The Future of Carbon Pricing (UK)

UK CRC (carbon trading based on electricity through half hourly meters) is closed. The final compliance year for participants in CRC was 2018 to 2019. A participant’s CRC registry account must be maintained until 31 March 2022 and evidence packs until 31 March 2025. The CRC regulators will continue to do compliance audits and take enforcement action where necessary until 31 March 2025.

From 1 April 2019 SECR requires many companies formerly within the scope of the CRC to report energy consumption and energy efficiency actions. They must do this as part of their annual director’s report. Subscribers with Law Checklists have a line entry for SECR, which I have asked on a number of occasions should be completed, as evidence you are on top of this requirement.

The UK Government and Devolved Administrations consulted on the future of carbon pricing in the UK after EU Exit, receiving over 130 responses from a range of stakeholders, with the majority supporting most of the proposals on the design of a UK ETS.

As a result, the UK intends to establish a UK Emissions Trading System with Phase I running from 2021- 2030, which could operate as either a linked or standalone system.

As stated in ‘The UK’s Approach to Negotiations’ the UK would be open to considering a link between any future UK Emissions Trading System (ETS) and the EU ETS (as Switzerland has done with its ETS), if it suited both sides’ interests.

As announced at Budget 2020, the UK Government will publish a consultation later this year on the design of a Carbon Emission Tax as an alternative to a UK ETS, to ensure a carbon price remains in place in all scenarios. I blog posted some time ago, that provision for a Carbon Emissions Tax is already on the statute books in a UK Finance Act.

The UK ETS will apply to energy intensive industries (EIIs), the power generation sector and aviation – covering activities involving combustion of fuels in installations with a total rated thermal input exceeding 20MW (except in installations for the incineration of hazardous or municipal waste) and sectors like refining, heavy industry and manufacturing. The proposed aviation routes include UK domestic flights, flights between the UK and Gibraltar, flights from the UK to EEA states, and flights from the UK to Switzerland once an agreement is reached.

In light of the UK’s commitment to reaching net-zero emissions by 2050, the UK ETS will show greater climate ambition from the start. As such, the cap will initially be set 5% below the UK’s notional share of the EU ETS cap for Phase IV of the EU ETS.

The Committee on Climate Change (CCC) will advise later this year on a cost-effective pathway to net-zero, as part of their advice on the Sixth Carbon Budget. The state will consult again on what an appropriate trajectory for the UK ETS cap is for the remainder of the first phase within nine months of this advice being published.

The aim is that any changes to the policy to appropriately align the cap with a net zero trajectory will be implemented by 2023 if possible and no later than January 2024, although the aim is also to give industry at least one year’s notice to provide the market with appropriate forewarning.

Auctioning will continue to be the primary means of introducing allowances into the market. To safeguard competitiveness in the UK ETS and reduce the risk of carbon leakage, a proportion of allowances will be allocated for free. Some free allowances will also be made available for new stationary entrants to the UK ETS as well as existing operators who increase their activity – these allowances will be accessible through the New Entrants Reserve. The initial UK ETS free allocation approach will be similar to that of Phase IV in order to ensure a smooth transition for participants for the 2021 launch.

In a standalone UK ETS the state will introduce a transitional Auction Reserve Price (ARP) of £15 (nominal) to ensure a minimum level of ambition and price continuity during the initial years.

A Small Emitter and Hospital Opt-Out will be implemented for installations with emissions lower than 25,000t CO2e per annum and a net-rated thermal capacity below 35MW. An Ultra-Small Emitter Exemption will be implemented for installations with emissions lower than 2,500t CO2e per annum.

International credits will not be permitted in a UK ETS at this time. This is without prejudice to ongoing reviews on how best to implement the UN global offsetting scheme, CORSIA, alongside a UK ETS.

The sections above re the UK ETS are abridged (with highlights) from the summary in the Responses Document – the document itself is here.

