Legalize / United Kingdom / Public General Act

Energy Act 2023

Type Public General Act

Publication 2023-10-26

Last updated 2026-04-06

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(b) a financial penalty notice (see section 117),

(d) an operator removal notice (see section 119).

(4) Sanction notices, other than enforcement notices, may be given in respect of a failure to comply with a sanctionable requirement even if, at the time the notice is given, the failure to comply has already been remedied.

(5) Where the OGA gives a sanction notice to a person in respect of a particular failure to comply with a sanctionable requirement—

(a) it may, at the same time, give another type of sanction notice to the person in respect of that failure to comply;

(b) it may give subsequent sanction notices in respect of that failure only in accordance with section 122 (subsequent sanction notices).

(6) The OGA’s power to give sanction notices under this section is subject to section 120 (duty of OGA to give sanction warning notices).

(7) Where the OGA gives a sanction notice to a licensee in respect of a failure to comply with a sanctionable requirement—

(a) the matter is to be dealt with in accordance with this Chapter, and

(b) any requirement under the licensee’s carbon storage licence to deal with the matter in a certain way (including by arbitration) does not apply in respect of that failure to comply.

Enforcement notices

116

(1) An enforcement notice is a notice which—

(a) specifies the sanctionable requirement in question,

(b) gives details of the failure to comply with the requirement, and

(i) the sanctionable requirement, and

(ii) any directions included in the notice as mentioned in subsection (2),

before the end of the period specified in the notice.

(2) The notice may include directions as to the measures to be taken for the purposes of compliance with the sanctionable requirement.

(3) Requirements imposed by directions included in an enforcement notice as mentioned in subsection (2) are sanctionable in accordance with this Chapter.

Financial penalty notices

117

(1) A financial penalty notice is a notice which—

(a) specifies the sanctionable requirement in question,

(b) gives details of the failure to comply with the requirement, and

(i) comply with the sanctionable requirement before the end of a period specified in the notice, where it is appropriate to require such compliance and the failure to comply with the requirement has not already been remedied at the time the notice is given, and

(ii) pay the OGA a financial penalty of the amount specified in the notice before the end of a period specified in the notice.

(2) The period specified under subsection (1)(c)(ii) must not end earlier than the end of the period of 28 days beginning with the day on which the financial penalty notice is given.

(3) The financial penalty payable under a financial penalty notice in respect of a failure to comply with a sanctionable requirement (whether payable by one person, or jointly by two or more persons) must not exceed £1 million.

(4) If a financial penalty notice is given jointly to two or more persons, those persons are jointly and severally liable to pay the financial penalty under it.

(5) A financial penalty payable under a financial penalty notice is to be recoverable as a civil debt if it is not paid before the end of the period specified under subsection (1)(c)(ii).

(6) The OGA must—

(a) issue guidance as to the matters to which it will have regard when determining the amount of the financial penalty to be imposed by a financial penalty notice, and

(b) have regard to the guidance when determining the amount of the penalty in any particular case.

(7) The OGA may from time to time review guidance issued under subsection (6)(a) and, if it considers appropriate, revise it.

(8) Before issuing or revising guidance under this section, the OGA must consult such persons as it considers appropriate.

(9) The OGA must—

(a) lay any guidance issued under this section, and any revision of it, before each House of Parliament;

(b) publish any guidance issued under this section, and any revision of it, in such manner as the OGA considers appropriate.

(10) The Secretary of State may by regulations subject to the affirmative procedure amend subsection (3) to change the amount specified to an amount not exceeding £5 million.

(11) Money received by the OGA under a financial penalty notice must be paid into the Consolidated Fund.

Revocation notices

118

(1) A revocation notice may be given only in respect of a failure to comply with a sanctionable requirement imposed on a licensee in that capacity.

(2) Where two or more persons are the licensee in respect of a carbon storage licence, the revocation notice must be given jointly to all of those persons.

(3) A revocation notice is a notice which—

(a) specifies the sanctionable requirement in question,

(b) gives details of the failure to comply with the requirement,

(i) where no storage permit has been granted under the carbon storage licence, the licence is to be terminated, or

(ii) where a storage permit has been granted under the carbon storage licence, the permit is to be revoked,

on the date specified in the notice (“the revocation date”).

(4) The revocation date must not be earlier than the end of the period of 28 days beginning with the day on which the revocation notice is given.

(5) A revocation notice may not be given in circumstances where the carbon storage licence to be terminated, or the storage permit to be revoked, in accordance with the notice is one which, on the date the notice is given, the OGA would not have the power to grant.

(6) Where a carbon storage licence is terminated in accordance with a revocation notice—

(a) the rights granted to the licensee by the licence cease on the revocation date;

(b) the revocation does not affect any obligation or liability imposed on or incurred by the licensee under the terms and conditions of the licence;

(c) the terms and conditions of the licence apply as if the licence had been terminated in accordance with those terms and conditions, subject to section 115 (7)(b).

(7) Where a storage permit is revoked in accordance with a revocation notice—

(a) the authorisation granted by the storage permit ceases on the revocation date;

(b) the revocation does not affect any obligation or liability imposed or incurred under the terms and conditions of the storage permit;

(c) the terms and conditions of the carbon storage licence apply as if the storage permit had been revoked in accordance with those terms and conditions, subject to section 115 (7)(b).

Operator removal notices

119

(1) An operator removal notice may be given only in respect of a failure to comply with a sanctionable requirement imposed on an exploration operator under a carbon storage licence in that capacity.

(2) An operator removal notice is a notice which—

(a) specifies the sanctionable requirement,

(b) gives details of the failure to comply with the requirement, and

(c) informs the exploration operator to whom it is given that, with effect from a date specified in the notice (“the removal date”), the licensee under whose carbon storage licence the exploration operator operates (“the relevant licensee”) is to be required to remove the exploration operator (see subsection (4)).

(3) The OGA must—

(a) give a copy of the operator removal notice to the relevant licensee, and

(b) require the relevant licensee to remove the exploration operator with effect from the removal date.

