sanctions and regular reviews
of any civil sanctions provisions.
76. Paragraph 25 provides a significant safeguard
against the potential misuse by administrators of powers to impose
civil sanctions. It does so by conferring a power of directions
on the relevant national authority. Such directions have the effect
of suspending the administrator's powers to issue notices imposing
civil sanctions.
77. The Department recognises that this in itself
is a significant power and that this needs to be subject to a
high level of scrutiny. Accordingly, the relevant national authority
is under a duty to consult the administrator and such other persons
as it considers appropriate before giving a direction. Where a
direction is given by the relevant national authority, it must
lay a copy before the relevant Parliament.
Part 3 of the new Schedule (Procedures applying
to regulations)
78. Part 3 of the new Schedule makes provision
about the procedures to be followed when making regulations about
charges for single use carrier bags. This is in addition to the
procedural provisions in clause 82 referred to in paragraph 32
of this memorandum.
79. Paragraph 27 set out the procedure to be
followed where regulations are made by a single national authority.
Sub-paragraphs (2) and (3) set out the affirmative resolution
procedure applying in Parliament and the devolved legislatures.
Sub-paragraphs (4) to (6) set out the negative resolution procedure
applying in Parliament and the devolved legislatures.
80. Sub-paragraph (7) provides for any provision
which may be made using the negative resolution procedure to be
made using the affirmative procedure. These provisions have been
included in order to reduce bureaucracy by allowing the powers
in different parts of the new Schedule to be used in combination
with each other. Without sub-paragraph (7) it would not be possible
to make regulations in the same instrument introducing a new civil
sanction (which would be subject to the affirmative procedure
by virtue of subsection (4)(b) of the new clause) and amending
the definition of a "single use carrier bag" (subject
to the negative resolution procedure by virtue of subsection (5)
of the new clause) since they are subject to different parliamentary
procedures.
81. Paragraph 28 defines how these procedures
are to operate where regulations are made jointly by two or more
national authorities acting together. The purpose of this is to
ensure that each relevant legislature retains its ability to scrutinise
the exercise of power by each of the national authorities.
82. Most notably, it provides that if the regulations
were to be split into their constituent parts, and any of those
parts would normally be subject to the affirmative procedure,
then the whole instrument is to be subject to the affirmative
resolution procedure. This enables provisions which would normally
be subject to different levels of scrutiny to be contained in
the same instrument, without lowering the level of parliamentary
scrutiny applicable.
83. Where the affirmative procedure applies,
the regulations may not be made unless the instrument has been
laid before and approved by a resolution of each of the relevant
legislatures.
84. Where the negative resolution procedure applies,
nothing further must be done under the regulations if any of the
relevant legislatures prays or resolves that the regulations be
annulled. If that eventuality occurs, the instrument may be revoked
by Order in Council.
85. Paragraph 29 provides that where regulations
made under the new Schedule would otherwise be treated as a hybrid
instrument under the standing orders of either House of Parliament,
the instrument is to proceed as if it were not a hybrid instrument.
This paragraph has been included because it may be necessary to
name individual retailers as "sellers" for the purposes
of the legislation. The Department does not believe that inclusion
in a scheme requiring charges for single use carrier bags would
sufficiently threaten the vital interests of any such named retailer
so as to justify the use of the hybrid procedure. An example of
what the Department has in mind is that smaller outlets owned
by major household name retailers such as Sainsbury and Tesco
might be caught, but not similar size stored owned by others.
PART C: COMMONS AMENDMENTS 44 AND 79
86. This Part of the memorandum describes the
purpose and content of Commons Amendments 44 and 79 which would
add a new clause (Commons Amendment 44) introducing a new Schedule
(Commons Amendment 79) amending the Gas Act 1986, the Electricity
Act 1989 and the Utilities Act 2000. This Part of the memorandum
describes the existing powers to make delegated legislation and
explains why the existing powers are being widened.
