UK: Climate Change – The Long Haul

Article by Peter McMaster
Barrister, Serle Court, London¹

The UK Government has unveiled a far-reaching scheme for deep emissions reductions stretching to 2050. The proposal is to introduce a series of so-called ‘carbon budgets’, reducing emissions by 60 per cent compared with 1990 levels. A Committee on Climate Change will be set up, ostensibly to provide advice and oversee the process. Transparent accounting for emissions based on international standards and annual reporting requirements will stimulate political debate on progress towards targeted reductions. In an attempt to give credibility to the commitment to reduce emissions, the bill proposes a legal duty to meet the targeted reductions. Despite suggestions to the contrary, the proposal stops short of measures that might lend real substance to the legal duty.

Introduction

Limiting the effects of anthropogenic climate change requires long term action. By the Kyoto Protocol to the United Nations Framework Convention on Climate Change (Kyoto), the United Kingdom promised that by 2012 it would have cut greenhouse gas (GHG) emissions to 8 per cent below 1990 levels.² Kyoto is only a first step. The current consensus is that if global average temperatures are to be stabilised, the developed world must go much further, and many developing countries will also have to reduce their emissions significantly. On 8–9 March 2007, the EU proposed measures to contain global average temperature increases within 2ºC above preindustrial levels comprising:

• a unilateral commitment to cut GHG emissions by 2020 to 20 per cent below 1990 levels

• a proposal to cut GHG emissions to 30 per cent below 1990 levels, if other developed countries will make a comparable commitment.

Even this is not enough. The EU’s view is that, to achieve the goal of containing warming to 2ºC, developed countries must collectively reduce their emissions by 60 to 80 per cent by 2050, compared with 1990.³

The ambitious goal is to create a world in which developed countries achieve deep cuts in their own emissions, while the future energy demands of developing country growth are met by low carbon means.

On 13 March 2007, the Prime Minister proposed a draft climate change bill reflecting these objectives at national level.⁴ The bill proposes a statutory duty to achieve emissions reductions in the same timeframe. The 2020 figure for the United Kingdom is between 26 and 32 per cent, the 2050 figure is 60 per cent. Neither is conditional on a commitment from other developed countries (explicitly at least).

This long-term commitment to emissions reductions serves two purposes. One is to set a good example in the hope that, along with others, the United Kingdom can persuade the world to adopt the necessary measures for a low carbon future. Another is to provide a suitable climate for investment in low-carbon technology by sending a signal that carbon reduction is a long-term commitment, with a view to creating a long-term stable incentive (in the form of a price for carbon reductions) for investors in new carbon-reducing technologies.

The reductions are to be achieved over a series of five-year terms for each of which a ‘carbon budget’ is to be set, representing a progressive reduction to the 2020 and 2050 targets. In putting forward the bill, the government has made much of the statutory duty to achieve the targets: it has even said in the consultation material published with the bill that these are ‘legally binding policy commitments’ and that a government that failed to stay within the targets would variously ‘be open to judicial review’ and ‘could be required to take remedial action by order of court’. The bill is being presented as a simple, effective, even legally enforceable, path to achieving the target reductions. This is an exaggeration.

This article looks at the various elements of the scheme, considers to what extent they are legally enforceable and (briefly) what other measures might have been proposed to give teeth to the scheme.

The 2020 and 2050 targets

The commitment to reduce emissions by 26 per cent to 32 per cent by 2020 exceeds the minimum EU commitment of 20 per cent, and at the upper end slightly exceeds the EU’s offer to achieve 30 per cent cuts if other developed nations make comparable commitments. The 60 per cent figure is at the bottom of the range of 60 to 80 per cent identified by the EU as being necessary in developed countries if global average temperatures are to be stabilised to within 2ºC of pre-industrial temperatures. Striving to meet these ambitious targets will become futile, even economically damaging, if others do not make suitable commitments. At the moment, the USA and China have not accepted any quantified reductions in emissions, and even the EU has not got off to a good start with its pioneering emissions trading scheme. Furthermore, scientific understanding of the machinery of climate change is evolving, and it is possible that these emissions targets will seem inappropriate at some stage in the future. The bill allows the Secretary of State to alter the 2020 and 2050 targets, but only in the light of significant developments in scientific knowledge of climate change or in international law or policy.

