IPCC publishes latest reports on climate change
The United Nations Intergovernmental Panel on Climate Change (IPCC) recently published the second and third volumes of its Fifth Assessment Report (AR5). WG II reports on the impacts, adaptation and vulnerability resulting from climate change. It highlights how climate change is already impacting the natural environment, warning that global warming will increase the risk of severe, pervasive and irreversible impacts in the future. WG III assesses options for mitigating climate change risks identified in the first two reports, through increased action to limit or prevent greenhouse gas emissions, and promoting activities which remove them from the atmosphere.
The publication of the reports follows the release last September of the first working group report (WG I) on the physical science basis of climate change.
WG II assesses the impact of climate change so far, along with future risks and opportunities to reduce such risks. In addition to identifying many notable impacts which have already been observed, WG II highlights three key risks from climate change for Europe, namely:
- Economic losses from flooding in river basins and coastal areas;
- Restrictions on available water from river abstraction and groundwater resources, coupled with increased water demand for agricultural, energy, industrial and domestic use; and
- Economic losses from extreme heat events, resulting from reduced labour productivity, crop production and air quality.
The report suggests that a combination of adaptation and mitigation could reduce the scale of these risks, although some risks will be unavoidable. In particular WG II stresses the importance of acting now to reduce the risks faced in the latter part of the century, as early action will provide more time to adapt.
WG III focuses on how to address the issues and risks identified in WG I and WG II through the reduction of human activities which contribute to climate change. In particular, it identifies current greenhouse gas emissions levels, ideal future emissions levels, and how such levels can be achieved. The report takes a global approach, identifying the contributions which can be made from all regions in order to solve environmental issues.
Key findings of WG III include that:
- Efforts to reduce emissions must take place across all sectors and all regions, with reductions in energy demands (eg through increased efficiency) playing a significant part in this;
- Although many countries already have emissions reduction policies in place, much more needs to be done. In particular investment in clean technology should be massively increased, with mitigation policies integrated fully into broader political policy on growth, employment and the environment; and
- International action and international cooperation is essential to effectively deal with climate change.
ECJ ruling on declassification of ‘areas of special consideration’ under the Habitats Directive
The European Court of Justice has ruled that it is permissible for the competent authorities of member states to apply to the European Commission for the declassification of an area designated an ‘area of special consideration’ under the Habitats Directive when surveillance gives rise to the conclusion that the site is definitively no longer capable of contributing to the achievement of its objectives.
The Habitats Directive regime requires member states to identify sites on which habitats of the types listed in the directive are located. The European Commission then works with the member states to establish a list of ‘areas of special consideration’ (SCIs) drawn from the sites identified by each member state. The Habitats Directive obliges member states to take steps to avoid the deterioration of the habitats located in SCIs.
The ECJ recently considered the interpretation of the Habitats Directive in the case of Cascina Tre Pini  EUECJ C-301/12. Cascina Tre Pini (Cascina) owned a site in the region of Lombardia close to Milan Malpensa airport. The site was included in the list of proposed SCIs. Cascina claimed that the increased volume of air traffic, resulting from an expansion of Milan Malpensa airport, had compromised the ecological quality of the site. It submitted an application to the appropriate regional body for the site’s removal from the list of proposed SCIs claiming that the conditions for inclusion in the list could no longer be satisfied. Cascina had an interest in having its site removed from the list because its presence on the list resulted in development restrictions applying to it. A legal dispute ensued in the course of which a number of questions on the interpretation of the Habitats Directive were referred to the ECJ.
Firstly, the ECJ was asked whether, under the Habitats Directive, competent authorities are required to propose the declassification of SCIs where they have received a request to do so. The court answered by stating that the competent authority must apply for declassification of a site on the list of SCIs when surveillance gives rise to the conclusion that the site is definitively no longer capable of contributing to the achievement of the objectives of the Habitats Directive. The court emphasised that the obligation is all the greater when the site belongs to an owner whose rights to deal with his property are restricted by the site’s inclusion on the list. The court went on to explain that the failure of a member state to take the measures necessary to safeguard a site does not warrant declassification. It is only where, despite compliance with the obligations arising under the directive, the site becomes inherently unsuitable to meet the objectives of the Habitats Directive that an application for declassification will become justified.
