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Challenge to New UK Emissions Trading Scheme Dismissed

Richard Honey QC

Mr Justice Dove has handed down judgment in the case of R (Elliott-Smith) v Secretary of State for Business, Energy and Industrial Strategy & others [2021] EWHC 1633 (Admin), dismissing a judicial review of the decision to implement a new UK emissions trading scheme (UK ETS).

The judicial review was a challenge to the decision of the Secretary of State and the devolved administrations on the appropriate design of the new UK ETS.  The decision was published on 1 June 2020 by way of the document entitled ‘The future of UK carbon pricing: UK Government and devolved administrations’ response’.  The UK ETS was challenged on two grounds.  

The first ground was that the decision was taken leaving out of account an alleged material consideration, namely an important requirement or imperative in Article 4.1 of the Paris Agreement to act urgently to limit greenhouse gas (GHG) emissions in the short-term, separate from the need for action to meet longer-term goals.  

The Secretary of State submitted that the aim in Article 4.1 of the Paris Agreement of reaching global peaking of GHG emissions as soon as possible was part and parcel of the journey to meeting the longer-term goals of the Paris Agreement and was not a separate and distinct element of the Paris Agreement independent from the longer-term aspects.

The Judge recognised – following R (Corner House) v Director of the Serious Fraud Office [2009] 1 AC 756 – that, as the Paris Agreement is an unincorporated international treaty, it was not the role of the Court to resolve definitively questions of construction of the Paris Agreement.  It was held that, in resolving the argument raised by the Claimant, provided the Government’s interpretation of the Paris Agreement was tenable, that interpretation should be followed.  

The Judge held that the Government’s interpretation was not only “tenable” but also “entirely appropriate”.  He said that this interpretation did not deny the urgency of the need to address climate change and involved the recognition that, in order to meet the long-term requirements of the Paris Agreement, action is required now, as taking measures in the short-term is an essential part of achieving the longer-term objective.  

Dove J went on to conclude that the decision-making Secretary of State and devolved administration ministers would have been fully aware of the Paris Agreement’s provisions in this respect and that the lack of any express reference to them in documents did not mean that it should be concluded that they were left out of account.  The Judge said that there was “convincing evidence” that an appropriate understanding of the requirements of the Paris Agreement had been taken into account in the decisions on the UK ETS.  

The second ground of challenge was that the power in s44 of the Climate Change Act 2008 to establish trading schemes had been exercised for an improper purpose because, it was argued, the effect of the UK ETS as designed was not to encourage GHG emissions reductions and that emissions reductions would not be achieved, because the cap on the emissions was set above the projected level of ‘business as usual’ emissions.

On the meaning of s44(2)(a), the Judge agreed with the Secretary of State, concluding that an ETS does not necessarily have to achieve a reduction in the activities consisting of GHG emissions or causing or contributing such emissions and that it is sufficient if the design of the ETS limits or encourages the limitation of such activities.  A lawful ETS could be designed to place a limit upon or encourage the limitation of activities leading to GHG emissions, rather than requiring them to be reduced.  The Judge noted that s44 provides flexibility in relation to a range of approaches which might be taken in devising emissions trading schemes.

The Judge, however, went on to conclude on the evidence that reduction of GHG emissions would be achieved by the UK ETS.  This was based on significant, detailed modelling work which had been undertaken by BEIS.  The Judge considered that it was neither appropriate nor possible for the Court to go behind this modelling, especially where no rival modelling, or detailed criticisms of the modelling work, had been advanced.  

Dove J dismissed the judicial review without having to deal with submissions from the devolved administrations in Scotland and Northern Ireland to the effect that the High Court of England and Wales did not have jurisdiction to consider the legality of their decisions.

Richard Honey QC acted for the successful Secretary of State, instructed by the Government Legal Department.