The Greenhouse Gas Emissions Trading Scheme (Amendment) (EU Exit) Regulations 2019

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations are made in exercise of the powers conferred by section 8 of the European Union (Withdrawal) Act 2018 in order to address failures of retained EU law to operate effectively and other deficiencies (in particular under paragraphs 2 (a), (b), (c), (d) and (g) of section 8) arising from the withdrawal of the United Kingdom from the European Union.

The functioning of the EU Emissions Trading Scheme (“EU ETS”) depends on the monitoring and reporting of emissions by participants for each scheme year. It also requires the surrender by participants of a corresponding number of allowances in relation to their emissions for each scheme year. The issuing and surrender of allowances is dependent on EU systems and infrastructure, as such that aspect of the scheme will cease to apply to UK operators after the 2018 Scheme year in a no deal scenario. The monitoring, reporting, accreditation and verification obligations will continue to apply.

Part 2 makes amendments to the Greenhouse Gas Emissions Trading Scheme Regulations 2012 (the “2012 Regulations”).

Regulation 3 amends the definitions section of the 2012 Regulations and Regulation 4 amends designations made pursuant to EU Regulations to reflect changes arising from the withdrawal of the United Kingdom from the EU.

Regulation 8 amends provisions relating to the allocation of allowances to reflect the fact that allowances will no longer be allocated for scheme years after exit day. To reflect this fact, regulations 56, 57, 58 and 59 amend schedules 6, 6A, 7 and 8 of the 2012 Regulations respectively, which set out the procedure for the allocation of allowances.

Regulation 9 amends regulation 20 of the 2012 Regulations to adapt the definitions relating to aviation to reflect the fact that the UK will no longer be an EU Member State after exit and to redefine UK administered operator to reflect this.

Regulations 11 and 12 provide that regulations 22 and 23 respectively cease to apply from exit day, and regulations 14, 16 and 18 amend regulations 26, 28 and 32 of the 2012 Regulations respectively, to remove provisions in relation to the designation, listing and transfer of UK administered operators which will no longer apply after exit day.

Regulations 17, 19, 20, 21, 23, 24 and 42, omit redundant provisions.

Regulation 27 amends regulation 41 of the 2012 Regulations to provide that operators of installations must surrender allowances in accordance with their surrender obligations for emissions emitted up to the end of the scheme year 2018, thereafter these obligations will not apply for subsequent scheme years. Likewise regulation 54 amends Schedule 4 to the 2012 Regulations to reflect this change within the provisions relating to permit conditions.

Similarly, regulation 28 amends regulation 42A of the 2012 Regulations to provide that UK aircraft operators must surrender allowances in accordance with their surrender obligations for emissions up to the end of the scheme year 2018, thereafter these obligations will not apply and regulation 29 amends regulation 42B to reflect this change.

Regulations 33, 34, 37 and 38 amend certain penalty provisions to omit the carbon pricing element of those penalties, given this will not apply after exit day.

Regulation 36 amends the penalty provision in regulation 55 of the 2012 Regulations to reflect that excluded installations will not have emissions targets after exit day. Regulation 55 amends Schedule 5 of the 2012 Regulations to provide that an operator of an excluded installation must not exceed the emissions target up to the end of the scheme year 2018, but thereafter that obligation will not apply.

Regulations 46, 47, 48 and 50 amend regulations 74, 77, 80 and 82 of the 2012 Regulations to reflect the fact that the UK is not guaranteed access to the Union Registry after exit from the EU.

Part 3 amends EU Regulations, Decisions and the provisions relating to the EU ETS in Annex XX of the EEA Agreement, which are incorporated into UK law under the European Union Withdrawal Act, to ensure that the provisions in those apply correctly in the United Kingdom after exit from the European Union.

Regulations 66 to 96 amend Commission Regulation (EU) No 600/2012 on the Verification of greenhouse gas emission reports and tonne-kilometre reports and the accreditation of verifiers pursuant to Directive 2003/87. Those amendments ensure that the provisions in those regulation apply correctly in the United Kingdom after exit from the European Union.

Regulations 98 to 132 amend Commission Regulation (EU) No 601/2012 on the monitoring and reporting of greenhouse gas emissions. Those amendments ensure that the provisions in that regulation apply correctly in the United Kingdom after exit from the European Union.

Part 4 revokes EU Decisions and Regulations which will cease to apply on exit day because they relate to inoperable aspects of the EU ETS.

An impact assessment has not been produced for this instrument as no, or no significant, impact on the private or voluntary sector is foreseen.