---

Climate Change Bill [HL]

I do not think the Minister is correct. The EU ETS is a trading system not a target system. Article 13 of directive 2003/87/EC, which set up the EU ETS, specifically states under ““Validity of allowances””: "““Four months after the beginning of the first five-year period referred to in Article 11(2), allowances which are no longer valid and have not been surrendered””—" that is, used— "““and cancelled in accordance with Article 12.3””—" which concerns trading— "““shall be cancelled by the competent authority””." You can over a one-year period use trading, but over a five-year period—and we are talking about five-year budget periods within this context—you cannot transfer certificates under the EU ETS from phase 1 to phase 2.