(4) Where a licensee is required to remove an exploration operator from a specified date, the licensee must ensure that, with effect from that date, the exploration operator does not exercise any function of organising or supervising any of the activities referred to in paragraphs (a) and (b) of section 107 (3).

(5) The removal date must not be earlier than the end of the period of 28 days beginning with the day on which the operator removal notice is given.

(6) An operator removal notice may not be given in circumstances where the carbon storage licence under which the exploration operator operates is one which, on the date the notice is given, the OGA would not have the power to grant.

(7) A requirement imposed on a licensee under subsection (3)(b) is sanctionable in accordance with this Chapter.

Duty of OGA to give sanction warning notices

120

(1) This section applies where the OGA proposes to give a sanction notice in respect of a failure to comply with a sanctionable requirement.

(2) The OGA must give a sanction warning notice in respect of the sanctionable requirement to—

(a) the person or persons to whom it proposes to give a sanction notice, and

(b) where it proposes to give an operator removal notice, the relevant licensee (see section 119 (2)(c)).

(3) A sanction warning notice, in respect of a sanctionable requirement, is a notice which—

(a) specifies the sanctionable requirement,

(b) informs the person or persons to whom it is given that the OGA proposes to give a sanction notice in respect of a failure to comply with the requirement,

(d) informs the person or persons to whom it is given that the person or persons may, within the period specified in the notice (“the representations period”), make representations to the OGA in relation to the matters dealt with in the notice.

(4) The representations period must be such period as the OGA considers appropriate in the circumstances.

(5) Subsections (6) and (7) apply where the OGA gives a sanction warning notice to a person or persons in respect of a sanctionable requirement.

(6) The OGA must not give a sanction notice to the person or persons in respect of a failure to comply with the requirement until after the end of the representations period specified in the sanction warning notice.

(7) Having regard to representations made during the representations period specified in the sanction warning notice, the OGA may decide—

(a) to give the person or persons a sanction notice in respect of the failure to comply with the requirement detailed in the sanction warning notice under subsection (3)(c),

(b) to give the person or persons a sanction notice in respect of a failure to comply with the requirement which differs from the failure detailed in the sanction warning notice under subsection (3)(c), or

Grant, extension or restriction of gas transporter licence by Secretary of State

121

(1) The OGA may publish details of any sanction notice given in accordance with this Chapter.

(2) But the OGA may not publish anything that, in its opinion—

(a) is commercially sensitive,

(b) is not in the public interest to publish, or

(3) If, after details of a sanction notice are published by the OGA, the sanction notice is—

(a) cancelled on appeal, or

(b) withdrawn under section 123,

the OGA must publish details of the cancellation or withdrawal.

Subsequent sanction notices

122

(1) This section applies where the OGA gives a sanction notice in respect of a particular failure to comply with a sanctionable requirement (whether the notice is given alone or at the same time as another type of sanction notice).

(2) If the sanction notice given is a revocation notice or an operator removal notice, no further sanction notices may be given in respect of the failure to comply.

(3) If the sanction notice given is a financial penalty notice which does not require compliance with the sanctionable requirement, no further sanction notices may be given in respect of the failure to comply.

(4) Subsection (5) applies if the sanction notice given is—

(a) an enforcement notice, or

(b) a financial penalty notice which requires compliance with the sanctionable requirement.

(5) No further sanction notices may be given in respect of the failure to comply before the end of the period specified under section 116 (1)(c) or 117 (1)(c)(i), as the case may be (period for compliance with sanctionable requirement).

Withdrawal of sanction notices

123

(1) The OGA may, at any time after giving a sanction notice, withdraw the sanction notice.

(2) If a sanction notice is withdrawn by the OGA—

(a) the notice ceases to have effect, and

(b) the OGA must notify the following persons of the withdrawal of the notice—

(i) the person or persons to whom the notice was given;

(ii) in the case of an operator removal notice, the licensee under whose carbon storage licence the exploration operator operates.

Sanctions: information powers

124

(1) This section applies for the purposes of an investigation which—

(a) concerns whether a person has failed to comply with a sanctionable requirement, and

(b) is carried out by the OGA for the purpose of enabling it to decide whether to give the person a sanction notice, or on what terms a sanction notice should be given to the person.

(2) The OGA may by notice in writing, for the purposes of that investigation, require the person to provide specified documents or other information.

(3) “Specified” means specified, or of a description specified, in a notice under this section.

(4) A requirement under subsection (2) applies only to the extent—

(a) that the documents requested are documents in the person’s possession or control, or

(b) that the information requested is information in the person’s possession or control.

(5) A requirement imposed by a notice under subsection (2) is sanctionable in accordance with this Chapter.

(6) The documents or information requested—

(a) may include documents or information held in any form (including in electronic form);

(b) may include documents or information that may be regarded as commercially sensitive;

(7) The notice must specify—

(a) to whom the information is to be provided;

(b) where it is to be provided;

(d) the form and manner in which it is to be provided.

General

Appeals

125

In Schedule 8—

(a) Part 1 contains provision about appeals against decisions by the OGA relating to the preparation of an information and samples plan and appeals against the giving of a notice under section 112, and

(b) Part 2 contains provision about appeals against the imposition of sanction notices and appeals against the giving of a notice under section 124.

Procedure for enforcement decisions

126

(1) The OGA—

(a) must determine the procedure that it proposes to follow in relation to enforcement decisions, and

(b) must issue a statement of its proposals.

(2) The procedure mentioned in subsection (1)(a) must be designed to secure, among other things, that an enforcement decision is taken—

(a) by a person falling within subsection (3), or

(b) by two or more persons, each of whom falls within subsection (3).

(3) A person falls within this subsection if the person was not directly involved in establishing the evidence on which the enforcement decision is based.

(4) The statement mentioned in subsection (1)(b) must be published in whatever way appears to the OGA to be best calculated to bring the statement to the attention of the public.

(5) When the OGA takes an enforcement decision, the OGA must follow its stated procedure.

(6) If the OGA changes its procedure in a material way, it must publish a revised statement.

