2011 Autumn Statement: environmental implications

Practical Law UK Legal Update 6-514-1134 (Approx. 11 pages)

2011 Autumn Statement: environmental implications

by PLC Environment

Autumn Statement 2011

Autumn Statement

On 29 November 2011, the Chancellor of the Exchequer, George Osborne, gave his Autumn Statement 2011, which sets out the actions the government will take in three areas:

Protecting the economy.
Building a stronger economy for the future.
Fairness.

(See HM Treasury press release, Autumn Forecast Statement by the Chancellor of the Exchequer, Rt Hon George Osborne MP, 29 November 2011.)

National Infrastructure Plan 2011 (NIP 2011)

The government published its National Infrastructure Plan 2011 (NIP 2011) at the same time as the Autumn Statement (see HM Treasury: National Infrastructure Plan 2011).

The NIP 2011 follows the first NIP, published in 2010 (see Legal update, Government publishes National Infrastructure Plan 2010: construction, environment and property implications). It sets out a new strategy for meeting the infrastructure needs of the UK economy with significant spending aimed at strengthening the economy.

PLC will report on NIP 2011 in more detail shortly.

Planning reform

The government is proposing a number of planning reforms in order to speed up infrastructure development and reduce costs. The planning proposals set out in the sections below will be of interest to environment practitioners.

Implementing the Penfold Review of non-planning consents

In July 2010, Adrian Penfold (the head of planning and environment at British Land) published a report reviewing the regimes for obtaining non-planning consents for property development projects (Penfold Review). His recommendations aim to create greater certainty, achieve speedier decisions and reduce duplication and bureaucracy in determining non-planning consents (see Legal update, Penfold Review: final report published and Legal update, Penfold Review: progress report published).

On 29 November 2011, BIS published Implementation of Penfold Review. PLC will report on the BIS report in more detail shortly.

Following the Penfold Review, the government announced in the Autumn Statement that:

Once the National Planning Policy Framework (NPPF) (with its important presumption in favour of sustainable development) is finalised, the government will ensure the key consenting and advisory agencies have a remit to promote sustainable development. For more information on the NPPF, see Legal update, Consultation on Draft National Planning Policy Framework.
It will introduce a 13-week maximum timescale for the majority of non-planning consents, to speed up the consenting process and give certainty to developers. This will take immediate effect for government agencies.
It will simplify a number of heritage, highways and environmental non-planning consents, from early 2012. Some consents will no longer be needed.
It will make it easier to apply for non-planning consents, with changes to information provided from April 2012.

(Autumn statement, chapter 1, paragraph 1.98 and NIP 2011, paragraph 6.12.)

Major infrastructure planning regime

The Planning Act 2008 introduced a new regime of unified development consent for nationally significant infrastructure projects (see Practice note, Planning Act 2008: environmental implications).

In the Autumn Statement, the government announced that it intends to build more flexibility into the major infrastructure planning regime, particularly in working with developers in the pre-application phase (Autumn Statement, paragraph 1.99). There is no further detail on what the flexibility will consist of, but the government intends to introduce the changes by summer 2012.

The government will carry out a formal review of the regime for major infrastructure projects development consent from April 2014 (NIP 2011, paragraph 6.21).

Compliance with Habitats and Birds Directives

The Habitats Directive (Directive 92/43/EEC on the conservation of natural habitats and of wild fauna and flora) and the Birds Directive (Directive 2009/147/EC on the conservation of wild birds) provide for habitats and wildlife protection regimes, including designations of protected sites and species. Existing or proposed designations can impact on proposals for development (see Practice note, Habitats and wildlife: overview).

The government announced in its Autumn Statement that:

It will ensure that compliance with the Habitats and Wild Birds Directives does not lead to unnecessary costs and delays to development, while continuing to support the Directives’ objectives.
It will review the current implementation of the Directives in England by Budget 2012.
It is committed to tackling blockages for developments where compliance is particularly complex or has large impacts.
There has been progress on specific projects where compliance has already proved problematic, including Falmouth Harbour.

(Autumn Statement, chapter 1, paragraph 1.99.)

Non-domestic microgeneration

The government announced that it will introduce new permitted development rights for non-domestic microgeneration of electricity, to incentivise the take up of small-scale renewable and low carbon energy technologies (Autumn Statement, Annex A, paragraph A.58).

Residential property already has permitted development rights for certain microgeneration equipment (see Legal update, General development rights for microgeneration equipment on residential property).

For more information on the government's policy and strategies for microgeneration, see Practice note, Microgeneration.

