CRC Energy Efficiency Scheme
The CRC Energy Efficiency Scheme comes into force in April 2010 and is one of the primary mechanisms by which the Government will tackle climate change. As the name suggests it is designed to reduce carbon dioxide emissions by encouraging improved energy efficiency in buildings by introducing the first mandatory UK-wide carbon trading scheme.
Who will it catch?
The CRC will operate in phases, with the initial introductory phase running from April 2010 - 2013. During this first phase parties (i) with one or more half hourly electricity meters settled on the half hourly market; and (ii) who consumed more that 6,000MWh in 2008 (which equates to an energy bill of approximately £500k per annum) will be caught. These criteria may however change for future phases of the scheme.
How does it work?
At the start of each year participants will need to forecast their annual CO2 emissions and buy allowances from the Government to cover those emissions. At the end of the relevant year the participant will relinquish sufficient allowances to cover their actual emissions. If a participant has excess allowances these may be sold; however, if not enough allowances are held additional allowances will need to be purchased or else a fine will be due. To drive down annual emissions the Government will reduce the number of allowances released to market each year.
The scheme is designed to be revenue neutral to the Government, in that money generated by allowance sales will be recycled to participants. How much a participant actually receives will be determined by where they place on the annual league table the Government will publish, which league will rank participants depending upon their emissions for the year. The higher an organisation is ranked, the more it will receive.
How will it affect businesses?
There are expected to be three principal impacts arising from the CRC:
- Compliance Costs - participants will incur (i) financial costs via compliance with the CRC (i.e. forecasting emissions, measuring and reporting annual emissions, buying allowances, penalty costs etc) and (ii) reputational costs depending upon their ranking in the league table:
- Corporate Activity – the CRC will need to be considered by purchasers of corporate entities and building stock to determine whether transfer of CRC allowances should form part of the commercial negotiation; and
- Leasing – the CRC will affect the landlord/tenant relationship where the landlord purchases electricity from a utility (and therefore is responsible for resultant emissions under the CRC) but it is the tenant who uses the electricity (and therefore determines how many allowances the landlord needs to purchase). It will be for parties to determine whether their lease should allow the landlord to recover the cost of allowances from their tenant and, if so, whether the tenant should be able to recover any of the recycled payment.
Contaminated Land in Northern Ireland
Contaminated land is dealt with in England, Scotland and Wales by Part IIA of the Environmental Protection Act 1990 ("Part IIA") which has been in force for over 10 years. The equivalent legislation in Northern Ireland is Part III of the Waste and Contaminated Land (Northern Ireland) Order 1997 ("Part III").
The key difference between the position in Great Britain as opposed to Northern Ireland is that Part III is not yet in force, and no timetable has yet been set for its implementation. In the interim, the Northern Ireland Environment Agency's position is that, although not implemented, Part III should be complied with in any event, as it will apply retrospectively. Further, contaminated land can and should be dealt with through the planning process (where appropriate).
Part III is not expected to come into force until mid – late 2011 at the earliest because the District Councils responsible for drawing up the implementation strategy are reluctant to proceed until the Review of Public Administration has been finalised. The Review is scheduled to be finalised in May 2011 and will, amongst other things, redefine Council boundaries.
Similar to Part IIA, Part III defines contaminated land as land in such a condition because of substances in, on or under it by virtue of which: (i) significant harm is being caused or there is a significant possibility of such harm being caused; or (ii) pollution of water-ways or underground strata is being, or is likely to be, caused. The concept of "significant" is to be explained through guidance by the Department of the Environment ("DOE"). However, as yet no such guidance has been provided.
On identifying a contaminated site, the appropriate District Council will notify the DOE, the owner of the land, the occupier of the land and any others deemed to be an "appropriate person". The enforcing authority (either the District Council or the DOE) will serve a remediation notice, specifying the timescale for the requisite action to be taken.
A remediation notice can be served upon the person who caused or knowingly permitted the substances causing the contamination, the owner or occupier of the land and those who cause or knowingly permit contaminating substances to be in or on land. It is an offence not to comply with a remediation notice (subject to a fine not exceeding £20,000) and an appeal mechanism is available.
In addition, the enforcing authority may take High Court proceedings to secure compliance. That authority will also be empowered to carry out remediation to prevent imminent danger of serious harm or in the event of non-compliance with a remediation notice, for which it can recover its reasonable costs.
Finally, developers should note that they may be liable for environmental damage by virtue of the EU Environmental Liability Directive which has been transposed into law in Northern Ireland by the Environmental Liability (Prevention and Remediation) Regulations (Northern Ireland) 2009.
Landowners and developers (among others) in Northern Ireland should therefore consider the treatment of contaminated land very carefully, notwithstanding the fact that the contaminated land regime under Part III has yet to come into force.
Mining Waste Directive
Overview & Scope
The Mining Waste Directive ("MWD") is European legislation that covers the management of "extractive waste" from surface and underground mines and quarries in order to prevent or reduce the risk of damage to the environment and human health.