(7) A failure of the OGA in a particular case to follow its procedure as set out in the latest published statement does not affect the validity of an enforcement decision taken in that case.

(8) But subsection (7) does not prevent the Tribunal from taking into account any such failure in considering an appeal under paragraph 4 or 5 of Schedule 8 in relation to a sanction notice.

(9) In this section, “enforcement decision” means—

(a) a decision to give a sanction notice in respect of a failure to comply with a sanctionable requirement, or

(b) a decision as to the details of the sanction to be imposed by the notice.

Interpretation of Chapter 5

127

In this Chapter—

“information and samples plan” has the meaning given in section 109;

“items subject to legal privilege”— in England and Wales, has the same meaning as in the Police and Criminal Evidence Act 1984 (see section 10 of that Act); in Scotland, has the meaning given by section 412 of the Proceeds of Crime Act 2002; in Northern Ireland, has the same meaning as in the Police and Criminal Evidence (Northern Ireland) Order 1989 (S.I. 1989/1341 (NI 12));

“OGA” means the Oil and Gas Authority;

“protected material” has the meaning given in section 113;

“sanction notice” has the meaning given in section 115;

“storage permit” has the same meaning as in the Storage of Carbon Dioxide (Licensing etc) Regulations 2010 (S.I. 2010/2221) (see regulation 1(3) of those Regulations);

“subsequent holder” has the meaning given in section 113;

“Tribunal” means the First-tier Tribunal.

Chapter 6 — General

Access to infrastructure

128

(1) The Secretary of State may by regulations make provision about the acquisition of rights to use relevant infrastructure (whether existing or proposed).

(2) In exercising the power under subsection (1) the Secretary of State must have regard to the need to ensure that the process for acquiring such rights operates in a transparent and non-discriminatory manner.

(3) Without prejudice to the generality of subsection (1), regulations under that subsection may amend, revoke or replace or make provision similar or corresponding to—

(a) the Storage of Carbon Dioxide (Access to Infrastructure) Regulations 2011 (S.I. 2011/2305);

(b) the Storage of Carbon Dioxide (Access to Infrastructure) Regulations (Northern Ireland) 2015 (S.R. (N.I.) 2015 No. 388).

(4) Regulations under subsection (1)—

(a) may confer functions (including discretions) on any person;

(b) may confer jurisdiction on a court or tribunal;

(d) may make other provision about enforcement;

(e) must provide for any offences created by the regulations to be triable—

(i) only summarily, or

(ii) either summarily or on indictment.

(5) Where regulations under subsection (1) impose a civil penalty, they must also provide for a right of appeal against the imposition of the penalty.

(6) Before making regulations under subsection (1) the Secretary of State must give to the appropriate consultees a notice—

(a) stating that the Secretary of State proposes to make regulations under subsection (1), and

(b) specifying the period (of not less than 28 days from the date on which the notice is given) within which representations must be made with respect to the proposed provisions,

and must consider any representations duly made and not withdrawn.

(7) For the purposes of this section the “appropriate consultees” are—

(a) the GEMA;

(b) the Scottish Ministers, if the regulations contain provision that would be within the legislative competence of the Scottish Parliament if it were contained in an Act of that Parliament;

(c) the Welsh Ministers, if the regulations contain provision that would be within the legislative competence of Senedd Cymru if it were contained in an Act of the Senedd (ignoring any requirement for the consent of a Minister of the Crown imposed under Schedule 7B to the Government of Wales Act 2006);

(d) the Department for the Economy in Northern Ireland, if the regulations contain provision that—

(i) would be within the legislative competence of the Northern Ireland Assembly if it were contained in an Act of that Assembly, and

(ii) would not, if it were contained in a Bill in the Northern Ireland Assembly, result in the Bill requiring the consent of the Secretary of State under section 8 of the Northern Ireland Act 1998;

(e) the Oil and Gas Authority.

(8) Regulations under subsection (1) are subject to the affirmative procedure.

(9) In this section “relevant infrastructure” means—

(a) a site for the geological storage of carbon dioxide that is situated in a regulated place, or

(b) a pipeline, situated in a regulated place, which is used or intended to be used to convey carbon dioxide to a site falling within paragraph (a),

and any associated installations, apparatus or works.

(10) For the purposes of this section a site or pipeline is situated in a “regulated place” if it is situated—

(a) in the United Kingdom, or

(b) in, under or over—

(i) the internal waters of the United Kingdom,

(ii) the territorial sea adjacent to United Kingdom, or

(iii) waters in a Gas Importation and Storage Zone (within the meaning given by section 1 of the Energy Act 2008).

(11) In this section “geological storage” has the same meaning as in Part 1 (see section 55).

Financial assistance

129

(1) The Secretary of State may provide financial assistance to any person for the purpose of encouraging, supporting or facilitating—

(a) transportation of carbon dioxide;

(b) storage of carbon dioxide;

(c) carbon dioxide capture facilities which operate (or are to operate) in association with facilities for any activity mentioned in paragraph (a) or (b);

(d) low carbon hydrogen production;

(e) transportation of hydrogen;

(f) storage of hydrogen.

(2) The financial assistance referred to in subsection (1) includes expenditure incurred by the Secretary of State for the purposes of, or in connection with—

(a) the establishment of a revenue support counterparty, a hydrogen levy administrator or an allocation body;

(b) making payments to a revenue support counterparty.

(3) Financial assistance under this section—

(a) may be provided in any form and in particular by way of grants, loans, guarantees or indemnities or by the provision of insurance;

(b) may be provided subject to conditions (which may include conditions about repayment with or without interest or other return);

(d) may be provided to an investment fund for onward investment or for administrative costs relating to onward investment;

(e) may be provided by incurring expenditure for the benefit of the person assisted;

(f) may be provided by the acquisition of shares or any other interest in, or securities of, a body corporate;

(g) may be provided by the acquisition of any undertaking or of any assets.

(4) The Secretary of State is not authorised by this section to give financial assistance in the way described in subsection (3)(f) without the consent of the body corporate concerned.

(5) The power to provide financial assistance under this section is in addition to (and does not limit or replace) any other power of a Minister of the Crown to provide financial assistance.