COVID-19 Restrictions Changes (UK)

In the past days, a number of UK jurisdictions have changed their Restrictions law. This is in order to relax some of the lockdown measures.

The new amendments will be loaded today into the COVID-19 Law List in Cardinal Environment EHS Legislation Registers & Checklists – the COVID-19 Law List is found on the top right accessed from the OHS topic page. [UK and Ireland systems]

As this emergency situation continues, we will be bringing forward COVID-19 Law Checklists (UK jurisdictions). I will advise nearer the time when these will be available.

Brexit and COVID-19 measures (UK)

The UK left the EU at end of January 2020, and will leave the transition period at end of December 2020.

The World Health Organisation (WHO) declared COVID-19 a pandemic on 11th March 2020.

These two events are prompting substantive changes in many occupational, health and safety, and environment related measures in the UK (substantive measures are also being taken in other countries, and at EU level).

The UK’s Brexit measures are found here.

[the vast majority of the UK’s Brexit measures are unchanged since any update made in February 2020]

The UK’s COVID-19 measures are found here.

[the vast majority of the UK’s COVID-19 measures date March 2020]

The UK’s Brexit and the COVID-19 measures are rooted in law. Cardinal Environment Limited advises on occupational health and safety law and environmental law via Email Alert to subscribers to Cardinal Environment EHS Legislation Registers & Checklists. The next Email Alert on UK Registers & Checklists will be at end March (the monthly UK Email Alert as usual).

Subscribers are reminded that they can request Annual Review (a teleconference) on renewal of annual subscriptions.

Of particular note are –

(1) changes around borders

(2) changes around goods transport

(3) changes around people mobility, including across borders

(4) changes around workplace organisation, particularly additional requirements to keep the workplace safe and provide for home working

(5) temporary bans on the opening of some business premises on health grounds

(6) changes around worker employment (this Blog does not address detailed matters of Employment Law)

Coronavirus/COVID-19 measures (UK)

UPDATE : the general guidance for employers, employees and business includes these additional stipulations –

• businesses and workplaces should encourage their employees to work at home, wherever possible

• if someone becomes unwell in the workplace with a new, continuous cough or a high temperature, they should be sent home and advised to follow the advice to stay at home

• employees should be reminded to wash their hands for 20 seconds more frequently and catch coughs and sneezes in tissues

• frequently clean and disinfect objects and surfaces that are touched regularly, using your standard cleaning products

• employees will need your support to adhere to the recommendation to stay at home to reduce the spread of coronavirus (COVID-19) to others

Last week saw a raft of measures and the first legislation compelling action. These are compiled online – here.

Of particular note to this Blog are –

(1) the mandated closure of some workplaces and all workplace canteens where food is sold – here plus law on the matter here (England) and here (Wales)

[note the workplace canteen exceptions in the law]

(2) the definition of key worker – found in the guidance for schools closure – here

(3) the definitions of “self-isolating”, “social distancing” and “shielding” and the cohorts these apply to

“Self-isolating” – here

“Social distancing” – here

“Shielding” – here

(4) the relaxation of drivers’ hours (I blog posted about this last week) – here

(5) changes to Planning Inspectorate site visits, appeals, inquiries and events – here

(6) changes to Courts and tribunals planning and preparation – here

[note there are also changes to HSE and Environment Agency, and other regulator, site visits etc which are published in their own online web resources]

(7) general guidance for employers, employees and businesses – here

(8) guidance on the cleaning of workplace surfaces – here

(9) shipping and sea ports guidance – here

(10) restriction of non-essential rail travel – here

[note the London Mayor has announced reductions in TFL transport and transport in London, including by driving, should be for essential travel only]

[transport by driving outside of London should also be essential travel only]

The advice for anyone in any setting is to follow these main guidelines.

