The Greenhouse Gas Emissions Trading Scheme (Amendment) (Charging Schemes) Regulations 2012

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations deal with matters arising from the duty to transpose into United Kingdom law Directive 2003/87/EC of the European Parliament and of the Council establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (“the EU ETS Directive”), as amended in particular by Directives 2008/101/EC and 2009/29/EC of the European Parliament and of the Council. Under the emissions trading system established by those Directives (“EU ETS”), an overall cap is set for emissions of greenhouse gases from specified activities. Operators must monitor and report emissions, and surrender sufficient emissions trading allowances to cover their emissions for each year. Under the amendments made by Directive 2008/101/EC, the system covers emissions from aviation activities as well as from stationary installations. A new phase of the system (“Phase 3”) begins on 1st January 2013.

The EU ETS Directive is currently implemented by the Greenhouse Gas Emissions Trading Scheme Regulations 2005 (S.I. 2005/925) and the Aviation Greenhouse Gas Emissions Trading Scheme Regulations 2010 (S.I. 2010/1996) (“the current implementing Regulations”). These confer responsibility for the day-to-day administration of the system on regulators in England and Wales, Scotland and Northern Ireland (respectively the Environment Agency, the Scottish Environment Protection Agency, and the chief inspector in Northern Ireland). By virtue of the charging provisions of Part 1 of the Environment Act 1995, of the Environment (Northern Ireland) Order 2002, and of the Greenhouse Gas Emissions Trading Scheme Charging Scheme Regulations (Northern Ireland) 2010, those regulators may make charging schemes in order to cover the costs of carrying out their EU ETS functions. The present Regulations amend those charging provisions so that appropriate charging schemes can continue to be made when the current implementing Regulations are themselves amended or replaced (and in particular when this is done for the purposes of the implementation of Phase 3 of EU ETS).

Regulations 4 and 5 amend sections 41 and 41A of the Environment Act 1995 (“the Act”), which applies to regulators in England, Wales and Scotland. As a result, the charging scheme powers for EU ETS will now be contained solely in section 41A. In addition, the provisions will no longer make specific reference to the current implementing Regulations or to functions specifically relating to permits. Instead, a more general reference will now be made to functions conferred by regulations made for the purpose of implementing the EU ETS Directive. Charges may also be prescribed in relation to opening, subsistence and updating of accounts that are required to be held in a trading scheme registry (these being the accounts held by the operators and aircraft operators covered by EU ETS). The definition of “trading scheme registry” is then updated to take into account the Registries Regulation 2011 (Commission Regulation (EU) No 1193/2011).

Regulation 6 makes consequential amendments to section 42 of the Act. As a result, the provisions relating to consultation, approval by Secretary of State (or Scottish Ministers) and Treasury consent will continue to apply to charging schemes made for the purposes of EU ETS. Amendments also ensure that the conditions for approval set out in section 42(2) extend to all the EU ETS functions of the regulators concerned.

Regulation 7 makes consequential amendments to the definitions in section 56 of the Act. The amendments made by regulation 8 then ensure that the provisions in section 111 (relating to evidence in proceedings) continue to apply.

Regulations 10 to 12 similarly amend Schedule 1 to the Environment (Northern Ireland) Order 2002, which applies to functions in Northern Ireland. As a result, that Schedule will no longer make specific reference to the current implementing Regulations, or to functions specifically relating to permits. Paragraph 9B of the Schedule will now refer instead to functions conferred by regulations made for the purpose of implementing the EU ETS Directive (as now defined in paragraph 26), and to accounts that are required to be held in a trading scheme registry. The definition of “trading scheme registry” is similarly updated.

Regulations 14 and 15 make corresponding amendments to the Greenhouse Gas Emissions Trading Scheme Charging Scheme Regulations (Northern Ireland) 2010.

Regulation 16 makes consequential amendments to the Pollution Prevention and Control Act 1999.

Regulation 17 revokes provisions which, as a result of the above amendments made by these Regulations, are now otiose.

An Impact Assessment has not been prepared as the instrument is not expected to have any direct impact on the private, voluntary or public sectors. An Explanatory Memorandum is published alongside the instrument on the legislation website of The National Archives (http://www.legislation.gov.uk).