Office of Public Sector Information
127.Subsection (3) provides that the Secretary of State may either designate a single base year or may designate a number of base years and use the average of the emissions of the gas in those years.
128.Subsection (4) restricts the use of the power to amend the base years that are set out in the table in subsection (1). Those base years can only be amended if there have been significant developments in European or international law or policy that make it appropriate to do so, for example if an international agreement was reached that required every country to use a particular base year for a gas.
129.Subsection (5) requires the Secretary of State to consult the devolved administrations, and also to obtain and consider advice from the Committee on Climate Change, before making an order designating a base year or years.
130.Subsection (6) requires the Committee on Climate Change, as soon as is reasonably practicable after giving its advice to the Secretary of State, to publish that advice in any way it thinks is appropriate.
131.Subsection (7) places a duty on the Secretary of State, if setting a base year in a way that differs from the Committee’s recommendations, to publish a statement setting out the reasons for that decision. Subsection (8) allows the Secretary of State to publish this statement in any way he thinks is appropriate.
132.Subsection (9) provides that an order under subsection (2) must be made using the affirmative resolution procedure.
133.In addition to the level of “net UK emissions” (which is defined in section 29 (1)(c)), the “net UK carbon account” (as determined in accordance with section 27) is affected by the addition and subtraction of “carbon units” through a process of “carbon accounting”. This section, and section 27, allow the Secretary of State to determine what carbon units should be added to and subtracted from the net UK carbon account and how “carbon accounting” will work.
134.Subsection (1) allows the Secretary of State to make regulations setting out specifically what “carbon units” can be used for carbon accounting purposes. “Carbon units” in the regulations can only be:
units representing a reduction in the amount of greenhouse gas emissions;
units representing the removal of greenhouse gas from the atmosphere; or
units representing greenhouse gas emissions which are allowed under a scheme or arrangement which limits total emissions of greenhouse gases (for example, under certain kinds of emissions trading scheme).
135.Subsection (2) allows the Secretary of State to make regulations which contain details of how carbon units should be registered and kept track of, and allows him to establish and maintain accounts containing carbon units. Carbon units can be moved between accounts. The intention is to establish an accounting system broadly similar to, and compatible and co-ordinated with, that used to keep track of the UK’s assigned amount units (AAUs) and other units issued under the Kyoto Protocol; subsection (2) specifically provides that the Secretary of State can use an existing system as the basis of the carbon accounting system.
136.Subsection (3) gives more detail of what the regulations can say. The Secretary of State is allowed to appoint a body to operate the accounting scheme, to set up a new body for that purpose, to make provision allowing him to give guidance and directions to the body and to require users of the scheme to pay charges towards the cost of operating the scheme.
137.Subsection (4) provides that if an existing body is appointed to operate the accounting scheme, then the Secretary of State can make any necessary amendments to relevant enactments.
138.The procedures relating to the regulations are set out in section 28.
139.Subsection (1) defines the term “net UK carbon account” for a budgetary period as being net UK emissions (as defined in section 29(1)(c)) as decreased by a number of carbon units to be credited to the account and increased by a number of carbon units to be debited from the account in accordance with regulations made by the Secretary of State.
140.Subsection (2) provides that the net amount of carbon units credited to the net UK carbon account must not exceed the limit for the period set by order under section 11. See the notes on section 11 for details of how the “net amount of carbon units” is calculated.
141.Subsection (3) requires the Secretary of State to make regulations setting out the circumstances in which carbon units are to be credited to and debited from the net UK carbon account, and the manner in which it is to be done. For example, the regulations could provide that units purchased through the EU Emissions Trading Scheme can be treated as units to be credited to the net UK carbon account.
142.Subsection (4) provides that where carbon units are to be credited to the net UK carbon account, then provision must be made so that they are no longer available to offset other greenhouse gases: they must be put beyond use so that they cannot be double-counted.