1 The most common symptoms of coronavirus (COVID-19) are recent onset of a new continuous cough and/or high temperature. If you have these symptoms, however mild, stay at home and do not leave your house for 7 days from when your symptoms started. You do not need to call NHS 111 to go into self-isolation. If your symptoms worsen during home isolation or are no better after 7 days, contact NHS 111 online. If you have no internet access, you should call NHS 111. For a medical emergency dial 999.

2 Wash your hands more often than usual, for 20 seconds using soap and hot water, particularly after coughing, sneezing and blowing your nose, or after being in public areas where other people are doing so. Use hand sanitiser if that’s all you have access to.

3 To reduce the spread of germs when you cough or sneeze, cover your mouth and nose with a tissue, or your sleeve (not your hands) if you don’t have a tissue, and throw the tissue in a bin immediately. Then wash your hands or use a hand sanitising gel.

4 Clean and disinfect regularly touched objects and surfaces using your regular cleaning products to reduce the risk of passing the infection on to other people.

Environmental Taxes (UK)

The Finance Bill 2020 increases existing environmental taxes, amends the carbon emissions tax that is not commenced, and provides for a new packaging tax.

Vehicle Excise and Registration Tax

The government announced at Budget 2017 it would introduce a new regime for calculating a car’s CO2 emissions, known as the Worldwide Harmonised Light vehicles Test Procedure (WLTP). The WLTP applied from 1st September 2017. All EC certificates of conformity or UK approval certificates for new cars show CO2 emissions figures based upon the WLTP test procedure, in addition to those based upon the existing methodology (NEDC).

Schedule 1 to Vehicle Excise and Registration Act (VERA) 1994 provides the legislation for annual rates of duty. The Finance Bill 2020 amends VERA to facilitate implementation of the WLTP regime.

VERA is also amended to exempt all registered zero-emission light passenger vehicles registered from 1 April 2017 from the Vehicle Excise Duty (VED) supplement for light passenger vehicles with a list price exceeding £40,000, when their licence is renewed on or after 1 April 2020.

Air Passenger Duty (APD)

The rates for APD are set out in section 30 of the Finance Act 1994. The rates of APD for flights to Band A destinations are unchanged. Band B destination APD is increased – in force 1st April 2021.

Climate Change Levy (CCL)

The main rates of Climate Change Levy (CCL) are amended with effect from 1 April 2020. The reduced rate percentages that apply to the main rates of CCL payable by participants in the Climate Change Agreement (CCA) scheme, are also amended with effect from 1 April 2020.

The main rates of Climate Change Levy (CCL) are amended with effect from 1 April 2021. The reduced rate percentages that apply to the Climate Change Levy (CCL) main rates payable by participants in the Climate Change Agreement (CCA) scheme, are also amended with effect from 1 April 2021.

[ Budget 2016 announced that, from 1 April 2019, rates would become subject to ‘rebalancing’ to reflect changes in the fuel mix used in electricity generation. The increase in rates, from 1 April 2019, also sought to recover the tax revenues lost by closing the Carbon Reduction Commitment Energy Efficiency Scheme.

Budget 2016 announced that, alongside the rates increase from 1 April 2019, the reduced rates of CCL for qualifying businesses in the CCA scheme would be amended so that participants did not pay more in CCL than they would have if the rates were increased in line with the Retail Prices Index (RPI) as in previous years.]

[ Budget 2017 announced that in order to ensure a better consistency between portable fuels in the off-gas grid market, the CCL rate for liquefied petroleum gas (LPG) would be frozen at the 2019-20 level in the years 2020-21 and 2021-22. For this reason, the reduced rate for LPG will remain set at 23 percent for the years 2020-21 and 2021-22.]

[ Budget 2018 reaffirmed the government’s commitment to continue with the rebalancing and the CCL rates with effect from 1 April 2020 reflect this.

Budget 2018 announced the amended reduced rates for 2020-21 would limit the impact on CCA scheme participants to an RPI increase similar to that in the year 2019-20.

Budget 2018 announced the amended reduced rates for 2021 to 2022 would limit the impact on CCA scheme participants to an RPI increase.]

