The Community Emissions Trading Scheme (Allocation of Allowances for Payment) (Amendment) Regulations 2008

EXPLANATORY NOTE

(This note is not part of the Order)

These Regulations amend the Community Emissions Trading Scheme (Allocation of Allowances for Payment) Regulations 2008 (the “principal Regulations”) in order to create a criminal offence of wrongful disclosure of confidential information. They also make a minor amendment in order to permit allowances to be allocated to an account holder following an auction as a consequence of a review of a decision made by the person conducting an auction

Regulation 4 inserts new definitions of a “bid instruction” and “confidential information” in the principal Regulations.

Regulation 5 amends regulation 7 of the principal Regulations to permit allowances to be allocated to an account holder following an auction as a consequence of a review carried out under a Treasury scheme made under section 16(5) of the Finance Act 2007 of a decision by the person conducting an auction.

Regulation 6 inserts a new regulation 9A after Regulation 9 (transfer of excess allowances) in the principal Regulations. Regulation 9A provides that confidential information must not be disclosed by any person who obtains the information, whether directly or indirectly, from an account holder unless disclosure is permitted under this regulation. The regulation then sets out a list of permitted disclosures of confidential information.

Regulation 6 also inserts a new regulation 9B which provides that disclosure in breach of regulation 9A is an offence.

Regulation 6 also inserts a new regulation 9C which provides that it is a defence to prove that the person charged reasonably believed the disclosure to be lawful or took all reasonable precautions and exercised all due diligence to avoid committing the offence.

Regulation 6 inserts a new regulation 9D which sets out the penalties for a person guilty of the offence. New regulation 9D also makes provision in relation to corporate bodies and provides that the Director of Public Prosecutions must give consent before proceedings may be instituted for an offence under regulation 9B.

These Regulations amend the framework for allocating Community tradeable emissions allowances in return for payment, and as with the principal Regulations, no administrative impact in the private sector is foreseen. The administrative impact of allocations in return for payment will depend on the detailed design of the auction or other allocation method. The Government consulted on auction design and other allocation methods at the end of 2007 and that consultation was accompanied by a full Impact Assessment, which can be found at www.defra.gov.uk. The Treasury will publish a Scheme, which will cover the conduct and terms of allocation, along with the detailed design of the auctions or other sales methods, and the requirements in order to participate. An updated impact assessment will be published along with the Scheme.