143.Subsection (5) provides that the regulations must make specific provision for dealing with the situation where the UK has a cap on emissions under a European or international scheme or arrangement that is less stringent than the carbon budget for a period, for example, if the UK’s target under the first commitment period of the Kyoto Protocol (2008–2012) is less stringent than the domestic carbon budget for that period. In that situation, the regulations must provide that the excess allowances are not used to offset greenhouse gas emissions in the UK or elsewhere.
144.This section sets out the procedure that must be followed when carbon accounting regulations are made under section 26 or section 27.
145.Subsection (2) provides that the affirmative resolution procedure must be used in the following cases:
for the first set of carbon accounting regulations;
if the regulations specify a new kind of carbon unit;
if the regulations alter the value of a carbon unit;
if the regulations modify primary legislation.
146.Subsection (3) provides that the negative resolution procedure applies in all other situations.
147.Subsection (4) requires the Secretary of State to consult the devolved administrations before laying or making the regulations (depending on which Parliamentary process is being used).
148.Subsection (5) requires the Secretary of State to consult the Committee on Climate Change on the first set of regulations and whenever subsequent regulations specify a new kind of carbon unit or alter the value of a carbon unit.
149.This section defines the terms “UK emissions”, “UK removals” and “net UK emissions” used in Part 1 of the Act. “UK emissions” are emissions of gases from sources in the United Kingdom; “UK removals” are removals of gases from the atmosphere as a result of land use, land-use change or forestry; “net UK emissions” of a gas are calculated by subtracting the amount of UK removals of the gas from the amount of UK emissions of the gas.
150.Subsection (2) provides that UK emissions and UK removals are to be determined by following international protocols, such as the United Nations Framework Convention on Climate Change (UNFCCC) Reporting Guidelines on Annual Inventories. Emissions only count for the purposes of this Act if they are emissions of greenhouse gases from anthropogenic sources; non-anthropogenic sources of greenhouse gases (for example, emissions from volcanic activity) are not included in the figures (see the definition of “emissions” in section 97).
151.This section makes provision about greenhouse gas emissions from international aviation or international shipping. Subsection (1) provides that those emissions do not count as emissions from sources in the United Kingdom (so they do not count as “UK emissions” under section 29(1)(a)) for the targets and budgeting in Part 1, unless regulations make provision for them to do so.
152.Until such time as regulations are made under subsection (1), section 16(5) requires the Secretary of State to report the levels of emissions from international aviation and international shipping, calculated in accordance with international carbon reporting practice (see section 90), in his annual statement to Parliament. See also section 10(2)(i), which requires the Secretary of State to take into account the estimated amount of reportable emissions from international aviation and international shipping in relation to carbon budgets – see the notes on section 10 for more details.
153.Subsection (2) allows the Secretary of State to define in more detail what is meant by “international aviation or shipping” by affirmative resolution order.
154.Subsection (3) requires the Secretary of State, by 31st December 2012, either:
to make provision by regulations setting out the circumstances and extent to which emissions from international aviation or international are to be regarded as being emissions from sources in the United Kingdom. Under the mechanisms in the Act, any emissions regarded as being from sources in the United Kingdom are “UK emissions” (see section 29(1)(a)) and count towards calculating and meeting the 2050 target and the carbon budgets, or
to lay before Parliament a report saying why he has not made any regulations.
155.Subsection (4) makes it clear that even after the five-year period has expired the Secretary of State is still allowed to make regulations setting out the circumstances and extent to which emissions from international aviation or international shipping are to be regarded as being from sources in the United Kingdom.
156.Subsection (5) provides that regulations under this section can only deal with emissions of “targeted greenhouse gases” (see section 24). It also provides that the regulations can, in particular, provide that emissions from international aviation or international shipping will only count as UK emissions if they relate to the transport of passengers or goods to or from the United Kingdom.
157.Subsection (6) specifically allows the Secretary of State to make provision in the regulations about which time periods should be used when calculating UK emissions from international aviation and international shipping, and how emissions in the base year for the gas should be calculated. Subsection (7) allows the Secretary of State to assign a different base year for this purpose, or to assign a number of base years and to treat the average amount of emissions in those years as emissions in the base year. Subsection (8) explains that the base year for carbon dioxide is 1990 (referred to as the “1990 baseline” in section 1).
