European Green Deal (EU)

11 December will see the incoming Commissioner (European Commission) for the Green Deal present a draft of a new environmental law (a new climate EU Law, part of the European Green Deal) to Members of the European Parliament (MEPs) ahead of the 12/13 December Council summit.

European watchers have seen a draft version of the European Green Deal (also known as “Green New Deal”) – it comprises a summary of an early draft proposal – marked “for internal use only” – that was circulated to EU countries’ national representations in Brussels in order to get some feedback. European watchers describe the draft document as more like a shopping list, filled with numerous bullet points stacked under a series of headlines.

First in the list (in the draft European Green Deal document) is Europe’s objective of reaching climate neutrality, to be achieved by a European ‘Climate Law’ enshrining the 2050 climate neutrality objective, to be submitted by March 2020.

The European Commission 2050 long-term strategy is here.

And by October 2020, the draft says, the European Commission “will present a comprehensive plan on how to increase the EU’s greenhouse gas emission reduction target for 2030 to at least 50% and towards 55%”.

The European Commission 2030 climate & energy framework is here.

Credit Euractiv for the text below in italics that gives other details –

Further down, the Commission promises “mainstreaming sustainability” into all policies, by adopting “a green oath: ‘do no harm’”. In practice, Brussels will seek to eliminate “incoherent legislation that reduces the effectiveness in delivering the Green Deal”.

This includes financial aspects with a proposal to “screen and benchmark green budgeting practices” both at EU and national level. An “action plan on green financing” will be submitted in June 2020 in this regard. A review of “state aid guidelines for environment and energy” is also on the agenda.

Other widely-anticipated initiatives include a proposal to revise the Energy Taxation Directive with a view to “align it” with Europe’s climate ambitions. And while the Commission wants to “pursue efforts” to scrap the unanimity rule on taxation, there is no mention of the announced carbon border tax meant to protect industries like steelmaking from dumped Chinese imports.

Under the “zero-emission nobility” heading, the Commission plans to extend the EU’ cap-and-trade scheme for carbon emissions, to the maritime sector and reduce the amount of free pollution credits allocated to airlines.

Brussels will also “assess the possibility of including road transport emissions” in the scheme, a proposal which has long been resisted by environmental groups. And it plans to “withdraw and resubmit” proposals on the Eurovignette directive to charge heavy-duty trucks on European roads, a proposal which is currently stuck with EU member states in the Council of Ministers.

Under the ecosystem and biodiversity preservation heading, the Commission proposes to “review all existing legislation affecting agriculture and forestry to ensure it is in line with renewed climate and biodiversity ambition”.

And under the “farm to fork” strategy, the EU executive intends to adopt “a toolbox for alternatives to pesticides” and reform food information rules “to improve consumers’ information”.

Finally, the Commission aims to review air, water and chemicals legislation with a view to “eliminating all sources of pollution.”

Further Blog posts will be issued in due course on the various matters. Please look out for them.

European Parliament declares Climate Emergency (EU)

Ahead of the UN COP25 Climate Change Conference in Madrid 2-13 December, the European Parliament has today approved a resolution declaring a climate and environmental emergency in Europe and globally.

The adopted resolution will be available here.

The European Parliament also wants the European Commission to ensure that all relevant legislative and budgetary proposals are fully aligned with the objective of limiting global warming to under 1.5 °C.

In a separate resolution, the European Parliament urges the EU to submit its strategy to reach climate neutrality as soon as possible, and by 2050 at the latest, to the UN Convention on Climate Change. This adopted resolution will be available via the above link.

Members of the European Parliament (MEPs) also call on the new European Commission President Ursula von der Leyen to include a 55% reduction target of greenhouse gas emissions by 2030 in the European Green Deal.

In addition, MEPs say that all countries should include emissions from international shipping and aviation in their national contributions plans (NDCs), and they urge the European Commission to propose that the maritime sector be included in the EU’s Emissions Trading System (EUETS).

Note – the European Commission has already proposed the goal of net-zero emissions by 2050, but the European Council has not endorsed it as some Member States are opposed.

Long-term Strategy on Greenhouse Gas Emissions Reduction (Ireland)

Article 15 of the European Regulation (EU) 2018/1999 on the Governance of the Energy Union and Climate Action requires each Member State to prepare and submit to the Commission a long-term strategy for greenhouse gas emissions reduction with a perspective of at least 30 years.

Ireland has already established a detailed decarbonisation pathway to 2030 in its Climate Action Plan 2019. This will be reflected in Ireland’s final national energy and climate plan (NECP).

As part of the NECP consultation process, the Department of Communications, Climate Action and Environment sought views on decarbonising beyond 2030.

