A Review of Climate Change Legislation affecting the United Kingdom 1

A Review of Climate Change Legislation

affecting the United Kingdom
TEP Group 2A

Contents
Global Legislation .................................................................................................................................... 2
1992: United Nations Framework Convention on Climate Change (UNFCCC) ................................... 2
Summary: ........................................................................................................................................ 2
Achievements: ................................................................................................................................ 2
Failings: ........................................................................................................................................... 2
1997: Kyoto Protocol .......................................................................................................................... 2
Summary: ........................................................................................................................................ 2
Achievements: ................................................................................................................................ 2
Failings: ........................................................................................................................................... 3
1997 – Present: Post-Kyoto agreements and initiatives ..................................................................... 3
2007 Washington Declaration ........................................................................................................ 3
2009 United Nations Climate Change Conference ......................................................................... 3
European Legislation............................................................................................................................... 3
2005: The European Union Emission Trading System (EU ETS) .......................................................... 3
UK National Legislation ........................................................................................................................... 4
2001: UK Climate Change Levy (CCL) .................................................................................................. 4
2002: UK Renewables Obligation (RO)................................................................................................ 4
2006: UK Climate Change and Sustainable Energy Act ....................................................................... 5
2008: Climate Change Act ................................................................................................................... 5
References .............................................................................................................................................. 5
 Global Legislation 2

Global Legislation

Presented in Chronological Order:

1992: United Nations Framework Convention on Climate Change (UNFCCC)

Summary: Enforced with the aim of reducing greenhouse gas emission, “to achieve stabilization of
greenhouse gas concentrations in the atmosphere at a low enough level to prevent dangerous
anthropogenic interference with the climate system.”1

Although the treaty was presented to and signed by nations at all stages of development, it was
targeted at already industrialised nations (so-called Annex I nations in the treaty), who would
promise to reduce their emissions by the same extent as developing nations would be increase
theirs, thereby stabilising greenhouse emissions.2

Achievements: This was the first major International environmental treaty, presented at the Earth
Summit in Rio de Janeiro between the 3rd– 14th June 1992 and attracted 192 signatories, most
crucially including the-then G7 group of nations, which constituted Canada France, Germany, Italy,
the United States and United Kingdom.

It’s most pragmatic feature was to institute a global system in order to count greenhouse gas
emissions and sequestration. As a result, signatory countries established national Inventories to
measure their net greenhouse gas production. These national accounts are then published regularly
and given for review by the Secretariat of the UNFCCC.

Failings: Although the UNFCCC was a significant step in a multinational effort to curb climate
change, it was completely voluntary and by its very words, ‘non-binding’1. As a result, developed and
developing nations both continued increasing emissions2, undermining the treaty to the point of
being ineffectual.

1997: Kyoto Protocol

Summary: After the failings in the UNFCCC treaty of 1992, the need to create a binding treaty or
protocol became of paramount importance. In a meeting between UNFCCC nations at Kyoto in
December 1997, a protocol was suggested, to add to the already existing treaty but this time to
make it a binding agreement.

Achievements: The Protocol set Annex I nations a set of obligatory targets for the reduction of
Carbon Dioxide, Methane, Nitrous Oxide, Hydrofluorocarbons, Perfluorocarbons and Sulphur
Hexafluoride.2

In order to help Annex I nations realistically meet these objectives, the treaty also introduced three
mechanisms3:

1. International Emissions Trading – Popularly known as ‘Carbon Trading’. Annex I nations are
given an allowance corresponding to the amount of Greenhouse gasses they may release. If
they should pollute to a level below their quota, they can then sell their spare ‘carbon
credits’ to other Annex I nations on an international carbon trading market.
 European Legislation 3

2. Clean Development Mechanism (CDM) – An Annex I nation can invest in projects reducing
emissions in non-Annex I nations, as a replacement for reducing their domestic emissions.
3. Joint Implementation (JI) – Similar to the CDM, here an Annex I nation can invest in a ‘Joint
Implementation Project’, which is designed to reduce greenhouse emissions in another
Annex I country as an alternative to reducing domestic emissions.

Both CDM and JI mechanisms allow for funding into schemes which would otherwise not have been
considered feasible before the Kyoto Protocol, a term called additionality. All the schemes operate
by placing a fiscal sphere into the diplomatic accord. Hence, it becomes economically advantageous
to reduce greenhouse emissions.

