Climate Change Bill

The Government published its consultative draft Climate Change Bill on 13 March 2007.  The deadline for responses is 12 June 2007 with a full Climate Change Bill set to be published in the Autumn. The Legislation is to be centred around 4 pillars:

9 May 2007

The Government published its consultative draft Climate Change Bill on 13 March 2007.  The deadline for responses is 12 June 2007 with a full Climate Change Bill set to be published in the Autumn. The Legislation is to be centred around 4 pillars:

  • To cut CO2 emissions by 60% from 1990 levels by 2050
  • Establishing an independent "Carbon Committee" to work with ministers to deliver reductions "over time and across the economy"
  • Creating new powers to ensure that the 2050 target is achieved
  • Improving the way CO2 reductions are monitored and reported, including to Parliament

The Targets
The Bill sets the target of reducing carbon emissions by 60% by 2050 and 26-32% by 2020 against the 1990 baseline, which will be enshrined in the statute.  The Secretary of State will have the ability to vary these percentages by order, to allow a degree of flexibility. However, variation is only permitted if there have been significant developments in scientific knowledge about climate change or international law or policy that would make it appropriate. The fact that percentages were unlikely to be met would not be justification for allowing them to be varied.  No annual emission targets, which opposition parties and environmentalists deem necessary to tackle global warming, have been set. 

The Budgets
These targets are to be achieved by the implementation of carbon budgets which are to be set for budgetary periods.  Each budgetary period is to be for five years starting in 2008.  Various matters are to be taken into account in determining these budgets.

Flexibility is maintained by incorporating an option to "bank" reductions that exceed the budget targets for the particular period to be put towards the next budget period and to "borrow" reductions from subsequent budget periods to accommodate uncertainties. This is subject to a limit of 1% variation. This could be used for example where the power demand due to a very cold winter breaks the budget for one year or conversely where a mild winter means that a budget is exceeded in another. The carbon reduction targets will be based on advice by an independent committee named the Committee on Climate Change. 

These budgets are to be set out on a 5 yearly basis with 3 budgets set at any one time to enable industry to plan its investment. The first budget period is set to begin in 18 months time for the periods 2008 – 2012; 2013 – 2017; 2018 – 2022.

An Independent Committee
The Bill also envisages introducing a carbon trading scheme, the details of which will be set out in secondary legislation. A Carbon Committee will be created to advise on the carbon budgets to be set for each budgetary period, the extent to which that budget should be met and the contribution that various sectors must make to that budget. The Committee will then be required to report to Parliament on an annual basis on the progress that has been made in meeting the percentage "targets". 

The Committee will also be required to advise the Secretary of State in all aspects of the exercise of its functions under the Act and as such it is proposed that it will be made up of technical experts rather than representatives of stakeholder groups.   The Committee's function is to advise the Government's final decision on what is included in the budgets with the Government having the final say.

The Bill introduces various enabling powers for the Secretary of State to bring in regulations that will, amongst other things, introduce new emission trading schemes, set targets and levels of obligations, introduce compliance mechanisms and penalties and also develop an appeal process.
How will this affect business?
Much of the enabling legislation for the Bill is to be dealt with by secondary legislation and as such there is currently no specific scheme for reducing emissions outlined at present. The draft bill does not stipulate how the cuts should be made or give specific reduction targets for individual businesses, councils and households.  The Government has however published a strategy paper which is to be read in conjunction with the draft Bill. 

The strategies include promoting greater energy efficiency, with more consumers becoming "producers" of their own energy at home and investment in low-carbon fuels and technologies, such as carbon capture and storage, wind, wave and solar power.  It is also envisaged that future policies to control emissions will be made "quicker and easier" to introduce.

Global Effort:
The Kyoto Treaty is the current international agreement on climate change and this comes to an end in 2012. There is no agreement between Countries as to the steps required to tackle climate change post Kyoto. To this end the UK is seeking to hold itself out as the global leader on combating climate change – only time will tell if this Bill goes far enough to make this a reality.