Climate legislation (Ireland)

On 23 March, Ireland published its Climate Action and Low Carbon Development (Amendment) Bill 2021.

This Bill, when enacted, will amend the Climate Action and Low Carbon Development Act 2015 – to –

(1) set an objective of climate neutrality by 2050,

(2) set an interim target of a 51% reduction in GHG emissions by 2030 relative to a baseline of 2018,

(3) provide a framework for the development of enabling plans and strategies to reach the 2030 and 2050 targets as follows:

* annual climate action plans

* five-yearly long-term climate action strategies

* five-yearly climate budgets

* sectoral emissions ceilings

* a national adaption framework,

(4) make changes to the Climate Change Advisory Council including to its functions and its membership,

(5) oblige all local authorities to make individual local climate action plans,

(6) oblige climate reporting by a Minister to the Joint Oireachtas Committee,

The Bill does not propose a ban on the sale of new, and importation of, petrol and diesel vehicles by 2030 (which was included in the 2019 General Scheme of the Bill) or a ban on the importation of fracked gas and on liquified natural gas (LNG) terminals.

The Bill is here.

We will add this legislation to Cardinal Environment EHS Legislation Registers & Checklists (Ireland), when it is enacted.

European Climate Law (EU)

I blog posted before (in December) about the EU’s proposal for a European Climate Law. On 21 April, the EU’s co-legislators reached provisional agreement on the matter.

The European Climate Law will contain the EU’s commitment to reaching climate neutrality by 2050 and the intermediate target of reducing net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels.

Once this provisional agreement is formally approved by Parliament and Council, the European Climate Law will be published in the Official Journal of the Union and will enter into force.

Further information is here.

UK Emissions Trading System (Britain from 1st Jan)

I Email Alerted to customers carbon trading in the EU ETS system. This morning, the UK government publishes Britain will set up its own UK ETS (it had the law already in place and in force to set up the UK ETS from 1st Jan). Britain will not operate a carbon tax. Northern Ireland will continue inside the EU ETS.

The Legislation for the UK ETS is in the Brexit Consolidated Law List (see the Email Alert I issued – look in your inboxes). UK ETS law is in force, and will be included in the EHS Registers & Law Checklists from 1st Jan 2021. Existing Brexit Transition Registers also have the Carbon Tax provision, it is marked “not in force” and there is no Summary and it is not in Law Checklists.

Despite this morning’s announcement, there are still few details for UK ETS.

The announcement this morning is of the Energy White Paper – here.

The details so far (from this announcement) –

The UK ETS will be the world’s first net zero carbon cap and trade market, and a crucial step towards achieving the UK’s target for net zero carbon emissions by 2050.

The scheme is more ambitious than the EU system it replaces – from day one the cap on emissions allowed within the system will be reduced by 5%, and we will consult in due course on how to align with net zero.

I will issue a new Email Alert shortly.

This UK ETS, adds to the list of standalone UK/GB systems –

(1) UK REACH

(2) GB CLP

(3) UKCA

(4) UK ETS

European Climate Law (EU)

Today saw the publication of the conclusions of the December meeting of the European Council. On the matter of Climate Change, the European Council endorsed a binding EU target of a net domestic reduction of at least 55% in greenhouse gas emissions by 2030 compared to 1990, tasking the co-legislators to reflect this new target in the European Climate Law proposal and to adopt the latter swiftly.

The EU’s nationally determined contribution (NDC) will be updated according to the new binding target and submitted to the UNFCCC secretariat by the end of the year (ahead of COP 26 – the 2021 UN Climate Change Conference).

Information on the European Climate Law is here. (note, it’s a proposal)

Meeting Climate Change Requirements (UK from 1 Jan 2021)

On 7 July, the EU revised and updated its 1 Jan 2021 Readiness Notice on the EUETS (EU carbon trading) (previously dated 19 Dec 2018). This updated Notice is here.

Amongst the list of instructions are :

(1) Operators of stationary installations in the UK and aircraft operators where the UK is the administering EU member state – to continue holding emission allowances after 30 April 2021 – must open a trading account in the Union Registry administered by an EU Member State and move their assets to this account.

(2) They must also – ensure that their annual emission reports are verified by verifiers established in the EU and accredited by the national accreditation body of an EU Member State.

Please note the Notice also sets out specific restrictions that will apply in Northern Ireland from 1 Jan 2021.