Secondly, the ECJ was asked whether national legislation, which permitted a regional or local authority to propose adaptation of the list of SCIs but conferred no power on the member state to act, even where the regional or local authority had failed to do so, was inconsistent with the provisions of the Habitats Directive. The ECJ stated that member states were permitted to designate regional or local authorities to propose the adaptation of the list of SCIs. Further, the court went on to state that no obligation was imposed upon the member states to step in if regional or local authorities failed to act. However, the ECJ emphasised that this did not detract from the fact that national arrangements in their entirety must be sufficient to ensure the correct application of the provisions of the Habitats Directive. In other words, member states can implement the provisions of the directive however they choose so long as the provisions are properly implemented.
Aviation EU ETS further delayed
The EU ETS Aviation Amending Regulation is now in force. This extends the temporary derogation from the EU Emissions Trading System (ETS) for flights to and from countries outside the EEA from 1 January to 31 December 2016. It also provides a temporary exclusion for small non-commercial aircraft operators to 31 December 2020 and a one year postponement for obligations to report emissions and surrender allowances for 2013 flights within the EEA.
The adoption of the regulation comes immediately before the expiry of the EU ‘stop the clock decision’ published last April which temporarily deferred the application of the EU ETS in respect of international flights.
As a result, operators of flights to and from countries outside the EEA will not have to submit monitoring plans, report greenhouse gas emissions and surrender the requisite number of EU ETS aviation allowances until after the end of 2016. Furthermore, for those operating flights within the EEA, the deadline for reporting 2013 emissions and surrendering the corresponding number of allowances is extended to 31 March and 30 April 2015 respectively. Member states are also required to report by 1 August on the number of free allowances that will be allocated to each aircraft operator in respect on flights within the EEA.
Special equalisation scheme for energy intensive industry
As reported in our December 2013 edition, there has been a lengthy dispute between the federal government and the European Commission following the adoption of the German Renewables Energy Act (EEG). The EEG guarantees renewable energy generators a favourable set price for delivery of electricity to the national grid, as well as requiring renewable energy to be purchased by network operators. The additional cost of financing the set price paid for renewable electricity is passed on to consumers in the form of the EEG levy. In the latest development, the German federal cabinet has recently published essential facts for the review of the current special equalisation scheme, which provides financial relief from the EEG levy for Germany’s energy intensive industry.
The new special equalisation scheme will be based on the following key points:
- Businesses from 68 industry sectors with high electricity costs and trade intensity (listed in the EU carbon leakage guidelines) will continue to enjoy financial relief from the levy in the future. They will be charged up to a maximum of 15 per cent of the regular levy.
- None of these businesses will be forced to pay more than 4 per cent of their gross value added, which may lead to a charge of less than 15 per cent of the regular levy for some businesses. Those with outstandingly high electricity costs will only have to pay an amount covering
0.5 per cent of their gross value added by way of the EEG levy.
- Besides the businesses listed in the EU’s guidelines, businesses from other sectors can also profit from exemptions if they have a trade intensity of at least 4 per cent and high electricity costs.
- Businesses that will no longer profit from exemptions from the levy can still benefit from hardship provisions. They will not have to pay more than 20 per cent of the levy.
The special equalisation scheme will be implemented into the EEG, which the cabinet adopted in early April.
The delay in publishing the new details of the scheme has been caused by the fact that it
has to be in line with the EU’s guidelines on environment and energy state aid for 2014–2020, which were published shortly after the cabinet had passed the Renewables Energy Act. The previous guidelines on environmental aid 2008, which are still in force until 31 December 2014, do not contain any provisions concerning the admissibility of asset relief measures for alternative energy sources under EU law. The new special equalisation scheme’s compliance with the EU’s state aid guidelines is mandatory in order to avoid further state aid proceeding against Germany.
Defra launches review of environmental legislation
As part of the next phase of its Smarter Environmental Regulation Review (the SERR), Defra is conducting a review to develop a new framework for environmental legislation in England, taking account of the shift in attitude towards the environment.
The first phase of the SERR focused on guidance and data requirements. This resulted in the recent publication of an implementation plan on updating information reporting – see below. The next phase of the SERR will focus on legislative review to address concerns that England’s existing environmental law has evolved in a ‘piecemeal way’ which can result in it being ‘fragmented, overlapping, inconsistent and complex’. Further, the shift to greater social awareness in relation to the environment has seen a greater ‘motivation and appetite for rising levels of environmental performance’.
