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Government set to weaken EU:ETS penalty regime

Published: 19th September 2013

The government is set to weaken its penalty regime for those companies which fail to comply with the EU carbon emissions trading system (EU:ETS).  This follows the reduction in sanctions for non-compliance introduced last January, which lowered the Environment Agency’s enforcement powers from criminal sanctions to purely civil remedies.

Currently, undisclosed errors that are voluntarily reported to the regulator before a penalty notice is issued are exempted both from the €5,000 civil penalty and the full €100 per tonne of carbon dioxide equivalent excess charge.

 To be exempt, the company must also have bought enough allowances following discovery of the error.  These extra allowances currently attract the lower civil penalty of €20 per tonne of carbon dioxide.

But the new proposals from the Department of Energy & Climate Change (DECC) enable the Environment Agency to levy an even “lower level of civil penalty, or even waive a penalty entirely.”

 The Agency is to be given discretion to lower (or even remove) fines to below the levels that exceed the economic benefits of non-compliance for the recalcitrant company.  This, says DECC, should apply in particular “where non-compliance has been inadvertent”

Some lawyers have warned that claims for inadvertency will in consequence escalate.  There is also some doubt as to whether, by removing strict liability, this would be breaching European law.  That is certainly the recorded view of the Scottish Environment Protection Agency.  There is no suggestion that the Scottish Government has any intention of adopting a similarly lenient approach to transgressors.

 In addition, the Environment Agency is to be stripped of certain existing powers to enter installations to acquire necessary information. This will apparently “help reduce the regulatory burden on businesses.”

Original article from Energy in Buildings and Industry Nr 2.  Sept 2013

 

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