87. Again, it is convenient to refer to "the
new Schedule" for the purposes of this Part of memorandum.
Background
88. Section 41A of the Electricity Act 1989 provides
the Secretary of State with a power to make delegated legislation.[2]
The power may be exercised for the purposes of imposing an obligation
on electricity suppliers and/or electricity distributors to achieve
a carbon emissions reduction target. Broadly, a carbon emissions
reduction target means a target for the promotion of energy efficiency
measures to consumers.
89. Section 33BC of the Gas Act 1986 contains
a similar power to that contained in section 41A of the Electricity
Act 1989 except it relates to gas transporters and/or gas suppliers.[3]
90. The purpose of these powers is to enable
the Secretary of State by order to impose obligations on licensed
electricity and gas suppliers, licensed electricity distributors
or gas transporters to meet targets for the promotion of improvements
in the use by consumers of energy.
91. The power in section 41A of the Electricity
Act 1989 and section 33BC of the Gas Act 1986 has been jointly
exercised on three [4]
separate occasions to make the following Orders—
a) Electricity and Gas (Energy Efficiency Obligations)
Order 2001, SI 2001/4011;
b) Electricity and Gas (Energy Efficiency Obligations)
Order 2004, SI 2004/3392; and
c) Electricity and Gas (Carbon Emissions Reduction)
Order 2008, SI 2008/188.
92. Without exception, these powers have been
exercised to impose obligations on licensed electricity suppliers
and gas suppliers. The Secretary of State has not thought it appropriate
to exercise the power in relation to electricity distributors
or gas transporters.
Existing safeguards
93. The exercise of the existing powers is subject
to—
a) the requirement to consult the Authority (Ofgem),
the Gas and Electricity Consumer Council, electricity distributors,
electricity suppliers, gas suppliers, gas transporters and such
other persons as the Secretary of State considers appropriate;
b) the affirmative parliamentary procedure.
The new powers inserted by the provisions discussed
below do not alter the application of these safeguards. The powers
described below are subject to these two safeguards in the same
way that the current framework of powers are subject.
Enforcement
94. The Authority enforces the requirements of
an order made under the exercise of these powers using the enforcement
powers as provided for under the Gas Act 1986, the Electricity
Act 1989 the and the Utilities Act 2000.
Paragraph 3(2) of the new Schedule (amendment
of scope of power in section 41A of the Electricity Act 1989)
Power conferred on: Secretary of State
Power exercisable by: Statutory instrument
Parliamentary procedure: Affirmative
95. Paragraph 3(2) of the new Schedule would
widen the scope of the existing power in section 41A of the Electricity
Act 1989 to allow the Secretary of State to impose an obligation
on electricity generators, a class of person hitherto beyond the
scope of the power. Paragraph 3(2) would not alter the requirement
to consult before exercising the power in section 41A nor does
it alter the affirmative resolution procedure.
96. The Department intends to propose a new carbon
emissions reduction obligation that will fall on electricity suppliers,
gas suppliers and also electricity generators. The Department
believes that it is appropriate to bring electricity generators
within the scope of the existing power in section 41A Electricity
Act 1989 in order to help continue to improve the energy efficiency
of the existing housing stock within Great Britain.