(6) In this section—

“allocation body” has the same meaning as in Chapter 1 (see section 73 (6));

“greenhouse gas” has the meaning given by section 92(1) of the Climate Change Act 2008;

“hydrogen levy administrator” has the same meaning as in Chapter 1 (see section 69 (6));

“low carbon hydrogen production” means production of hydrogen by a method which in the opinion of the Secretary of State will contribute to a reduction in emissions of greenhouse gases;

“revenue support counterparty” has the same meaning as in Chapter 1 (see section 58 (6));

“storage”, in relation to carbon dioxide, means any storage with a view to the permanent containment of carbon dioxide;

“undertaking” means any trade or business or any other activity providing employment.

Part 3 — Licensing of hydrogen pipeline projects

Introductory

Key definitions for Part 3

130

(1) In this Part—

“designated person” means a person in relation to whom a designation under section 131 (1) has effect (and any reference to designation, in relation to a person, is to be construed accordingly);

“designated project”, in relation to a person, means a hydrogen pipeline project in relation to which the person is designated;

“gas transporter licence” means a licence under section 7 of the Gas Act 1986;

“hydrogen” means any gas that consists wholly or mainly of hydrogen;

“hydrogen pipeline project” means a project involving the construction, alteration or operation of a pipeline for the purpose of the conveyance of hydrogen.

(2) References in this Part to the extension or restriction of a licence are to the giving of a direction in respect of the licence under (respectively) section 7(4) or (4A) of the Gas Act 1986.

Designation in relation to hydrogen pipeline projects

Designation

131

(1) The Secretary of State may by notice given to a person designate the person in relation to a hydrogen pipeline project.

(2) The Secretary of State may designate a person in relation to a hydrogen pipeline project only if the Secretary of State is of the opinion—

(a) that it is likely to be appropriate for conditions described in section 137 (1)(a) and (b) to be included in any gas transporter licence held by the person for the purposes of the project (whether or not the person already holds such a licence), and

(b) that the project is likely to result in value for money.

(3) A person may be designated only with the person’s consent.

(4) A designation may not relate to more than one hydrogen pipeline project (but a person who is designated in relation to one project may be designated separately in relation to another).

Designation: procedure

132

(1) The Secretary of State must publish a statement setting out—

(a) the procedure that the Secretary of State expects to follow in determining whether to exercise the power under section 131 (1), and

(b) how the Secretary of State expects to determine whether the conditions in section 131 (2) are met.

(2) A duty imposed by subsection (1) may be satisfied by things done before the passing of this Act (as well as by things done after that time).

(3) A designation notice must include—

(a) a description of the hydrogen pipeline project to which the designation relates,

(b) the Secretary of State’s reasons for the designation,

(d) the date of the notice.

(4) The Secretary of State must give the GEMA a copy of a designation notice.

(5) The Secretary of State must publish a designation notice, but may exclude from publication any material the disclosure or publication of which the Secretary of State considers—

(a) would be likely to prejudice the commercial interests of any person, or

(b) would be contrary to the interests of national security.

(6) In this section, “designation notice” means a notice under section 131 (1).

Revocation of designation

133

(1) The Secretary of State may by notice given to a designated person revoke the person’s designation in relation to a hydrogen pipeline project if—

(a) either of the conditions in section 131 (2) ceases to be met in relation to the project,

(b) the Secretary of State determines that a condition to which the designation is subject has not been met, or

(2) Section 132 (3)(a), (b) and (d), (4) and (5) applies (with necessary modifications) in relation to the revocation of a person’s designation as it applies in relation to the designation of a person.

(3) Where the Secretary of State gives a notice to a person under subsection (1), the person’s designation in relation to the hydrogen pipeline project in question ceases to have effect at the end of the day on which the notice is given to the person.

(4) The revocation of a person’s designation in relation to a hydrogen pipeline project does not affect anything done in relation to the licence by the Secretary of State under or by virtue of this Part while the person was designated in relation to the project.

Grant etc of gas transporter licence

Grant, extension or restriction of gas transporter licence by Secretary of State

134

(1) The Secretary of State may exercise the power under section 7(2) of the Gas Act 1986 (grant of gas transporter licences) so as to grant a gas transporter licence to a designated person, subject to subsection (2).

(2) The Secretary of State may only grant a gas transporter licence which authorises the conveyance of hydrogen through pipes for the purposes of the person’s designated project.

(3) The Secretary of State may exercise the power under section 7(4) of the Gas Act 1986 (direction to extend licence) so as to extend a gas transporter licence where—

(a) the licence is held by a designated person, and

(b) the extension authorises the conveyance of hydrogen through pipes for the purposes of the person’s designated project.

(4) The Secretary of State may exercise the power under section 7(4A) of the Gas Act 1986 (direction to restrict licence) so as to restrict a gas transporter licence where—

(a) the licence is or was held by a designated person, and

(b) the restriction is in connection with the revocation of the person’s designation in relation to a hydrogen pipeline project.

(5) In its application for the purposes of subsections (1), (3) and (4), the Gas Act 1986 has effect as if—

(a) in the following provisions, references to the GEMA were to the Secretary of State—

(i) section 7(5) and (6)(a);

(ii) section 7B(9);

(iii) section 8(3), (4) and (5)(a);

(b) in sections 7(6)(b) and 8(5)(b), references to the Secretary of State were to the GEMA;

(c) in section 7B(4)(c), the reference to the GEMA included a reference to the Secretary of State, but only for the purpose of enabling the inclusion of conditions requiring the rendering of a payment on the grant of a licence;

(d) section 7B(9) also required a copy of the licence to be sent to the GEMA.

(6) When granting or extending a gas transporter licence by virtue of this section, the Secretary of State must have regard to—

(a) costs, expenditure or liabilities of any description that the designated person may reasonably be expected to incur in carrying out its activities;

(b) the need to secure that the designated person is able to finance its activities;

(c) the need to secure that the designated person has appropriate incentives in relation to the carrying on of its activities;

(d) such other matters as the Secretary of State considers appropriate.