158.This section sets out the procedures that the Secretary of State must follow before making regulations on emissions from international aviation or international shipping under section 30.
159.Subsection (1) places a duty on the Secretary of State to obtain and consider advice from the Committee on Climate Change. Subsection (2) requires the Committee on Climate Change, as soon as is reasonably practicable after giving its advice to the Secretary of State, to publish that advice in any way it thinks is appropriate.
160.Subsection (3) places a duty on the Secretary of State, if making regulations in a way that differs from the Committee’s recommendations, to publish a statement setting out the reasons for that decision. The statement may be published in any way the Secretary of State thinks is appropriate (subsection (4)).
161.Subsection (5) provides that regulations made under section 30 are subject to the affirmative resolution procedure.
162.This section establishes a new, independent, non-departmental public body, the Committee on Climate Change (in Welsh, y Pwyllgor ar Newid Hinsawdd) and introduces Schedule 1.
163.Schedule 1 makes further provision about the Committee, including provision on its membership, staff, procedures and other administrative requirements.
164.Paragraphs 1 and 2 make provision in respect of the membership of the Committee on Climate Change. The Committee will have a chair and between five and eight members (one of whom may be appointed as the deputy chair) who will be appointed jointly by the Secretary of State the Scottish Ministers, the Welsh Ministers and the relevant Northern Ireland department (together, the “national authorities”) after consultation with the chairperson. The Secretary of State may, with the consent of the other national authorities, amend the number of members by negative resolution order. Paragraph 1(3) gives a list, in alphabetical order, of the areas of experience and knowledge that are desirable in the Committee’s membership, taken as a whole.
165.Paragraph 3 provides that a person will be a member of the Committee on the terms which are set upon appointment (which will include terms about the length of time the person is to serve on the Committee). Paragraphs 4 to 7 make provision about how members can resign, the situations in which they can be removed from their posts, and allows the reappointment of members.
166.Paragraphs 8 to 10 allow the national authorities to pay remuneration and allowances to members, and allow the national authorities to provide pensions for members or to make payments towards the provision of pensions. They also allow payments of compensation to outgoing members in special circumstances.
167.Paragraphs 11 to 14 relate to the Committee’s employees. The Committee must appoint a chief executive who has been approved by the national authorities. It may also appoint other employees. These paragraphs make provision about employees’ pay and pensions, and allow employees to be pensionable under the Principal Civil Service Pension Scheme.
168.Paragraphs 15 to 21 make provision about how the Committee may operate. The Committee can set up sub-committees, which can include people who are not members of the Committee (and they may be paid remuneration and allowances).
169.Paragraph 16 establishes a sub-committee of the Committee to be known as the Adaptation Sub-Committee or, in Welsh, as yr Is-bwyllgor Addasu; it is referred to in the rest of paragraph 16 as “the ASC”. The ASC will have a chair and not less than 5 other members appointed by the national authorities. Before appointing the ASC chair, the national authorities must consult the chair of the Committee; the ASC chair must be consulted before ASC members are appointed. Paragraph 16(4) provides that the ASC’s role is to provide the Committee with such advice, analysis, information or other assistance as it may require in exercising its functions under sections 38(1)(c) (advice on adaptation requested by national authorities), 57 (advice on report on impact of climate change) and 59 (reporting on progress in connection with adaptation).
170.The Committee is allowed to regulate its own procedure (including quorum) and sub-committee procedures. The Committee is required to publish the minutes of its meetings in any manner it considers appropriate. The Committee may authorise a sub-committee, member or employee to exercise its functions.
171.Paragraphs 22 to 25 require the Committee to prepare annual reports and annual statements of accounts; reports and accounts must be laid before Parliament, the Scottish Parliament, the National Assembly for Wales and the Northern Ireland Assembly. The Committee’s accounts will be audited by the National Audit Office. The Committee is placed under a duty to keep proper records, and must provide information to the national authorities on request.
