Environmental news update – 18 October
Welcome to the latest edition of our weekly Environment Law news update. As ever, we bring you developments, insights, and analysis in the world of environmental law.
NEWS ROUND UP
Climate Change Agreement scheme extended for another 6 years
Climate Change Agreement (“CCA”) scheme started in 2013 and has proved to be a valuable tool in the fight against climate change. It allows eligible energy intensive facilities to receive a reduced rate on the Climate Change Levy (“CCL”) in exchange for meeting energy efficiency targets by reducing their Scope 1 and Scope 2 emissions.
The scheme operates under a two-tiered structure:
- The first tier involves umbrella agreements negotiated between the Department for Energy Security and Net Zero (“DESNZ”) and industry sectors. These agreements are held between the sector or trade association and the administrator, which is the EA;
- The second tier consists of underlying agreements between the EA and the operator of the eligible facility, setting out specific targets and obligations for the facility.
The EA administers the CCA scheme, including entering into agreements, maintaining a CCA register, and setting up sector accounts. The administration costs are recovered through a charging scheme run by the EA. Additionally, HMRC oversees the application of the reduced CCL rate once a business is certified as a participant in the scheme.
Following a recent two-year extension, in light of the need for long-term certainty for planning and investment, DESNZ decided to extend the scheme yet again, setting targets through to the end of 2030, with the first target being set for 1 January 2026. Furthermore, the new scheme widens its reach accepting new applicants (those that meet the obligations until March 2033) and making more businesses eligible from various sectors.
The consultation for the new scheme concluded in February this year receiving 62 responses from trade associations, businesses, consultants, academics and other respondents who supported it in their majority. They highlighted the maintenance of the current financial penalty, the ability to carry forward surplus energy savings between target period and the update of the primary electricity factor before each target period. However, they expressed concerns relating to potential increases in administrative costs and the feasibility of the proposed timelines.
According to Industry Minister Sarah Jones the scheme is a “critical step in supporting our energy-intensive industries as we transition to a low-carbon economy”. She stated that it provides £310m per year in savings helping businesses to invest in energy efficiency and decarbonisation projects as well as advancing the UK’s path to net zero.
OEP allowed to intervene in river restoration case
As we previously reported here, the Office for Environmental Protection (“OEP”) applied in September to intervene in a significant legal case concerning the government’s statutory obligations to restore and improve the environmental condition of waterways.
The case in discussion is the judicial review of DEFRA’s 2022 River Basin Management Plan (“RBMP”) for the Humber district. RBMPs, mandated under the Water Framework Directive (“WFD”), must be updated every six years to set legally binding, locally specific environmental objectives for water regulation.
Last November, the High Court’s ruling found that the government and the Environment Agency (“EA”) had failed in their legal duties to review, update, and implement measures to restore rivers and water bodies under the WFD. DEFRA and the EA appealed this ruling.
The Court of Appeal has now granted the OEP’s request, allowing intervention via written submissions only. The OEP stated that the appeal has broader implications for the content of planned measures to achieve environmental objectives for water bodies across England.
Recently, the OEP has also sought to intervene in a separate legal case relating to the Environmental Principles Policy Statement, as we reported here.
Strengthening environmental accountability: Key amendments to the Water (Special Measures) Bill
The Water (Special Measures) Bill begins its committee stage in the House of Lords on 28th October with aims to fulfil the government’s election promise by introducing legislation that places water companies under “special measures”. This includes giving regulators stronger enforcement powers and imposing tougher penalties on offenders, potentially including prison sentences for company executives.
While the government positioned the bill as a key step towards holding water companies accountable, some campaigners and peers argue that it lacks sufficient measures to tackle the issue. Ahead of the committee stage several amendments have been proposed for inclusion in the bill. Some of the proposed amendments are as follows:
- To formalise the Water Restoration Fund in legislation. This fund is intended to support nature restoration projects financed through environmental fines and penalties imposed on water and sewerage companies. DEFRA announced in April that £11million had been allocated to the fund sourced from fines collected since April 2022. However, concerns have been raised that without explicit legislative protections these funds might be absorbed by the Treasury;
- Requiring water companies to not only publish but also implement Pollution Production Plans. While the current bill mandates that companies annually produce these plans it does not explicitly obligate them to follow through on them. The amendment would make it an offence for water companies to fail to implement these pollution reduction strategies in addition to the existing penalty for failing to publish the plan;
- Supported by campaign group Wildfish ensuring that water companies are treated as public authorities in line with a 2015 court ruling. This would have the effect of placing water companies under the requirements of the Environmental Information Regulations improving public access to real-time operational data from water companies;
- Requiring water companies to publicly disclose the volume and concentration of discharge from emergency overflows;
- Reducing the notice period for removing a water company’s operating licence to just six months. Under the current rules Ofwat has to provide 25 years notice before revoking a licence.