In line with this shift, Defra will use the legislative review to propose a new long-term framework for environmental legislation, over a five to ten year period. In particular, it will only consider options for future environmental legislation that:
- deliver policy outcomes effectively and efficiently;
- reduce unnecessary burdens and costs;
- are practical and feasible;
- improve the efficiency and effectiveness of environmental regulators; and
- clearly benefit the environment, businesses and other stakeholders.
The review will initially focus on three industries: waste, residential development and car manufacturing. Findings will then be applied to other sectors. In conducting its review, the review panel will seek opinions from industry, regulators, NGOs, legal and academic
bodies, as well as the wider public. The panel is expected to report its findings to ministers later this year.
Defra seeks to improve data reporting requirements
Business will be able to submit less information to Defra and DECC following a review of environmental data reporting requirements. In addition, many application and reporting processes will be digitised and simplified, with others removed altogether.
The changes form a part of Defra’s SERR, discussed above. They come following findings that information being requested by government departments and agencies is frequently overwhelming, time consuming and lacking a clear purpose.
A number of applications are to be digitised, including those for new environmental permits, the transfer, revision or surrender of existing permits, permit reports, flood defence and water abstraction consents, and waste exemptions. The digitisation process is expected to be completed by March 2016, dependent on Environment Agency funding and resources. Reporting under CRC Energy Efficiency Scheme, climate change agreements and EU ETS will also move to an online system.
A key change is the removal of the Resource Efficiency Physical Index (REPI). REPI required Part A(1) installations to report data on energy, water and waste consumption. Since January 2014 this has no longer been required.
The Environment Agency will also begin to consult with industry regarding scrapping permit conditions which are no longer needed for compliance with EU requirements. The latter will be replaced by standard rules. It is also considering the removal of certain activities from Part A(2) and B of the integrated pollution prevention and control regime, including glassworks and foundries, rendering plants and petrol stations, sawmills and paint manufacturers. Operating requirements would instead being replaced by a general code of conduct.
Further proposed changes include the use of corporate assurance statements instead of traditional permit reporting, ending requirements for premises producing hazardous waste to be registered, and scrapping the requirement to submit return forms after consignment of hazardous waste. Information would instead be collected through permit returns.
There are also moves to extend the national waste packaging database to include waste electrical and electronic equipment, as well as to standardise the reporting system across all the relevant waste regimes.
Further announcements regarding changes to information reporting requirements are expected from Defra in June.
Court of Appeal rules on meaning of ‘knowingly permitting’
The Court of Appeal has recently given its judgement in a case concerning liability for environmental offences committed by a subcontractor. The Court took a restricted view of the meaning of ‘knowingly permitted’, holding that in order to commit an offence all that had to be proved was that the activity was taking place, not that the defendant know the activity was not permitted. The case is important as a number of environmental permitting offences are founded on the basis of them having been knowingly permitted.
Walker and Sons (Hauliers) Ltd v Environment Agency  EWCA Crim 100 involved a prosecution of a haulage company undertaking the redevelopment of a site. They had
subcontracted the demolition work involved to another company, Bloom (Plant) Limited,
who were transferring third party waste to the site and burning it without a suitable permit. Following complainants from local residents, Bloom was found guilty of undertaking an illegal waste activity. The defendant was also charged under the Environmental Permitting Regulations 2007 of ‘knowingly permitting’ the activity.
Whilst the managing director of Walker had been aware of the waste activity and the fires, he had not known that all the activities were not related to the contracted work, nor that they were not authorised by permit. The Court of Appeal had to determine whether ‘knowingly permitted’ required the Environment Agency to show that the activity had not been an authorised on or whether all that was required was knowledge of the activities that had occurred on the site.
The Court of Appeal held that the latter approach prevailed – all the Environment Agency had to do was that the defendant had knowledge of the fires. Ignorance of a permit or the conditions attached to it was no defence. Further, it was apparent from the 2007 Regulations themselves that unlike the preceding legislation, there is no longer a defence based on the exercise of due diligence to avoid the commission of this offence. Accordingly, issues of care and due diligence are now only relevant in the context of mitigation of sentence.
Proposals for biodiversity offsetting
The government has recently responded to the concerns of the Environmental Audit Committee (EAC) about the proposed programme of biodiversity offsetting.
