In Elliott-Smith v Secretary of State for Business, Energy and Industrial Strategy, the claimant applied for judicial review of the legality of the defendants' joint decision to create the UK Emissions Trading Scheme (UK ETS) as a substitution for the UK's participation in the European Union Emissions Trading Scheme (EU ETS).
The defendants decided to establish the UK ETS as a result of the UK's withdrawal from the European Union. The aim of both the EU ETS or UK ETS is to establish a scheme to motivate 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 under a "cap and trade" scheme. This involves a cap being set on the total amount of certain greenhouse gases that can be emitted by sectors of the economy over a given period of time. The cap is then divided into allowances, which are either given to those required to participate in the scheme or have to be purchased to cover the emissions being generated. The cap is reduced over time to contain the generation of greenhouse gases through a steady fall of emissions.
The claimant brought the application for judicial review on the grounds that the Paris Agreement on climate change required urgent action to limit greenhouse gases. In approving the UK ETS with the cap and auction reserve price proposed, the claimant argued this criteria was not fulfilled.
The court concluded that it was not for the court to decide on an international treaty, but it could be assessed whether the defendants' view of the Paris Agreement was one which was tenable. The Judge stated that "adopting this tenable view approach, I am entirely satisfied that the approach to the Paris Agreement . . . is one which is tenable and entirely appropriate".
The claimant also argued that under the Climate Change Act 2008 the words "limiting or encouraging the limitation of activities" must be interpreted to mean a reduction in greenhouse gas emissions, which was not satisfied by the UK ETS.
The court considered the definition of a trading scheme in the Climate Change Act 2008, the long title of the Act, and also the Explanatory Memorandum. Justice Dove concluded a trading scheme under the Climate Change Act 2008 "does not necessarily have to achieve a reduction in the activities consisting of greenhouse gas emissions or causing or contributing such emissions: it is sufficient that the design of the scheme limits or encourages the limitation of those activities".
The application was refused.
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