Environment Update February 2010
Renewed hopes for renewables
The renewable heat industry should hopefully see a surge in the installation of renewable heating as the Department of Energy and Climate Change (DECC) announces new proposals for renewable energy technology, boosting the financial incentive for homeowners and businesses to install such technology for either in-house use, or for distributing through the National Grid.
The first development comes with the Government’s declaration of the final rates for the feed-in tariff (FIT) scheme, to be introduced on 1 April 2010 for small-scale generation. Rewards are set according to the cost and maturity of each technology, when installing solar PV, wind or hydro-electric generation, and organic waste anaerobic digestion plants of up to 5 megawatts in size. The tariffs demonstrate to homeowners and businesses that there is a real incentive for them to install the qualifying technology, the rates of return being considerably more attractive than those previously proposed by the DECC in its July 2009 consultation.
The proposals for the FIT scheme are contained within the DECC’s consultation document on the wider scale Renewable Heat Incentive (RHI) scheme, a ‘clean energy cashback’ project, due to come into operation in 2011. The RHI is supported by the Renewables Obligation (RO) which enables those generating renewable energy to earn ROCs (Renewable Obligation Certificates). Unlike FIT, the RHI will apply to installations of renewable technology of any size and payment will be in a fixed amount over a number of years. The RHI aims to support a wide range of renewable heat technology including air, ground and water source heat pumps and solar thermal panels. In addition, it will support biomass boilers, renewable combined heat and power technology and technology producing heat from biogas, either from on site combustion or the injection of biomethane into the national grid.
Tariff levels have been calculated to cover the financial gap between the cost of conventional and renewable heat systems at all scales, differentiating the cost of the tariffs by the size of the supported technology. There is additional compensation for certain technologies which have crossed non-financial barriers, such as the disruption of digging up gardens to install ground source heat pumps. Finally, the tariffs should pay a 12% rate of return across all technologies, with 6% for solar thermal. A further bonus will be paid out to installers who choose to export energy to the grid.
Responses to the consultation, which can be accessed through the link below, are sought by Monday 26 April 2010.
http://www.decc.gov.uk/en/content/cms/consultations/rhi/rhi.aspx
Environmental offences – what’s the probability?
An important distinction has been drawn for the term “likely to" cause contamination as used in many environmental offences, the High Court approving the test that there has to be “a real possibility” rather than a high probability of contamination arising.
Wallis v Bristol Water plc ([2009] EWHC 3432), came before the High Court on appeal, following a claim by Bristol Water that a farmer had breached regulation 3(2) of the 1999 Water Supply (Water Fittings) Regulations 1999, which make it illegal to install or use water fittings “in such a manner that it causes or is likely to cause” contamination of water supplied by the water undertaker. In this case, the farmer had fitted taps in a dairy with inadequate backflow prevention.
Looking at the phrase “likely to cause contamination”, the High Court upheld the decision of the Divisional Court, determining that it was unlikely that the restriction imposed by that regulation was intended to only apply to cases where there was a high probability of contamination of the water supply occurring. The Appellant argued that the correct criminal standard of proof had not been applied as the seriousness of contamination of the water supply, i.e. the consequences should not have been considered alongside the possibility of contamination.
While it was accepted that in some criminal statutes the word “likely” does mean “probable”, Lord Justice Dyson concluded that the fact that the ill-fitted water taps created high health risks and the potential for significant harm in the water environment, were grounds enough to justify the term “likely” being used in the sense of a “real possibility”.
The case sets apart penal provisions in environmental laws - often designed to prevent environmental offences before they occur, therefore making it possible to apply the reasoning of the case across the wording of many environmental provisions. The term “likely to” arises in many other environmental laws, including waste offences created under section 33 of the Environmental Protection Act 1990 (treating or keeping waste in a manner “likely to cause” pollution).
As a result of the wide usage of the phrase “likely to cause” contamination, the Court was asked by the Appellant to certify this point of law. However, whether they do so is a matter for which the Courts full decision is awaited.
