Georgia Elliott-Smith v Secretary of State for Business, Energy and Industrial Strategy
| Jurisdiction | England & Wales |
| Judge | Mr Justice Dove |
| Judgment Date | 15 June 2021 |
| Neutral Citation | [2021] EWHC 1633 (Admin) |
| Docket Number | Case No: CO/3093/2020 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 15 June 2021 |
[2021] EWHC 1633 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
THE HONOURABLE Mr Justice Dove
Case No: CO/3093/2020
and
and
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David Wolfe QC and Ben Mitchell (instructed by Leigh Day Solicitors) for the Claimant
Richard Honey QC (instructed by Government Legal Department) for the First Defendant
Andrew Sharland QC (instructed by Government Legal Department) for the Second Defendant
Tom de la Mare QC (instructed by Government Legal Department) and Stephen Donnelly (instructed by Government Legal Department) for the Third Defendant
Mona Bayoumi (instructed by Welsh Government Legal Services) for Fourth Defendant
Hearing dates: 14 th & 15 th April 2021
Approved Judgment
Introduction
This application for judicial review concerns the legality of the defendants' joint decision to create the UK Emissions Trading Scheme (the UK ETS) as a replacement for the UK's participation in the European Union Emissions Trading System (the EU ETS) following the departure of the UK from the European Union. The claim as originally formulated sought declarations in relation to the defendants' decision on the 1 st June 2020 to create a form of UK ETS described in a document entitled “The future of UK carbon pricing, UK Government and devolved administrations response” (“the Response”). The particular features of concern to the claimant are described below. At the time when the claim was issued a draft order to give effect to the UK ETS had been published but not made. Subsequent to the issuing of proceedings, on 11 th November 2020, the Greenhouse Gas Emissions Trading Scheme Order 2020 (“the 2020 Order”) was made. At the hearing it was clarified by the claimant that she does not seek for that order to be quashed, but rather seeks declarations that the scheme which is enacted by it is unlawful for the reasons which are explained below. It is apparent that the 2020 Order will require revision in the future as part of further phases of the UK ETS, and the claimant seeks the declarations to inform those future revisions so as to take account of the concerns which are central to her bringing this action for judicial review.
The second and third defendants raise as part of their defence to this claim, albeit at a very late stage, the submission that this court does not have jurisdiction over the decisions which were reached by those defendants to participate in the UK ETS. Prior to the hearing of this matter it was agreed that the sensible course was for me to determine the substance of the claimant's grounds for challenging the decisions in respect of the UK ETS, and for these jurisdictional questions to be litigated in the event that it was concluded that, in principle, the claimant is entitled to relief. As such, apart from furnishing written material, the second and third defendants did not take an active part in the hearing. In any event both the second and third defendants adopted the submissions made by the first defendant in resisting the substance of the claimant's case.
The factual background
The essence of a scheme such as the EU ETS or UK ETS is to establish a scheme to encourage the reduction of emissions of greenhouse gases, in particular by those operating activities which give rise to major greenhouse gas emissions. Both the EU ETS and UK ETS operate as what is known as a “cap and trade” scheme. A cap is set on the total amount of certain greenhouse gases that can be emitted by sectors of the economy over a given period of time (usually around 10 years), and that cap is then divided into allowances. Those required to participate in the scheme are then either given allowances or they have to purchase them to cover the emissions which their activities are generating. Failure to surrender sufficient allowances to cover emissions generated results in civil penalties. Over the course of time the cap is reduced so as to impose a limit on emissions which steadily falls and thereby contains the generation of greenhouse gases. Allowances can be traded, thereby effectively putting a price on emissions or, as it is often termed, carbon. Allowances are sold through auctions by the governments administering the scheme, and the purchase of allowances can lead to both a trade in allowances taking place and also cause hedging of allowances that may be required in future years. The price of allowances has the potential to have a number of significant influences. It can influence the viability of businesses required to participate in the scheme; it can incentivise investment and other activities to reduce the generation of emissions; it can, if too high, lead to carbon leakage whereby energy intensive industries may seek to transfer to countries elsewhere to avoid the extra costs of the scheme. In establishing the scheme, it is the contention of the defendants that it is necessary to establish a liquid and stable market in allowances in order for the objective of reducing emissions over time to be accomplished. The evidence before the court demonstrates that there are numerous emissions trading schemes in operation, with the EU ETS being the largest.
The objective of implementing an emissions trading scheme and the need to limit greenhouse gas emissions is directly related to the need to combat climate change. In November 2008 the Climate Change Act 2008 (which is dealt with in greater detail below) came into force, bringing with it a decision-making structure which included the enactment of carbon budgets taking account of the advice of the Committee on Climate Change (“the CCC”), an institution created by the 2008 Act. The setting of legally binding carbon budgets through the 2008 Act is designed to bear down on the emission of greenhouse gases in order for the UK to play its part in combatting climate change.
Following advice from the CCC delivered in May 2019 to the first defendant, the UK legislated for a target comprising a net zero increase in greenhouse gas emissions compared to the level of emissions in 1990 to be achieved by 2050. Amongst the other provisions contained within the 2008 Act are powers to establish an emissions trading scheme which are dealt with in detail below.
On 12 th December 2015 the state parties to the UN Framework Convention on Climate Change adopted the Paris Agreement in relation to climate change. The recitals to the agreement recognise “the need for an effective and progressive response to the urgent threat of climate change on the basis of the best available scientific knowledge”, along with “the importance of the engagements of all levels of government and various actors… in addressing climate change”. The recitals recognised that sustainable lifestyles and sustainable patterns of consumption and production, with developed country parties taking the lead, play an important role in addressing climate change. Articles 2 and 4 of the agreement provided as follows so far as relevant to the issues in this case:
“Article 2
1. This Agreement, in enhancing the implementation of the Convention, including its objective, aims to strengthen the global response to the threat of climate change, in the context of sustainable development and efforts to eradicate poverty, including by:
(a) Holding the increase in the global average temperature to well below 2 °C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5 °C above pre-industrial levels, recognising that this would significantly reduce risks and impacts of climate change.
…
Article 4
1. In order to achieve the long-term temperature goal set out in Article 2, Parties aim to reach global peaking of greenhouse gas emissions as soon as possible, recognising that peaking will take longer for developing country Parties, and to undertake rapid reductions thereafter in accordance with best available science, so as to achieve a balance between anthropogenic by sources and removals by sinks of greenhouses gases in the second half of this century, on the basis of equity, and in the context of sustainable development and efforts to eradicate poverty.”
In October 2017 the first defendant published a document entitled “The Clean Growth Strategy”. At that time, it was clear that the UK would be leaving the EU and the document noted that the UK's departure would have no impact on the level of commitment to tackling climate change and implementing the provisions of the Paris Agreement. The document also noted the participation of the UK in the EU ETS, and indicated that consideration was being given to future participation in the EU ETS after exit from the EU.
On the 2 nd May 2019, and with the deadline for the UK leaving the EU no doubt clearly in mind, the defendants wrote to the CCC seeking their advice on the establishment of a UK ETS. This was on the basis of two scenarios: firstly, a standalone UK ETS and, secondly, a UK ETS linked to the EU ETS (subject to satisfactory negotiation of a linking agreement). The letter pointed out (with specific reference to the statutory framework) as follows:
“Pursuant to Section 41(3)(b) of the CCA, we request that your advice takes into account the following principles that a UK ETS must:
• Be an...
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