172.Paragraph 26 provides that the Committee is not required to publish anything it is prohibited from publishing or that it would not be required to publish under the Freedom of Information Act 2000 (c.36) or the Environmental Information Regulations 2004 (S.I. 2004/3391).
173.Paragraph 27 provides that the Committee is not a Crown body. It will be a statutory non-departmental public body, and its employees will not be civil servants.
174.Paragraphs 28 to 35 make amendments to, and provision in relation to, several enactments relating to public bodies; these have several effects, including that the body is subject to freedom of information laws, that the chair and members cannot be members of Parliament, and that the Committee’s activities can be subject to investigation by the Scottish Parliament and the appropriate Parliamentary ombudsman.
175.This section places a duty on the Committee on Climate Change to advise the Secretary of State on whether the 2050 target in section 1(1) should be amended and if so what the amended percentage should be. Subsection (2) requires the Committee to provide the reasons for its advice under this section, and subsection (3) requires the Committee to provide its advice no later than 1st December 2008.
176.Subsection (4) requires the Committee to send a copy of the report to each of the devolved administrations. Subsection (5) requires the Committee on Climate Change, as soon as is reasonably practicable after giving its advice to the Secretary of State, to publish that advice in any way it thinks is appropriate.
177.This section sets out the Committee on Climate Change’s advisory duties in relation to carbon budgets, and the timing of the advice that must be given.
178.Subsection (1) requires the Committee to give advice on carbon budgets. The Committee must advise on the levels at which carbon budgets should be set and on the extent to which budgets should be met by reducing the level of net UK emissions or by the use of carbon units credited to the net UK carbon account. The Committee must advise on the contributions towards meeting carbon budgets that should be made by sectors of the economy covered by trading schemes (taken as a whole) and by other sectors (taken as a whole). The Committee is also required to advise on sectors of the economy in which there are particular opportunities for contributions to be made towards meeting carbon budgets through reductions in emissions of targeted greenhouse gases.
179.Subsection (2) gives the Committee an advisory duty that only applies to the 2008–2012 budget period. The Committee is required to advise the Secretary of State on whether its advice on the level of the 2008–2012 budget is consistent with meeting a separate target of reducing emissions to an annual equivalent (as defined in section 5(2)) of 20% below the 1990 baseline, and to set out what the costs and benefits would be of setting a budget consistent with that target.
180.Subsection (3) requires the Committee to set out the reasons for its advice and subsection (4) makes provision on the timing of the advice.
181.Subsection (5) imposes upon the Committee a duty to send copies of the advice to the devolved administrations at the same time as it gives its advice to the Secretary of State. Subsection (6) gives the Committee a duty to publish its advice in any manner it considers appropriate.
182.Subsection (1) of this section places a duty on the Committee on Climate Change to advise the Secretary of State on the consequences of treating emissions from international aviation and international shipping as UK emissions for the purposes of the targets and budgets in the Act.
183.Subsection (2) provides that the duty does not apply if, and to the extent that, the Secretary of State has already made regulations under section 30 which provide for emissions from international aviation and international shipping to be treated as UK emissions.
184.Subsection (3) requires the Committee on Climate Change to provide reasons with its advice. Subsection (4) makes provision on the timing of the advice, requiring the Committee on Climate Change to give its first advice under this section when it advises on the carbon budget for 2023–2027 (which must be given by 31st December 2010, as calculated in accordance with sections 34(4)(b) and 4(2)(b)). Subsequent advice must be given at the same time as its advice on carbon budgets.
185.Subsection (5) requires the Committee on Climate Change to send a copy of its advice to the devolved administrations, and subsection (6) requires it to publish its advice, in such manner as it considers appropriate, as soon as is reasonably practicable after it has given it to the Secretary of State.