(7) References in subsection (6) to a designated person’s activities are to the person’s activities for the purposes of—

(a) the designated project to which the grant or extension relates, and

(b) in the case of an extension, any other designated project already authorised by the person’s gas transporter licence.

(8) A gas transporter licence granted, extended or restricted by the Secretary of State by virtue of this section has effect for all purposes as if it had been granted, extended or restricted by the GEMA.

Applications for grant etc of gas transporter licence

135

(1) The Secretary of State may by regulations make provision about the making, consideration and determination of relevant applications, including provision—

(a) about the person to whom a relevant application must be made;

(b) about the form and manner in which a relevant application must be made;

(d) requiring a relevant application to be accompanied by such information and documents as may be specified in the regulations;

(e) requiring a relevant application to be accompanied by such fee (if any) as may be—

(i) specified in the regulations, or

(ii) determined, by the person to whom the application is made, in accordance with the regulations;

(f) about the matters to be taken into account in determining a relevant application;

(g) requiring a determination to be accompanied by reasons;

(h) requiring determinations to be published;

(i) conferring functions on the Secretary of State or the GEMA (including functions involving the exercise of a discretion);

(j) for anything falling to be determined under the regulations to be determined—

(i) by the Secretary of State, the GEMA or another person specified in the regulations, and

(ii) in accordance with such procedure and by reference to such matters and to the opinion of such persons as may be so specified.

(2) “Relevant application” means an application within any of the following paragraphs (whether made to the Secretary of State or the GEMA)—

(a) an application by a designated person for the grant of a gas transporter licence that authorises the conveyance of hydrogen through pipes for the purposes of the person’s designated project;

(b) an application by a designated person for the extension of a gas transporter licence held by the person so that it authorises the conveyance of hydrogen through pipes for the purposes of the person’s designated project;

(c) an application by a person who is or has been designated for the restriction of a gas transporter licence held by the person, in connection with the person’s designation in relation to a hydrogen pipeline project ceasing to have effect.

(3) Provision made by virtue of subsection (1)(j)(ii) may in particular be made by reference to a document as amended from time to time.

(4) Regulations under this section—

(a) may provide for cases in which an application is not required;

(b) may provide for a relevant application that has been rejected by one person to be dealt with afresh by another person.

(5) Before making regulations under this section, the Secretary of State must consult the GEMA.

(6) Section 7B(1) to (2A) of the Gas Act 1986 does not apply to an application for the grant, extension or restriction of a gas transporter licence so far as the application is one to which regulations under this section apply.

(7) Any sums received by the Secretary of State or the GEMA by virtue of this section are to be paid into the Consolidated Fund.

(8) Regulations under this section are subject to the negative procedure.

(9) For the purposes of section 5A(1) to (10) of the Utilities Act 2000 (duty of the GEMA to carry out impact assessment), a function exercisable by the GEMA by virtue of regulations under this section is to be treated as if it were a function exercisable by it under or by virtue of Part 1 of the Gas Act 1986.

Modification of gas transporter licence

Modification of gas transporter licence by Secretary of State

136

(1) The Secretary of State may modify—

(a) the conditions of a designated person’s gas transporter licence;

(b) the terms of a designated person’s gas transporter licence;

(d) a document maintained in accordance with the conditions of licences of a relevant type or an agreement that gives effect to a document so maintained.

(2) The Secretary of State may exercise the power under subsection (1) only for the purpose of—

(a) facilitating or supporting the financing of the design, construction, commissioning or operation of a hydrogen pipeline project (or of hydrogen pipeline projects generally), or

(b) promoting value for money in connection with a hydrogen pipeline project (or in connection with hydrogen pipeline projects generally).

(3) When making modifications under subsection (1)(a) or (b), the Secretary of State must have regard to—

(a) the duties in sections 1 and 4(1)(b) of the Climate Change Act 2008 (carbon targets and budgets);

(b) the interests of existing and future consumers of gas conveyed through pipes, including their interests in relation to the cost and security of supply of gas;

(c) costs, expenditure or liabilities of any description that the designated person may reasonably be expected to incur in carrying out its activities;

(d) the need to secure that the designated person is able to finance its activities;

(e) the need to secure that the designated person has appropriate incentives in relation to the carrying on of its activities;

(f) such other matters as the Secretary of State considers appropriate.

In paragraph (b), “gas” has the same meaning as in Part 1 of the Gas Act 1986 (see section 48(1) of that Act).

(4) The Secretary of State may modify the conditions or terms of a gas transporter licence held by a person who is or was a designated person in connection with the revocation of the person’s designation in relation to a hydrogen pipeline project.

(5) For the purposes of subsection (1), each of the following is a relevant type of licence—

(a) a gas transporter licence;

(b) a licence under section 7A(1) of the Gas Act 1986 (gas supply licence);

(d) a licence under section 7AC of that Act (code manager licence).

(6) References in this section to a designated person’s activities are to the person’s activities for the purposes of—

(a) the designated project to which the modification relates, and

(b) any other designated project authorised by the person’s gas transporter licence.

Scope of modification powers under section 136

137

(1) Modifications made under section 136 (1)(a) may include, for example, provision—

(a) about the revenue that the designated person may receive in respect of its activities (its “allowed revenue”);

(b) about how the designated person’s allowed revenue is to be calculated;

(c) about the amounts that the designated person is entitled to receive, or is required to pay, under any hydrogen transport revenue support contract (within the meaning of Chapter 1 of Part 2) to which it is a party;

(d) about activities that the designated person must, may or may not carry on;

(e) about the management of the designated person’s activities, including the manner in which they are carried out;

(f) conferring functions on the GEMA, including provision enabling or requiring the designated person to refer for determination, decision or approval by the GEMA matters specified, or of a description specified, in the licence;

(g) for the amendment of the licence for the purpose of implementing a determination or decision of the GEMA or the Competition and Markets Authority;

(h) requiring the designated person to comply with any direction or instruction, or to have regard to any guidance, given by the GEMA in relation to matters specified, or of a description specified, in the licence;

(i) requiring the designated person to co-operate with the GEMA and to provide such information and assistance to the GEMA as it may require for the purposes of carrying out any of its functions;

(j) about the payment by the designated person, to the GEMA or to the Competition and Markets Authority, of such amounts as may be determined by or in accordance with the licence;

(k) about the disclosure or publication of information by the designated person.

