Carbon Emissions Legislation
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Carbon Emissions Legislation European Union • Australia • Brazil • Canada (Alberta and British Columbia) China • Colombia • France • Germany • Israel • Japan • Mexico New Zealand • South Africa • South Korea Sweden • United Kingdom March 2014 LL File No. 2014-010386 LRA-D-PUB-000011 The Law Library of Congress, Global Legal Research Directorate (202) 707-5080 (phone) • (866) 550-0442 (fax) • [email protected] • http://www.law.gov This report is provided for reference purposes only. It does not constitute legal advice and does not represent the official opinion of the United States Government. The information provided reflects research undertaken as of the date of writing. It has not been updated. Contents Comparative Summary ....................................................................................................................1 European Union ...............................................................................................................................7 Australia .........................................................................................................................................22 Brazil ..............................................................................................................................................31 Canada, Alberta..............................................................................................................................36 Canada, British Columbia ..............................................................................................................42 China ..............................................................................................................................................46 Colombia ........................................................................................................................................55 France .............................................................................................................................................63 Germany .........................................................................................................................................69 Israel ...............................................................................................................................................75 Japan ..............................................................................................................................................82 Mexico ...........................................................................................................................................92 New Zealand ..................................................................................................................................96 South Africa .................................................................................................................................105 South Korea .................................................................................................................................111 Sweden .........................................................................................................................................118 United Kingdom...........................................................................................................................128 International Law .........................................................................................................................136 Bibliography ................................................................................................................................142 Comparative Summary Nicolas Boring Foreign Law Specialist This report examines the ways in which a number of countries are attempting to reduce their greenhouse gas (GHG) emissions. A particular emphasis is put on emissions trading schemes (ETS), but other emissions-reduction policies are examined as well. Indeed, many countries do not participate in any ETS, and instead aim to reduce GHG emissions through other means. I. Definition It is important to note that, although the term “carbon” is often used, the policies discussed in this report actually go beyond a reduction of carbon dioxide (CO2) to include other GHGs. The European Union ETS, for example, applies to carbon dioxide and “other gaseous constituents of the atmosphere, both natural and anthropogenic, that absorb and re-emit infrared radiation,”1 which would include (but not be limited to) methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulphur hexafluoride in addition to carbon dioxide. Australia’s ETS is meant to cover carbon dioxide, methane, nitrous oxide, and specified perfluorocarbons attributable to aluminum production—a list that appears somewhat narrower than the EU scheme but one which nonetheless goes well beyond carbon dioxide. II. Global Concern over Greenhouse Gas Emissions Global warming appears to be generally considered a major environmental concern in the jurisdictions discussed in this report. Most Britons, for example, seem to believe that a series of floods that have recently affected the United Kingdom are attributable to global warming. Similarly, recent polls find that a large majority of the French public believes that climate change will adversely affect their daily lives, and over half of the Mexican public sees global warming as a major threat. In Sweden, concerns over global warming have helped turn the Green Party into the country’s third largest political party. All of the jurisdictions discussed here have adopted the position that greenhouse gas emissions constitute an important environmental issue. However, there is no general consensus over the best policies to reduce these emissions. As illustrated by the chart below, several countries (as well as the EU and the Canadian province of British Columbia) either already have an ETS, or are developing one. Yet others, such as Israel and South Africa, have not adopted any sort of 1 Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 Establishing a Scheme for Greenhouse Gas Emissions Allowance Trading Within the Community and Amending Council Directive 96/61/EC art. 3(c), 2003 O.J. (L 275) 32, http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L: 2003:275:0032:0032:EN:PDF, as amended by Directive 2009/29/EC of the European Parliament and of the Council of 23 April 2009 Amending Directive 2003/87/EC so as to Improve and Extend the Greenhouse Gas Emissions Allowance Trading Scheme of the Community, 2009 O.J. (L 140) 63, http://eur-lex.europa.eu/LexUriServ/ LexUriServ.do?uri=OJ:L:2009:140:0063:0087:en:PDF. The Law Library of Congress 1 Carbon Emissions Legislation: Comparative Summary cap-and-trade mechanism, and Australia appears set to dismantle its existing ETS in the near future. Table: ETS Status by Jurisdiction Jurisdiction ETS in Operation ETS Under Development No ETS European Union Australia Brazil Canada – Alberta Canada – British Columbia China Colombia France * Germany * Israel Japan Mexico New Zealand South Africa South Korea Sweden * United Kingdom * * Participates in the European Union ETS. III. Cap-and-Trade Schemes The current ETSs operate on the same basic principles. The government issues allowances that permit a certain amount of GHG emission. Entities that operate within certain legally- determined sectors of activity, or which release a certain amount of emissions, must obtain enough of these allowances to cover their emissions every year. These entities must then surrender their allowances back to the government at the end of the year, at which time their levels of emissions are compared to the number of allowances they hold. An operator emitting more GHG than its number of allowances permitted has to pay a penalty—typically a forced purchase of its missing allowances, and/or a fine. One of the defining aspects of this type of scheme is that, after the allowances have been sold or otherwise distributed by the government to private operators, these entities may trade these allowances among themselves, thereby creating a market. The ultimate goal is to create a strong incentive for polluting industries to find ways to reduce their GHG emissions. The government’s initial distribution of allowances to the polluting entities is typically a sale— either at a fixed price or through an auction. However, in most cases, the practice has been to begin implementing an ETS with an introductory period during which allowances are distributed for free. The Law Library of Congress 2 Carbon Emissions Legislation: Comparative Summary The various ETSs discussed in this report cover different ranges of activity. Most focus on industrial activity (particularly heavy industry) and on the energy sector. The biggest existing ETS, the EU’s, originally only applied to operators in the energy sector, the production and processing of ferrous metals, the mineral industry, and large-scale pulp production. Since 2009, it also covers oil refinery; the production of coke, lime, cement, paper and cardboard, carbon black, nitric acid, and ammonia; and the manufacturing of glass, ceramics, and mineral wool. Australia’s ETS covers electricity generation, stationary energy, industrial processes, fugitive emissions from coal and gas, and emissions from waste deposited in landfills. Even though agriculture can be an important source of GHG emissions, it appears that this sector is generally not included when the ETS apply to specifically defined activities. New Zealand