The Climate Action Plan 2019 puts in place a decarbonisation pathway to 2030 which would be consistent with the adoption of a net zero target in Ireland by 2050. Action 1 under the Plan has also committed to evaluating in detail the changes required to adopt a more ambitious commitment of net-zero greenhouse gas emissions by 2050, as part of finalising Ireland’s long-term climate strategy by the end of 2019 as per the advice of the Intergovernmental Panel on Climate Change and the recommendation of the Joint Oireachtas Committee on Climate Action.

The Department of Communications, Climate Action and Environment is now seeking further views in relation to decarbonisation pathways beyond 2030, including transition options across all key sectors of the economy (energy, buildings, transport, enterprise, waste, agriculture and land-use), on the role of innovative technologies and on socio-economic factors.

Link to Long-term Strategy Consultation Document – here.

Page 5 sets out the ways in which a response may be made. The deadline is 16th December 2019.

Environment Bill (the OEP) (England & UK part)

The Environment Bill creates a new Office for Environmental Protection (OEP), in England (with extension to Northern Ireland), I identified this in an earlier post.

This is necessary because Exiting the EU will leave a gap in governance.

The Bill –

– creates a statutory obligation on the Secretary of State, in exercising functions relating to the OEP, for example when making ministerial appointments to the OEP, to have regard to the independence of the OEP

[a Ministerial Statement will confirm the OEP will be given five year ring fenced indicative budget]

– covers climate change – the earlier exclusion of climate legislation is removed

– could consider in scope the spending of other departments on matters that related to environmental law (this is not however, the same, as the EU’s explicit incorporation of the environment in the policy making of all departments)

– envisages and facilitates (via information sharing) cooperation and mandates consultation (on transboundary areas) with any equivalent ‘devolved environmental body’ that is set up in Scotland and Wales

– extends to Northern Ireland (a Schedule in the Bill covers this) if so mandated by a restored Stormont – the Schedule provides for the Chair of such a NI extension to be selected by the Secretary of State for NI and DAERA (the environment department in NI)

– includes ‘environmental review’ enforcement powers in the Upper Tribunal

The OEP will launch to coincide with the IP (Implementation Period) completion day – 31st Dec 2020.

Scotland and Wales have made no announcements re their own bodies.

Carbon Emissions Tax (UK Brexit)

Exit day is 31st October.

I previously posted that a Carbon Emissions Tax was being considered, then it seemed it would not go ahead. Today 29 July, the Government issued updated guidance giving 4th November as the start of the Carbon Emissions Tax (in the event of no-deal). The Carbon Emissions Tax is already provided for by Part 3 of the Finance Act 2019.

Part 3 (if not already added to Subscribers EHS Legislation Registers & Checklists) will be added shortly, to the Brexit Law List, as part of the Brexit Law consolidation that is a work in progress.

The relevant Guidance section states : the updated Guidance is here (please read other parts also)

Carbon pricing

As set out at Budget 2018, if the UK leaves the EU in a no deal scenario, the UK government would introduce a Carbon Emissions Tax to help meet the UK’s legally binding carbon reduction commitments under the Climate Change Act.

In this scenario, for 2019 a rate of £16 would be applied to each tonne of carbon dioxide emitted over and above an installation’s emissions allowance. For permit holders outside the simplified reporting scheme this allowance would be based on the allocation of free EUAs that would have been allocated to installations under Phase III of the EU ETS. For those currently covered by the simplified reporting arrangements, the allowance would be based on their current emissions target. The rate for years beyond 2019 would be set at future fiscal events.

The tax would apply from 4 November 2019 to all UK stationary installations currently participating in the EU ETS. The aviation sector would not be subject to the Carbon Emissions Tax. Aviation operators would still be obliged to comply with greenhouse gas Monitoring Reporting and Verification requirements throughout 2019.

Carbon Pricing Consultation (UK Brexit)

Exit day is 31st October 2019

UPDATE : persons are invited to attend one of consultation workshops:

• London, 22 May 2019: book on Eventbrite

• Northern Ireland, Belfast, 30 May 2019*

• North Wales, Llandudno Junction, 3 June 2019

• South Wales, Swansea, 5 June 2019

• Scotland, Glasgow, 12 June 2019*

All the workshops will be available on Eventbrite. * events do not cover aviation

———-

The UK government and the devolved administrations are now seeking views (by way of consultation) on their proposals for carbon pricing after Exit. The consultation ends 12 July 2019, and the documents are here

The consultation focuses on four aspects :

(1) the design of a UK Emissions Trading System (ETS) (I posted a few days ago, that a UK ETS is a prospect)

(2) the operation of a UK ETS

(3) aviation

(4) continued UK membership of the EU ETS for Phase IV (2021-2030).