(2) Modifications made under section 136 (1)(b) may include, for example, provision about the circumstances in which a licence may be revoked or suspended.

(3) The powers under section 136 (1) and (4) to “modify” include the power to amend, add to or remove; and references to modification in section 136, this section and section 138 are to be construed accordingly.

(4) The powers conferred by section 136 (1) and (4)—

(a) may be exercised generally, only in relation to specified cases, or subject to exceptions (including by making provision for a case to be excepted only so long as specified conditions are satisfied);

(b) may be exercised differently for different purposes or areas;

(5) Provision included in a gas transporter licence, or in a document or agreement described in section 136 (1)(d), by virtue of section 136—

(a) need not relate to the activities authorised by the licence;

(b) may do anything authorised for gas transporter licences by section 7B(4A), (5)(a), (6) or (7) of the Gas Act 1986.

(6) The modification under section 136 (1) or (4) of part of a standard condition of a gas transporter licence does not prevent any other part of the condition from continuing to be regarded as a standard condition for the purposes of Part 1 of the Gas Act 1986.

(7) In section 81(2) of the Utilities Act 2000 (standard conditions of gas licences), after “section 89” (as inserted by section 91 (13) of this Act) insert “, section 136 (1) or (4)”.

(8) References in this section to a designated person’s activities are to the person’s activities for the purposes of—

(a) the designated project to which the modification relates, and

(b) any other designated project authorised by the person’s gas transporter licence.

Procedure etc relating to modifications under section 136

138

(1) Before making a modification under section 136 (1) or (4), the Secretary of State must consult—

(a) the holder of any licence being modified,

(b) the GEMA, and

(2) If under section 136 (1) the Secretary of State modifies the standard conditions of a gas transporter licence, the GEMA must—

(a) make the same modification of those standard conditions for the purposes of their incorporation in gas transporter licences granted after that time, and

(b) publish the modification.

(3) The Secretary of State must publish details of any modifications made under section 136 (1) and (4) as soon as reasonably practicable after they are made.

(4) The Secretary of State may exclude from publication under subsection (3) any material the disclosure or publication of which the Secretary of State considers—

(a) would be likely to prejudice the commercial interests of any person, or

(b) would be contrary to the interests of national security.

Information

Information and advice

139

(1) The Secretary of State may by regulations make provision about the provision and publication of information and advice in connection with the carrying out of functions of any person under or by virtue of this Part.

(2) The provision that may be made by virtue of subsection (1) includes provision—

(a) for the Secretary of State to require the GEMA to provide information to a hydrogen transport counterparty or any other specified person;

(b) for a hydrogen transport counterparty to require the GEMA to provide information to it;

(c) for the Secretary of State to require a designated person, a hydrogen transport counterparty or any other specified person to provide information to the GEMA;

(d) for the GEMA to require a designated person, a hydrogen transport counterparty or any other specified person to provide information to the GEMA;

(e) for the Secretary of State to require a designated person, a hydrogen transport counterparty, the GEMA or any other specified person to provide information or advice to the Secretary of State or any other specified person;

(f) for the classification and protection of confidential or sensitive information;

(g) for the enforcement of any requirement imposed by virtue of any of paragraphs (a) to (f).

(3) Section 105(1) of the Utilities Act 2000 (general restrictions on disclosure of information) does not apply to a disclosure required by virtue of this section.

(4) The first regulations under this section are subject to the affirmative procedure.

(5) Any other regulations under this section are subject to the negative procedure.

(6) In this section—

“designated person” includes a person who has been a designated person;

“hydrogen transport counterparty” has the same meaning as in Chapter 1 of Part 2 (see section 56);

“specified person” means a person specified, or of a description specified, in regulations under this section.

(7) See also section 34(4) of the Gas Act 1986 (general duty for the GEMA to give information, advice and assistance to the Secretary of State or the Competition and Markets Authority).

Conditions of gas transporter licences

Conditions of gas transporter licences for conveyance of hydrogen

140

(1) For the purposes of this section, “relevant licence” means a gas transporter licence so far as it authorises a person to convey hydrogen through pipes in connection with the carrying on of a hydrogen pipeline project.

(2) Without prejudice to the generality of section 7B(4)(a) of the Gas Act 1986 (conditions of licences), conditions described in subsection (3) may be included in a relevant licence in respect of circumstances where a person other than the licence holder (“the candidate”)—

(a) has applied for, or is considering whether to apply for, a relevant licence, or

(b) is considering whether to apply for financial support for activities relating to the production, transportation, storage or use of hydrogen.

(3) The conditions referred to in subsection (2) are conditions that require the licence holder to comply with a direction given by the Secretary of State or the GEMA requiring the holder to provide to the candidate—

(a) information in relation to the activities authorised by the licence, and

(b) any other assistance that the candidate may reasonably require for the purpose of determining whether to—

(i) apply for a relevant licence, or

(ii) apply for financial support as mentioned in subsection (2)(b).

(4) A person (“P”) may not under section 8(3) of the Gas Act 1986 modify a condition of a relevant licence unless P is of the opinion that the modification is such that—

(a) the licence holder would not be unduly disadvantaged in competing with one or more other holders of relevant licences, and

(b) no other holder of a relevant licence would be unduly disadvantaged in competing with other holders of such licences (including the holder of the relevant licence to be modified).

Other

Secretary of State directions to the GEMA

141

(1) In exercising any functions it has in relation to relevant gas transporter licences, the GEMA must comply with general or particular directions given to it by the Secretary of State for the purpose of promoting value for money in connection with a hydrogen pipeline project (or in connection with hydrogen pipeline projects generally).

(2) In subsection (1), “relevant gas transporter licence” means a gas transporter licence, held by a designated person, that authorises the conveyance of hydrogen through pipes in connection with the person’s designated project.

