The defendants proposed to create a United Kingdom emissions trading scheme (“the scheme”) as a replacement for the UK’s participation in the European Union Emissions Trading System following its departure from the Union. A consultation exercise was conducted and, as required by the Climate Change Act 2008, the defendants sought advice from the Committee on Climate Change (“CCC”), which expressed concerns as to whether the proposed scheme (based on the “cap and trade” system) would establish an effective market for allowances rather than simply operating as a tax, and as to the high level at which the cap and the correspondingly low auction reserve price (“ARP”) was to be set. The defendants responded to those concerns in a response document, which set out the purpose of the design of the scheme that they sought to establish. The response document was accompanied by an impact assessment, which described in detail the economic modelling work that had been undertaken in order to establish the impact of the scheme design upon greenhouse gas reductions. By a claim for judicial review the claimant sought to challenge the lawfulness of the defendants’ decision on 1 June 2020 to create the scheme on the grounds: (i) that the defendants had left out of account a mandatory material consideration, namely the imperatives of the Paris Agreement on Climate Change, in particular the asserted requirement in articles 2 and 4, not referred to in the defendants’ response document, for urgent action in the short and medium term to reduce greenhouse gas emissions in order to achieve the Agreement’s longer term temperature objectives; and (ii) that the scheme which had now been established did not fulfil or serve the statutory purpose for establishing trading schemes under section 44 of the 2008 Act, since the level at which the cap was set and the ARP decided upon would not be effective to reduce greenhouse gas emissions. The second ground raised the issue of statutory construction whether section 44(2)(a) of the 2008 Act had to be read in the light of section 44(2)(b) so that a trading scheme “limiting or encouraging the limitation of activities” had to achieve a reduction in greenhouse gas emissions.
On the application for permission to proceed with the claim for judicial review—
Held, claim dismissed on the merits. (1) As appeared to be common ground, the Paris Agreement on Climate Change had been a material consideration which, bearing in mind both the relationship between the 2008 Act and the Paris Agreement and the regular references to it throughout the response, had been taken into in the formulation of the scheme. However, it was not for the court to resolve definitively any questions of construction in relation to an unincorporated international treaty, to which 197 states were parties and which contained a mechanism for enforcing its implementation, along with other dispute resolution mechanisms. At most, the court should assess whether or not the Secretary of State’s view of the Paris Agreement was one which was tenable in examining the question of its construction posed by the claimant. Adopting that approach, while there had been no express reference in the response to the CCC to articles 2 and 4.1 of the Paris Agreement, the need to take action urgently and in the short term had been acknowledged and taken into account in the approach of the response and the setting up of the scheme. Taking measures in the short term was an essential part of achieving the longer term objective, which approach was clearly tenable in the light of the provisions of article 4.1, of which each of the defendants had been fully aware (paras 55, 56–60).
(2) A trading scheme within the definition in section 44(2)(a) of the Climate Change Act 2008 did not necessarily have to achieve a reduction in the activities consisting of greenhouse gas emissions or causing or contributing such emissions: it was sufficient that the design of the scheme limited or encouraged the limitation of those activities. Section 44(2) described two types of trading scheme and it was not, therefore, necessary to read section 44(2)(a) in the light of section 44(2)(b), which was directed to describing a different type of trading scheme from that covered by section 44(2)(a) (paras 66, 67).
(3) It was clear from the documentation that the development of the scheme and the decision reached on 1 June 2020 had been underpinned by an evidence base, which included a significant amount of technically complex modelling work. The defendants had been entitled to rely upon the modelling work which had been commissioned in addressing the detailed concerns raised by the CCC in respect of the levels at which the cap and the ARP had been set. In the absence of any rival modelling the conclusion that the outputs of the model showed a functional scheme reducing greenhouse gas emissions was one which had been open to the defendants on the available evidence. Accordingly, the scheme, which had been developed and designed in order to fulfil the statutory purpose contained within section 44(2)(a) of the 2008 Act, did indeed achieve that aim and therefore fell within the scope of the statutory power (paras 73, 74).
David Wolfe QC and Ben Mitchell (instructed by Leigh Day) for the claimant.
Richard Honey QC (instructed by Treasury Solicitor) for the Secretary of State.
Andrew Sharland QC (instructed by Treasury Solicitor) for the second defendant, the Department for Agriculture, Environment and Rural Affairs Northern Ireland.
Thomas de la Mare QC and Stephen Donnelly (instructed by Treasury Solicitor) for the third defendant, the Scottish Ministers.
Mona Bayoumi (instructed by Welsh Government Legal Services, Cardiff for the fourth defendant, the Minister for Environment, Energy and Rural Affairs Welsh Government).