186.Subsection (1) requires the Committee on Climate Change to make an annual report to Parliament, the Scottish Parliament, the National Assembly for Wales and the Northern Ireland Assembly containing its assessment of the progress that has been made towards meeting the carbon budgets already set and the 2050 target (that is, unless amended, to reduce the net UK carbon account to at least 80% below 1990 levels); the further progress that is needed to meet the budgets and that target; and whether the budgets and that target are likely to be met.
187.Subsection (2) applies to progress reports in the second year after the end of each budget period (for example, for the 2008–2012 budget period, in 2014; the final figures for a budget period are not available until the second year after it ends). In those reports, the Committee is required to give its views on the manner in which the budget was or was not met, and its views on the action taken to reduce net UK emissions during the budgetary period.
188.Subsection (3) provides that the first report under this section must be laid by 30th September 2009, to take into account the fact that the Secretary of State is required to set the first three budgets by 1st June 2009 (see section 4(2)). Subsection (4) provides that each subsequent report under this section, other than the one in the second year after the end of a budgetary period, must be laid by 30th June in the year in which it is made.
189.Subsection (5) requires that each report in the second year after the end of a budgetary period must be laid by 15th July in the year in which it is made.
190.Subsections (6) to (8) allow the Secretary of State to amend the timing of the report by negative resolution order after consulting the devolved administrations.
191.See also section 59, which requires the Committee to provide progress reports on the implementation of the UK Government’s adaptation programmes under section 58. See the notes on section 59 for more detail on the timing of those progress reports.
192.This section places a duty on the Secretary of State to lay before Parliament a response to the points raised by each of the Committee on Climate Change’s annual progress reports.
193.Subsection (2) requires the Secretary of State to consult the devolved administrations on a draft of the response. Subsection (3) provides that the response to the Committee’s first report must be laid no later than 15th January 2010. Subsection (4) provides that each subsequent report must be laid by 15th October in the year the Committee’s report was made.
194.Subsections (5) and (6) allow the Secretary of State to change the deadline by negative resolution order. This provision is to allow flexibility (it might, for example, be used to allow for the consequences of future international treaties on climate change necessitating a change to the date when the Committee makes its report).
195.This section will also require the Secretary of State to respond to any points raised by the Committee in its progress reports under section 59 in relation to progress made in implementing the adaptation programmes under section 58. See the notes on section 59 on the timing of those reports. Also of relevance is section 82, which repeals a reporting requirement under section 2(a) of the Climate Change and Sustainable Energy Act 2006 (c.19).
196.Subsection (1) requires the Committee on Climate Change to provide advice, analysis, information or other assistance, when requested to do so, to the Secretary of State, the Scottish Ministers, the Welsh Ministers or the relevant Northern Ireland department (together, the “national authorities”). Any request can be made if it relates to an authority’s functions under the Act, the progress that is being made towards meeting objectives set under the Act, to adaptation to climate change or to climate change generally.
197.Subsection (2) gives specific examples of what may be required of the Committee, including advice on caps on activities under trading schemes or assistance in the preparation of statistics.
198.Subsection (3) gives the Committee a duty to provide a devolved administration (not the Secretary of State), when requested to do so, with advice, analysis, information or other assistance on a target, budget or similar requirement it has adopted (whether or not the target, budget or similar requirement is contained in legislation) or which has been imposed on it. For example, the Committee would, if requested to do so, be required to advise the Scottish Ministers in relation to any target adopted under an Act of the Scottish Parliament.
199.Subsection (1) gives the Committee on Climate Change the power to do anything that appears to it necessary or appropriate for the purpose of, or in connection with, the carrying out of its functions. Subsections (2) and (3) set out examples to illustrate the scope of the power. Ancillary powers are not freestanding; they may be used only to facilitate the exercise of formal functions. Subsection (4) requires the Committee to have regard to the desirability of involving the public in the exercise of its functions.
200.This section enables each national authority (the Secretary of State, the Scottish Ministers, the Welsh Ministers and the relevant Northern Ireland department) to fund the Committee on Climate Change. National authorities may impose conditions when giving a grant (for example, a condition requiring the Committee to supply a financial memorandum or enter into a management agreement).