The full text of the judgement can be read via the link:
http://www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWHC/Admin/2009/3432.html&query=title+(+Wallis+)+and+title+(+v+)+and+title+(+Bristol+)+and+title+(+Water+)+and+title+(+plc+)&method=boolean
Marine powers
Following the publication of the Marine Coastal Access (MCA) Act 2009, DEFRA have issued draft guidance in relation to the powers and duties of public authorities to designate and protect Marine Conservation Zones (MCZs). The Act was introduced with the aim of improving the way the UK uses its marine resources and maximises the benefits it gets from them, with enhanced protection of the marine environment and biodiversity forming a key element in reaching this objective.
An ecologically coherent network of Marine Protected Areas (MPAs) is to be created, with MCZs merging with Special Areas of Conservation (SACs) under the Habitats Directive, and Special Protection Areas (SPAs) under the Wild Birds Directive.
The guidance focuses upon the duties imposed upon public authorities under sections 125 and 126 of the Act, which expand upon the existing functions and consent regimes, with the aim of encouraging public authorities and developers to fulfil the MCZ conservation objectives more efficiently. In exercising these functions there is the necessity to consult a number of conservation authorities brought within one umbrella body known as the statutory nature conservation body (SNCB) – Natural England, The Joint Nature Conservation Committee (for offshore waters), and the Countryside Council for Wales.
Briefly, the essential duties imposed upon public authorities under sections 125 and 126 of the MCA include:
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The requirement that public authorities be proactive in furthering the conservation objectives of MCZs – this includes the duty to inform the SNCB of occasions where carrying out their functions may significantly hinder the conservation objectives of MCZs and to inform the SNCB of any offence which potentially hinders a MCZ conservation objective.
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The requirement to consider the impact of proposed activities on MCZs before authorising them, and the obligation to consult the SNCB if it is thought that there is any act capable of hindering a MCZ conservation objective.
The duties also apply to Inshore Fisheries and Conservation Authorities (IFCAs) who are subject to section 154 Part 6 of the Act. Their functions will be carried out to manage the exploitation of sea fisheries resources in an IFC district.
Meanwhile, while the English and Welsh authorities press on with implementation of the MCA, in Scotland the Marine (Scotland) Bill has just recently been passed, making provision for the devolved functions and activities of public authorities in the Scottish marine area. The Bill includes provision regarding marine plans, licensing of marine activities, protection of the area and its wildlife including seals, and regulation of sea fisheries.
The DEFRA guidance may be viewed by clicking on the following link:
http://www.defra.gov.uk/environment/biodiversity/marine/documents/guidance-note2.pdf
The Scottish Marine Bill can be accessed at:
http://www.scottish.parliament.uk/s3/bills/25-MarineScot/index.htm
Co-firing comes under review
A consultation by the Department of Energy and Climate Change (DECC) is underway for the early review of the support given to co-firing of biomass and energy crops with combined heat and power (CoCHP) under the Renewables Obligation (RO).
The RO operates as the Government’s main mechanism for increasing the deployment of renewable electricity generation and rewarding licensed electricity suppliers with RO certificates (ROCs) for a specified number of megawatt hours of renewables electricity generated (ROCs per MWh).
Up until 2009, the RO provided support to a limited set of renewable technologies, but the creation of the Renewables Obligation Order (ROO) 2009 introduced “banding up” to enable increased support for emerging technologies that are less well-developed or further from the market, such as offshore wind or energy crops. Low risk technologies were correspondingly “banded down”.
The present review arises as a result of the separate banding set for CoCHP, the DECC having realised that the costs of generating electricity by this method are significantly different to those assumed in the initial banding decisions.
The current consultation is therefore focused solely on the question of deciding whether any amendment should be made to the banding set for CoCHP, following further evidence having been gathered. It is proposed that the banding for co-firing of biomass with CHP and for co-firing of energy crops with CHP should remain at 1 ROC per MWh and 1.5 ROC per MWh respectively.
