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Energy Act 2023

Commentary on provisions of Act

Part 1: Licensing of Carbon Dioxide Transport and Storage

Chapter 1: Licensing of Activities

Section 1: Principal objectives and general duties of the Secretary of State and the economic regulator

  1. This section establishes the Gas and Electricity Markets Authority as the economic regulator of carbon dioxide (CO2) transport and storage, and establishes that the principal objectives and general duties for the Secretary of State and economic regulator in its decision making and exercise of their respective functions under this Part of the Act are to:
    1. protect the interests of current and future users of CO2 transport and storage networks,
    2. protect the interests of consumers where relevant, and
    3. promote the efficient and economic development and operation of transport and storage networks, having regard to the need for licence holders to be able to finance their licensable activities.
  2. Users of the network are defined as those seeking to have their carbon dioxide conveyed to storage.
  3. The principal objectives reflect the balance of considerations for an emergent CO2 transport and storage sector, where the needs of both current and future users of the networks, and by extension consumers who may fund carbon capture activities for certain users, need to be balanced with the need for efficient and economic networks that are able to attract the investment that will be needed to drive innovation and growth.
  4. In carrying out their functions under this Part of the Act, the Secretary of State and economic regulator must carry out their functions in a manner best calculated to:
    1. promote effective competition,
    2. promote the resilience of transport and storage networks, and
    3. protect the public from dangers arising from the construction, operation and decommissioning of transport and storage infrastructure.
  5. The economic regulator and Secretary of State shall also have regard to the need to contribute to the achievement of sustainable development, including statutory decarbonisation targets.

Section 2: Prohibition on unlicensed activities

  1. This section prohibits a person from carrying on certain activities without a licence.
  2. The activities comprise the transportation of CO2 by onshore and offshore pipeline and operating a site for the geological storage of CO2. The scope of the licensable activities is initially concerned with pipeline transportation of CO2 and the operation of an associated geological storage facility as these assets have monopolistic characteristics.
  3. This section also enables the Secretary of State to specify in regulations other, non-pipeline, means of transportation of CO2 (e.g., shipping, road, rail) to which the licensing regime should apply, should it be considered appropriate in future to extend the scope of the regime. This might be required if competitive forces do not regulate prices in those sectors as anticipated.
  4. In addition to the licence requirements established in Part 1 of the Act, the licensing requirements for CO2 storage activities under the existing provisions of Chapter 3 of Part 1 of the Energy Act 2008 continue to apply.

Section 3: Consultation on proposals for additional activities to become licensable

  1. This provision provides for prior consultation on any proposals to extend by regulations the application of the licensing regime to other (non-pipeline) forms of transportation of CO2.

Section 4: Territorial scope of prohibition

  1. The prohibition on operating a CO2 transport and storage network extends across the UK onshore and offshore, including the territorial sea and waters in a Gas Importation and Storage Zone.

Section 5: Exemption from prohibition

  1. Section 5 enables regulations to be made providing for exemptions to be granted from the prohibition on carrying out licensable activities without a licence. Exemptions may only be granted by the Secretary of State and may be granted either to a class of persons or to an individual person, following a process of consultation.

Section 6: Revocation or withdrawal of exemption

  1. The Secretary of State may attach conditions to any exemption, and may revoke or withdraw an exemption if, for example, such a condition is breached, or if an exemption is no longer considered appropriate.

Section 7: Power to grant licences

  1. Section 7 provides for the granting of licences to permit the carrying out of carbon dioxide transport and storage activities. In the enduring regulatory regime, licences will be granted by the economic regulator. In the initial period, as set out in section 16 and Schedule 1, the power to grant licences will rest with the Secretary of State.

Section 8: Power to create licence types

  1. In the future, the market may evolve such that it may become appropriate for separate licences to be granted to cover distinct elements of a transport and storage network, to allow operators to specialise in the provision and operation of certain elements of the transport and storage infrastructure, for example to cover the onshore and offshore elements separately, and which may necessitate different licence conditions. Section 8 enables the Secretary of State, by regulations, to provide for the creation of different types of licence for the licensable activities specified in section 2(2).

