Environmental Law Service

Climate Law Database

Why the law is needed?

Firstly, because the policies, proclamations and declaration could be easily forgotten or set aside and are not legally binding. Secondly, it is much more difficult to change or adjust the law once it is adopted and in force, therefore it is not totally subject to the government of the day and the current political situation what is crucial when dealing with the climate change.

One of the reasons why the British Climate Change Act („CCA“ hereinafter) has been adopted and widely accepted by public, business and industry is that the CCA provides long term clarity about the amount of GHG emissions and gives businesses the certainty they needed to invest to the new, low carbon technologies. The investors have legitimate expectations so they act under the assumption that their long term investments to the low carbon technologies will pay off in the near future where the more stringent GHG emission reduction will be required. In the case that the future government radically changes the environmental policy the investors (including the foreign investors) may sue for damages. On the other hand the CCA provides also some flexibility in achieving the GHG emission reduction targets so the investors may choose their own approach how they may achieve the reduction targets. The CCA together with the direct or indirect state support of the „green“ technologies may speed up the transition to the low carbon economy and also to adapt to the future climate change effectivelly.

The Stern Review estimates that if there is no action taken on reducing greenhouse gas emissions to avoid the worst impacts of the climate change, the overall costs and risks of the climate change will be equivalent to losing at least 5% of global GDP each year. If a wider range of risks and impacts is taken into account, the estimates of damage could rise to 20% of GDP each year or more. On the contrary, the costs of taken action can be limited to around 1% of global GDP each year. Despite the disputable low discount rate used by Stern (0,1%) the possible future economic impacts are on of the main reasons for adopting the CCA.