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Aviation emissions – new global deal looks likely

Government officials are negotiating a market-based mechanism to reduce emissions in the international aviation industry. Ministers from over 190 countries have gathered at the International Civil Aviation Organization’s General Assembly in Montreal to discuss and vote on a draft resolution. If passed, it will be the first industry-specific global market-based measure for CO2 emissions.
The prospects of achieving resolution are good. So far, 55 countries, including the US, China and EU member states have indicated their support for the proposal and agreed to sign-up for the initial voluntary stage. However, some states with large aviation emissions have yet to confirm their agreement and the EU has questioned how effective the measure will be in combatting climate change. A deal is expected by the end of the Assembly on 7 October.
The proposal aims to prevent the growth of aviation emissions beyond 2020 levels by requiring airlines to offset emissions with carbon credits. The mechanism would take effect on a voluntary basis from 2021, and become mandatory in 2027 with exceptions for some states which are less developed or have low aviation emissions. The offsetting obligations will be based on the sector average emission growth, and later move to incorporate the actual emission growth of individual airlines.

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Aviation emissions – new global deal looks likely

Reform of energy efficiency taxes – have your say

CRC, EU ETS, ESOS, Climate Change Levy – the alphabet spaghetti of overlapping environmental taxes, levies and reporting obligations on businesses grow every year.

Many think that the current system is too complicated,  and a distraction from improving energy efficiency. So it is good news that the Treasury is considering a much simpler system.

HM Treasury has released a consultation on reform of the energy efficiency tax landscape. The consultation is available here (https://www.gov.uk/government/consultations/consultation-reforming-the-business-energy-efficiency-tax-landscape) and closes on 7 November 2015.

The headline proposals are below.

Energy Consumption Tax

The Treasury proposes replacing the CRC Energy Efficiency Scheme and the Climate Change Levy (CCL) with a new single energy consumption tax (based on the CCL). Stakeholders are asked to comment on several issues, including:

  • How to best design a single tax to improve its effectiveness;
  • Should rates vary across businesses;
  • Whether different approaches are needed for different businesses.

Energy Reporting

The government is considering using the Energy Savings Opportunity Scheme (ESOS) as the primary tool for energy reporting. The consultation asks a number of questions on reporting, including:

  • Should reporting be mandatory;
  • Should reporting require board level approval;
  • Should reported data be publically available;
  • What data should be collected through the reporting scheme (e.g. GHG emissions, renewable energy proportion and actions taken to meet any audit recommendations)
  • Does a streamlined report enable market actors have access to transparent, reliable and comparable information in order to support financing and investment in efficient and low carbon measures.

Incentives

The Treasury is also consulting on incentives for energy efficiency and carbon reduction,  and the simplest way to enable businesses to access decarbonising incentives.

The results and corresponding reforms are likely to be announced in the 2016 Budget.

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Reform of energy efficiency taxes – have your say

New Environment Agency enforcement approach to CRC and EU ETS

The Environment Agency has published a new annex to its Enforcement and Sanctions Guidance to cover breaches under the CRC Energy Efficiency Scheme (CRC), EU Emissions Trading Scheme (EU ETS) and climate change agreements (CCAs).

In considering whether to exercise its discretion to enforce a breach of one of these regimes, the EA will take into account public interest factors, including financial implications, whether there has been any previous non-compliance and the attitude of the offender.

The Guidance confirms that the EA will not normally impose financial penalties on individuals or corporate entities that are subject to an insolvency procedure and action taken by an organisation to correct its non-compliance will be taken into account.

Failure to pay a civil penalty is recoverable as a civil debt, and in the case of a failure to pay a CCA penalty, the CCA may also be terminated.

There are no requirements to have public registers under the EU ETS, CRC and CCA regimes. However, the EA has decided that when it imposes a penalty under one of these three regimes, it will normally publish information (for a period of 12 months) about the:

  • Person on whom the penalty was imposed.
  • Legal requirements that were not complied with.
  • Amount of the penalty.

The guidance can be accessed here

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/389349/LIT_5551.pdf

New Environment Agency enforcement approach to CRC and EU ETS