Section 9: Procedure for licence applications

  1. This provision provides that the process for licence applications may be specified in regulations. Such regulations may specify the details of how the application should be made and any associated fees payable.

Section 10: Competitive tenders for licences

  1. Section 10 enables regulations to be made to establish a procedure for granting future licences on a competitive basis.

Section 11: Conditions of licences: general

  1. Section 11 establishes the conditions that may be included in a licence. Such conditions must be limited to those which the grantor (the Secretary of State or the economic regulator) considers necessary having regard to their statutory duties and objectives.
  2. In order that the economic regulator may cover its costs of administering the licence, this section confirms that the licence may contain conditions requiring a payment to be made to the economic regulator during the term of the licence.
  3. Conditions may also include the ability to require that the licence holder: complies with directions relating to specified matters; consents to the disclosure of information; be prohibited from doing certain actions unless the consent of the Secretary of State or economic regulator has been provided; refer certain matters for a determination by the economic regulator or the Secretary of State; and refer certain things e.g. contracts or agreements which are related to the licence, for approval from the economic regulator or the Secretary of State.
  4. In particular subsection (3) confirms that the licence may contain provision about the calculation of the ‘allowed revenue’ that the licence holder is entitled to receive.
  5. Subsections (5) and (6) enable the licence to require the provision of certain information to inform persons who are considering applying for a licence and also potential users of the network who are considering whether to apply for financial support for carbon capture activities, where carbon capture could be from a range of potential sources, including power plants, industrial facilities, low carbon hydrogen, carbon capture from energy from waste, carbon capture from bioenergy and potentially direct air capture.
  6. Any monies received by the economic regulator pursuant to the conditions must be paid into the Consolidated Fund.

Section 12: Standard conditions of licences

  1. A number of conditions will be appropriate to include as standard in all licences of the relevant type (subject to certain exceptions). For example, it is likely to be appropriate to require all CO2 transport and storage companies to avoid any undue preference or undue discrimination in the terms on which they undertake the conveyance of CO2, in order to ensure there is an open market which drives down costs by reducing anticompetitive behaviour.
  2. The standard conditions of the licence are automatically incorporated by reference when the licence is granted. If different types of licence are developed pursuant to section 8 there may be different standard conditions for each of those types.

Section 13: Modification of conditions of licences

  1. Section 13 provides for the economic regulator to be able to modify the conditions of a licence. If the economic regulator intends to make a modification, this provision sets out how that modification should be made. The Secretary of State has the power, within the consultation period, to direct that a modification should not be made, and the economic regulator must comply with any such direction.
  2. The economic regulator is obliged to publish the decision and modifications in such a manner as it considers appropriate to bring it to the attention of those likely to be affected by the modification, stating the effect of the modifications, how it has taken account of any representations and the reasons for any proposed differences between the original and modified proposal.

Section 14: Modifications of conditions under section 13: supplementary

  1. Section 14 requires that where the economic regulator has made modifications to the standard condition of a licence of a particular type, it must also make similar changes to the standard conditions of any other licence of that type.

Section 15: Modification by order under other enactments

  1. Section 15 provides for the Secretary of State and the CMA to modify licence conditions in circumstances where it is necessary to account for mergers between enterprises which are licence holders and ensure effective competition in the market.

Section 16: Interim power of Secretary of State to grant licences

  1. The Secretary of State will grant initial licences and determine the initial terms and conditions of the first licences. These licences will be regulated by the economic regulator. For the enduring regulatory regime, the power to grant licences will be transferred to the economic regulator. Together with Schedule 1, section 16 provides for the Secretary of State to set in regulations the date on which responsibility for the granting of licences transfers from the Secretary of State to the economic regulator.

Section 17: Termination of licence

  1. The terms of the licence will provide for the economic regulator to be able to revoke a licence in certain predefined circumstances and after providing a certain number of days’ notice. The economic regulator will be required to notify persons who may be affected by the licence termination, which includes the relevant licensing authorities for CO2 storage licences under the provisions of the Energy Act 2008.

Section 18: Transfer of licences

  1. Section 18 provides for a licence to be transferred to another person, or the inclusion of another person as a party to the licence, providing the consent of the economic regulator has been granted. That consent may be made subject to specified conditions. For example, a licensee may wish to transfer their licence as part of a proposed commercial merger transaction.