201.This section makes provision on how the Committee on Climate Change can be given guidance on how to carry out its functions. The Committee is required to “have regard” to guidance (see subsection (5)) – this means that the Committee must take the guidance into account when exercising the function.
Subsection (1) provides that any guidance on the Committee’s functions generally or its functions under Schedule 1 is to be given by the national authorities (and this means that such guidance must be given jointly by all the national authorities: see section 95(2));
Subsection (2) provides that any guidance given on the Committee’s functions under Part 1 of the Act (for example, the function of advising on an amendment of the 2050 target), on its advice on the level of the 2050 target and on carbon budgets under sections 33 and 34, in connection with international aviation and international shipping under section 35, on the report on the impact of climate change under section 57 or on its duty to make progress reports under section 36 or 59 is to be given by the Secretary of State. Unless he is only issuing guidance in relation to the Committee’s functions under section 59, the Secretary of State must consult the devolved administrations;
Subsection (3) provides that any guidance given on the Committee’s duty to provide advice or other assistance under section 38 or on trading schemes under section 48 is to be given by the national authority seeking the advice or other assistance. If two or more national authorities are seeking the advice or other assistance, then the guidance must be given jointly.
202.This section makes provision on how the Committee on Climate Change can be given directions on how to carry out its functions. The Committee is required to comply with the directions (see subsection (6)), but the Committee cannot be given directions as to the content of any advice or report (see subsection (4)).
Subsection (1) provides that any direction on the Committee’s functions generally or its functions under Schedule 1 is to be given (jointly) by the national authorities;
Subsection (2) provides that any direction given on the Committee’s functions under Part 1 of the Act (for example, the function of advising on an amendment of the 2050 target), on its advice on the level of the 2050 target and on carbon budgets under sections 33 and 34, in connection with international aviation and international shipping under section 35, on the report on the impact of climate change under section 57 or on its duty to make progress reports under section 36 or 59 is to be given by the Secretary of State. Unless he is only issuing directions in relation to the Committee’s functions under section 59, the Secretary of State must consult the devolved administrations;
Subsection (3) provides that any direction given on the Committee’s duty to provide advice and other assistance under section 38 or on trading schemes under section 48 is to be given by the national authority seeking the advice or other assistance. If two or more national authorities are seeking the advice or other assistance, then the directions must be given jointly.
203.This section provides the relevant national authority (defined in section 47 as the Secretary of State, the Scottish Ministers, the Welsh Ministers or the relevant Northern Ireland department) with the power to set up trading schemes relating to greenhouse gas emissions using secondary legislation.
204.Subsection (2)(a) provides for trading schemes which limit activities that consist of the emission of greenhouse gases, or that directly or indirectly lead to such emissions (for example, “cap and trade schemes” which cap emissions from a particular set of activities and allow trading of emissions within the cap). Subsection (2)(b) provides for trading schemes which encourage activities that directly or indirectly lead to a reduction in greenhouse gas emissions or the removal of greenhouse gases from the atmosphere.
205.This section sets out what activities are regarded as indirectly causing or contributing to greenhouse gas emissions or reductions in greenhouse gas emissions. It also makes provision in relation to the location of activities and emissions covered by this Part.
206.Subsection (1) sets out the types of activity which are considered to be indirect causes of, or contributors to, greenhouse gas emissions, such as activities which involve the use of energy or those involving the supply of something the use of which would lead to greenhouse gas emissions. For example, the supply of a heating fuel would be regarded as indirectly causing emissions because it leads to emissions at the point of use by the consumer. Subsection (2) provides that reductions in the level of those activities are to be regarded as indirectly causing or contributing to reductions in greenhouse gas emissions.
207.Subsection (3) provides that Part 3 of the Act applies to activities carried out in the United Kingdom, regardless of where emissions, or reductions in emissions, actually occur.