97. Although paragraph 3(2) only affects the
scope of the power in section 41A of the Electricity Act 1989,
the Department suggests that is nevertheless suitable for inclusion
in an existing delegated powers provision for the following reasons—
a) the exercise of the power in relation to electricity
generators is likely to be exercised at the same time as the power
in relation to electricity suppliers and gas suppliers. Therefore,
it is sensible to ensure that the power in relation to electricity
generators is subject to the same conditions as the exercise of
power in relation to electricity suppliers;
b) it is necessary to have some flexibility which
allows the description of electricity generators upon whom an
obligation may be imposed or the circumstances in which an obligation
may be imposed to be varied relatively quickly. For example, an
obligation may be imposed on electricity generators which is calculated
on the basis of the energy generated over a particular period,
i.e. above a stated level. The stated-level or the method by which
the stated-level is calculated may need to change over the course
of time and therefore it is necessary to have flexibility to effect
such a change relatively quickly. A power to make secondary legislation
provides that flexibility;
Practical considerations
98. Paragraph 3(2) amends section 41A of the
Electricity Act 1989 which itself contains the existing framework
of powers provided to the Secretary of State. The Department intends
for the power in relation to electricity generators to be exercised
in accordance with and subject to the same conditions as appear
within the existing framework of powers. The existing framework
is as relevant to electricity generators as it is to electricity
suppliers. For example, in relation to electricity suppliers,
the Secretary of State is able to—
a) prescribe the type of energy efficiency measures
which can be promoted, section 41A(2)(b);
b) specify the criteria by reference to which
the Authority is to determine carbon emissions reduction targets,
section 41A(3);
c) make provision as to the treatment of persons
who become electricity suppliers after the beginning of the period
to which the order relates, section 41A(5)(a);
d) make provision as to the circumstances in
which an electricity supplier's carbon emissions reduction target
may be altered during the period to which the order relates, section
41A(7)(a).
These are illustrative examples and are not intended
to be exhaustive. They are existing provisions which are as relevant
to the exercise of the power in relation to electricity generators
as they are to electricity distributors and electricity suppliers.
Further, the flexibility afforded to the Secretary of State by
these provisions include the prospect of making provision relevant
to the circumstances prevailing at any particular time and as
such this flexibility should also be afforded to the exercise
of power in relation to electricity generators.
99. The reasons outlined in paragraphs 97 and
98 highlight the need for flexibility in the exercise of this
power. However, they also underline the technical nature of some
of the considerations relevant to the exercise of the power, for
example the methodology by which individual obligations will be
determined. These technical considerations produce provisions
in the order which ensure the obligation imposed is practicable.
100. The Department believes that the technical
nature of some of the details underpinning the exercise of the
power coupled with the need to be flexible make it appropriate
for paragraph 3(2) to fall within the existing delegated power
provision of section 41A of the Electricity Act 1989.
101. None of the safeguards which are applicable
to the existing exercise of power in relation to electricity distributors
and electricity suppliers have been modified by paragraph 3(2).
Therefore, the exercise of power in relation to electricity generators
will also be subject to—
a) the requirement to consult the persons described
in paragraph 93(a) of this memorandum; and
b) the affirmative procedure.
102. For all of these reasons, the Department
believes that it is appropriate that the power in paragraph 3(2)
of the new Schedule is capable of being exercised by statutory
instrument.
Paragraphs 1(3) and 3(6) of the new Schedule (Powers
to give directions)
Power conferred on: Secretary of State
Power exercisable by: Statutory instrument
Parliamentary procedure: Affirmative
103. Like paragraph 3(2), paragraphs 1(3) and
3(6) introduce amendments to the existing suite of powers in section
33BC of the Gas Act 1986 and section 41A of the Electricity Act
1989. Whilst paragraph 3(2) is aimed at widening the scope of
the existing power in section 41A of the Electricity Act 1989,
paragraphs 1(3) and 3(6) introduce a new power to make a particular
type of provision.
104. The Government would like to propose a new
carbon emissions reduction target which requires electricity suppliers,
electricity generators and gas suppliers to direct energy efficiency
measures at communities where there is a high density of low-income
households; households who may be particularly vulnerable to rising
energy costs.
105. Neither section 33BC of the Gas Act 1986
or section 41A of the Electricity Act 1989 contain a power which
would allow the Secretary of State to direct where those under
an obligation to achieve a carbon emissions reduction target must
promote some or all of the energy efficiency measures required
to meet their individual carbon emissions reduction obligation.