Section 19: Consenting to transfer

  1. Section 19 describes the process that must be followed by the economic regulator before it gives consent to any transfer, requiring a notice of any proposal to grant consent to be given to specified persons and requiring the economic regulator to take into account any representations made by those persons in advance of making a decision. In particular, the Secretary of State has a right to direct the economic regulator not to consent to a transfer of licence as there may be Government support contracts in place between the Secretary of State and the transport and storage company pursuant to the licence.

Section 20: Appeal to the CMA

  1. Section 20 establishes that a licence holder, or a transport and storage network user whose interests are materially affected by a decision by the economic regulator to modify a licence condition, has a right to appeal a licence modification decision to the Competition and Markets Authority (CMA). This is intended to ensure due process and that there are sufficient safeguards for investors whose rights may be interfered with by a proposed licence modification during the term of the licence.
  2. The CMA’s permission is required to bring an appeal, but the CMA may only refuse to allow an appeal on one of the grounds specified in subsection (4) These are: where the person bringing the appeal’s interests are not materially affected by the decision or because the grounds for appeal are trivial or vexatious or have no reasonable prospects of success.

Section 21: Procedure on appeal to CMA

  1. The process for appeals to be made and dealt with is set out in Schedule 2. Schedule 2 sets out the process by which an application to bring an appeal may be made; provides that the CMA may direct any decision not to have effect pending the determination of an appeal; specifies the time limit for representations and observations by the economic regulator to be made; establishes the way that a CMA group who is making this quasi- judicial determination should be constituted; and specifies the matters that may be considered on appeal. Further, to ensure a fair process and in order that the CMA may make a fully informed decision, the provisions establish a right for the CMA to require the production of documents and written statements, and for persons to attend to give oral evidence. It establishes an offence for failure to comply with a notice to provide information and allows the CMA to make a costs order relating to the appeal.

Section 22: Determination by CMA of appeal

  1. This provision sets out the matters to which the CMA must have regard when determining an appeal and the circumstances in which the CMA may allow an appeal to be brought.

Section 23: CMA’s powers on allowing appeal

  1. Section 23 sets out the remedies available to the CMA where it has allowed an appeal. The CMA can quash the decision or require the economic regulator to reconsider the decision. If the appeal relates to a price control decision, the CMA can quash the decision, require the economic regulator to reconsider the decision or substitute its own decision.

Section 24: Time limits for CMA to determine an appeal

  1. Section 24 sets out that the CMA has an obligation to determine any appeal against a decision within a period of four months of the date on which permission to bring the appeal was given, unless it is a price control decision, in which case they have a period of six months.
  2. Where representations on timing are made and the CMA considers there are special reasons why the time limits above cannot be met, it may have an extra month for its decision. Thereby the CMA must determine an appeal in five months, or seven months in the case of a price control decision. In this case, the CMA must inform the parties of the time limit and publish it in a manner it considers appropriate to bring it to the attention of parties who may be affected by the determination.

Section 25: Determination of appeal by CMA: supplementary

  1. Section 25 sets out that any determination by the CMA must be contained in an order setting out the reasons for the determination and stated to take effect on the time specified in the order. The order must be notified to the parties to the appeal and published as soon as reasonably practicable in such manner as the CMA considers appropriate to bring it to the attention of parties who may be affected by the determination (with the ability to redact commercially sensitive information or to protect personal data).
  2. The economic regulator must take necessary steps to comply within the time specified in the order, or, where not specified, within a reasonable timeframe.