As a result, the UK has updated (19th August) its pre-existing instructions on meeting climate change requirements (covering emissions trading, ecodesign and energy labelling) previously issued on 12 October 2018. Note: the EU does not have 1 Jan 2021 Readiness Notices on ecodesign or energy labelling (only on EMAS and the EU Ecolabel).

The UK instructions are here. I Blog posted about these instructions at the time in 2018.

Key points : (taking account of the EU Readiness Notice)

(1) UK stationary installation operators and aircraft operators will continue to have access to Operator Holding Accounts and Aircraft Operator Holding Accounts administered by the UK for 2020 compliance obligations, up to and including 30 April 2021. Access to accounts after this date may no longer be possible.

Where applicable, operators should confirm with their traders that delivery of allowances will be possible from 1 January 2021 to ensure sufficient allowances are available to enable compliance with surrender obligations for 2020 emissions.

(2) Holders of Trading Accounts, Person Holding Accounts, Person Accounts in National Kyoto Protocol Registry and Former Operator Holding Accounts in the UK section of the Union Registry should plan for a loss of registry access from 1 January 2021.

(3) Free allowances will need to be allocated by the National Administrator on or before 31 December 2020 (the end of the transition period) subject to any changes being agreed by the European Commission in a Commission decision meeting.

(4) The deadlines for UK operators participating in the EU ETS during the transition period are:

• 31 March 2021 – submit Verified Annual Emissions Report for 2020 emissions

• 30 April 2021 – surrender equivalent allowances to 2020 verified emissions

NOTE : The temporary suspension by the European Commission on the processes relating to the UK registry was lifted on 3 February 2020 and the UK commenced the process of issuing 2019 and 2020 free allocation, as well as resuming auctions. The lifting of the suspension also allowed UK stationary installation operators and aircraft operators to regain the ability to use their entitlement in the Union Registry to exchange international credits for EU ETS allowances.

(5) Account holders who use their accounts to hold and trade Certified Emission Reductions and Emission Reduction Units will continue to be able to access their accounts within the UK’s Kyoto Protocol National Registry until 1 January 2021. As of 1 January 2021 (the day following the end of the transition period), account holders will no longer have access to these accounts.

The UK government is procuring a new system to enable account holders to hold and trade Certified Emission Reductions and Emission Reduction Units, which we expect to be operational in Spring 2021. Businesses with accounts in the Kyoto Protocol National Registry should consider taking action to manage the risks created by a short gap in service before the new system is implemented. For example, affected business could consider opening an account in another country’s registry to hold and trade Certified Emission Reductions and Emission Reduction Units during this period.

EU PRODUCT DATABASE (this is not an EU Readiness Notice, so this UK information derives directly)

(1) In terms of the EU product database:

• all consumers will still have access to the ‘open’ section of the database

• however, the UK’s Market Surveillance Authorities will no longer have access to the ‘closed’ compliance section of the database.

There will be changes for UK and EU suppliers regarding the EU product database. UK and EU suppliers placing relevant energy-using products:

• on the EU market will have to enter relevant information into the database

• on the UK market will not be required, under domestic law, to enter relevant information into the database, including for those products placed on the market between 1 August 2017 and 1 January 2019 after 1 January 2021.

UK and EU suppliers must ensure that relevant energy-using products:

• placed on the UK market comply with minimum UK Ecodesign and Energy Labelling standards

• placed on the EU market comply with minimum EU Ecodesign and Energy Labelling standards

UK and EU retailers must ensure that relevant energy-using products:

• placed on the UK market comply with minimum UK Energy Labelling standards

• placed on the EU market comply with minimum EU Energy Labelling standards

RE standards – All EU ecodesign and energy labelling requirements which enter into force and apply before 31 December 2020 will have effect in the UK. Further legislation is being prepared to ensure that all of these requirements continue to function in the UK from 1 January 2021.

Please clarify any gaps e.g. verification of annual emission reports, and the specifics applying in Northern Ireland, with the UK government department BEIS.

Climate Change Agreements (UK)

In the Spring Budget 2020, the UK Government announced that the current Climate Change Agreements (CCA) scheme would be reopened to new entrants for a set period and extended for a further two years until March 2025.

In April 2020, the UK government consulted on its proposals for how this extension would be implemented and sought views on potential reforms were there to be a future CCA scheme beyond March 2025.

