On 13 April 2021, the House of Lords is due to hold a debate in Grand Committee on the Draft Greenhouse Gas Emissions (Kyoto Protocol Registry) Regulations 2021.

The regulations were laid in draft before both the House of Lords and House of Commons on 25 February 2021. They are subject to the affirmative procedure, which requires both Houses to approve the instrument in draft before it becomes law. If passed, the regulations would come into force on 1 May 2021. The Government published an Explanatory Memorandum alongside the regulations.

The purpose of the statutory instrument is to amend retained EU law to allow the UK to operate its own domestic Kyoto Protocol (KP) registry. The Kyoto Protocol sets out greenhouse gas emission reduction obligations which apply to the UK, European Union and other countries; a domestic registry would allow the UK to demonstrate continued compliance with the Kyoto Protocol. During the transition period the UK had access to the European Union’s KP registry, known as the Consolidated System of European Union Registries (CSEUR). Since the end of the transition period the UK’s registry is no longer housed on the CSEUR.

The Secondary Legislation Scrutiny Committee (SLSC) noted the draft regulations as an instrument of interest.

What is the Kyoto Protocol?

The Kyoto Protocol is part of the United Nations Framework on Climate Change (UNFCCC), an international climate change treaty. The protocol commits countries to limit and reduce greenhouse gas emissions in accordance with agreed individual targets.

The first protocol was adopted on 11 December 1997 and came into force 16 February 2005. It covered the period 2008–12, known as the first commitment period. On 8 December 2012, in Doha, Qatar, the protocol was adopted for a second commitment period from 2013–20.

Countries with commitments under the Kyoto Protocol must meet their targets primarily through national measures, such as subsidies, educational programmes or the use of renewable energy sources. However, the protocol also introduced three market-based mechanisms: the clean development mechanism; joint implementation; and emissions trading. The United Nations describes these three mechanisms as “creating what it is now known as a carbon market”.

The limits agreed with countries, or allowed emissions, are also known as “assigned amounts”. These are divided into assigned amount units (AAUs) and countries can sell their spare unused units to countries that are over their targets. In addition, other units can be transferred under the scheme, each equal to one tonne of CO2, which may be in the form of:

  • A removal unit (RMU) on the basis of land use, land-use change and forestry (LULUCF) activities such as reforestation;
  • An emission reduction unit (ERU) generated by a joint implementation project; and
  • A certified emission reduction (CER) generated from a clean development mechanism project activity.

To participate in the Kyoto mechanisms, countries must have ratified the Kyoto Protocol and agreed an “assigned amount” limit, in terms of tonnes of CO2 equivalent emissions. Countries must also have in place a national system for estimating emissions and removals of greenhouse gases within their territory. In addition, countries must have in place a national registry to record and track the creation and movement of trading units in the carbon market and must annually report such information to the UNFCCC secretariat.

The emission reduction obligations denoted by the protocol apply for the period up to 31 December 2020. Both EU member states and the UK are signatories. The UK still has accounting obligations in relation to this commitment period, in order to demonstrate its compliance with the protocol. As the UK has ratified the protocol in its own right, leaving the EU has not affected the UK’s obligations with regard to the UNFCCC and the Kyoto Protocol.

What would the regulations do?

The instrument seeks to ensure that a domestic Kyoto Protocol Registry, independent of the EU-wide Consolidated System of European Union Registries (CSEUR), can be established. The UK used the CSEUR until the end of the transition period, in order to demonstrate that the UK was meeting its Kyoto Protocol obligations.

The Department for Business, Energy and Industrial Strategy (BEIS) has confirmed that it intends the UK Kyoto Protocol registry to become available for users to register on the system from 1 May 2021. There will then be a process of verifying users’ identification and assigning them to their accounts that have been transferred from the EU system where they were previously held. BEIS anticipates that the UK KP registry will be ready for trading KP units in June 2021.

Prior to June 2021, UK businesses that wish to trade KP units will need to open KP accounts in other countries’ registries. However, this is optional and BEIS has stated that it is not aware of any UK businesses having opened KP accounts in other countries’ registries:

[G]iven the short period that the UK KP registry is unavailable, and the low value of KP units, we understand from previous stakeholder engagement that most businesses are content to wait until the new UK system is ready.

In addition to introducing the UK KP registry, the instrument amends retained law to remove references to the EU emissions trading scheme (ETS). The EU ETS registry was replaced in 2020 by a domestic UK ETS registry, through the Greenhouse Gas Emissions Trading Scheme Order 2020 and the Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020.

It should be noted that the UK KP registry is distinct from the recently developed UK ETS registry. KP units cannot be used in the UK ETS, and UK ETS allowances cannot be traded on the UK KP registry.

The instrument would also remove an obligation for the Environment Agency to comply with EU law; instead it must act consistently with the UK’s relevant international climate law obligations.

Image by catazul from Pixabay.