Section 26: Provision of information to or by the economic regulator

  1. Section 26 allows the economic regulator to request and provide information from or to relevant persons or bodies listed in subsection (2) as it considers appropriate to facilitate the duties or functions of the economic regulator or the relevant person or body.
  2. Subsection (2) lists relevant bodies including the North Sea Transition Authority (referred to in the legislation as ‘the Oil and Gas Authority’), the Environment Agency, the Health and Safety Executive Scottish Ministers, the Scottish Environment Protection Agency, the Welsh Ministers, Natural Resources Wales, the Department for the Economy in Northern Ireland, the Northern Ireland Environment Agency, the Health and Safety Executive for Northern Ireland, the CMA and any other person the economic regulator considers appropriate who has powers conferred by or pursuant to primary legislation, which is intended to include the counterparty to any contracts providing consumer or taxpayer support for associated carbon capture activities. The economic regulator may also request from or provide information to any other persons or bodies not listed in subsection (2) as it considers appropriate.
  3. Information requested by the economic regulator should be provided within the time period specified in the notice.
  4. Disclosure of information in accordance with this power does not breach any obligation of confidence owed by the person making the disclosure nor does it breach any other restriction on disclosure however that restriction is imposed. However, this power does not authorise or require disclosure in breach of the data protection legislation.

Section 27: Power of Secretary of State to require information

  1. Section 27 confers power to the Secretary of State to request information directly from a licence holder as required for the purposes of the Secretary of State’s functions. This could include requests for information to inform a transfer scheme or to facilitate the formulation of policy. Such information should be requested by way of a notice, which explains the nature and form of the information required and the time within which a response is requested. However, such a request cannot be made to obtain information protected by legal professional privilege, or, in Scotland, confidentiality of communications.
  2. Disclosure of information in accordance with this power does not breach any obligation of confidence owed by the person making the disclosure nor does it breach any other restriction on disclosure however that restriction is imposed. However, this power does not authorise or require disclosure in a breach of the data protection legislation.

Section 28: Monitoring, information gathering etc

  1. Under this section, the economic regulator is obligated to keep the state of the market under review, in particular reviewing the activities of operating a site for the permanent storage of carbon dioxide and associated transportation of carbon dioxide as well as ancillary activities.
  2. The economic regulator may collect information for the carrying out of market monitoring functions and is obliged to share relevant information with the Secretary of State or the CMA as requested.

Section 29: Power to require information for purposes of monitoring

  1. In order to enable it to properly carry out its functions and fulfill its obligation under section 28 to keep the state of the market under review, the economic regulator may request relevant information by notice from any licence holder.
  2. This provision establishes an offence where the licence holder does not comply with a request for relevant information or alters or destroys a document.
  3. Disclosure of information in accordance with this provision does not breach any obligation of confidence owed by the person making the disclosure nor does it breach any other restriction on disclosure however that restriction is imposed. Nonetheless, this power does not authorise or require disclosure in breach of the data protection legislation.

Section 30: Duty to carry out impact assessment

  1. Section 30 applies where the economic regulator is minded to pursue a proposal which could have a significant impact on licence holders or persons engaged in activities associated with the licensable activities or on the general public or the environment. Prior to implementing any such proposal, the economic regulator is required to carry out and publish an assessment of the likely impact of implementing the proposal or confirm that it considers it unnecessary to carry out such an assessment, with the reasons for this conclusion.
  2. If the economic regulator publishes an impact assessment for a proposal, section 30 requires that it publishes the assessment in an appropriate manner to provide an opportunity for those who are likely to be significantly affected by the proposal’s implementation to make representations. The economic regulator is required to explain how representations must be made alongside the assessment and allow an appropriate opportunity for representations to be made prior to implementation.
  3. A list of the assessments carried out during the relevant financial year and a summary of the decisions taken during that year which relate to proposals which were assessed must be published in every annual report published pursuant to section 41.

Section 31: Reasons for decisions

  1. To ensure transparency of decision making, under section 31 the economic regulator and the Secretary of State are required to give reasons for their decisions and determinations listed in subsection (1).
  2. Upon making a decision the economic regulator or the Secretary of State must publish a notice stating the reasons for the decision for the benefit of those who are likely to be interested as well as sending a copy of the notice to the relevant licence holder. But before publishing a notice the economic regulator or the Secretary of State must have regard to the need to exclude information that could seriously and prejudicially affect the interests of an individual or body.

Section 32: Enforcement of obligations of licence holders

  1. Together with Schedule 3, section 32 provides for the economic regulator to enforce the conditions of licences and other obligations upon licence holders. Schedule 3 sets out procedural requirements which the economic regulator must comply with in relation to enforcing and securing compliance with licence conditions, including in respect of the imposition of financial penalties.

