Environmental Law News Update
October 8, 2019
In this latest Environmental Law News Update Christopher Badger considers Ofwat’s new strategy, the publication of a new report on climate benchmarks by the EU Technical Expert Group and a new Environment Agency consultation on the new standard rules permits.
Ofwat publishes new strategy
On 8 October 2019 Ofwat published its new strategy to drive progress in the water sector, both now and over the longer term. It is intended to ensure that the organisation remains focused on sustaining progress over decades to come.
It has set itself three goals for the coming years:
- To transform water companies’ performance
- To drive water companies to meet long term challenges through increased collaboration and partnerships
- For water companies to provide greater public value, delivering more for customers, society and the environment.
The document reads like an ambitious wish list. It refers to the need for a “laser focus on driving up performance and efficiency”, the “need to innovate”, securing legitimacy and goodwill by embedding a “wider public purpose” and unlocking the “full potential of their people”. However, within the strategy are key issues that need to be addressed, including:
Innovation. There remains significant untapped opportunities to trial and adopt new practices and technology to improve performance. Ofwat is going to trial a “one-stop-shop” to give regulatory advice to anyone looking to get innovations off the ground.
Open data. Making data freely available for everyone to access, use and share. This is intended to improve transparency with customers and build trust in the water companies.
Acting on the information held by Ofwat. Referred to as “insights”, Ofwat has recognised that it needs to understand what progress, if any, is being made in improving performance and meeting aspirations.
Providing greater public value. For water companies, it is suggested that a stronger focus on public purpose could help them rebuild legitimacy in the eyes of the public and engage with others to tackle the challenges that lie ahead.
One proposal put forward by Ofwat is that it will develop a framework to understand social and environmental value. While it is intended to provide space for water companies to consider for themselves how to embed a public purpose, it appears inevitable that in light of the importance of environmental issues to the wider community, this is only going to get more important.
The full strategy can be found here
EU Technical Expert Group publishes report on climate benchmarks
On 30 September 2019 the EU Technical Expert Group on sustainable finance published its final report on two new types of climate benchmarks and the definition of Environmental, Social and Governance (ESG) disclosure requirements that shall be applicable to all investment benchmarks.
Why is this important? The EU is a leading driver of Financing Sustainable Growth. Through standardised ESG disclosures, comparability between any benchmarks on the level of sustainability will be improved. Transparency and comparability can lead to a greater uptake of ESG indices, which leads to more sustainable investment, which improves disclosure. The report recognises the need to align investment portfolios to the objectives of the Paris Climate Agreement.
Investors using these new types of benchmark not only intend to hedge against climate transition risks but also direct their investments towards opportunities related to the energy transition. EU Paris Aligned Benchmarks (EU PABs) are designed for highly ambitious climate-related investment strategies. EU Climate Transition Benchmarks (EU CTBs) allow for greater diversification and serve the needs for institutional investors in their core asset allocation.
Key criteria that have to be met to qualify as an EU CTB or an EU PAB include:
- Climate benchmarks must demonstrate a significant decrease in GHG emissions intensity compared to their underlying investment universes or parent indices. Minimum relative decarbonisation is set at 30% for EU CTBs and 50% for EU PABs;
- Climate benchmarks must be sufficiently exposed to sectors relevant to the fight against climate change. You cannot just take into account sectors with an inherently limited impact on the environment.
- Climate benchmarks must demonstrate their ability to reduce their own GHG emissions intensity on an annual basis.
The Technical Expert Group proposes to set out disclosure requirements based on how the market currently understands that ESG and climate-related considerations can be integrated in the valuation of assets across various asset classes. Its final report will serve as basis to the drafting of delegated acts to an amending Regulation expected to be published by November 2019.
The summary of the report can be found here
The full report can be found here
Environment Agency consults on new standard rules permits
On 1 October 2019, the Environment Agency published ‘Standard Rules Consultation no 21’. As a consequence of an earlier consultation published in 2018 aimed at reducing waste crime, it is proposed to make a number of revisions to the waste exemption regime. This includes the withdrawal of three exemptions: T8 (mechanically treating end-of-life tyres), T9 (recovering scrap metal) and U16 (using depolluted ELV vehicles for parts) as well as the reduction of waste quantities (for example paper) and the removal of waste types (for example used mattresses) in certain other exemptions. The result is that more activities will become regulated by environmental permits.
This consultation proposes three new standard rules permits relating to the treatment of waste tyres for recovery, treatment of waste mattresses for recovery and the treatment of waste paper, cardboard and plastic for recovery, together with generic risk assessments for the new rules sets.
SR2019 No 6 – Treatment of waste tyres for recovery
This standard rules set will allow the operator to:
- operate a tyre recovery facility at a specified location;
- accept end-of-life tyres and shredded/granulated end-of-life tyres only;
- accept no more than 3,500 tonnes of waste each year. The combined storage limit of all wastes stored on the site at any one time is limited to 60 tonnes (approximately 1,200 commercial tyres or 4,800 car or van tyres).
- carry out treatment which must only be for waste recovery, and must be done indoors. Treatment is limited to cleaning tyres and separating from rims, re-treading tyres for re-use, baling, shredding, peeling, shaving, or granulating.
SR2019 No 4 – Treatment of waste mattresses for recovery
This standard rules set will allow the operator to:
- operate a mattress recovery facility at a specified location;
- only accept waste mattresses;
- accept no more than 3,500 tonnes of waste each year. The operator can store no more than 220 tonnes of waste on the site at any one time;
- carry out treatment which must be for waste recovery only. Treatment is limited to sorting, separation, baling, crumbing and shredding. Storage and treatment of waste must be indoors, except for specified wastes.
SR2019 No 5 – Treatment of waste paper, cardboard and plastic for recovery
This standard rules set will allow the operator to:
- operate a paper, cardboard and plastic recovery facility at a specified location;
- accept waste paper and cardboard and plastic only;
- accept no more than 75,000 tonnes of waste each year. The operator can store no more than 1,500 tonnes of waste on site at any one time. It must be stored inside unless it is a specified waste;
- carry out treatment which must be for waste recovery only. Treatment is limited to sorting, shredding, cutting, bale-breaking and baling, and must be performed indoors.
The consultation sets out the proposed charges associated with each standard rules permit and the questions are fairly wide-ranging. No information is provided on the likely business impact but the consultation records that in accordance with the Growth Duty, the Environment Agency is carrying out an assessment of the financial impacts of these proposed new permits. It is worth noting that the limitations on the storage of waste imposed by the standard rules permit for waste paper – this will necessitate quick turnaround times for sites operating under these rules, as well as the need for reliable end markets. Operators will need to be alert to potential problems, particularly if operating at capacity.
The deadline for responding to the consultation is 24 December 2019. It is proposed that the new standard rules permits and risk assessments will be published in March 2020.
The consultation can be found here
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