Landfill Tax

Sections 42(1)(a) and 42(2) of the Finance Act 1996 to increase both rates of Landfill tax (the standard and the reduced rate) in line with inflation (rounded to the nearest 5 pence). The increased rates apply to any disposal of relevant materials made (or treated as made) at a landfill site in England or Northern Ireland on or after 1 April 2020. The increased standard rate also applies from the same date to any disposal of relevant materials made (or treated as made) at an unauthorized waste site in England or Northern Ireland. The standard rate will increase to £94.15 per tonne and the lower rate to £3.00 per tonne.

Carbon Emissions Tax

Part 3 of the Finance Act 2019 (which established the Carbon Emissions Tax – not commenced) is amended. If the Government decides to use the tax as its carbon pricing policy after the Transition Period, the tax would be commenced on 1 January 2021.

The UK remains in the EU Emissions Trading System (ETS) until 31 December 2020. As set out in the UK’s Approach to Negotiations, the UK would be open to considering a link between any future UK Emissions Trading System (ETS) and the EU ETS, if it suited both sides’ interests.

In the event that there is no link agreed between a UK ETS and the EU ETS the UK would introduce an alternative carbon pricing policy.

The Government is therefore preparing both a standalone emissions trading system and a Carbon Emissions Tax.

Budget 2020 announced that legislation would be included in Finance Bill 2020 to: provide a charging power to establish a UK ETS linked to the EU ETS or a standalone UK ETS; and update the existing legislation relating to Carbon Emissions Tax.

The Finance Bill 2020 amends Finance Act 2019 to ensure that the tax would be ready to be operational from at the end of the Transition Period, if needed.

UK permit holders operating stationary installations would be set a tax emission allowance and be taxed on all emissions that exceeded this allowance on a carbon equivalent basis. The first emissions reports would cover 1 January to 31 December 2021 and the tax would be collected by HMRC annually. It is intended that the bills relating to the first reports would be issued in summer 2022. The tax would rely on data supplied by taxable installations under existing (and continuing) emissions reporting arrangements.

The EU ETS requires participants to obtain permits to emit and then to submit a report annually providing details of their activities across the previous calendar year, from which their emissions across the period are calculated. All greenhouse gas emissions are calculated on a carbon equivalent basis. The data on emissions will continue to be collected following the UK’s departure from the EU.

Much of the existing legislation supporting the EU ETS would, under a Carbon Emissions Tax, continue to provide the legal basis for the monitoring, reporting and verification of emissions, and the permitting of installations.

The Finance Bill 2020 also allows HM Treasury to make regulations which provide for the allocation of emissions allowances in return for payment under any future UK Emissions Trading System (UK ETS).

These include the powers for HM Treasury to establish a UK Emissions Trading System (ETS). This means that emissions allowances can be auctioned in any future UK ETS, as defined in regulations.

The Finance Bill 2020 also allows for the potential implementation of additional market stability mechanisms in a standalone UK ETS. As set out in the consultation, this could include a Cost Containment Mechanism (CCM) to respond to any significant short- term price spikes and an Auction Reserve Price (ARP). If implemented, the ARP would set a minimum price for which allowances can be sold at auction to provide a minimum carbon price signal.

[A response to last summer’s consultation on the Future of UK Carbon Pricing will be published over the coming months.]

Packaging Tax

The Finance Bill 2020 enables HM Revenue and Customs (HMRC) to prepare for the introduction of a tax on plastic packaging before it is formally provided for in law.

[At Budget 2018, the Government announced the introduction of a new tax on plastic packaging which has less than 30% recycled plastic.]

Coronavirus Bill (UK)

UPDATE (Thursday 19th March) : all stages of the Coronavirus Bill will be taken in the Commons on Monday (not today) – the timetable in the Lords is not published

As we are all aware, coronavirus COVID-19 was declared a global pandemic by the World Health Organization on 11 March 2020.