[Note: I don’t cover aviation in detail in this Blog]

A UK ETS that is linked to the EU ETS is the UK Government’s and the Devolved Administrations’ preferred carbon pricing option. This is envisaged in the Political Declaration that accompanies the Withdrawal Agreement (that is not ratified by the UK Parliament).

The view is a linked ETS would create a larger carbon market that would deliver more cost-effective emission reduction opportunities for UK businesses.

The consultation document sets out alternatives, including:

* a standalone domestic emissions trading system;

* a tax on carbon, similar to the policy described in the HMRC technical note “Carbon Emissions Tax” (and provided for in Legislation, not yet commenced – I Blog posted about this); or

* participating in Phase IV of the EU ETS.

Note : the consultation does not seek detail re a tax on carbon. But, the summary states – if necessary, responses to this consultation may be used to develop work on such an alternative.

Questions relevant to a standalone UK ETS or a tax on carbon are included. The proposals in Chapters 1-3 would be applicable for either a linked or standalone UK ETS unless clearly stated otherwise.

Chapter 1 focuses on proposals for the design of a linked or standalone UK ETS which covers: the scope in terms of gases and sectors; the cap and trajectory; the distribution of allowances; free allocation; supply flexibility; phases and reviews; the small emitter opt-out; and the ultra-small emitter exemption; and a UK industrial decarbonisation fund.

• To ensure that any UK ETS is linkable to the EU ETS, the proposal is to match the scope of a UK ETS with the scope of the EU ETS both in respect of sectors and greenhouse gases covered. Views are, in addition, sought on the potential to expand scope in later years of UK ETS operation.

• For the free allocation of allowances, the proposal is to follow broadly the free allocation methodology used in the EU ETS to provide a smooth transition for the relevant sectors and to support the potential for linking a UK ETS with the EU ETS.

• The proposals for a Small Emitter and Hospitals Opt-out Scheme and an Ultra- Small Emitter Exemption also align with the EU ETS, including setting a threshold of 25,000t CO2eq/35MW and 2,500t CO2eq respectively.

• In addition, views are sought on the possibility of monetising allowances from within the UK ETS to fund UK industrial decarbonisation.

Chapter 2 seeks views on the operation of a UK ETS.

Chapter 4 covers the scenario whereby the UK remains part of Phase IV of the EU ETS past 2020. Note: while the UK is still within the EU or within the Transition/Implementation Period, the UK has an obligation to transpose the Phase IV revisions to the EU ETS Directive into UK law before 9 October 2019.

The chapter also includes proposed Phase IV implementation features which may be incorporated within a UK ETS.

Chapter 4 seeks views on:

• The timing and method of this transposition (and further transposition arising as a result of tertiary legislation not yet agreed at EU level);

• Elements of Phase IV where the UK has discretion over whether and how to implement – most notably the opt out schemes for small emitters, which the proposal is to implement anyway as part of a linked or standalone UK ETS.

The above sets out some salient features, the reader is asked to scan the entire consultation.

[the Exit Day could change, please continue to follow this Blog]

Climate Change and EUETS (UK Brexit)

Exit day is 31st October 2019

Climate Change

Today (2 May 2019) sees the publication, by the UK Committee on Climate Change (CCC), of (277 pages of) advice in response to the request of the governments in Westminster, Edinburgh and Cardiff, sent in October 2018.

The CCC advice is for the UK Government to legislate for and reach a net-zero emissions goal by 2050, so as to end its contribution to global warming within thirty years. This net-zero target should cover all greenhouse gases and should include international aviation and shipping, but exclude the use of emissions credits.

Carbon Brief has summarised in a useful Q&A – here – extracts are below –

In 2015, almost every country of the world promised to reach net-zero emissions later this century as part of the Paris Agreement on climate change. The deal set a limit to global warming of “well-below” 2C above pre-industrial temperatures and said countries will “pursue efforts” to keep warming to 1.5C.

In contrast, the UK’s existing climate targets were set in the context of a 2C warming limit. Its overall goal, first set in 2008, has been to cut greenhouse gas emissions to 80% below 1990 levels by 2050.

In the wake of the raised ambition of the Paris deal, the government asked its official climate advisers, the CCC, what this should mean for the UK.

In two separate pieces of advice in 2016, the CCC said that the UK would ultimately have to raise its ambition for 2050, to match the Paris goals, but that it was not the time for doing so.

Under the Climate Change Act 2008, the UK has legally binding five-yearly carbon budgets, which mark staging posts on the way towards the “80% by 2050” goal. So far, the first five carbon budgets have been set down in legislation, covering 2008-2032.

On 8 October 2018, the Intergovernmental Panel on Climate Change (IPCC) published a special report on 1.5C that clearly set out the risks of allowing warming to exceed this level. This report also summarised the latest scientific evidence on what would be needed to stay below 1.5C.