Green Deal

The government will put £200 million one-off capital into the Green Deal.

The Green Deal is the government's flagship initiative for improving the energy efficiency of buildings in Great Britain, by removing the upfront cost of such measures. The capital is intended to encourage early take up when the Green Deal launches in autumn 2012. For more information, see Practice note, The Green Deal.

(Autumn Statement, chapter 1, paragraph 1.102.)

Energy

In his speech to Parliament, the Chancellor stated that he supports "sensible" steps to reduce the UK's reliance on fossil fuels and its move to a low carbon economy.

However, the government also says that it is committed to ensuring that manufacturing is able to remain competitive and to minimising the "carbon leakage" that might happen if industry were to relocate abroad due to regulatory costs.

Carbon price floor

The government will provide compensation of up to £100 million to key electricity-intensive industries that operate in internationally-competitive markets, to help offset the indirect cost of the carbon price floor from April 2013 until 2014-15. The carbon price floor was announced in Budget 2011 and is to be introduced as part of the government's Electricity Market Reform (EMR) in 2013 (see Legal update, 2011 Budget: environmental announcements).

The government will consult on the precise thresholds for eligibility for the compensation to ensure that the most at-risk industries are protected. The compensation will also be subject to relevant EU state aid rules.

For more information on the carbon price floor, see Legal update, Government publishes Electricity Market Reform White Paper 2011: environmental implications: Carbon price floor.

(Autumn Statement, chapter 1, paragraph 1.105.)

EU Emissions Trading Scheme (EU ETS)

The government will provide compensation to electricity-intensive industries for the indirect impacts of the EU Emissions Trading System (EU ETS) on electricity costs from January 2013 of up to £110 million until 2014-15.

Eligibility for such compensation will be based on EU rules, which are due to be agreed in 2012 (see Legal update, EU ETS: final list of sectors at risk of carbon leakage in 2013-2014).

For more information on the EU ETS, see Practice note, EU Emissions Trading Scheme: summary.

(Autumn Statement, chapter 1, paragraph 1.105.)

Climate change levy (CCL)

The government will increase the level of relief from the climate change levy (CCL) on electricity for climate change agreement (CCA) participants to 90% from 1 April 2013.

The CCL is a tax levied on energy suppliers on energy (electricity, gas, solid fuel and liquefied gas) used by non-domestic consumers (see Practice note, Climate change levy and climate change agreements). CCAs provide a mechanism for energy-intensive business users to receive a discount from the CCL, which is currently set at 65%.

(Autumn Statement, chapter 1, paragraph 1.105.)

Electricity Market Reform (EMR)

The government will explore options for reducing the impact of electricity costs arising as a result of EMR policies, including feed-in tariffs, on electricity-intensive industries, where this significantly impacts their competitiveness and subject to value for money and state aid considerations (see Legal update, Government publishes Electricity Market Reform White Paper 2011: environmental implications).

(Autumn Statement, chapter 1, paragraph 1.106.)

UK Green Investments (UKGI) and Green Investment Bank (GIB)

The government will invest, as UK Green Investments (UKGI), in green infrastructure projects from April 2012, in advance of obtaining state aid approval from the European Commission (Commission) for the Green Investment Bank (GIB). Non-domestic energy efficiency will be one of the priority sectors for UKGI, which will make up to £100 million available in the next financial year for commercial and industrial energy efficiency projects.

Once the Commission has approved the GIB, legislation will be introduced to establish the GIB as an independent institution. For more information on the GIB, see Legal update, Green Investment Bank to begin investing from April 2012.

(Autumn Statement, Annex A, paragraph A.69.)

Implementation of EU Directives

The government is publishing a report which includes 16 specific cases, highlighted by businesses, for EU regulatory reform to improve UK business growth. The government considers that these cases will reinforce the UK aim of reducing the overall EU regulatory burden and preventing gold-plating by UK regulators.

The government is continuing to work to reduce the burdens imposed by EU legislation. The Autumn Statement specifically refers to reducing the burdens from the following EU environmental regimes:

CLP (Classification, labelling and packaging of chemicals) (see Practice note, CLP: classification, labelling and packaging of chemical substances regime).
REACH (Registration, Evaluation, Authorisation and restriction of Chemicals) (see Practice note, REACH: EU chemicals regime).
Air Quality Directive 2008 (see Practice note, Air pollution: overview: Air Quality Directive 2008).
National Emissions Ceilings Directive 2001 (see Practice note, Air pollution: overview: National Emission Ceilings Directive 2001).
Freshwater legislation, principally under the Water Framework Directive 2000 (see Practice note, Water Framework Directive 2000: implementation in England and Wales).

