On the same day that the UN published data showing that developed nations' greenhouse gas emissions rose to a near all-time high in 2005, the Queen's speech announced that the long awaited Climate Change Bill, first proposed in 2005, will finally be presented to Parliament this week with a view to becoming law by Easter 2008. Parliament will also consider a new Energy Bill, implementing a number of the policies set out in the May Energy White Paper.

The Climate Change Bill

The bill creates the legal framework to reduce the UK's CO2 emissions by at least 60% by 2050 with an intermediate goal of achieving a 26-32% reduction on 1990 levels by 2020. It also demonstrates the UK's commitment to leading by example in creating a low-carbon economy, a commitment which may be important at the UN Climate Change Conference (Bali 3-14 December), where it is hoped a roadmap towards international agreement on post-2012, post Kyoto targets, will be set out. The bill also:

  • establishes the structure of the proposed independent Committee on Climate Change which will be tasked with advising the government on its targets and how to achieve them;
  • sets the first five-year "carbon budget" to run from 2008 through to 2012 and states that budgets will be set at least 15 years in advance - but it does not go so far as to introduce the need to set annual targets which many commentators have called for. Critics also raise concern about setting budgets 15 years ahead based on targets which are already under review;
  • requires the government to publish a report, at the time of each new five-year budget, containing its proposals and policies for meeting the budget;
  • obliges government to report annually to Parliament on emissions from international aviation and shipping as well a regular reports on the risks of climate change to the UK and policies for sustainable adaption strategies; and
  • allows the government to extend carbon trading, which is currently limited to power generation, mineral oil refineries, offshore installations, other heavy industrial sectors and some smaller non-industrial installations with on-site combustion capacity.

Critics however suggest that the good news story of the Climate Change Bill has been used to push through major changes in the planning system which will in fact give the green light to major projects such as motorway widening-schemes and new airport runways which will lead to increased carbon emissions.

Committee on Climate Change

One of the Committee's first tasks will be to assess whether the five-year carbon budget set out in the bill is consistent with achieving the government's voluntary target of a 20% reduction in emissions by 2010. It has already been tasked with reviewing whether the 60% target is adequately ambitious as consultation respondents suggested the target should be at least 80%, and it will consider the role of international trading schemes and the implications of extending the scope of the targets to other greenhouse gases and emissions from international aviation and shipping.

Following the latest consultation on the draft bill, which finished in June this year, the Committee's role has been strengthened as the bill now requires government to seek its advice, before amending the 2020 or 2050 targets, and if government chooses not to accept that advice it must explain why.

US climate developments

Big steps were also made this week in the US when a Climate Bill was approved by four votes to three by the Senate subcommittee so it will now be debated by the full Environment and Public Works Committee. The US bill indicates how the US plans to cap carbon emissions and trade credits, offers financial incentives to develop clean coal technologies, and proposes that publicly traded companies be required to tell the Securities and Exchange Commission about any material risks they run as a result of climate change.

The Energy Bill

The Queen confirmed the introduction of an Energy Bill following on from the May Energy White Paper1, to provide clean, secure and affordable supplies of energy. The main elements of the bill are expected to include:

  • offshore gas supply infrastructure: encouraging private sector investment by way of strengthening the regulatory framework in order to help maintain reliable supplies of energy;
  • carbon capture and storage: enabling private sector investment in CCS projects by creating a regulatory framework which will potentially facilitate the reduction of CO2 emissions from fossil fuel power stations by up to 90%;
  • renewables: diversifying and improving deployment of renewables in the UK by way of strengthening the Renewables Obligation, to enhance the reliability of energy supplies and help lower CO2 emissions from the electricity sector;
  • decommissioning of offshore renewables and oil and gas installations: strengthening statutory decommissioning provisions in an attempt to shield taxpayers whilst minimising the risk of liabilities falling to the Government;
  • improvements to offshore oil and gas licensing: improving the licensing regime in response to changes in the commercial environment and enable BERR to carry out its regulatory functions more effectively;
  • nuclear waste and decommissioning financing: ensuring the operators of new nuclear power stations accumulate funds to meet the full costs of decommissioning and their full share of waste management costs;
  • offshore electricity transmission: amending powers such that OFGEM is able to run the offshore transmission licensing regime more effectively; and
  • various other provisions covering nuclear security and transfer of various regulatory functions to/from BERR.

This Energy Bill, along with the Planning Reform Bill2 are expected to clear away some of the regulatory hurdles and uncertainties that currently exist for major on and offshore infrastructure projects including a new nuclear fleet and carbon capture and storage. The bill is expected to receive Royal Assent by summer 2008.