Under existing powers the Secretary of State can set an overall
target which electricity and gas suppliers must achieve. However,
it is for a supplier to determine where they promote the energy
efficiency measures.[5]
106. Paragraphs 1(3) and 3(6) provide the Secretary
of State with a power to direct that some or all of a person's
carbon emissions reduction obligation must be achieved by promoting
measures to people in specified areas or areas of a specified
description. In practice, the power will allow the Secretary of
State to provide in the order that, for example, a stated percentage
of a supplier's carbon emissions reduction obligation must be
achieved by promoting measures to specified persons in specified
areas or to specified persons in areas of a specified description.
The specified areas might be a county, a district within a county,
a postcode or a defined location within any of these areas.
107. As stated in paragraph 104 of this memorandum,
the purpose behind paragraphs 1(3) and 3(6) is to ensure that
energy efficiency measures are directed to those areas where there
is a particular social/environmental need for energy efficiency
measures. The particular areas will change over a period of time
and therefore it is important to have flexibility in relation
to this power. For example, although the Secretary of State may
require energy efficiency measures to be promoted in particular
areas (i.e. A and B) in years 1 and 2, it is possible that different
areas (i.e. C and D) will require focus in year 3.
108. Neither paragraph 1(3) or paragraph 3(6)
creates a free-standing power. Both paragraphs introduce a new
power which is exercisable in the context of the broader power
in section 41A of the Electricity Act 1989 or section 33BC of
the Gas Act 1986. Therefore, the safeguards which attach to the
broad power remain applicable. There remains the requirement to
consult all of the relevant persons listed in paragraph 93(a)
of this memorandum. The exercise of power also remains subject
to the affirmative resolution procedure and therefore either House
may prevent an order being made if dissatisfied by the way in
which the Secretary of State is proposing to exercise it.
109. The other amendments made by the new Schedule
are minor or consequential.
Department of Energy and Climate Change
Department for Environment, Food and Rural Affairs
October 2008
Second supplementary memorandum by the Department
for Energy and Climate Change
1. This memorandum has been prepared by the Department
of Energy and Climate Change and relates to the amendments tabled
by the Department on 10th November 2008 in lieu of the words left
out by Commons Amendment 17 to the Climate Change Bill, as brought
from the House of Commons on 29th October 2008.
2. As an aid to interpreting this memorandum—
a) references to "the Bill" are to
Commons Bill 97, the Bill first printed for the Commons, and references
to clauses are to clauses in that print of the Bill;
b) references to "the Department" are
to the Department of Energy and Climate Change;
c) references to "the Committee" are
to the Delegated Powers and Regulatory Reform Committee, not to
the Committee on Climate Change;
d) the reference to "the Main Memorandum"
is to the Delegated Powers Memorandum in relation to the Bill,
submitted to the Committee on 19th November 2007 when the Bill
was introduced and printed in Appendix 4 to the Committee's 2nd
Report of Session 2007-2008.
Government amendment to add a new clause in lieu
of the words left out by Commons Amendment 17: duty to set a limit,
by order, on the net amount of carbon units that can be credited
to the net UK carbon account in a budgetary period
Power conferred on: Secretary of State
Power exercisable by: Statutory Instrument
Parliamentary procedure: Affirmative
resolution
3. The proposed amendments would introduce a
new clause to the Bill ("the new clause") and an amendment
to clause 27 of the Bill. The new clause would place a duty on
the Secretary of State to exercise a new delegated power. The
duty would require the Secretary of State to set a limit, by order,
on the net amount of carbon units that may be credited to the
net UK carbon account for each budgetary period. Only two elements
are left to the Secretary of State's discretion—
a) the power to determine the level of the limit
(subsection (1)); and
b) a power to make provision as to carbon units
which will not count towards the limit (subsection (5)).
4. The Department considers that it is appropriate
to delegate both of these powers to the Secretary of State, and
that an appropriate level of Parliamentary scrutiny is provided
by the affirmative resolution procedure.