208.Subsections (1) and (2) introduce Schedule 2 to the Act, which gives further details about regulations establishing trading schemes. Subsection (3) provides that regulations may also contain provision about their application to the Crown.
209.Schedule 2 makes specific provision on what may or must be included in regulations establishing trading schemes. Parts 1 and 2 make provision, respectively, in relation to trading schemes operating to achieve different results; but it is possible to make trading schemes that operate to achieve both types of results by combining different elements of those Parts.
210.Part 1 of Schedule 2 contains details of what can or must be included in a trading scheme which operates by limiting, or encouraging the limitation of, activities that consist of or lead to emissions of greenhouse gases. For example, the Carbon Reduction Commitment, a proposed scheme to reduce energy use, would be a scheme under Part 1 of Schedule 2.
211.A trading scheme under Part 1 must operate by having trading periods (paragraph 2), by defining the activities covered by the scheme (paragraph 3(1)) and by specifying scheme “units” (which may be specified by reference to the activities themselves, things consumed or used for their purposes, things produced by the activities or other consequences of the activities) (paragraph 3(3) and (4)). The scheme must define the participants covered by it; participants may be defined by reference to criteria (paragraph 4).
212.A scheme under Part 1 may provide for allowances to be allocated to participants; allowances represent the right to carry out a specified amount of the activity covered by the scheme. But the regulations cannot provide for allowances to be allocated in return for payment (paragraph 5). Any provisions for auctioning allowances would be contained in different legislation (for example, a Finance Act).
213.The scheme rules may require a participant to have or acquire a certain number of allowances to cover his activities in a trading period (paragraph 6). A scheme may also allow or require the participant to purchase defined credits to offset his activities, but the regulations can also place limits on the use of credits (paragraph 7). A scheme might also operate by requiring payments to be made if the participant did not hold a sufficient number of allowances or credits (paragraph 8).
214.A scheme under Part 1 must allow trading in allowances or credits under the scheme, and the scheme must set out the circumstances in which trading will operate. Third parties (who would not otherwise be participants) may also be allowed to trade (paragraph 9). A trading scheme may also specify that activities can only be carried out if the participant holds a permit (paragraph 10) and may allow recognition of allowances, credits, certificates or other units issued under other trading schemes (whether at domestic, European or international level) (paragraph 11).
215.Part 2 of Schedule 2 contains details of what can or must be included in a trading scheme which operates by encouraging activities that consist of, or that cause or contribute (directly or indirectly) to reductions in greenhouse gas emissions or the removal of greenhouse gases from the atmosphere.
216.A trading scheme under Part 2 must operate by having trading periods (paragraph 13), by defining the activities covered by the scheme (paragraph 14(1)) and by specifying scheme “units” (which may be specified by reference to the activities themselves, things consumed or used for their purposes, things produced by the activities or other consequences of the activities) (paragraph 14(3) and (4)). The scheme must define the participants covered by it; participants can be defined by reference to criteria (paragraph 15).
217.A scheme under Part 2 must set targets for participants to achieve in the trading period (paragraph 16). They must provide for the issue of certificates to participants; certificates act as evidence of the amount of the activity that has carried on, but can also be used as evidence of the activity of another person. The scheme must require each participant to have, at the end of a trading period, enough certificates to meet his target (paragraph 17), and may provide that a participant who does not have enough certificates should have to make payments (paragraph 18).
218.A scheme under Part 2 must allow trading in certificates under the scheme, and the scheme must set out the circumstances in which trading will operate. Third parties (who would not otherwise be participants) may also be allowed to trade (paragraph 19). A trading scheme may allow recognition of allowances, credits, certificates or other units issued under other trading schemes (whether at domestic, European or international level) (paragraph 20).
219.Part 3 of Schedule 2 makes provision on the administration and enforcement of trading schemes.
220.The regulations may appoint an administrator of the scheme and impose functions on him; the administrator must be one of the national authorities or a public body, or a combination of any of these (paragraph 21). The administrator of a trading scheme is the body which operates the scheme on a day-to-day basis.
Climate Change Act 2008