101 UK Brexit Notes

Connemara Programme October 16 2018 pg. 180 Meeting climate change requirements if there’s no Brexit deal Purpose This notice aims to support the contingency planning of UK operators of installations (for example, power stations and oil refineries) and UK-administered aircraft operators that currently participate in the EU Emissions Trading System, and other organisations and individuals with accounts within the UK section of the Consolidated System of European Registries which also includes the UK’s Kyoto Protocol National Registry. It clarifies the implications of the UK leaving the EU on the licensing regime for the geological storage of carbon dioxide; whilst this is not a direct component of the EU Emissions Trading System, the licensing regime for the geological storage of carbon dioxide partly relies on EU Emissions Trading System legislation. It also outlines the impact on energy-using products that fall under the ecodesign directive and/or energy labelling regulations. Climate change regulations and mechanisms Before 29 March 2019 The UK is a global leader in the fight against climate change and we are proud to be the first country to set legally binding targets to reduce greenhouse gas emissions. The UK’s Climate Change Act requires us to reduce emissions by at least 80% against 1990 levels by 2050. We have put clean growth at the centre of our modern Industrial Strategy and our Clean Growth Strategy sets out a comprehensive set of policies and proposals that aim to accelerate the pace of clean growth, i.e. deliver increased economic growth and decreased emissions. The UK is deeply committed to domestic and international efforts to tackle climate change. The UK is a Party, in its own right as well as through the EU, to international climate change agreements, including the Doha Amendment to the Kyoto Protocol and the Paris Agreement. EU Emissions Trading System: The EU Emissions Trading System is an international, greenhouse gas emissions trading system which applies to multiple sectors. There are around 1,000 installations in the UK which participate in the EU Emissions Trading System, including: power stations, oil refineries, offshore platforms, industries that produce iron and steel, cement and lime, paper, glass, ceramics and chemicals. In addition, approximately 140 UK-administered aircraft operators take part in the EU Emissions Trading System. Participating operators are required to develop plans to monitor their emissions in accordance with the European Commission’s Monitoring and Reporting Regulation. They are also required to produce annual emissions reports that are verified independently in accordance with the Accreditation and Verification Regulation. EU Emissions Trading System operators hold EU Emissions Trading System Union Registry accounts which provide them with access to their emissions allowances. At the end of each compliance year, operators must give up from their account one allowance for each tonne of verified carbon dioxide (or equivalent) emitted. Operators who are considered at risk of carbon leakage receive allowances through free allocation (if eligible) from their Member State of predetermined amounts agreed by the EU Commission. Other operators buy allowances on the carbon market or via a government administered auction. Some UK-based operators falling within the scope of the EU Emissions Trading System Directive are excluded from the scheme through their inclusion in the UK Small-Emitter and Hospital Opt-Out Scheme. Instead of receiving and needing to give up allowances these operators are given emissions targets, these excluded installations pay only for emissions which exceed their target. Targets for excluded installations are set based on the allocation they would receive for free had they remained in the EU Emissions Trading System. Aircraft operators with total emissions below 25,000t or intra EEA emissions below 3,000t may use a simplified verification procedure. The Kyoto Protocol The Kyoto Protocol established three market-based mechanisms, emissions trading, the Clean Development Mechanism, and Joint Implementation. The Clean Development Mechanism and Joint Implementation provide for the development of projects which are credited with emission reduction units for offsetting greenhouse gas emissions. The UK has established regulatory functions, the Designated National Authority for Clean Development Mechanism projects and Designated Focal Point for Joint Implementation projects, responsible for issuing letters of approval for Clean Development Mechanism and Joint Implementation project activities respectively. The UK’s National Kyoto Protocol Registry is located within the Consolidated System of European Registries and facilitates the trading of Kyoto Protocol emissions units. Holders of accounts within the Registry include: actors who trade in Certified Emission Reductions and Emission Reduction Units generated under Clean Development Mechanism, and Joint Implementation, project developers who secured approval for Clean Development Mechanism projects from the UK’s Designated National Authority After March 2019 if there’s no deal There is no change to the UK’s deep commitment to domestic and international efforts to tackle climate change. The UK’s Climate Change Act is domestic legislation and will be unaffected by exiting the EU. The UK will remain a party to international climate change agreements and its commitment to them will remain as strong as ever and will be unaffected by EU exit. The UK will therefore continue to take ambitious steps to reduce greenhouse gas emissions, and the UK’s Clean Growth Strategy highlights our policies and proposals for doing so. EU Emissions Trading System The UK will be excluded from participating in the EU Emissions Trading System in a ‘no deal’ scenario. This means that current participants in the EU Emissions Trading System who are UK operators of installations will no longer take part in the system and flights within the UK will no longer be covered by EU Emissions Trading System obligations. Flights between the UK and the European Economic Area (EEA) are not expected to be covered by EU Emissions Trading System