(Autumn Statement, chapter 1, paragraph 1.113.)

The government had already launched, as part of its Red Tape Challenge:

In April 2011, a consultation aimed at reducing the burden of environmental regulation (see Legal update, Red tape challenge: government invites comments on environmental law regulations).
In November 2011, a consultation aimed at reducing the burden of energy regulation (see DECC press release, Putting energy red tape under the spotlight, 25 November 2011).

Review of regulators

The government will:

Launch a review of regulators.
Impose sunset clauses to limit the lifetime of powers for new regulators.
Take steps to ensure that enforcement arrangements are appropriate, proportionate, fit for purpose and risk-based.

A consultation was held in summer 2011 and the government indicates it will publish its response soon.

(Autumn Statement, chapter 1, paragraph 1.113.)

Health and safety: review of regulations

The government has accepted the recommendations of Professor Löfstedt's review of health and safety regulation including:

Exempting self-employed people who pose no risk to others from health and safety legislation.
Simplifying guidance and codes of practice.
Making health and safety legislation consistent and predictable, so that businesses have certainty. This includes a power for the Health and Safety Executive (HSE) to direct all local health and safety regulatory activities.
The HSE taking steps to clarify the legal position of businesses to ensure they are only held accountable for what they can realistically manage.
The HSE negotiating a risk and evidence based approach to health and safety regulation with the EU.

For more information, see Legal update, Professor Löfstedt's health and safety report and government response published.

(Autumn Statement, chapter 1, paragraph 1.113.)

Air passenger duty

The government has confirmed that:

Air passenger duty (APD) rates will increase from 1 April 2012, as set out in Budget 2011.
It will proceed with the extension of APD to flights on business jets from 1 April 2013.
APD will be cut for passengers travelling on direct long-haul routes from airports in Northern Ireland, from 1 November 2011.

The government will publish its response to the APD consultation, launched earlier in 2011, on 6 December 2011 (see Legal update, Government consultation on changes to Air Passenger Duty: environmental implications).

(Autumn Statement, chapter 1, paragraph 1.137.)

Comment

Before the Chancellor delivered the Autumn Statement, there were reports that the government was planning to use some of the money previously intended for the carbon capture and storage (CCS) competition towards other infrastructure development. This followed the government's announcement, in October 2011, that it would not be providing funding for Scottish Power's CCS project at Longannet (see Legal update, Carbon capture and storage: government announces Longannet pilot will not receive funding ). Environmental NGOs have called on the government to invest the money in other low carbon projects, such as feed-in tariffs (FITs), which are being significantly reduced (see Practice note: Feed-in tariffs: overview: Reviews of FITs). The position on how the funding will be used remains unclear. For more information, see CCS plans mired in confusion as Treasury raids £1bn fund, BusinessGreen.com, 28 November 2011.

Following publication of the Autumn Statement, environmental NGOs and renewable industry representatives criticised the:

Tax breaks designed to minimise the impact of the planned carbon floor price on energy intensive industries, to an anticipated total of £250 million.
Delay in the 3p increase on fuel duty, which had been due in January 2012.
Announcements of new road building projects in the NIP 2011.
Undermining of the Natural Environment White Paper through announcements on implementation of the Habitats Directive and the Birds Directive (see Legal update, Defra publishes Natural Environment White Paper ).

Margaret Ounsley, head of public affairs at WWF-UK, said:

"It's deeply disappointing to see this government continuing to see environmental protection as a burden and rewarding high carbon infrastructure...The government has a clear choice: take the opportunity and invest in the green economy, tackling both the economic and the climate crisis as one, or risk hard-won environmental improvements in the pursuit of short-term growth."

(See Green business concessions sneak into Osborne's Autumn Statement, BusinessGreen.com, 29 November 2011.)

Most commentators thought the government has chosen economic growth over environmental protection. However, business responded more positively.

John Cridland, CBI director general, is quoted as saying:

"Equally important for jobs and growth is the recognition that the UK's energy-intensive users need help as a result of the unilateral increases in manufacturing energy costs from the carbon floor price and electricity market reform."

(See George Osborne's autumn statement 2011: what the experts say, guardian.co.uk, 29 November 2011.)

Both industry and environmental NGOs welcomed the announcement of £200 million to be put towards the Green Deal, which is seen as essential to kick-start the scheme. However, there was no detail on how this will be paid.

For more reactions, see Autumn Statement - the reaction, BusinessGreen.com, 29 November 2011.

2011 Autumn Statement: environmental implications | Practical Law