The UK Department of Health and Social Care (DHSC) has identified that to effectively manage this coronavirus outbreak in the UK, new fast-tracked legislation is required – termed the Coronavirus Bill.

The legislation will be time-limited – for 2 years – and not all of these measures will come into force immediately. The bill allows the 4 UK governments to switch on these new powers when they are needed, and, crucially, to switch them off again once they are no longer necessary, based on the advice of Chief Medical Officers of the 4 nations.

This Blog does not focus on the specifics of the healthcare sector or social care, but there are some areas in this Bill, that this Blog does track – the Bill :

(1) enables the Home Secretary to request that port and airport operators temporarily close and suspend operations if Border Force staff shortages result in a real and significant threat to the UK’s border security. This is to ensure the UK can maintain adequate border security throughout the pandemic and protect the public from the threat of criminality or importation of prohibited items that could result from an inadequately controlled border. This would only be used in extremis, where necessary and proportionate, and any direction will be kept to the minimum period necessary to maintain the security of the UK border

(2) enables the government to restrict or prohibit events and gatherings during the pandemic in any place, vehicle, train, vessel or aircraft, any movable structure and any offshore installation and, where necessary, to close premises

(3) enables the police and immigration officers to detain a person, for a limited period, who is, or may be, infectious and to take them to a suitable place to enable screening and assessment

(4) requires industry to provide information about food supplies, in the event that an industry partner does not co-operate with current voluntary information-sharing arrangements during a period of potential disruption.

Link to details about the Coronavirus Bill.

This Bill is expected to become law on Thursday.

Medicines and Medical Devices Bill (UK Brexit)

The (Brexit) Medicines and Medical Devices Bill 2019-20 was announced in the Queen’s Speech on 19 December 2019. The second reading is taking place today.

A large proportion of the legal framework for medicines and medical devices in the UK derives from EU Directives and has been implemented into domestic legislation through section 2(2) of the European Communities Act 1972 (ECA). This enables EU Directives to be transposed into UK law through secondary legislation and has been used to create a body of regulations that include the:

• Human Medicines Regulations 2012

• Medicines for Human Use (Clinical Trials) Regulations 2004

• Veterinary Medicines Regulations 2013

• Medical Devices Regulations 2002.

At the end of the Transition Period, the European Union (Withdrawal) Act 2018 (see the Brexit Law List in subscribers’ systems) will have preserved these frameworks as “retained EU Law”. Since the ECA is now no longer available (due to the Act that implemented the Withdrawal Agreement), there is no other ‘general power’ for updating these regulations from 1st January 2021, except through the introduction of new primary legislation.

The Medicines and Medical Devices Bill seeks to address this regulatory gap through introducing regulation-making, delegated powers covering the fields of

* human medicines,

* clinical trials of human medicines,

* veterinary medicines, and

* medical devices.

Its purpose is to enable the existing regulatory frameworks to be updated at the end of the Transition Period.

The Bill has been drawn to create ‘targeted’ delegated powers which can only be exercised in relation to a restricted number of matters. The Government states in the Explanatory Notes to the Bill that it intends to use these powers to keep the existing regulatory frameworks updated, while also consolidating the enforcement regime for medical devices. In addition, the Bill will provide the Secretary of State with the ability to impose civil sanctions – as an alternative to criminal prosecution – for breaches of the medical device regime.

Further details are set out in this Commons Briefing – here.

Environment Bill (England & UK Brexit)

The Environment Bill returns to the Commons for Second Reading today. It is a slightly different Bill to 2019. Please reprise the posts I wrote in 2019, I summarise the changes (from those posts) below – I had got as far as Water – please find those posts in the Environment Bill category on this blog.