Explanation of the new clause
5. Both the duty to meet the 2050 target, in
clause 2(1), and the duty to ensure that carbon budgets are not
exceeded, in clause 5(1)(b), are framed by reference to the concept
of the "net UK carbon account". The level of the net
UK carbon account is calculated in accordance with clause 27(1)
which can be summarised as —
Net UK carbon account = net UK emissions - credited
carbon units + debited carbon units
6. Clause 26 of the Bill gives the Secretary
of State the power to determine the circumstances in which those
units are to be "credited to" or "debited from"
the net UK carbon account. The justification for those powers
was set out in paragraphs 98-116 of the Main Memorandum; the Committee
did not criticise the provisions of the Bill as introduced, but
see paragraph 17 of the Committee's 2nd Report of Session 2007-2008.
7. The Committee may be interested to note that
the Department recently published a consultation document on the
policy that will lie behind the first regulations to be made using
powers in clauses 26 and 27, which can be found at the following
link:
http://www.defra.gov.uk/corporate/consult/carbon-accounting/consult-doc.pdf
8. The new clause would provide that the Secretary
of State is required to set, by order, a limit on the net amount
of carbon units that can be credited to the net UK carbon account
in any budgetary period.
9. The "net amount of carbon units"
is defined in subsection (2) of the new clause to mean the amount
of carbon units credited to the net UK carbon account minus the
amount of units debited to the account. By setting a limit on
the net amount of carbon units (rather than, say, simply
the number of units that may be credited to the net UK carbon
account) a free movement of units to and from the account is permissible
during the budgetary period; only the total number of units credited,
after taking into account the total amount of units debited, will
be limited.
10. Under subsection (3), the general rule would
be that the Secretary of State must set the limit for each budgetary
period 18 months before the start of the period in question. In
the case of the first budget (2008-12), the Secretary of State
would be required to set the limit by 1st June 2009 - the same
date on which that budget is to be set in accordance with clause
5(2)(a).
11. Subsection (5) permits the Secretary of State
to provide that "carbon units of a description specified
in the order" should not be counted towards the limit in
the order. Further explanation of this subsection is contained
in paragraphs 18-24 below, which set out the justification for
it.
12. The setting of a limit by order would not,
in itself, have any legal effect. That is why the second amendment
in the package would add a new subsection to clause 27 to provide
that, for the purposes of the net UK carbon account, the limit
on the net amount of carbon units to be credited to the net UK
carbon account cannot be exceeded. If the maximum amount of units
were to be credited, but further reductions in the level of the
net UK carbon account were necessary in order to meet the 2050
target in accordance with clause 2(1) or to stay within a budget
in accordance with clause 5(1)(b), those reductions could only
be achieved by reducing net UK emissions.
Power to determine the level of the limit
13. The Department considers that the delegation
of the power in the new clause to set the limit on the use of
credits is justified because—
a) the limit should be set near the time of the
budgetary period;
b) the limit should be set in the context of
what a "carbon unit" is at that time, which is already
a delegated decision; and
c) the limit should be set in the context of
all the other circumstances of the situation at the time, especially
the European and international context.
14. The Department thinks that it is essential
that any limit on the use of credits should be set before the
start of, but near the time of, the budgetary period. A limit
can only be set at an appropriate level once it is clear how much
effort is likely to be required to meet the budget in question
and in its wider context. It is also important to set the limit
before the budgetary period begins (in contrast to the effect
of clause 25 - see paragraphs 32 and 33 below). The requirement
to set the limit 18 months before the start of the budgetary period
allows sufficient time for effective policies to be put in place
to ensure that the net UK carbon account for the period is managed
in the most effective and economically optimal manner.