Repeal of Part 3

142

(1) The Secretary of State may by regulations repeal any of the preceding provisions of this Part.

(2) So far as any of those provisions is still in force on a relevant date, the Secretary of State must—

(a) consider whether it is appropriate to repeal that provision, and

(b) if satisfied that it is not appropriate to do so, publish a statement no later than 3 months after that date explaining why not.

(3) “Relevant date” in subsection (2) means 31 December 2040 and each five-year anniversary of that date.

(4) Regulations under this section are subject to the affirmative procedure.

Part 4 — New technology

Chapter 1 — Low-carbon heat schemes

Low-carbon heat schemes

143

(1) The Secretary of State may by regulations make provision for the establishment and operation of one or more low-carbon heat schemes.

(2) A “low-carbon heat scheme” is a scheme for encouraging the supply or installation in the United Kingdom of relevant heating appliances through the imposition of low-carbon heat targets on persons to whom the scheme applies.

(3) In this Chapter—

“low-carbon heat target” means a target imposed by or under scheme regulations;

“relevant heating appliance” means— a heating appliance that generates heat but is incapable of burning fossil fuels or peat to do so, or a heating appliance that generates heat by burning fossil fuels or peat, but does so only as part of a wider system to supplement heat from air, water or the ground.

(4) In the definition of “relevant heating appliance” in subsection (3), “fossil fuel” means—

(a) coal,

(b) lignite,

(d) crude liquid petroleum,

(e) petroleum products (within the meaning of that Act), or

(f) any substance produced directly or indirectly from a substance mentioned in paragraphs (a) to (e).

(5) The provision made by sections 144 to 150 is without prejudice to the generality of subsection (1).

(6) In this Chapter, “scheme regulations” means regulations under subsection (1).

Application of scheme

144

(1) Scheme regulations that provide for the establishment of a low-carbon heat scheme must identify—

(a) the descriptions of person to whom the scheme applies;

(b) the kinds of relevant heating appliance to which the scheme applies.

(2) A person within a description identified by virtue of subsection (1)(a) is referred to in this Chapter as a “scheme participant”.

(3) Scheme regulations may—

(a) set low-carbon heat targets, or

(b) provide for low-carbon heat targets to be set in accordance with provision made by the regulations.

Section 145 contains further provision about the setting of targets.

(4) Scheme regulations must make provision about the period or periods in relation to which low-carbon heat targets have effect.

(5) The provision that may be made by virtue of subsection (4) includes—

(a) provision authorising things done by a scheme participant before the first period in relation to which a low-carbon heat target has effect to be treated as done by the scheme participant during that period;

(b) provision authorising things done by a scheme participant during one period in relation to which a low-carbon-heat target has effect to be treated instead as done by the scheme participant during a different period in relation to which such a target has effect.

Setting of targets etc

145

(1) A low-carbon heat target may be set in whatever way, and by reference to whatever criteria, the Secretary of State considers appropriate, and may for example be set—

(a) by reference to the carrying on of specified activities;

(b) as a proportion of the activities of a scheme participant that must relate to relevant heating appliances;

(c) by reference to the average level of energy efficiency (determined in accordance with scheme regulations) to be achieved in relation to heating appliances, or specified descriptions of heating appliances, supplied or installed by a scheme participant;

(d) by reference to the average carbon intensity of heat generation (determined in accordance with scheme regulations) of heating appliances, or specified descriptions of heating appliances, supplied or installed by a scheme participant;

(e) where a scheme participant manufactures heating appliances, by specifying what proportion of those heating appliances, or of specified heating appliances, that are supplied or installed (whether or not by the scheme participant) must be relevant heating appliances.

(2) The power to specify an activity by virtue of subsection (1)(a) includes power to specify circumstances or conditions relating to the carrying out of the activity.

(3) In the case of a low-carbon heat target that is imposed by virtue of subsection (1)(c) or (d) on a scheme participant who manufactures heating appliances, the target may be set by reference to heating appliances that are supplied or installed (whether or not by the scheme participant).

(4) Scheme regulations may confer a discretion on the Secretary of State or any other person in connection with the setting of low-carbon heat targets.

(5) The reference in subsection (1)(d) to the carbon intensity of heat generation, in relation to an appliance, is a reference to the level of greenhouse gas emissions per unit of heat generated by the appliance.

“Greenhouse gas emissions” means emissions of any greenhouse gas within the meaning of section 92(1) of the Climate Change Act 2008.

(6) Scheme regulations may provide—

(a) for different weight to be given to different kinds of appliance or different activities;

(b) for low-carbon heat targets to be set at different levels for different kinds of appliance or different activities.

(7) Scheme regulations may provide for specified activities to count towards the meeting of a low-carbon heat target.

(8) In this section, “specified” means specified in scheme regulations.

Further provision about scheme regulations

146

(1) Scheme regulations must provide for the making of determinations as to whether a scheme participant has met a low-carbon heat target imposed on the scheme participant.

(2) Scheme regulations may make provision for monitoring the operation of a low-carbon heat scheme, and may in particular make provision about—

(a) the keeping of records by scheme participants and others;

(b) the provision of information by scheme participants and others;

(3) Scheme regulations may make provision—

(a) enabling scheme participants to pool or transfer low-carbon heat targets imposed on them;

(b) for the issuing of certificates representing activities or appliances to which a low-carbon heat target relates;

(c) enabling scheme participants to acquire certificates mentioned in paragraph (b) for the purpose of meeting a low-carbon heat target;

(d) about the keeping of records in relation to—

(i) the pooling or transfer of low-carbon heat targets;

(ii) the acquisition of certificates.

(4) Scheme regulations may make provision—

(a) requiring a scheme participant who fails to meet a low-carbon heat target to make a payment, before a specified deadline, of an amount specified by or determined in accordance with the regulations;

(b) for a payment mentioned in paragraph (a) to be made to the administrator (see section 147) or to such other person as the regulations may specify;

(c) for a person who fails to meet a low-carbon heat target to be subject to such consequences (instead of or in addition to a requirement mentioned in paragraph (a)) as may be specified;

(d) about how liability to make a payment, or to other consequences, is to be determined where low-carbon heat targets have been pooled or transferred by virtue of provision made under subsection (3)(a).