Following this report, on 15 October 2018, the governments in Westminster, Cardiff and Edinburgh asked collectively the CCC for advice on when the UK should cut its emissions to net-zero.

Their letter asked whether the UK should set separate targets for CO2 and other greenhouse gases (GHGs). It asked “whether now is the right time for the UK to set such a target” in legislation. And it asked how the UK would reach net-zero, as well as the costs and benefits of doing so.

Today’s advice from the CCC is its response to this formal request. It comprises 277 pages of advice to the three governments, covering each of the questions posed by their October letter.

This advice is backed by another 300-odd pages setting out the significant changes in scientific knowledge and international policy that have taken place since the UK’s existing 2050 target was set. Behind the scenes are numerous research projects, technical annexes and advisory groups.

The UK Government response is to welcome the advice, to not accept its recommendations immediately, and to respond in due course. The response is here.

Re Scotland, the CCC advice is for Scotland to reach net-zero by 2045 (5 years earlier). The Scottish Government will now legislate to achieve this, and on Sunday its First Minister declared a “Climate Emergency”. A 2018 bill currently going through the Scottish Parliament aims to increase the current 2009 Climate Change (Scotland) Act target to 90% (emissions reduction by 2050 against a 1990 benchmark). It will now be amended so MSPs can vote on the new target of net-zero by 2045.

The current Scotland bill is here.

Re Wales, the CCC advice is the 2050 goal should be for a 95% reduction on 1990 levels. This is due to its relatively lower potential for CO2 storage and relatively high agricultural emissions. The Welsh government has also declared a “Climate Emergency” – here. And in March 2019, the Welsh government published its Plan to set out how Wales aims to meet the first carbon budget (2016-2020) and consequently the 2020 interim target through 100 policies and proposals across Ministerial portfolios.

I will update this post online, with the Welsh government response to the CCC advice.

EUETS

The EU emissions trading system (EUETS) requires heavy industry and power producers to obtain and surrender allowances equal to their level of carbon emissions on an annual basis. Companies that are the most exposed to international competition are allocated a proportion of free ETS allowances annually. For years, many companies have used these free allowances to comply with their obligations for the previous year.

Just over four months ago, in December 2018, the European Commission suspended the UK’s ability to auction ETS allowances until the withdrawal agreement was ratified. This was decided in order to maintain the integrity of the European carbon market in the event that the UK left the EU without a deal on 29 March this year. This position means that free allowances for 2019 are not issued. I posted about this decision before Christmas.

The withdrawal agreement negotiated with the European Union (but not ratified by the UK Parliament) allows for full and continuing membership of the EU ETS until the end of December 2020.

If it had been ratified when planned, the UK would have had the full legal basis immediately to issue free 2019 allowances. However, the decision of the UK Parliament was not to vote in favour of the withdrawal agreement. This has meant that UK businesses have, since December, been left without access to 2019 free allowances.

Despite the situation, all UK installations had met their 2018 obligations in full (allowances are available in other markets) – before the 30th April compliance deadline. The UK government (BEIS department) had reminded all participants that they still had a legal duty to meet their obligations for 2018 and that the UK is committed to upholding its environmental standards and continuing to comply fully with European law while its remains a member of the EU. I posted before about this deadline and the delay in the no-Deal replacement carbon tax.

Re British Steel (special case) – the UK Government has entered into a short-term bridge facility, valued at about £120 million, under section 7 of the Industrial Development Act 1982, at an interest rate of LIBOR plus 7%. The effect of this agreement is that the Government has, in the last week, purchased the necessary emissions allowances on behalf of British Steel, to enable British Steel to meet its EUETS obligations.

Per the BEIS Minister statement to Parliament yesterday – In return, under a deed of forfeiture, ownership of the company’s 2019 allowances will now be transferred to the Government once they are released. Through the subsequent sale of these 2019 allowances, the UK Government expect the taxpayer to be repaid in full. The 2019 allowances are more than are needed to fulfil the 2018 obligations, and all of them will come to the Government.

The terms of the deal ensure that if the price of allowances were to rise, the taxpayer would receive half of any financial upside once the allowances are sold back into the market. To ensure the taxpayer is protected in the event that allowances were to fall, under the terms of the deal, British Steel has been required to underwrite any shortfall and is covering the cost of arranging the facility. The price of carbon allowances has been rising over the past two years, and the Exchequer received £1.4 billion from auctioning allowances in 2018, up from £533 million in 2017.

The UK Government is engaging with the Commission about the implications for the UK continued participation in the EU ETS.

In the event that an agreement is not reached (and the Withdrawal Agreement stays unratified) – the UKGovernment will put in place a domestic scheme that provides security against the loss of EU-derived allowances. I will post again about this, when further information is public.

[the Exit day may change, please continue to follow this Blog]