The Environment Agency is expected to certify eligible new entrant facilities from January 2021. The deadline for applications is extended to 30 November 2020.

The baseline period is to be updated. Where discrete data for 2018 is not currently available, appropriately adjusted Target Period 3 (covering 2017 and 2018) data may be used instead to estimate a 2018 baseline.

The deadline for sector organisations to submit counter proposals for agreeing sectoral targets will be extended to 30 October 2020.

The Buy-out Price will increase to £18/tCO2e for Target Period 5 (1st Jan 2021 to 31 Dec 2022). The Target Period 4 (1 Jan 2019 to 32 Dec 2020) buy-out remains at £14/tCOe.

The financial penalty price for penalties related to Target Period 5 will increase in line with the buy-out cost per tCO2e for the appropriate target period; the financial penalty will increase to be the greater of £250 or £18/tCO2e.

A short window to make some specific amendments to agreements will be opened in 2021, with separate guidance to follow on this.

The Government will look to confirm a timeline for further engagement on the future of the CCA scheme shortly.

Further information on the CCA extension to March 2025 (and the views received on the future of the CCA scheme) is found here.

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.

New – European Climate Law (EU)

The EU has today launched a Proposal for a new Regulation establishing a framework for achieving climate neutrality (European Climate Law) – here.

This new Regulation proposes a legally binding target of net zero greenhouse gas emissions by 2050, and binds the EU Institutions and the Member States to take the necessary measures at EU and national level to meet the target.

The new Regulation includes measures to keep track of progress and adjust actions accordingly, based on existing systems such as the governance process for Member States’ National Energy and Climate Plans, regular reports by the European Environment Agency, and the latest scientific evidence on climate change and its impacts.

Progress will be reviewed every five years, in line with the global stocktake exercise under the Paris Agreement.

The new Regulation also sets steps to get to the 2050 target:

• Based on a comprehensive impact assessment, the Commission will propose a new EU target for 2030 greenhouse gas emissions reductions. This part of the proposed Regulation will be amended once the impact assessment is completed.

• By June 2021, the Commission will review, and where necessary propose to revise, all relevant policy instruments to deliver the additional emissions reductions for 2030.

• The Commission proposes the adoption of a 2030-2050 EU-wide trajectory for greenhouse gas emission reductions, to measure progress and give predictability to public authorities, businesses and citizens.

• By September 2023, and every five years thereafter, the Commission will assess the consistency of EU and national measures with the climate-neutrality objective and the 2030-2050 trajectory.

• The Commission will be empowered to issue Recommendations to Member States whose actions are inconsistent with the climate-neutrality objective, and Member States will be obliged to take due account of these Recommendations or to explain their reasoning if they fail to do so.

• Member States will also be required to develop and implement adaptation strategies to strengthen resilience and reduce vulnerability to the effects of climate change.

The next step for the proposed Regulation is consideration by the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions under the ordinary legislative procedure.

Emissions Trading Systems (UK Brexit, EU, Switzerland)

As of 1 January 2020, Switzerland is the first country to link its greenhouse gas emissions trading system (SETS) with the EU emissions trading system (EU ETS).

A process that took almost 10 years, is now finalized allowing the entry into force of the entire agreement between the EU and Switzerland on the linking of their greenhouse gas emissions trading systems that was signed in Bern on 23 November 2017 (Agreement).

The EU and Switzerland operate separate greenhouse gas emissions trading systems (ETS) as part of their respective policies to tackle climate change. After the Agreement’s entry into force in 1 January 2020, the SETS is now linked to the much larger EU ETS to allow for the mutual recognition of emission allowances from the two system.

The UK, whilst in the transition period, participates in the EU ETS, and the 2018 suspension applicable to UK auctioning and issuing 2019 allowances is lifted (with access to UK registry accounts continuing). Please confirm this with BEIS.

The UK has a hitherto unused Carbon Tax on its statute books, and has closed its wider (non EU ETS) existing ETS (the CRC carbon trading system). From 1st January 2021, it could seek to continue a UK version of the EU ETS with mutual recognition of allowances between the UK and the EU systems. The linking of the (Switzerland) SETS with the EU ETS would be a reference point for such negotiations.

China, Canada, Japan, New Zealand, South Korea and the United States are operating or are developing ETSs.

Further information is in this article – here.

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.