Targets (unchanged from 2019 Bill) – reprising because I didn’t set these out before – England only (targets are within the competencies of devolved legislatures)

– allow government to set long-term targets (of at least 15 years duration) in relation to the natural environment and people’s enjoyment of the natural environment via statutory instrument;

– require government to meet long-term targets, and to prepare remedial plans where long-term targets are not met;

– require government to set, by October 2022, at least one long-term target in each of the priority areas of air quality, water, biodiversity, and resource efficiency and waste reduction;

– require government to set and meet an air quality target for fine particulate matter in ambient air (PM2.5);

– require government to periodically review all environmental targets to assess whether meeting them would significantly improve the natural environment in England.

Note Clause 20 – Clause 20: Reports on international environmental protection legislation (this is unchanged from 2019 Bill, but I did not spell it out before) – this clause places an obligation on the Secretary of State to produce a report on significant developments in international environmental protection legislation, every two years, and lay it before Parliament. England only (competencies are within the competencies of devolved legislatures).

The scope and content of the report will be determined by the Secretary of State – see subsection (5). However, in a given reporting period it could cover: significant developments in the legislation of other countries that are mainly concerned with seeking to protect the natural environment from the effects of human activity or protecting people from the effects of human activity on the environment; legislation on the maintenance, restoration or enhancement of the natural environment; or legislative provisions around monitoring, assessing, considering and reporting and monitoring on these matters. The report will not extend to reviewing or considering the planning systems of other countries.

OEP (Office for Environmental Protection) – unchanged from 2019 Bill – see Blog posts on this – England only (establishing an OEP is within the competencies of devolved legislatures – Scotland indicated it would go this direction see its Environmental Strategy – see my post of yesterday).

Changes to UK REACH – unchanged from 2019 Bill

Waste, Air and Water appear unchanged from the 2019 Bill, and I have Blog posted before about these topics. Nonetheless, I will Blog again re Waste, because this is highly complex and a lot of new processes are announced. Please read the Explanatory Notes – here.

New Blog posts will be made about the rest of the Bill, please look out for those.

Environment Bill (England & UK, Brexit)

Exit day is tomorrow, the transition period will last until 31st December.

The Environment Bill (from the previous session) is being brought back today and given its First Reading in the UK Parliament.

I Blog posted already about the earlier Environment Bill (various sections). When the Bill is published I will reprise those areas that are changed, and Blog post as well on the further sections I had not covered.

To remind – the Environment Bill is an important Bill setting up the Office for Environmental Protection (England) and making further changes to UK REACH to enable it to function from 1st Jan 2021, and additionally setting out other measures (England, and some provisions for Scotland, Wales and Northern Ireland).

The government announcement last night signals :

(1) A ban on the export of plastic waste (which was in the Conservative manifesto), additional to the waste provisions in the previous Bill. Note, the waste provisions as signalled do not align with the 2019 EU Single-Use Plastics Directive.

(2) A bi-annual review of international developments in environmental law that it says will inform domestic law making.

Please look out for further Blog posts on the matter, when the Bill is published.

Agriculture & Fisheries Bills (UK Brexit)

Exit day is Friday (11pm UK time)

The Brexit Agriculture Bill is already published and has a its Second Reading in February. The Brexit Fisheries Bill is being published later today.

The Agriculture Bill relates to England predominantly (and some provisions apply in Wales and Northern Ireland). It mainly deals with agriculture supports (phasing in a new changed basis for these supports that rewards nature and environmental protection), and government collection of data from economic actors in the food supply chain, in England. It enables England, Wales and Northern Ireland to set their own food marketing standards. Separate Agriculture Bills are expected in Scotland, Wales and Northern Ireland.

The Fisheries Bill is [update 30th Jan] publicised by the UK Government – it is not yet in the list of Bills. It sets up a new system for marine and coastal fisheries management, gives new powers to Devolved Governments, and includes a set of UK-wide objectives to manage fisheries stocks sustainably (and a new objective to move towards “climate-smart” fishing in UK waters). It gives new powers to the Marine Management Organisation to give advice and assistance on sustainable fisheries, marine planning, licensing and conservation overseas.

Further Blog posts will be issued on these matters in due course.