Failings: Although more successful than the 1992 treaty, Kyoto has still faces dire problems. The
protocol has not been ratified in the United States (the world’s largest polluter of greenhouse gases
on a per capita basis) and therefore holds no authority there. Additionally, several Annex I nations,
including the 15 pre-2004 expansion members of the EU have failed to cut their emissions by the
levels set by Kyoto. Both Canada and Japan have increased their emissions since the Protocol came
into effect.3

1997 – Present: Post-Kyoto agreements and initiatives

2007 Washington Declaration – During a meeting of the G8 + 5 countries in Washington D.C. on
February 2007, a new system of emissions trading for both developed and developing nations was
discussed and agreed in principle. The attending nations signed a non-binding pledge to enforce this
agreement by 2009.4

2009 United Nations Climate Change Conference – has been scheduled for December 2009 in
the Danish city of Copenhagen. All signatories of the 1992 UNFCCC and Kyoto Protocol are expected
to attend and decide on a successor treaty to Kyoto. Planned topics of debate include carbon
capture and storage, biofuels and technology transfer. 5

European Legislation

2005: The European Union Emission Trading System (EU ETS)

Is an EU-wide emissions trading initiative which works on a similar basis to, as well as in conjunction
with the Kyoto protocol. Specifically, the EU ETS looks to reduce all member states’ greenhouse gas
emissions but with an emphasis on Carbon Dioxide.

Each member country will be allocated a set allowance for their emissions over a period of years, in
accordance with the Kyoto Protocol, with one unit of allowance equal to one tonne of CO2 released.

The scheme works in two phases, with a third currently under discussion. Phase one lasted between
the 1st of January 2005 to December 31st 2007 and focused on electricity generation, the paper
industry, mineral industries and the steel industry.

Phase two lasts from the 1st of January 2008 until the 31st of December 2012. In this phase, aviation
emissions are also included and the CDM and JI flexibility mechanisms from the Kyoto protocol are
also taken into account.3
 UK National Legislation 4

UK National Legislation

2001: UK Climate Change Levy (CCL)

The CCL is a tax on energy used on industry, commerce and the public sector in the UK. It aims to
reduce carbon dioxide emissions by at least 2.5 million tonnes of carbon per year by 2010.3

As well as their usual energy bill, operations subject to the CCL are required to pay the below levy to
the UK government.

Table 1 – CCL Rates from the 1st of April 20077

2002: UK Renewables Obligation (RO)

The RO places a requirement on all UK licensed electricity suppliers to provide a percentage of their
energy production from renewable sources. This percentage is then increased annually. For each
MegaWatt hour of renewable energy created, the supplier earns a tradable Renewable Obligation
Certificate (ROC).

Alternatively, the supplier may also make a payment to an annual buy-out fund. This is a set quantity
of money paid for each MegaWatt hour of renewable energy unproduced. The fund is then released
at the end of the year to ROC holders and is used to fund increased energy efficiency or renewable
energy technologies.

Suppliers fulfil their obligation either through obtaining ROCs or paying the buy-out fund, or a
combination of both.

Table 2 – RO Rates from the 1st April 2002 8

Renewable Obligation Period Required Renewable Percentage Buy-Out Price (£/MWh)

1st April 2002 – 31st March 2003 3.0 30.00
1st April 2003 – 31st March 2004 4.3 30.51
1st April 2004 – 31st March 2005 4.9 31.59
1st April 2005 – 31st March 2006 5.5 32.33
1st April 2006 – 31st March 2007 6.7 33.24
1st April 2007 – 31st March 2008 7.9 34.30
1st April 2008 – 31st March 2009 9.1 35.76
1st April 2009 – 31st March 2010 9.7 37.19
 References 5

2006: UK Climate Change and Sustainable Energy Act

The 2006 act was an attempt to increase the number of sustainable microgeneration sites (e.g. small
scale solar panel, wind turbine) available for homes and businesses in the UK and therefore reduce
greenhouse gas emissions.

The Act aims to deliver cheap energy from these sites, which will be promoted by both the
government and energy companies. Additionally, local authorities will be promoted to work for local
level energy efficiency within their district, such as constructing more efficient heating/cooling
systems instead of other buildings.3

2008: Climate Change Act

The Climate Change Act allowed for a change in bureaucracy and formed a platform from which
climate change in the UK could be better combated. This act was made law in order to ensure that
the UK would fulfil its Kyoto obligations. It makes it the Secretary of State’s responsibility to
accomplish this task and also gives ministers new authority to enforce laws concerning climate
change.3

References
1 -P.3, United Nations Framework Convention on Climate Change, United Nations, 1992.

2- P. 620, The Rise of International Environmental Politics, Michael Zurn, 1998.

3 -A Short History of Climate Change, The Times, 2008.

4 - http://news.bbc.co.uk/1/hi/sci/tech/6364663.stm Politicians Sign New Climate Pact, BBC News, 16th Feb 2007.

5 -United Nations Framework Convention on Climate Change 2009 Draft, United Nations, 2009.

6 - HM Revenue & Customs ‘Climate Change Levy (CCL): Changes to Rates’ 2006
http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pa
geExcise_RatesCodesTools&propertyType=document&id=HMCE_PROD1_025377 [accessed 21/08/06]

7 -Ofgem Annual Report 08/09, Ofgem, 2009.