For the avoidance of confusion, the DECC have stressed that the co-firing of Energy from Waste (EfW) is not affected by the error in calculation and is therefore outside the remit of the review. Due to the narrow technology focus of the banding review, the consultation has been shortened to six weeks, with the deadline for responses being 12 March 2010.
However, the first planned review of all bands is due to start in October 2010, at which time banding for CoCHP will be reconsidered, with any changes which flow from that wider review to be implemented in 2013.
The DECC consultation document on an early review for CoCHP and details of how to respond may be found by clicking on the following link:
http://www.decc.gov.uk/en/content/cms/consultations/early_review/early_review.aspx
Carbon offsetting – the mitigating factor
With issues of climate change and global warming gaining prominence, most organisations will be familiar with the concepts of sustainability, carbon footprints, green energy and the aspirational objective of carbon neutrality.
The Government’s definition of “carbon neutral” is that “through a transparent process of calculating emissions, reducing those emissions and offsetting residual emissions, net carbon emissions equal zero”.
The third leg of that definition is an acknowledgement that many emissions cannot at present be reduced or avoided altogether, largely due to the limitations of our transportation and energy supply infrastructure.
Carbon offsetting is then used to mitigate the impact of unavoidable emissions by buying carbon credits from third parties in order to offset residual emissions. One carbon offset represents a reduction of one metric tonne of carbon dioxide (or its equivalent in other greenhouse gases). The process generally involves the funding of projects which cut down or avoid emissions with the carbon credits generated being used to offset a corresponding quantity of emissions elsewhere in the world. Carbon credits represent savings against a business-as-usual assessment and must be additional to the savings that would have happened without the funding from the sale/purchase of carbon credits.
Clearly offset purchase will not in itself help to reduce carbon emissions, nor will it ensure carbon neutrality. Offsetting without reducing emissions is likely to be unsustainable and DECC advises that it must be used in conjunction with other carbon reduction efforts.
There are two recognised markets for carbon offsets:
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The non-compliance market – this involves the trade of non-Kyoto compliant credits which are issued by unregulated bodies and overseen by voluntary standards such as the Voluntary Carbon Standard (VCS); and
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The compliance market – used rather more exclusively by companies, governments and other organisations for the trading of credits as sanctioned by the Kyoto Protocol in order to comply with caps on carbon emissions. These credits are generally issued through the Clean Development Mechanism or Joint Implementation.
Irrespective of the market, a carbon offset must meet certain quality criteria in order to be a credible component of carbon neutrality. Project documentation must be publicly available and independently verified to ensure that:
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The reduction in emissions would not have occurred without the carbon finance;
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It will ultimately be retired from the carbon market to avoid double counting;
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It delivers emissions reductions as projected; and
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There is no causal increase in emissions elsewhere.
The Government’s Quality Assurance Scheme (QAS) for carbon offsetting was launched to inform and safeguard all manner of consumers by setting standards for best practice which incorporate the above criteria. The scheme aims to provide confidence that offsets purchased will genuinely balance the impact of emissions. To benefit from the QAS endorsement and obtain a quality stamp of approval offsets must:
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Follow the accurate calculation of emissions;
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Use Kyoto-compliant carbon credits;
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Be priced in a clear and transparent manner;
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Result in cancellation of carbon credits within a year of the offset purchase; and
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Include information regarding the role of offsetting in tackling climate change and offer advice on reducing carbon footprints.
For businesses striving for carbon neutrality, offsetting presents an opportunity to demonstrate environmental credentials and an immediate commitment to environmental sustainability whilst longer-term integrated carbon reduction strategies are devised. Corporate social responsibility also plays a part, as funding emissions reduction projects in developing countries can help to improve livelihoods overseas and may provide an opportunity to engage staff and customers whilst helping your organisation to align its financial and environmental goals.
The matters covered in this ebulletin are intended as a general overview and discussion of the subjects dealt with. They are not intended, and should not be used, as a substitute for taking legal advice in any specific situation. Semple Fraser LLP will accept no responsibility for any actions taken or not taken on the basis of this publication.
FOR FURTHER INFORMATION CONTACT: FIONA ROSS