(5) In subsection (4), “specified” means specified in scheme regulations.

Administration of scheme

147

(1) Scheme regulations may provide for the appointment of a person as the administrator of a low-carbon heat scheme.

(2) Scheme regulations—

(a) may confer functions on the administrator for the purposes of the scheme;

(b) may authorise the administrator to arrange for another person to carry out any functions of the administrator.

(3) The functions that may be conferred on the administrator by virtue of subsection (2) include, for example, functions in connection with—

(a) setting low-carbon heat targets;

(b) determining whether low-carbon heat targets have been met;

(d) keeping records;

(e) requiring scheme participants to make payments to the administrator in connection with the costs of operating the scheme.

(4) Only the following may be appointed as the administrator of a low-carbon heat scheme—

(a) the Secretary of State;

(b) the Scottish Ministers;

(d) the Department for the Economy in Northern Ireland;

(e) a public authority (other than a person within any of paragraphs (a) to (d));

(f) any combination of the above.

(5) More than one person may be appointed as the administrator of a low-carbon heat scheme.

(6) Scheme regulations that appoint a public authority as the administrator of a low-carbon heat scheme may make such amendments to primary legislation as the Secretary of State considers appropriate for the purpose of enabling the authority to carry out the functions conferred on it by the regulations.

(7) In this section, “public authority” means a person with functions of a public nature.

Enforcement, penalties and offences

148

(1) Scheme regulations may authorise the administrator of a low-carbon heat scheme—

(a) to require the production of documents or the provision of information;

(b) to question the officers of a company or other individuals;

(d) to seize documents or records.

(2) Scheme regulations may authorise the administrator of a low-carbon heat scheme, in circumstances specified in the regulations—

(a) to treat activities of a person (A) as activities of a different person (B) for the purposes of the scheme, and

(b) to treat a low-carbon heat target imposed on A as if it had been imposed on B.

(3) Scheme regulations may provide that a person is liable to one or more penalties in respect of a failure to comply with a requirement imposed on the person by or under a low-carbon heat scheme.

(4) Where by virtue of subsection (3) scheme regulations provide that a person is liable to a financial penalty, the regulations—

(a) may specify the amount of the penalty or provide for the amount of the penalty to be determined in accordance with the regulations;

(b) must provide for the penalty to be paid to the administrator or to such other person as the regulations may specify.

(5) Scheme regulations may create offences for failure to comply with a requirement imposed by or under a low-carbon heat scheme.

(6) Scheme regulations made by virtue of subsection (5) may provide for an offence created by the regulations to be triable—

(a) only summarily, or

(b) either summarily or on indictment.

(7) Scheme regulations made by virtue of subsection (5) may provide for an offence created by the regulations to be punishable with a fine.

Application of sums paid by virtue of section 146(4) or 148(3)

149

(1) Scheme regulations may make provision about the application of amounts paid by virtue of section 146 (4)(a) or 148 (3).

(2) Provision made by virtue of subsection (1) may require the payment of amounts into the Consolidated Fund.

Appeals

150

(1) Scheme regulations that, by virtue of section 148 (3), provide that a person is liable to a financial penalty must also provide for a person to have a right of appeal to a court or tribunal against the imposition of the penalty.

(2) Scheme regulations may make provision about appeals against—

(a) decisions made by the administrator of a low-carbon heat scheme, and

(b) penalties imposed (other than financial penalties) or enforcement action taken for failure to comply with a requirement imposed by or under a low-carbon heat scheme.

(3) Scheme regulations that make provision by virtue of subsection (2) must specify the court, tribunal or person who is to hear and determine an appeal made by virtue of that subsection.

Scheme regulations: procedure etc

151

(1) Scheme regulations are subject to the negative procedure unless subsection (2) applies, in which case they are subject to the affirmative procedure.

(2) This subsection applies if scheme regulations—

(a) establish a low-carbon heat scheme;

(b) extend the descriptions of person, or the kinds of relevant heating appliance, to which a low-carbon heat scheme applies;

(d) increase the amount of existing financial penalties by more than is necessary to reflect changes in the value of money;

(e) create an offence or increase the fine for an existing offence;

(f) confer new powers to enforce requirements imposed by or under a low-carbon heat scheme;

(g) amend primary legislation.

(3) Scheme regulations may create exceptions to any requirement imposed by the regulations.

(4) Before making scheme regulations that apply in relation to Scotland, Wales or Northern Ireland, the Secretary of State must give notice—

(a) stating that the Secretary of State proposes to make scheme regulations,

(b) setting out or describing the provisions of the regulations that apply in relation to Scotland, Wales or Northern Ireland, and

(c) specifying the period (of not less than 28 days from the date on which the notice is given) within which representations may be made with respect to those provisions,

and must consider any representations duly made and not withdrawn.

(5) A notice under subsection (4) must be given to each relevant devolved authority, that is to say—

(a) the Scottish Ministers, so far as the regulations apply in relation to Scotland;

(b) the Welsh Ministers, so far as the regulations apply in relation to Wales;

(6) The Secretary of State need not wait until the end of the period specified under subsection (4)(c) before making regulations if, before the end of that period, each relevant devolved authority to which the notice was given has confirmed that it has made any representations it intends to make with respect to the provisions referred to in subsection (4)(b).

(7) The Secretary of State must, if requested to do so by a relevant devolved authority, give the authority a statement setting out whether and how representations made by the authority with respect to the provisions referred to in subsection (4)(b) have been taken into account in the regulations.

Interpretation of Chapter 1

152

In this Chapter—

“low-carbon heat scheme” has the meaning given by section 143 (2);

“low-carbon heat target” has the meaning given by section 143 (3);

“primary legislation” means— an Act, an Act of the Scottish Parliament, a Measure or Act of Senedd Cymru, or Northern Ireland legislation;

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