judgment

Repsol Sinopec Resources UK Ltd v. Secretary of State for Business, Energy and Industrial Strategy - judgment

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An appellate regulatory body dismissed a claim that in seeking to recover over-allocated allowances under the European Union Emissions Trading Scheme (EU ETS), a UK regulator needed to "net off" other allowances to which the operator was entitled. 

Appellant Repsol holds a greenhouse gas emissions permit under the EU ETS for an offshore oil-production, storage and offloading unit called Bleo Holm. Pursuant to the EU ETS, Repsol received a free allocation of allowances for the period 2012-2017 based on a historic baseline assessment of CO2 emissions from Bleo Holm, and was required to surrender sufficient allowances to cover its total emissions each year, whether the free allowances or additional allowances that had been purchased.  Following an investigation, the Offshore Production Regulator for Environment and Decommissioning (OPRED) found that there had been a significant decrease in capacity at Bleo Holm and, as a result, determined that Repsol was not entitled to all of the free allowances that it had received.  OPRED sought to recover the over-allocated allowances under the Greenhouse Gas Emissions Trading Scheme Regulations 2012 on behalf of the Secretary of State for Business, Energy and Industrial Strategy (BEIS).  OPRED is still investigating another significant capacity reduction issue which may have resulted in an over-allocation of allowances to Repsol. 

While the issues related to Repsol's allowances for 2013-2017 were under review, in December 2018, the European Commission decided to suspend the allocation of free allowances to UK operators in light of the uncertainties surrounding the UK's exit from the European Union.  As a result, Repsol did not receive free allowances in 2018 as expected, and so the company had to purchase sufficient allowances to offset its emissions for that year. 

In March 2019 Repsol appealed BEIS's Notice of Recovery, bringing three claims before the Tribunal General Regulatory Chamber. First, Repsol contended that BEIS should not have sought to recover the total number of allowances that had been over-allocated for 2012-2017, but rather, should have netted off the allowances that Repsol did not receive in 2018 due to the European Commission's decision to suspend the allocation of free allowances to UK operators.  Second, Repsol argued that the European Commission's decision to withhold allowances from UK operators was unlawful.  Third, Repsol claimed that by seeking recovery of allowances without netting off the allowances to which Repsol was entitled, BEIS violated Repsol's property rights under Article 1 of the First Protocol to the European Convention on Human Rights.  Repsol asked the Tribunal to quash the Notice of Recovery.

On November 18, 2019, the Tribunal dismissed the appeal. According to the Tribunal's order, the parties agree there was an over-allocation of allowances as a result of Repsol's failure to notify BEIS of the decreased capacity at Bleo Holm, and so BEIS had the power to issue a Notice of Recovery. The Tribunal further explained that although a Notice of Recovery must provide certain information to an operator, this does not include the details of any calculation to determine the sum of allowances to which the operator is entitled.  Therefore, the Tribunal reasoned, the sum of allowances does not include any netting-off calculation. Moreover, the 2012 regulations are intended to implement a strict accounting system.  Given this, the Tribunal determined that BEIS did not err in declining to net off any allowances from the Notice of Recovery.  The Tribunal further concluded that it lacked jurisdiction to re-interpret the European Commission's decision to suspend allowance allocations to UK operators or to declare the decision unlawful.  Finally, the Tribunal held that it lacked the power to resolve Repsol's property rights claim. 

Repsol Sinopec Resources UK Ltd v. Secretary of State for Business, Energy and Industrial Strategy

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An aim to achieve a quantifiable outcome within a given time-frame, set by an institution such as a national government.

Policy instruments are techniques or tools used by governing authorities to promote certain policies in order to achieve predetermined goals. Put simply, instruments are how a government tries to achieve its goals, with this taxonomy being focused on national policy instruments.

Risk is the potential for adverse consequences resulting from the dynamic interplay between (climate-related) hazards, exposure, and vulnerability of affected human or ecological systems.

Groups  of people who are adversely affected by climate change or the response to it

A set of principles, processes, and practices that build economic and political power to shift from an extractive economy to a regenerative economy.

Renewable energy means all forms of energy produced from renewable sources in a sustainable manner.

Fossil fuel is a generic term for non-renewable energy sources such as coal, fossil gas, and oil (including crude oil, and petroleum products), that can be used for electricity and heat generation. Fossil fuels are hydrocarbons formed from pressurised and heated organic material buried over millions of years.

Molecules in the atmosphere that play a key role in the greenhouse effect by trapping heat radiating from Earth’s surface.

Area of the economy in which actors engage in identical or related activities.

In human systems, the process of adjustment to actual or expected climate change and its effects, in order to moderate harm, increase resilience or exploit beneficial opportunities. In natural systems, the process of adjustment to actual climate change and its effects; human intervention may facilitate adjustment to expected climate change and its effects.

The management and allocation of funds, assets and investments to meet various objectives

A long-lived, colourless gas, chiefly emitted from fossil fuel combustion, deforestation and cement production.

Tradable permits are market-based tools that grant permission for specific activities, frequently used to regulate emissions. These permits can be issued within a trading system to manage environmental impacts.

Either money or something of monetary value is transferred between two or more organisations, people or countries.

This sector includes firms and individuals offering specialised expertise in fields such as law, accounting, consulting, science and engineering.

The activities of industries involved in the production, distribution, and sale of energy, including electricity, gas, and renewables.

Financial support to help individuals manage the effects of unexpected events, securing their livelihoods and increasing the resilience of people and businesses to the changing climate. It’s especially vital in developing regions where everyday risks, climate-related weather extremes, or crop failures can push people into poverty. Without insurance, people may have to resort to selling assets or cutting consumption to cope with losses.

Oil is a combustible liquid fossil fuel composed mainly of hydrocarbons, occurring as crude oil and refined into petroleum products such as petrol, diesel and kerosene.

The release of heat-trapping gases, primarily from human activities such as burning fossil fuels, agriculture and industry.

This sector involves activities that impart knowledge and skills to individuals, including formal schooling, vocational training and educational support.

Fossil gas, commonly known as natural gas, is a fossil fuel consisting chiefly of methane with smaller amounts of other hydrocarbons and trace gases, found in underground deposits.

Repsol Sinopec Resources UK Ltd v. Secretary of State for Business, Energy and Industrial Strategy - judgment

Policy instrument

Fossil fuel

Greenhouse gas

Economic sector

Finance