15. The Department considers that the limit can
only be sensibly set in the context of what a "carbon unit"
is at the time of the budget, and the conditions under which carbon
units are to be credited to and debited from the net UK carbon
account. The definition of what a carbon unit is will change over
time to reflect the international context and other policies,
as will the debiting and crediting conditions. The power to determine
those factors is already delegated to the Secretary of State (subject
to consultation and Parliamentary scrutiny) in recognition of
the fact that they will need to change over time. Given their
close relationship, the Department considers that the power to
determine the level of the limit should also be delegated.
16. The level of the limit should also be determined
by reference to all the circumstances applicable at the time.
These would include all the factors in clause 11 (which applies
whenever the Secretary of State takes a decision "relating
to carbon budgets") but especially circumstances at European
and international level. It is not unforeseeable that an international
agreement might directly determine what level of limit is permissible;
if a limit was fixed in the Bill, then primary legislation would
be required to adjust it in such circumstances, and might be required
relatively regularly.
17. The Department considers that the combination
of these factors justifies the delegation of the power to set
the limit.
The power to exclude certain units from counting
towards the limit
18. The Department also considers that it is
appropriate to delegate a power to exclude certain descriptions
of carbon units from counting towards the limit, and to delegate
a relatively broad power to describe them.
19. This power is designed to allow the Secretary
of State to exclude, if it is considered necessary, carbon units
which might otherwise be credited to or debited from the net UK
carbon account as a result of the participation of UK operators
in trading schemes such as the EU Emissions Trading Scheme.
20. Under a scheme like the EU Emissions Trading
Scheme, a cap is set at European level on the emissions from certain
industrial sectors. Participants in the scheme are free to trade
allowances with other participants across Europe, but must retire
enough allowances to cover their emissions in a given year. The
scheme does not require emissions reductions to be made by any
particular participant or in any particular country, so long as
the total cap is not exceeded.
21. So, to take an entirely hypothetical example,
a participant might begin by operating two inefficient industrial
plants, one in the UK and one in Germany. In order to reduce its
emissions (and thus the number of allowances it is required to
retire) the participant might decide to close both of the plants
and replace them with a single new one in the UK which is much
more efficient. That new plant might lead to increased emissions
in the UK, but the closure of the plant in Germany might mean
that there is a significant overall reduction in European emissions.
In that situation the EU Emissions Trading Scheme would be working
properly, but would lead to an increase in UK emissions.
22. The Department considers that it may be appropriate
in that situation to exclude carbon units credited and debited
as a result of transfers of carbon units under that capped international
scheme. The alternative might be to undermine the economic efficiency
of the trading scheme by placing additional regulation on UK-based
participants or, in order to avoid undermining the scheme, to
increase the burden on the sectors in the UK which are not capped
at international level. The exclusion of the units introduced
by the traded sectors would allow more transparency and predictability
in the regulation of both the traded and non-traded sectors, and
of the purchase of carbon units by the Government.
23. It is appropriate to delegate this power
of exclusion because schemes such as the EU Emissions Trading
Scheme change relatively regularly and will continue to change
over time. And there is also the real possibility that new and
different schemes at international level will be established in
the future, with similar implications for the level of a limit
on credits. Depending on the nature of such schemes, it might
also be appropriate only to exclude certain types of carbon unit
or only those which are credited or debited in relation to certain
sectors covered by the schemes.
24. For those reasons, the Department considers
that both the delegation of the power to exclude certain types
of carbon units, and the breadth of that power, are appropriate.
Procedure and Parliamentary scrutiny
25. Subsection (6) of the new clause provides
that the order is subject to the affirmative resolution procedure.
The Department considers that this is an appropriate level of
scrutiny for a power of this type, and reflects the level of scrutiny
applicable to the setting of carbon budgets under clause 5 and
the procedure for making carbon accounting regulations under clauses
26 and 27. This is an important issue that warrants full and open
debate.
