The Climate Change Act received Royal Assent on the 26 November 2008. Under the Act, the UK is committed to reducing emissions by 80% by 2050. The Act introduces a range of measures aimed at achieving this target, including legally binding carbon budgets which will set a ceiling on the levels of greenhouse gases that can be emitted into the atmosphere.

CLIMATE CHANGE COMMITTEE

A new, independent body, the expert Committee on Climate Change (CCC) has been created to advise the Government on the setting of carbon budgets, the best pathway to meet the 2050 target and to report annually on progress. The creation of the body aims to ensure the Government is held to account every year on its progress towards each five-year carbon budget and the 2020 and 2050 targets by reporting to Parliament on the Government's progress against targets.

CARBON BUDGETS

The 80% target of emissions reductions by 2050 is supported by the Carbon Budgeting system. The Government will set, in secondary legislation, binding targets on aggregate emissions over five-year periods - with three budgets set ahead to help businesses plan and invest with increased confidence.

The recently established CCC provided an interim report to Government on 1 December recommending that the Government commit unilaterally to reducing emissions of all greenhouse gases in the UK by at least 34% in 2020 relative to 1990 levels (the 'Interim budget'). They stated this should be increased to 42% relative to 1990 levels once a global deal to reduce emissions is achieved. The CCC says meeting these targets is necessary to contain the threat of climate change. The report sets out the analysis underpinning these recommendations and the proposed level of the first three carbon budgets covering the periods 2008-12, 2013-17 and 2018-22. It also states that the Government should not plan to purchase offset credits to meet the Interim budget. (Click here to access the report)

TRADING SCHEME POWERS

The Act contains enabling powers to introduce new trading schemes through secondary legislation, increasing the policy options which Government could use to stay within budgets and meet emissions targets. The Carbon Reduction Commitment is one of the trading schemes the Government intends to introduce (see our in-depth analysis on the scheme).

AVIATION AND SHIPPING

Due to the controversy caused by the proposed exemption of international aviation and shipping from targets, a late amendment to the Climate Change Bill was made detailing that the Secretary of State must make regulations by the end of 2012, as to the circumstances when emissions from international aviation and shipping are regarded as emissions from sources in the UK. Note that there is no detail or requirement in the Act as to what proportions of emissions (if any) must be regarded as emissions from the UK.

COMPANY REPORTING REQUIREMENTS

From 2012, certain companies will be under a compulsory obligation to report their carbon emissions. A process is outlined in the Act for establishing more rigorous common reporting standards, but it does not define exactly how big a company has to be to fall within the rules or the extent of the reporting requirement. Prior to 2012, a voluntary scheme will be in place and a consultation will begin on whether smaller businesses should also be forced to report on their carbon emissions.

The potential impact of this reporting requirement on companies is currently unclear. However, many companies already (or will soon have to) disclose their carbon dioxide output, either under existing regulations or voluntarily. Heavy industry operating under the EU Emissions Trading Scheme must monitor their emissions, whilst thousands of commercial premises will have to begin monitoring output under the Carbon Reduction Commitment.

Joan Ruddock, minister for energy and climate change, said that the reporting requirement would ensure business "goes green", stating that "this will allow companies to demonstrate their green credentials and provide transparency for investors and consumers. It aims to stimulate businesses to reduce their carbon footprint and work towards a productive low carbon future."

LOOKING FORWARD

As the Act is primarily an enabling piece of legislation, we are expecting a number of consultations on secondary legislation to be produced from early next year, not least on the implementation of the Carbon Reduction Commitment. We will provide you with up to date reviews of developments as they arise.