UK issues climate change bill to reduce emissions

David Miliband, the UK environmental secretary, has proposed legislation to enforce a 26-32% cut in carbon emissions by 2020 which could have significant implications for energy companies.

Uchenna Izundu
International Editor

LONDON, Mar. 19 -- David Miliband, the UK environmental secretary, has proposed legislation to enforce a 26-32% cut in carbon emissions by 2020 which could have significant implications for energy companies. The bill aims to slash emissions by 60% by 2050 and would create a legal framework for transition to a low-carbon economy.

In 2005, about 22.6 million tonnes of carbon emissions were produced from the UK continental shelf compared with 22.9 million tonnes in 2004.

Under the climate change bill, the UK would set legally binding 5-year "carbon budgets" to give businesses guidance on key targets and encourage investments in low-carbon technologies at least 15 years in advance. The first period would be in 2008-12.

The bill would require the government to inform on current and predicted impacts of climate change and on its proposals and policy for adapting to climate change and its progress in meeting the 5-year carbon budget and the 2020 and 2050 targets.

To achieve its targets, the government would receive guidance and expert advice from a new statutory body, the Committee on Climate Change. The bill would empower the government to drive through policies to reduce emissions.

The proposed bill would pose challenges for the industry because the UK North Sea is mature, and emissions could rise as companies use more energy to produce the remaining resources, which are estimated at 27 billion bbl.

"With climate change we can't just close our eyes and cross our fingers," Miliband said. We need to step up our action to tackle it, building on our considerable progress so far. And time isn't on our side. Government must rightly lead from the front on this, but we want everyone—the public, industry, Parliament—to have their say to help us ensure that the bill really delivers."

A spokeswoman from the UK Offshore Operators' Association (UKOOA) said the industry was already moving to reduce emissions, particularly the growing switch from coal and oil to gas, which has helped the UK meet its Kyoto target.

"Despite an increase in energy demand of 10% over the last 15 years and a slight increase in CO2 emissions since 2002, overall the UK has recorded a reduction in CO2 emissions since 1990," she added.

Many oil companies are involved in the EU Emissions Trading Scheme. "Carbon capture and storage in a geological structure such as a suitable mature oil or gas reservoir under the North Sea is being promoted as a possible method of enabling low-carbon electricity production. This is emerging technology, and there are still not insignificant economic and operational hurdles to overcome," the UKOOA spokeswoman said.

Critics have scorned establishing another independent body to produce reports and monitor progress on reaching carbon targets, and it is unlikely that the government can get the bill through Parliament without changes.

Michael Woods, head of the environment group at Stephenson Harwood law firm, told OGJ the proposed bill that many more details were needed before businesses could plan their future operations with certainty. "It is important for business to engage and influence the outcome because they will be significantly affected."

Woods said one very contentious issue is whether the 5-year cycles to reduce emissions should be transformed into annual targets. "Under the bill, the emissions-trading element is set up with enabling powers, but it doesn't go into the nitty-gritty of the social and economic effects; it's one thing to target big polluters, but quite another to look at big businesses, retail, and the general public."

The government's public consultation period closes Jun.12, but whether Parliament can enact the bill any time soon remains to be seen, as the ruling Labour Party faces difficult times ahead when its leader Tony Blair leaves later this year, opening the door to a possible leadership contest.

Contact Uchenna Izundu at uchennai@pennwell.com.

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