Section 33: Making of false statements etc

  1. Section 33 sets out that it is a statutory offence to make false statements knowingly or recklessly when providing any information under this Part.

Section 34: Liability of officers of entities

  1. Section 34 establishes the circumstances in which action may be taken against company officers such as directors within a corporate entity in relation to an offence that has been committed under this part of the Act.

Section 35: Criminal proceedings

  1. Section 35 sets out that an offence under Part 1, which could be committed onshore or in an offshore place may be taken to have been committed in any place in the United Kingdom and that offences committed in offshore places may only be instituted by the Secretary of State or by the Director of Public Prosecutions.

Chapter 2: Functions with respect to competition

Section 36: Functions under the Enterprise Act 2002

  1. Section 36 provides for the economic regulator for carbon dioxide transport and storage to exercise certain functions under the Enterprise Act 2002 concurrently with the CMA. This covers those functions under Part 4 of the Enterprise Act 2002, other than certain powers which rest only with the CMA, i.e., s166 (duty on the CMA to compile a register), 171 (duty on CMA to publish information and guidance relating to the exercise of their functions) and 174E (power for CMA to publish a statement on penalties), insofar as those functions:
    • are exercisable by the CMA Board (within the meaning of Schedule 4 to the Enterprise and Regulatory Reform Act 2013), and
    • relate to commercial activities connected with the transportation and storage of carbon dioxide i.e., those activities which are ordinarily prohibited without a licence under Part 1 of the Act, and any ancillary activities.
  1. This section sets out how relevant provisions within Part 4 Enterprise Act 2002 should be read to give effect to this. It also requires the economic regulator to provide certain information to a CMA group for the purpose of assisting a market investigation reference.

Section 37: Functions under the Competition Act 1998

  1. Section 37 provides for the economic regulator of carbon dioxide transport and storage to exercise certain functions under Part 1 of the Competition Act 1998 concurrently with the CMA, to enable them to investigate and enforce matters relating to anti-competitive behaviours and abuse of dominant position insofar as they relate to carrying on of relevant transport and storage activities.

Section 38: Sections 36 and 37: supplementary

  1. Section 38 provides for the economic regulator and CMA to consult each other prior to exercising those functions under the Enterprise Act 2002 and Competition Act 1998 which are held concurrently in respect of the economic regulation of CO2 transport and storage activities. It provides that neither entity may exercise functions under those Acts if such functions have already been exercised in relation to that matter by the other. It provides for the Secretary of State to make a determination in the event of a question arising as to whether the economic regulator has concurrent powers in relation to a particular case.

Chapter 3: Reporting Requirements

Section 39: Forward work programmes

  1. Section 39 establishes the process under which the economic regulator must set a forward work programme for the carrying out of its functions in respect of the regulation of carbon dioxide transport and storage. A forward work programme should include estimates of the expenditure expected to be incurred in connection with the programme. It is anticipated that Ofgem may choose to set out the transport and storage forward work programme covering their activities as economic regulator within a single document which also covers the forward work programme they are required to publish in relation to their functions in the gas and electricity markets pursuant to section 4 of the Utilities Act 2000.

Section 40: Information in relation to CCUS strategy and policy statement

  1. Section 40 requires the economic regulator to publish such information as may be required by any CCUS strategy and policy statement within a document or forward work programme. This section confirms the circumstances in which that duty does not apply and where the economic regulator may choose not to include certain information within a forward work programme for a particular financial year.

Section 41: Annual report on transport and storage licensing functions

  1. Section 41 sets out the requirement for the economic regulator to provide an annual report covering the exercise of is functions, or any activities of the CMA in relation to references made to it by the economic regulator, during the year in relation to transport and storage, and the process for laying such a report to facilitate appropriate Parliamentary scrutiny.

Chapter 4: Special Administration Regime

  1. This Chapter provides for the application of a Special Administration Regime (SAR), in the event of a CO2 transport and storage company insolvency.
  2. This will provide the Secretary of State or, with the Secretary of State’s permission, the economic regulator, with a power to apply to the courts for the appointment of a special administrator.
  3. The detailed rules governing the establishment of a SAR will be set in secondary legislation.