Biodiversity offsetting is a process by which developers can offset the damage caused to habitats by a development by carrying out work to create or improve habitats on a different site. The government set out its proposals for a biodiversity offsetting programme in a Green Paper in September 2013. Please click here for our October 2013 edition.
Having considered the government’s proposals, the EAC reported that it had a number
of concerns. The main concerns highlighted were: that the biodiversity offsetting metric described in the Green Paper was too simplistic; that it was unclear how biodiversity offsetting assessments would be carried out; and that any system needed to ensure that offsetting occurred close enough to the development site to be of benefit to local residents. The EAC concluded
that the government should allow the pilot schemes which had been set up to run their course and ensure that the results were independently evaluated. Only if that demonstrated ‘clear advantages’ to a biodiversity offsetting scheme should such a scheme be introduced. The EAC added that if a biodiversity scheme was to be introduced, the government should modify its proposals in light of the concerns raised in its report.
Biodiversity offsetting metric
The proposed metric for calculating biodiversity losses and gains quantifies the value of habitats based on their distinctiveness, quality and size. The risk associated with habitat recreation, the time needed to create a substitute habitat and the location of the offset would also be taken into consideration. The Green Paper suggested that the proposed metric could be applied in ‘as little as 20 minutes’. Aside from its concerns that it was overly simplistic, the EAC stated in its report that the priority should be ‘the rigorous protection of the environment’, as opposed to the speed with which the metric can be applied. It suggested that the metric used should reflect the full complexity of habitats including the value of a habitat as a local and national asset. It further suggested that offsetting would not be appropriate where the lost habitat could not be replaced within a reasonable time, unless the development was of national significance. The government’s response is that it will consider any changes needed to the metric to address the concerns raised by the EAC as its proposals moved forward. The government also went on to acknowledge that offsetting would not be appropriate in all compensation cases and that, for example, a more unique approach may be required where a development could impact upon a SSSI or a Natura 2000 site.
Carrying out assessments
The Green Paper set out that one of a number of bodies, including planning authorities, a national body set up for the purpose, or suitably qualified and accredited assessors, could have responsibility for carrying out biodiversity offsetting assessments (although it was envisaged that planning authorities would bear ultimate responsibility for the contents of the reports via a process of validation). The EAC emphasised that transparency was essential if the assessments were to command respect. It suggested that the government would need to provide clear and transparent guidance on the way in which biodiversity assessments should be carried out and the way in which the results of the assessments should be applied. The EAC also expressed concern that the proposals may place greater financial pressure on planning authorities. As a result, it was suggested the additional funding, sourced either from developers or from the government was likely to be required. In its response to the EAC’s proposals, the government indicates that the Green Paper envisaged offsetting being used as a mechanism by which existing planning policy requirements could be met. Since it is the responsibility of the developer to supply the information needed to determine a planning application, the government believed it to be unlikely that offsetting would place additional financial burdens on planning authorities.
Offsets to be proximate to development site
The Green Paper suggested that biodiversity offsetting could be carried out on land a considerable distance from the development site. One reason for this position was to allow developers to carry out offsetting on less expensive land. The Green Paper also emphasised that the offsetting system should be applied consistently across the country. The EAC took into account the importance of the public’s access to nature as well as the impact on wildlife and habitats in assessing the proposals set out in the Green Paper. It recommended that local people’s access to biodiversity should be taken into account when assessing the benefits of a development and therefore concluded that ‘offsetting decisions should be considered at the lowest planning level possible’ where local people’s access to biodiversity may be affected by a development. The government response indicates that the planning system separately promotes healthy communities and that it may be possible to refuse planning permission for a development on this basis even if biodiversity offsetting was undertaken. The government states that, for this reason, the impact of the loss of biodiversity upon local communities was not included in the metric. However, it pointed out that the Green Paper had asked for views on whether there should be rules governing
the location of offsets and what these rules should be.
Separately, the EU has produced a report on Biodiversity offsetting in light of the European Commission’s aim to create a system whereby there is ‘no net loss’ of habitats by 2015.
The report recommends mandatory offsetting and a system of close monitoring and enforcement by appropriately resourced authorities. This is in contrast the voluntary scheme envisaged by the Green Paper. Whether the EU will adopt the views expressed in the report, and the impact this may have upon the proposals set out in the Green Paper, remains to be seen.