The Greenhouse Gas Emissions Trading Scheme Regulations 2003

Explanatory Note

(This note is not part of the Regulations)

These Regulations are made under section 2(2) of the European Communities Act 1972. They provide the framework for a greenhouse gas emissions trading scheme for the purpose of implementing Directive 2003/87/EC of the European Parliament and the Council establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (the “Emissions Trading Directive”). The Regulations apply to the United Kingdom. Regulation 2 provides for the Scottish Ministers, Department of the Environment in Northern Ireland and National Assembly for Wales to act as appropriate authority for installations situated in their area (other than installations falling within the definition of offshore installation).

The Regulations control emissions of carbon dioxide from any of the activities listed in Schedule 1 to the Regulations. Part 2 of Schedule 1 sets out rules for the interpretation of Part 1 of Schedule 1.

Part 1 of the Regulations (regulations 1 to 6) sets out general provisions. Regulation 2 contains definitions including designating the regulators for installations under the scheme. The other regulations in Part 1 deal with general matters such as the service of notices under the Regulations.

Part 2 deals with the need for a permit to operate an installation covered by the Regulations (regulation 7), the procedure for granting permits and the contents of permits (regulations 8 to 10), and the treatment of permits once granted (regulations 12 to 16). The conditions of permits (regulation 10) must ensure that the emissions of the installation are properly monitored and reported and that the operator surrenders within 4 months of the end of each scheme year allowances equal to the annual reportable emissions from the installation during that year.

Regulation 11 enables an installation in respect of which the European Commission has provided for temporary exclusion to apply for a certificate excluding it from the scheme. Regulations 13 to 16 deal with the variation, transfer, surrender and revocation of permits. Regulation 17 provides for fees to be paid on application for a permit and in relation to the variation, transfer or surrender of permits.

Part 3 deals with the allocation of allowances. Regulation 18 requires the Secretary of State to develop a national allocation plan for each phase of the scheme and Regulation 19 provides for the Secretary of State to make a final allocation decision. This power may only be exercised with the agreement of the devolved administrations in relation to installations situated in their area (other than installations falling within the definition of offshore installations). There is a default power for the Secretary of State to act where no agreement is reached if it is necessary to ensure that the United Kingdom complies with its obligations under the Emissions Trading Directive. Regulation 20 makes provision for a registry. Regulation 21 enables operators of certain installations to apply to form a pool.

Part 4 (regulations 22 to 25) contains the enforcement powers under the Regulations. Part 5 (regulations 26 to 28) and Schedules 2 to 4 provide for appeals against decisions of the regulator and for appeals for the appropriate authority, responsible authority or the Secretary of State to reconsider decisions under the Regulations. Part 6 (regulations 29 to 31) sets out information gathering powers and publicity requirements. Part 7 (regulations 32 to 35) sets out offences for contraventions of the Regulations and civil penalties where an operator fails to surrender sufficient allowances to cover its specified emissions. Part 8 (regulations 36 to 37) enables the appropriate authority to give directions and guidance to regulators. Part 9 (regulation 38) and Schedule 5 deal with consequential amendments required by the introduction of the emissions trading scheme in the Regulations.

A regulatory impact assessment has not been prepared for these Regulations. It is intended to prepare a full regulatory impact assessment in conjunction with the national allocation plan for the first phase of the greenhouse gas emissions trading scheme.