Twenty Third Report Contents

Instruments drawn to the special attention of the House

The Greenhouse Gas Emissions Trading Scheme (Amendment) Regulations 2018 (SI 2018/306)

Date laid: 7 March 2018

Parliamentary procedure: negative

Summary: These Regulations update the EU Emissions Trading Scheme in relation to aircraft operators regulated by the UK following recent changes to the relevant EU Regulations. The changes make exemptions and introduce simplified procedures under the scheme for certain aircraft operators with small CO2 emissions. They also extend an exemption from the scheme for flights outside the European Economic Area, to facilitate the implementation of a broader international agreement on reducing aviation emissions and tackling climate change that has been negotiated by the International Civil Aviation Organisation, and will take effect from 2021.

These Regulations are drawn to the special attention of the House on the ground that they give rise to issues of public policy likely to be of interest to the House.

1.The Department for Business, Energy and Industrial Strategy (BEIS) has laid these Regulations with an Explanatory Memorandum (EM) and Impact Assessment (IA). The instrument amends an earlier instrument, which transposed the provisions of the EU Emissions Trading Scheme (EU ETS) Directive, by requiring aircraft operators, which fall within the geographical scope of the EU ETS and are administered by the UK, to monitor and report their aviation emissions each calendar year and then to surrender sufficient emissions trading allowances to cover those emissions.

2.In December 2017, the Committee reported on a related instrument which amended the compliance deadlines under the EU ETS for stationary installations and aircraft operators regulated by the UK, so that they are obliged to verify and report 2018 emissions and surrender allowances for those emissions in 2019 before the UK leaves the EU in March 2019. The Committee drew these Regulations to the special attention of the House to highlight that the UK’s exit from the EU was already affecting policy areas such as the control of greenhouse gas emissions, and leading to the need for secondary legislation under existing Acts.

3.This new instrument implements three provisions within the EU Regulations which came into force on 29 December 2017:

(a)It extends a temporary derogation from full scope, whereby only flights between states within the European Economic Area (EEA) are covered by the EU ETS, rather than all flights arriving at or departing from EEA airports, until 31 December 2023. Without the measure, the limited scope would have expired at the end of 2016. BEIS explains that extending the temporary derogation is necessary to facilitate the conditions for the implementation of a broader international agreement on tackling aviation emissions that has been negotiated by the International Civil Aviation Organisation (ICAO) and will come into effect from 2021, the so-called Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). BEIS says that not extending the limited scope of EU ETS could have revived widespread international opposition to the EU ETS, endangering implementation of CORSIA. When the EU first introduced the EU ETS, all flights, including from the EEA to non-EEA destinations as well as flights from non-EEA destinations to the EEA, were in scope, rather than only intra-EEA flights. A number of international airlines and countries including China and the United States opposed this approach, arguing that the EU did not have jurisdiction to regulate flights outside the EEA in this way. In response to this opposition, the EU exempted non-EEA flights from the EU ETS.

(b)The measure extends the use of certain simplified procedures to aircraft operators emitting fewer than 3,000 tonnes of CO2 per year on intra-EEA flights, exempting them from the need to use verification services for their emissions.

(c)The measure extends the exemption from obligations under the EU ETS from 2020 until 2030 for non-commercial aircraft operators emitting fewer than 1,000 tonnes of CO2 per year. This category includes, for example, private jets used in non-commercial settings.

4.BEIS conducted a four-week public consultation between 8 December 2017 and 5 January 2018. Only seven responses were received, four from the industry sector and three from organisations that asked to remain anonymous, all of which were supportive of BEIS’s overall approach. BEIS has explained that the timing and short consultation period reflected the lack of discretion over how the EU Regulation could be implemented, the limited timeframe available (the changes to the EU Regulations were agreed in October 2017 and published the following month), and the fact that stakeholders were aware of, and expecting, these changes. BEIS also held a workshop with stakeholders, including industry representatives and NGOs, to explain the changes.

5.BEIS concludes in the IA that the measure is expected to result in a net cost to the UK of an estimated £405 million between 2017 and 2023. This cost is driven mainly by the estimated impact of increased emissions. BEIS also states, however, that its analysis did not monetise the benefits of creating the conditions to facilitate the implementation of CORSIA from 2021 which is expected to result in significant environmental benefits, namely, in the reduction of emission of greenhouse gases.

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