26. Subsection (7)(a) provides that the Secretary
of State must take into account the advice of the Committee on
Climate Change under clause 33(1)(b) on the balance between reductions
in net UK emissions and the use of carbon units. Subsection (7)(b)
provides for consultation with the devolved administrations. The
Department considers that these are appropriate safeguards that
will ensure that the decision is taken on a proper and transparent
basis.
27. In addition, the Department would have to
set out the merits of its policy in the Explanatory Memorandum
accompanying the order, and the Merits of Statutory Instruments
Committee would be able to report the matter to the House if it
considers it appropriate.
Clause 25, Commons Amendment 17 and related amendments
28. The Committee may be interested to note the
reasons why the Department considers that the non-delegated approach
to setting a limit on the use of carbon units in clause 25 (which
would be removed by Commons Amendment 17) is inappropriate. This
section of the memorandum also addresses related amendments that
have already been tabled ahead of Lords Consideration of Commons
Amendments.
29. Clause 25(1) of the Bill places a duty on
the Secretary of State to achieve 70% of the "effort"
required to meet carbon budgets through, in effect, reductions
in net UK emissions. The term "effort" is defined in
clause 25(2) as the difference between the carbon budget for the
period and "verified emissions" (which the Department
interprets as meaning net UK emissions) in the previous budget.
30. An amendment has been tabled by Lord Teverson
(as an amendment in lieu of the House of Lords disagreeing with
Commons Amendment 17) which would amend "70%" to "50%".
31. Another way of expressing the effect of clause
25 is to say that it sets a limit on the use of credits at 30%
(or 50%, following Lord Teverson's amendment) of the effort required.
The level of the limit can be ascertained as an absolute amount
of carbon units once net UK emissions for the previous budgetary
period are known.
32. As well as meaning that the method of calculating
the limit would be fixed and that the limit could not be adjusted
to take account of the international context, the approach in
clause 25 presents two particular difficulties—
a) the final level of net UK emissions for the
previous budgetary period, and thus the level of the limit on
the use of carbon units, will not be known until 17 months into
the budgetary period to which the limit applies (see clause 17(9)
- the final date for the statement for the 2008-12 budgetary period
must only be presented by 31st May 2014); and
b) the limit will be fixed by reference to net
UK emissions, but leaves no possibility of taking into account
the UK's participation in trading schemes such as the EU Emissions
Trading Scheme, which might lead to increases in net UK emissions
while still achieving reductions in levels of global emissions
within an overall cap applicable to the scheme; despite those
overall reductions in emissions, the Secretary of State would
be required to reduce net UK emissions as well.
33. In summary, the approach in clause 25 would
set a limit too late to allow sensible policy decisions to be
taken to reduce UK emissions in response to it; and any attempts
to manage the risk of exceeding the budget would almost certainly
reduce the economic efficiency of emissions reductions policies.
34. The failure of the approach in clause 25
to allow the exclusion of carbon units credited to and debited
from the net UK carbon account as a result of participation in
trading schemes would lead to the problems identified in paragraph
22 of this memorandum.
35. The combined effect of the two factors is
also relevant. The Government would face uncertainty arising from
the date on which the limit becomes known, and further uncertainty
arising from the difficulty of projecting whether UK emissions
will rise or fall in the sectors covered by trading schemes. Taken
together, these factors mean that it would be very difficult for
the Government to predict what use of credits it would be permitted
and for the Government to take sensible and timely action to manage
the net UK carbon account.
36. Lord Taylor of Holbeach has also tabled a
motion that would insert a different amendment in lieu of the
words left out by Commons Amendment 17. That amendment would place
a duty on the Secretary of State to exercise a power to make regulations
setting a limit on the use of "non-domestic credits",
but provides no power to exclude certain types of credits from
the calculation. For the Committee's purposes, paragraphs 13-17
and 25-27 of this memorandum are equally applicable to that amendment,
but there is a new freestanding requirement to consult the Committee
on Climate Change and no provision is made for consulting the
devolved administrations.