Section 42: Transport and storage administration orders

  1. Section 42 sets out the meaning of some of the key terms in this Part and the scope of a transport and storage administration order. It requires that the relevant administrator must perform its functions as administrator so as to achieve the objectives set out in section 43.

Section 43: Objective of a transport and storage administration

  1. Section 43 provides the objective for an administration order made under this Part and the means by which the administrator has to achieve those objectives.
  2. The objective of the administrator for the purposes of the SAR is to commence or continue the activities authorised by the relevant licence of the company with the objective of ensuring the licenced activities can be continued in a manner which is efficient and economic, and which ensures the safety and security of the transport and storage network, and that it becomes unnecessary for the order to remain in force. The Government expects that the administrator will take into account any decommissioning requirements when considering what is required to ensure a safe and secure transport and storage network.
  3. The means by which the administrator can achieve the objective is by rescuing the company as a going concern or transferring its assets, rights and obligations to one or more companies.

Section 44: Application of certain provisions of the Energy Act 2004

  1. Section 44 applies sections 156 to 167, 171 and 196 of, and Schedules 20 and 21 to, the Energy Act 2004 with appropriate modifications. Those provisions of the Energy Act 2004 will apply as follows:
  2. Section 156, which provides that an application to the court for a SAR to be made by the Secretary of State or by the Authority (in this case the economic regulator), with the consent of the Secretary of State.
  3. Section 157, which empowers the court to make an order for a SAR in response to an application in the following circumstances:
    • The relevant licensee is unable to pay its debts,
    • The relevant licensee is likely to be unable to pay its debts, or
    • On petition from the Secretary of State under section 124A of the Insolvency Act 1986, the court is satisfied that it would be just and equitable (disregarding the objective in section 31(1)) to wind up the licensee company in the public interest.
  1. Section 158 provides that the administrator acts as the agent of the relevant licensee. It further provides that the administrator must exercise management functions for the purpose of achieving the objective of the administration order as quickly and efficiently as is reasonably practicable. Moreover, the exercise of powers and performance of duties must be carried out in a manner which, in so far as it is consistent with the objective of the administration, best protects the interests of the creditors of the company as a whole and, subject to those interests, the interests of the members of the company as a whole.
  2. Section 159, which applies the rule making power in section 411 of the Insolvency Act 1986 (c.45). Schedule 20, itself provides for certain provisions, with modifications, of Schedule B1 to the Insolvency Act 1986 (covering detailed rules relating to administration) to have effect.
  3. Sections 160 to 164, which are intended to prevent the SAR being frustrated by the granting of prior orders before the Secretary of State or the Authority have been given an opportunity to apply for an administration order.
  4. Section 165, which enables the Secretary of State, with the consent of the Treasury, to give a grant or loan to a company in administration to achieve the objective of administration. It also enables the Secretary of State to set the terms of a grant or loan including the requirement that all or part of a grant should be repaid.
  5. Section 166 which enables the Secretary of State, with the consent of the Treasury, to indemnify persons in respect of liabilities incurred or loss or damage sustained in connection with the exercise of the administrator’s powers and duties and requires the Secretary of State to lay a statement of any such agreement to indemnify persons before Parliament as soon as practicable.
  6. Section 167 which enables the Secretary of State, with the consent of the Treasury, to provide guarantees in relation to a relevant licensee in administration and requires the Secretary of State to lay a statement of any guarantees given before Parliament as soon as practicable.
  7. Section 171 which provides interpretations of various specific terms and section 196 which provides interpretations of various general terms.
  8. Schedule 20 provides for certain provisions, with modifications, of Schedule B1 to the Insolvency Act 1986 (covering detailed rules relating to administration) to have effect in relation to an administration. This includes the court ending an administration order on the application of the Secretary of State (or the economic regulator or the administrator, with the Secretary of State’s permission). This may happen in circumstances where the objective of the order has been achieved, or where the objective has not been achieved and a Transfer Scheme may need to follow.
  9. Schedule 21, which provides for the transfers to another company or companies as a going concern of the whole or part of a relevant licensee transportation or permanent storage company’s assets to ensure that the objective of the administration is met. Such transfer schemes are to be made by the administrator with the approval of the Secretary of State, and at a time appointed by the court.