The definition of "extractive waste" in the MWD is very wide and covers: (i) waste solids or slurries; (ii) waste rock and overburden; and (iii) topsoil.
As all mines and quarries will produce "extractive waste" (as defined), all mines and quarries throughout the UK will need to comply with the MWD once it has been fully transposed into UK law. The MWD must be transposed into UK law by 1 May 2012.
The requirements of the MWD differ depending on which of two distinct groups a site falls into, these being: (i) the highest risk facilities known as "Category A waste facilities" (e.g. facilities containing hazardous wastes or dangerous substances above certain thresholds), and (ii) all other sites which produce extractive waste.
Key Requirements
The following requirements will apply to all sites within the scope of the new regime:-
- Waste Management Plans – to be prepared by the operator of the mine and/or quarry.
- Closure procedures – for closing and managing closed mining waste facilities.
- Permits - for mining waste facilities that deposit or keep extractive waste such as ponds and dams.
More prescriptive requirements apply in respect of "Category A waste facilities" which are subject to the following additional requirements:
- Major Accident Prevention Policy – including safety management plan and internal emergency plan prepared by the operator.
- Financial Guarantee – must be in place before any extractive waste is deposited.
UK Implementation
The requirements of the MWD are being implemented in different ways within the UK jurisdictions as follows:
The Environmental Permitting (England & Wales) (Amendment) Regulations 2009 are being used to implement the requirements under the MWD in England & Wales. The EP Regulations came into force on 7 July 2009 and will be enforced by the Environment Agency (EA). All new mines and quarries will therefore need to apply for an Environmental Permit from the EA, in addition to obtaining planning permission.
Operators of existing sites are given more time to comply and will need to apply for an Environmental Permit by 1 May 2011 at the latest. Operators of Category A waste facilities are required to have a financial guarantee in place by 1 May 2014.
The planning system is to be used to implement the MWD requirements. Draft Management of Waste from Extractive Industries (Scotland) Regulations 2009 were consulted on between August and October 2009 and are expected to come into force shortly.
The draft Regulations provide that the documents, plans etc required by the MWD will require to be submitted along with the planning application for a new mine or quarry. Again, existing mines and quarries are given more time to adapt and will be required to provide the relevant paperwork evidencing compliance to the relevant planning authority no later than 1 May 2012.
Like Scotland the planning system is to be used to implement the requirement of the MWD. No detail has yet emerged on how the provisions of the MWD will be met but draft Regulations are expected in February 2010.
On the Radar
Flood & Water Management Bill
The Flood and Water Management Bill ("FWM Bill") is currently awaiting its second reading in the House of Lords. The FWM Bill primarily deals with flood and coastal erosion risk management in England & Wales.
The FWM Bill was originally wide-ranging and covered a variety of issues relevant to flooding and the water industry. It was also intended to transpose the EC Floods Directive (dealt with in Scotland by way of the Flood Risk Management (Scotland) Act 2009) but due to constraints on parliamentary time prior to the general election, the Government decided to transpose the Floods Directive by way of the Flood Risk Regulations 2009 (FRR) to ensure the transposition deadline of 26 November 2009 was met. The FRR transpose the Directive's requirement that Member States carry out preliminary flood risk assessments, prepare flood hazard and risk maps, and produce flood risk management plans.
A much shortened version of the FWM Bill has now been introduced to Parliament focusing on those matters which the Government deem most urgent. Provisions relating to responsibilities for managing flood risks are retained and clearly defined for the first time in legislation, whilst measures in relation to competition in the water industry have been dropped, at least for the time being.
The Energy Bill
The Energy Bill is currently awaiting the report stage in the House of Commons. The Bill is intended to take forward important elements of the Government's ambitious Low Carbon Transition Plan (which aims to cut carbon emissions by 80% on 1990 levels by 2050). It proposes to provide support for energy consumers (particularly the poorest and most vulnerable) by providing mandatory social price support, such as through an electricity bill rebate.
The Bill also creates the framework for the new "Carbon Capture and Storage Incentive" which will support up to four commercial-scale CCS demonstration projects. The full details of the mechanism (eg rate and frequency) will be laid out in regulations in Summer 2010, but broadly speaking there are two elements: (i) a levy on electricity supplies (paid by the electricity suppliers); and (ii) a mechanism for disbursing funds to selected CCS projects (to be selected through a competitive process). It is intended that the CCS Incentive will be fully operational by April 2011.
The Bill will apply to England, Scotland and Wales. In Scotland, all elements of the Bill are reserved except the disbursal of funds for the CCS demonstration projects which is devolved.
McGrigors LLP: UK Environment Team
Jennifer Ballantyne
Partner
Tel +44 (0)141 567 8655
Email jennifer.ballantyne@mcgrigors.com
Jacqueline Harris
Partner
Tel +44 (0)131 777 7136
Email jacqueline.harris@mcgrigors.com
Laura Cameron
Partner
Tel +44 (0)141 567 8632
Email laura.cameron@mcgrigors.com
Katharine Davies
Partner
Tel +44 (0)207 054 2629
Email katharine.davies@mcgrigors.com
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