Carbon accounting and carbon budgets

Emissions and reductions are to be calculated for each year from 2008, for CO2 alone.⁵ They are for all anthropogenic emissions in the United Kingdom (but exclude emissions from shipping and aviation activities⁶). The figures are to be presented in a ‘carbon account’. Statements will be put before Parliament each year showing the net emissions for the year and the state of the carbon account. The bill deals with the principles and not the details of calculation. The basic calculation is emissions, minus removals, minus carbon credits.⁷ The types of credit that can be used are to be the subject of regulation,⁸ but the principle that informs the accounting process is that ‘the amount of UK carbon dioxide emissions and UK carbon dioxide removals must be determined consistently with international carbon reporting practice’.⁹ Obvious sources of credits are the Kyoto Clean Development Mechanism (under which countries that have agreed to make cuts in emissions can purchase the benefit of emissions reducing projects in countries that have not undertaken to reduce emissions), Joint Implementation (as with the Clean Development Mechanism but uniquely between countries that have agreed to make emissions reductions), and internationally recognised trading schemes. In practice the accounting is likely to follow closely the accounting for Kyoto Protocol purposes.

The carbon budgets are a series of consecutive fiveyear terms for each of which an emissions target will be set, leading to a progressive reduction to the 2020 and 2050 targets. The first term runs from 2008–2012 (the Kyoto commitment period). The carbon budget is simply the sum of the allowable CO2 emissions from all sources in the United Kingdom.

The carbon accounting and carbon budgets are not novel at all. In the first period (2008–2012) they largely correspond to the Kyoto promise. In subsequent periods what is new is the unilateral commitment to make cuts, not the accounting or measurement processes.

The Committee on Climate Change

The Committee on Climate Change (CCC) is a body of five to eight persons appointed by the Secretary of State. It performs two important functions. First, it advises the Secretary of State for Environment, Food and Rural Affairs at what level to set the carbon budget and on certain high level issues regarding how it should be met,¹⁰ secondly it reports annually to Parliament on progress towards meeting the carbon budget and the 2020 and 2050 targets.¹¹

The process

The bill envisages early carbon budgets being set with speed. Before the end of 2008 the Secretary of State must set budgets for 2008–12 through to 2018–22. All subsequent budgets must be set at least 12 years before the start of the period in question.¹²The over-riding¹³ requirements in setting the budgets are that:

• they ensure that the 2020 and 2050 targets will be met

• they ensure that the United Kingdom complies with its international obligations

• they take into account the advice of the CCC.

There is a non-exhaustive list of additional matters to take into account including: scientific knowledge about climate change, technology relevant to climate change, economic, social, fiscal and international circumstances and energy policy.¹⁴ These matters can only affect the path toward the target cuts – they cannot justify failure to meet the targets. The CCC’s functions are to advise on the level of each budget and certain high level questions concerning how the budget should be achieved. The CCC advises on the level of the budget, it does not stipulate what it should be, and the Secretary of State is obliged to take the advice into account but not to follow it. The CCC also advises on the extent to which sectors of the economy covered by trading schemes and other sectors should contribute to meeting the budget.

As soon as reasonably practicable after the budget has been set, the Secretary of State must make a report to Parliament setting out the government’s proposals and policies for meeting all extant carbon budgets.¹⁵ The Secretary of State has a personal duty to ensure that the carbon account does not exceed the carbon budget during a budgetary period.¹⁶

Once into a budget period there will be annual statements of UK emissions¹⁷ and annual reports by the CCC setting out its views on the progress towards achieving the budget and meeting the 2020 and 2050 targets.¹⁸ It is these reports that are likely to provide the first warning of any likely failure to achieve budgets. The government is obliged to respond to each report.¹⁹

The reporting provisions are a plausible framework for achieving political accountability for the bill’s objectives. The targets are explicit and, although they are not set independently, they are subject to input from the CCC and must lead to a particular mathematical result over time (the 2020 and 2050 targets). Failure to set realistic targets will result in political pressure for as long as climate change remains high on the political agenda. Measurement of performance against targets is relatively objective and must conform to established international practice. Success or failure will be clear cut. Policies for meeting budgets must be announced well before the budget period, and the likelihood of success or failure will the subject of annual pronouncements by the CCC. The need to take action to forestall failure will probably become apparent through this process before it is too late, and because the government must respond to the CCC reports it can be judged on the adequacy or otherwise of its approach.

How will the targets be achieved?

The bill is silent on the means of achieving the targets. It contains enabling powers allowing the Secretary of State to create a variety of emissions trading schemes,²⁰ but is open as to how results are to be achieved. The use of the term ‘budget’ is deceptive. A carbon budget bears little resemblance to the Chancellor of the Exchequer’s budgets. When the Chancellor presents a budget, he is making a statement about how the government proposes to spend money. By controlling its own activities the government can make sure it stays within budget. A carbon budget is a statement by the government about what others will ‘spend’ (or emit). The government cannot maintain emissions within budget by regulating its own activities, it can only attempt to influence the emissions of others. Its tools are sticks and carrots through legislation. Emissions trading can play only a part. The hope is that by legislating for sticks and carrots the government can influence behaviour, in particular energy use, in a way that leads to emissions reductions.