Section 45: Conduct of administration, transfer schemes, etc

  1. Section 45 modifies section 159(3) of the Energy Act 2004. This works alongside the application of section 159 of the Energy Act 2004 by section 44(1) of the Energy Act 2023 to give the Secretary of State the power to make insolvency rules under section 411 of the Insolvency Act 1986 for the purposes of this Chapter.

Section 46: Modification of conditions of licences

  1. Section 46 provides a power to the Secretary of State to make modifications to the conditions and terms of the relevant licence for the purpose of furthering the objective of the administration and may only be exercised when an administration order is in force.
  2. This is intended to allow for the Secretary of State to recover financial support that may have been provided to secure the objectives of the SAR.

Section 47: Modification under the Enterprise Act 2002

  1. Section 47 extends the powers for the Secretary of State to modify or apply certain enactments, which are conferred by sections 248 and 277 of the Enterprise Act 2002 for the purposes of enabling future modifications to this Chapter, in order to ensure that the provisions do not get out of line with wider insolvency legislation.

Section 48: Power to make further modifications of insolvency legislation

  1. Section 48 provides the Secretary of State with the power to apply certain specified insolvency legislation, including with any necessary modifications, to enable the Secretary of State to amend the detail of the regime if experience of its application highlights any difficulties or areas of concern as well as to respond to changes in insolvency law, especially in relation to administration.

Section 49: Interpretation of Chapter 4

  1. Section 49 defines the relevant terms for this Chapter.

Chapter 5: Transfer Schemes

Section 50: Transfer schemes

  1. Section 50 provides for the Secretary of State to make a statutory transfer scheme under which certain property, rights or liabilities of a licence holder can be transferred either to an appropriate body or to the Secretary of State. The statutory transfer scheme can be affected where a termination event has arisen in relation to the licence and is intended to enable the Secretary of State to transfer all or part of the assets to an alternative entity to secure either the ongoing operation of the network, or that part of the network, in an efficient, economic, safe and secure manner, or, the safety and security of the network in such circumstances where the ongoing operation is no longer viable.
  2. It requires the Secretary of State to consider whether any proposed transferee would be able to meet the conditions and requirements of any licence or permit that would be transferred to the person under the proposed scheme. This is intended in particular to ensure that there is proper consideration of the appropriate conditions and requirements associated with any relevant storage licence or permit.
  3. It confirms that the transfer scheme should only take effect with the consent of the transferor and transferee.

Section 51: Consent and consultation in relation to transfers

  1. Section 51 provides for the Secretary of State to consult certain specified persons and persons whom the Secretary of State considers appropriate before effecting a statutory transfer scheme.

Section 52: Conduct of transfer schemes

  1. Section 52 applies Schedule 4, which describes the scope of what may be transferred and the process by which a transfer scheme may take place. In particular, a transfer scheme may provide for the transfer of any associated licences or permits e.g. any associated storage licence, and that powers and duties which are exercised or required to be performed in connection with the undertaking or property, rights or liabilities to be transferred may also be transferred. It is anticipated that this could be relied on, for example: to require the transferee to provide any necessary security as required in relation to any associated storage licence. The provisions set out the circumstances in which a transfer scheme may subsequently be modified.

Chapter 6: Miscellaneous and General

Section 53: Cooperation of storage licensing authority with economic regulator

  1. Section 53 inserts new sections 34A and 34B into the Energy Act 2008 to provide for cooperation and information-sharing between the economic regulator and the relevant CO2 storage licensing authority, which may be the Oil and Gas Authority or the relevant minister in the Scottish and Welsh administrations and the Department of the Economy in Northern Ireland. This is intended to support the exercise of the functions of the economic regulator, including by ensuring that relevant CO2 storage licensing authority informs the economic regulator if it becomes aware of circumstances that have arisen or are likely to arise that may affect the activities carried out under the licence.

Section 54: Amendments related to Part 1

  1. Consequential amendments to existing legislation arising from the measures in this Part are set out in Schedule 5.

Section 55: Interpretation of Part 1

  1. Section 55 sets out definitions of terms for the purpose of interpreting the provisions of this Part.

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