These proposed amendments reflect a strong push toward enhancing environmental accountability, transparency and regulatory power over water companies.
Internal review of DEFRA regulation and regulators announced
DEFRA announced on Tuesday this week that it will be carrying out an internal review into the regulation and regulators within the department, to be led by economist Dan Corry. This follows previous comments made by Steve Reed, the Secretary of State for Environment, Food and Rural Affairs. Speaking to The Times earlier in October, Reed raised the possibility of an internal review aimed at putting “economic growth at the heart of [DEFRA’s] regulatory landscape.”
The review will consider whether this regulatory landscape, as it stands, is “fit for purpose” and will propose recommendations to ensure that departmental regulation will “drive economic growth while protecting the environment”. To this end, the review will include:
- “Whether DEFRA regulators are equipped to drive economic growth, secure private sector investment and protect the environment
- The customer and stakeholder experience of regulation, including the impact on those who are regulated
- The efficiency of regulation, in particular whether the current regulatory landscape involves any duplication and/or contradiction, and whether there are opportunities to make improvements.”
This review sits within the wider ongoing work which seeks to position DEFRA as a key economic growth department. In its statement released this week, DEFRA outlined regulatory reform to a number of areas, including boosting private investment into the water sector, driving down waste through developing circular economy measures, and cutting red tape for farmers to drive rural economic growth. The statement also highlights improving economic resilience in communities requiring improved flood defences,and developing pragmatic solutions to meet the demand for homes and infrastructure “while protecting and improving environmental outcomes”.
DEFRA’s announcement was made following prime minister Sir Keir Starmer’s address to the International Investment Summit in London earlier this week, in which he outlined new investment deals and announced plans to tackle unnecessary regulation. Planning regulations in particular were identified as “needlessly holding back the investment we need to take our country forward”, with the PM setting out the government’s intention to “rip up the bureaucracy that blocks investment”.
Criticism received on the new UK product standards bill for excluding chemical regulations
The new Product Regulation and Metrology Bill, aimed at aligning UK product standards with the EU laws post-Brexit, has drawn criticism for not explicitly including the country’s main chemical legislation.
During its second reading in the House of Lords, it was noted that the bill has “insufficient powers” to update existing product safety laws or to keep pace with technical developments and new risks.
Labour peer Lord Leong introduced the bill, emphasizing its importance for enhancing the UK’s trading relationships. The bill aims to improve product safety, mitigate environmental impacts, and align with international standards. However, it is still being refined.
Baroness Bennett of the Green Party welcomed the bill’s alignment with EU standards; however, she did express some concerns over the lack of focus on chemical regulations, which are crucial for health and environmental safety. She also highlighted concern with the use of endocrine-disrupting chemicals and “forever chemicals” like PFAS and formaldehyde, which are becoming a rising threat. Another key concern is that the bill primarily focuses on products which fall within the jurisdiction of the Department for Business and Trade and the Office for Product Safety and Standards, whereas the UK chemical regulations would normally fall under DEFRA and the Health and Safety Executive.
Labour’s Lord Browne praised the bill’s effectiveness in promoting easier trade with the EU by avoiding “duplicate regulations”. However, he did also criticize the UK’s post-Brexit chemical regulations, pointing out that the EU has conducted 23 risk assessments on harmful substances since Brexit, while the UK has done only three. He questioned the effectiveness of the UK’s regulatory body and goes on to say, “I fear it may just be that our duplicate body has simply proven less effective—which, in turn, imperils the safety of people in this country, […]”
Liberal Democrat Lord Fox described UK chemical regulations as a major issue for British manufacturing and consumer safety, calling the implementation of UK REACH post-Brexit a “botch.” He urged the government to confirm whether REACH falls within the bill’s scope and suggested amendments will be necessary if it does not.
Baroness Brinton, argued that aligning with EU regulations could save resources, citing a 39% increased budget demand on the HSE’s chemical division due to post-Brexit backlogs, stating “On those figures alone, any sensible government would want to be able to use existing standards—in this case, the EU’s standards”.
In response to the above points, Lord Leong assured that the government is committed to protecting health and the environment from chemical risks and is considering the best approach to UK chemical regulation separately from this bill. He finished by stating “the devil will be in the secondary legislation detail”.