Government amendment to add a new clause in lieu
of the House of Lords disagreeing with Commons Amendment 48: power
to provide that buildings of a specified description are to be
treated as being, or as not being, part of the civil estate (subsection
(7))
Power conferred on: The Treasury
Power exercisable by: Statutory Instrument
Parliamentary procedure: Affirmative
resolution
37. Commons Amendment 48 would insert a new clause
into the Bill placing a duty on the Office of Government Commerce
to lay before Parliament each year a report setting out the progress
made by the Government towards improving the efficiency and sustainability
of its civil estate. Commons Amendment 48 was not a Government
amendment; it was accepted on the basis that it might benefit
from being re-drafted.
38. The Government has prepared an amendment
in lieu of the House of Lords disagreeing with Commons Amendment
48, which contains a new clause intended to have a substantially
identical effect to the one in Commons Amendment 48.
39. The new clause requires the annual report
to cover progress towards improving the energy efficiency and
the contribution to sustainability of "buildings that are
part of the civil estate". The word "building"
in the context of the new clause is defined in subsection (5)
to mean a building that uses energy for heating or cooling the
whole or any part of its interior.
40. Subsection (6) provides that, for the purposes
of the new clause, a building is part of the civil estate if it
is used for the purposes of central government administration
and it is, at Royal Assent, of a description of buildings in relation
to which the Treasury has responsibilities in relation to energy
efficiency and sustainability.
41. That definition will exclude certain parts
of the civil estate in relation to which the Treasury does not
currently have responsibility. For example, it will exclude buildings
used by the National Health Service, by Public Corporations such
as the BBC and the Civil Aviation Authority, and the Prisons Operational
Estate. But it will include the majority of buildings used as
offices by central government Departments, their executive agencies
and the non-Departmental bodies for which they have responsibility.
42. Subsection (7) of the proposed new clause
would confer a power on the Treasury to make provision, by order,
for buildings of a specified description to be treated as being,
or as not being, part of the civil estate for the purposes of
the new clause.
43. The Department considers that it is appropriate
to delegate this power to the Treasury. While the Office of Government
Commerce is likely to prepare the report as a matter of practice
it is, in legal terms, simply part of the Treasury. The purpose
of taking a power is to allow changes to be made to the scope
of the report over time so that it can reflect the role of the
Treasury in overseeing the management of the civil estate. The
Treasury's role in relation to the estate is almost certain to
change over time to reflect changes in the machinery of government
and policy changes as to the way in which different parts of the
public sector are to organise their property portfolios.
44. Those changes cannot be known in advance
but are very likely to take place over the lifetime of the power.
The Department considers that it is a sensible precaution to take
a power allowing the Treasury to specify areas that are or are
not to be treated as forming part of the civil estate, in order
to allow any such changes to be reflected in the annual report
under the new clause.
45. The Department also considers that the affirmative
resolution procedure provides the correct level of Parliamentary
Scrutiny in relation to any order made using the power, because
the power is theoretically wide enough to allow relatively significant
increases or decreases in the scope of the report. The use of
the affirmative resolution procedure will ensure that any order
must be approved by both Houses of Parliament.
Department for Energy and Climate Change
November 2008
2 The power was introduced by an amendment made by
s.70 of the Utilities Act 2000. Back
3
What is now section 33BC was inserted by s.10 of the Gas Act 1995
as s.33BB. Section 99 of the Utilities Act 2000 renumbered it
as s.33BC. Back
4
The power was also exercised in 2003 to make the Electricity and
Gas (Energy Efficiency Obligation) (Amendment) Order 2003, SI
2003/1180. However, this Order is not relevant for the purposes
of this memorandum. Back
5
This is subject to one exception which is not actually based on
location or geography of consumers. Electricity and gas suppliers
must achieve at least 40% of their carbon emissions reduction
obligation by promoting energy efficiency measures to the priority
group. The priority group is defined as a class of persons who
are in receipt of stated benefits or credits. Back
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