Adapting to climate change

Even if greenhouse gas emissions are stabilised we are likely to see climate change for many years to come; stabilising emissions will merely limit the effects of climate change. Thus we find²¹ a duty on the Secretary of State to lay before Parliament from time to time a report containing an assessment of the risks of the current and predicted impacts of climate change for the United Kingdom and the government’s policies and proposals for adapting to climate change. The first report is to be laid within three years of the act and subsequent reports at five year intervals.

Can the duties be legally enforced?

The draft bill deserves to be recognised as a well thought out set of proposals for a framework within which to work towards enduring and deep emissions reductions. Claims that the obligation to achieve reductions is legally enforceable, to the point where the courts may require remedial action where targets and budgets are not met, are neither necessary nor correct.

The duty to set a carbon budget is clear and unequivocal, and there is no reason to suppose that there would be any difficulty in obtaining judicial review of a failure to set a budget resulting in an order requiring the Secretary of State to remedy the failure.

While the Secretary of State is obliged to take into account the advice of the CCC in setting the level of any carbon budget (s)he is not obliged to follow it. There is probably limited scope for judicial review if the Secretary of State sets a budget widely at variance with the advice of the CCC.

The claim put forward by the government is that a government that failed to meet budgets or the 2020 and 2050 targets could be required to remedy its failure. It is difficult to see how this could be achieved.

The bill contains no provision for individual or collective sanctions in the case of failure to comply with the relevant duties. It contains no provision for the government to incur a civil liability for breach of statutory duty. Failure to achieve budgets or targets involves no liability to compensate or financial sanctions of any other kind.

Where a budget has not been met, there is no means of remedying the failure: the failure is a historic event that cannot be altered. In the relevant period the United Kingdom will have emitted more CO2 than the budgeted amount. The court might grant a declaration to that effect, but that would be an empty gesture, given that the annual statement of carbon emissions produced by the government would already have disclosed the true state of affairs. A government faced with this situation might, if circumstances permitted, reduce the permitted amount under a future carbon budget by an amount corresponding to the ‘overspend’, but that would be a decision for the government, not one the courts could force it to adopt. Under the statute, budgets are to be set with a view to achieving the 2020 and 2050 targets, taking into account the matters specified at section 5(2). There is no obligation to take into account a previous ‘overspend’, still less to attempt to correct it by making future budgets even harder to achieve.

In the event of an anticipated failure to meet a future budget (as opposed to a past failure to stay within budget) only two courses are available to the government. The first is to devise and introduce further legislation with a view to inducing or compelling the nation (or various parts of it) to change its carbon emitting habits and then to ask Parliament to enact the legislation. The second is to buy emissions credits to reduce net emissions. These are considered below.

Measures to reduce net CO2 emissions are highly political. They might include promoting the construction of more nuclear power stations, schemes to alter patterns of road transport, imposing obligations on electricity suppliers to generate a particular portion of the supply from renewable sources, further building regulations to promote energy efficiency, changes to the way certain activities are taxed, promoting the construction of carbon capture and storage facilities, and so on.

No court could make an effective order for remedial action without (a) requiring the Secretary of State to propose legislation and (b) somehow obliging Parliament to enact effective remedial measures. While the courts have been prepared to make declarations that UK law is not compatible with EU law and even to prevent UK law being enforced where incompatible with EU law,²² there is no reason to believe that they will go as far as to require Parliament to legislate to achieve a particular result, and every reason to think the opposite.²³ To make an order would be to usurp the legislative function.

An alternative to reducing UK emissions is to reduce the carbon account figure by purchasing emissions credits. The bill contains provision for funds to be made available by Parliament for the Secretary of State to purchase carbon credits to be set against net UK carbon emissions.²⁴ It will be recalled that before a carbon budget is set the advice of the CCC must be taken, and that its advice will include advice about the extent to which the budget should be met by purchasing carbon credits. That is to say, it is envisaged that a proportion of the emissions reductions will be achieved by purchasing credits resulting from emissions reduction activities in other countries. The funds that are to be made available are for this purpose. That is to say they are not available for the purposes of purchasing credits after a budget period or after a target date, to compensate for having previously missed the target.

In other words, the bill does not provide for the government to remedy failures to meet targets by purchasing compensating credits. If such provisions were to be enacted, the pressures to meet the targets would be more than purely political. An imaginative way of giving the bill real teeth would be to give the CCC power to stipulate that in respect of any budget or target, the government acquires and holds a particular number of carbon credits to reflect the CCC’s assessment of the risk that the government would miss its budget or targets (and to place the government under a corresponding duty). The stock of credits could be permitted to fluctuate as the government acted to rectify the perceived failure. The government would then have an immediate financial incentive to take measures deemed adequate not by the government of the day but by the CCC, and by acquiring the credits would contribute to emissions reductions overseas and thus to reducing overall emissions into the atmosphere.

As matters stand, the CCC is relegated to an advisory role, and there is no machinery for compulsion and no effective sanction, outside the political sphere, for breach of the duty to meet targets.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.