Landmark Chambers

Home > Resources > Inquiries

Inquiries

Landmark Chambers at forefront of United Kingdom Greenhouse Gas Emissions Trading appeals

DATE: 23 May 2011

2010 - 2011 has seen a number of determinations of appeals under the Greenhouse Gas Emissions Trading Scheme Regulations 2005 ("the 2005 Regulations"). Prior to this year the only appeal determinations in England and Wales under the 2005 Regulations were one made by the Welsh Ministers in the Alphasteel case (ENDS 2008, 401, 64-65) against a civil penalty notice and one by an Inspector in England against the refusal to allocate allowances from the missing and late reserve under reg. 22A of the 2005 Regulations (APP/ETS/06/02 University Hospital of North Durham v Defra).

This year DECC has made the following determinations under the 2005 Regulations, all were appeals against revocation notices (for further information please click here):

1. Wienerberger Limited - Determination Notice 
2. Premier Foods Group Limited - Determination Notice
3. Premier Foods Group Limited - Supplementary Determination
4. White's Recycling Solutions Limited - Determination Notice
5. White's Recycling Solutions Limited - Supplementary Determination

While the determinations are available on the DECC website the more detailed reports (all by David Hart QC following non-statutory inquiries) on which the determinations are based have not been published.

The EU ETS is the key policy introduced by the EU to help reduce the EU's greenhouse gas emissions. The EU ETS is based on Directive 2003/87/EC which established a scheme for greenhouse gas emission allowance trading within the Community. The Directive is implemented by the 2005 Regulations. Regulation 7 provides that: "No person shall carry out a Schedule 1 activity resulting in specified emissions, except under and to the extent authorised by a greenhouse gas emissions permit." Paragraph 1 of Schedule 1 sets out the activities and "specified emissions" which require operators to hold a greenhouse gas emissions permit. The specified emissions are "carbon dioxide".

Regulation 16 provides for the surrender of a permit:

"(1) Where an operator has ceased carrying out in an installation all of the Schedule 1 activities authorised by a greenhouse gas emissions permit in relation to that installation, the operator shall apply to the regulator to surrender the permit.
(2) An application under paragraph (1) shall be made before the expiry of one month beginning on the date on which the operator ceased to carry out the activity or activities in the installation to which the greenhouse gas emissions permit relates…
(3) Paragraph (1) shall not apply where-
(a) an approved national allocation plan provides for all allowances allocated under these Regulations in respect of any installation in which a Schedule 1 activity is no longer carried out to continue to be issued to the operator of such installation during the scheme phase to which the approved national allocation plan relates;
(b) an approved national allocation plan provides that, if conditions specified in that plan are met, an operator which ceases to carry out a Schedule 1 activity in an installation may retain the allowances allocated in respect of the installation under these Regulations and the operator has, before the expiry of a period of one month beginning on the date on which the operator ceased to carry out the Schedule 1 activities or of the date on which the approved NAP Regulations in relation to the scheme phase for which the allowances are allocated enter into force, whichever is the later, made an application to retain its allocation under regulation 24(1)"

Regulation 17 deals with the revocation of permits and provides materially:

"(1) Subject to paragraph (3), the regulator may at any time revoke a greenhouse gas emissions permit by serving a notice ("a revocation notice") on the operator…
(2) Without prejudice to the generality of paragraph (1) the regulator shall serve a notice under paragraph (1) where an operator fails to comply with an obligation under regulation 16(1)."

Pursuant to regulation 24, operators which cease to carry out a Schedule 1 activity in an installation may apply to retain these allowances where provided for in the NAP (regulation 24(1)). These are referred to as "rationalisation applications".

Regulation 32(2) provides that "a person…on whom a revocation notice…is served may appeal to the appropriate authority…" in England that is the Secretary of State for Climate Change, in Wales it is the Welsh Ministers and in Northern Ireland the Planning Appeals Commission.

Regulation 20(1) provides that "the Secretary of State shall develop a national allocation plan in respect of the second scheme phases and in respect of each subsequent scheme phase". Regulation 20(3) states that "[t]he Secretary of State shall publish in England the national allocation plan developed for each scheme phase…" The Greenhouse Gas Emissions Trading Scheme (Miscellaneous Provisions) Regulations 2007 ("the 2007 Regulations") came into force on 1 May 2007. Regulation 2 provides that for the purposes of the 2005 Regulations, "the document entitled "EU Emissions Trading scheme: Approved Phase II National Allocation Plan 2008-2012" published by the Secretary of State on 16 March 2007 is specified as the approved national allocation plan for the five year period beginning on 1st January 2008" ("the NAP").

Section F of Appendix D to the NAP deals with closures of installations. Pursuant to paragraph 71 "[a]n installation is considered to have closed when the Annex I activity at the installation has ceased operating". Paragraph 72 provides that the operator of an installation that is closing is required to inform the regulator in order to surrender its permit. Paragraph 73 sets out the procedure by which an operator may apply for the temporary closure of an installation. It states as follows: "An operator must also notify the regulator if an installation temporarily ceases an Annex I activity and this temporary closure is intended to be, or becomes, 50 days or longer. The regulators will use their discretion to distinguish between permanent closure and cases where a temporary period of closure has occurred during the normal course of business. Closures that are outside the "normal course of business" would be treated as having permanently ceased operation."

There has also this year been a determination on a revocation notice appeal in Northern Ireland (Commission Reference: 2010/IP001) in respect of which both the determination and the Planning Appeals Commission report is available. The case concerns Ibstock Brick Limited.

Landmark Chambers has been involved in all the above appeals under the 2005 Regulations:

James Maurici acted for the Environment Agency in the Alphasteel, Wienerberger Limited, Premier Foods Group Limited and White's Recycling Solutions Limited appeals.
David Forsdick acted for the NIEA in the Ibstock Brick Limited.
Simon Pickles acted for the appellants in the White's Recycling and University Hospital of North Durham appeals.