In this issue

International: New York Climate Summit: outcome

EU: EU adopts reporting obligations for human rights and other “non-financial” information; Commission DGs to merge

Germany: Government pushes regulation on electric mobility

UK: Shale gas: landowner’s permission to drill will not be required; CRC – annual report publication to remain in current format


New York Climate Summit: outcome 

Global leaders recently met in New York for the 2014 Climate Summit hosted by the UN Framework Convention on Climate Change (UNFCCC). Although no major commitments were made at the Summit, the path was laid for a global climate agreement to be finalised at the next key UNFCCC meeting, the 21st Conference of the Parties (COP) to be held in Paris in November next year. 

The New York Summit was attended by 125 heads of state and over 800 leaders from business and finance, with public and private financing of responses to climate change heading up the agenda. Both David Cameron and Barack Obama delivered speeches to reaffirm their countries’ commitment to climate change issues, although leaders from important developing nations China, India and Russia were notably absent from the talks.

One of the loudest campaign messages leading up to the Summit was for global leaders to demonstrate support for a limit in world temperature rise by 2 degrees Celsius from pre-industrial levels. This was a popular message, with many leaders calling for a peak in greenhouse gas emissions before 2020, aiming to dramatically reduce emissions and achieve climate neutrality beyond 2050. The EU formally committed to a target of reducing emissions to 40 per cent below 1990 levels by 2030. China made its first commitment to cutting emissions by 45 per cent by 2020 for each unit of GDP, with the Chinese delegate promising that the country would aim to reach a peak in emissions “as early as possible”. 

The financial world contributed many of the Summit’s key agreements with commercial banks announcing plans to issue US$30bn of green bonds by 2015. Support for the Green Climate Fund was evidenced by pledges of US$2.3bn from six countries, although this is still some way off the US$10bn market capitalisation suggested and the condition imposed by developing countries that the fund aim to generate US$100bn per year. 

More than US$200bn was pledged for financing low carbon development with US$100bn a year by 2020 promised by both public and private finance bodies. The EU committed US$3bn for climate change mitigation in developing countries between 2014 and 2020, and a total of US$18bn of financing for climate change adaptation and mitigation.

Leaders representing over half the world’s GDP and population agreed that carbon pricing would act as a positive signal to markets to invest in solutions to climate change. Institutional investors urged governments to provide stable and reliable carbon pricing policies which would encourage the level of investment required to meet the challenge of reducing the world’s carbon output. 

The UK was a signatory to the New York Declaration on Forests, a project to support REDD+, the UNFCCC’s programme for reducing carbon emissions from forestry related activities. It aims to halve the loss of natural forests globally by 2030 and to significantly increase efforts to restore forests. A joint statement between the UK, Germany and Norway also promised to work together and with other governments to provide ‘coordinated finance’ for large scale forest emission-reducing programmes and encourage efforts to reduce deforestation from soy, palm oil and timber production.


EU adopts reporting obligations for human rights and other “non-financial” information 

The European Council recently formally adopted the new directive on disclosure for mandatory CSR reporting by large public interest entities on human rights and other non-financial information. This marks a further step towards the hardening of human rights obligations in the business field. 

Read our full briefing here

Commission DGs to merge

The new European Commission President-elect, Jean-Claude Juncker, has announced changes to the way the new Commission will be organised. The changes will see the Environment Directorate-General merging with Maritime Affairs and Fisheries, whilst the Climate Action Directorate-General is merging with Energy. 

Other changes will see responsibility for biocides and food waste moving from the Environment portfolio to Health and the creation of a new post of Better Regulation Vice- President. The latter will be responsible for filtering all Commission policies and proposals to ensure that the aims cannot be achieved better by member states; approval from the Vice-President for new policy initiatives will be required before they can be put in the Commission’s work programme or on the college of commissioners’ agenda. 

The priorities for the new Environment, Maritime and Fisheries Directorate-General, as set out by Mr Junker in his mission letter, include continuing to overhaul existing environmental legislation to make it fit for purpose – the Habitats and Birds Directives will both be evaluated as part of this with a view to possibly being merged – and assessing reaction to the recent circular economy package (for more information see here). Meanwhile, the Climate Action and Energy Commissioner’s areas of focus will include energy security, steering negotiations of the legislative instruments that will follow political agreement on the 2030 energy and climate and package, developing further the EU policy on renewables and strengthening and promoting the EU Emissions Trading System.


Government pushes regulation on electric mobility

The Transport and Environment Ministries have recently issued a draft bill aimed at regulating electric mobility (Elektromobilitätsgesetz). It provides qualifying e-cars with preferential status, allowing them free car parking and use of some bus lanes. The Federal Cabinet will decide whether to take the bill forward, after hearing from stakeholders and internal consultation.

According to the bill, local municipalities will be able to reserve free car parking spaces in front of charging stations for certified electrically powered cars (e-cars). E-cars will also be able to use some existing bus lanes and will benefit from preferential waiting access restrictions, originally implemented to reduce pollution and noise in certain areas.

E-cars fully powered by battery, particularly environmentally friendly plug-in hybrids and fuel cell vehicles will benefit from the measures outlined in the bill. Plug-in hybrids must meet at least one of the following conditions to qualify: either carbon dioxide emissions must be below 50g/km or they must be able to travel a minimum distance of 30km (increasing to 40km as of 2018) just through electrical power. The licence plates of qualifying e-cars will be required to be specially labelled in order to easily differentiate them from usual cars. E-cars from other countries, which will also benefit from the measures, will be subject to separate identification.

The final decision as to what measures will apply should the municipalities decide to implement them will be up to the individual authority in charge of the traffic regulation.

The bill has come in for criticism from representatives from environmental organisations, as it would award preferential status to some cars with a high fuel consumption - provided they are in the possession of the appropriate plug-ins. Further, representatives from the municipalities spread the general fear that the introduction of the new regulations might weaken the public transportation system while bus drivers criticize the proposed usage of certain bus lanes.

If the Bundestag passes the law, it is likely to come into force in spring 2015, expiring in June 2030.


Shale gas: landowner’s permission to drill will not be required.

The government has announced that following its recent consultation, it will legislate to enable companies to drill for shale gas under private land without permission from the landowner. The Bill containing the proposals is expected to be hotly debated - 99 per cent of respondents to the underground access consultation responded negatively and some Scottish ministers have already criticised the proposals. 

Following its recent consultation (see here), the Department of Energy and Climate Change (DECC) has announced that the government intends to legislate to give companies underground access to land below 300 metres from the surface, to explore for and extract oil, gas and geothermal energy. 

In return for access, an industry voluntary payment scheme will oblige companies to make a one-off payment of £20,000 to the local community for each well that extends by more than 200 metres laterally. The government will introduce a reserve power to enforce the scheme. The community would be informed of the operations by a voluntary public notification. 

Provisions implementing these proposals will be added to the Infrastructure Bill already before parliament. 

Currently, developers must obtain the consent of any landowner under whose land they wish to drill regardless of the depth: the recent case of Star Energy Weald Basin Ltd v Bocardo SA [2010] UKSC 35 confirmed that drilling without the landowner’s consent amounts to a trespass. 

If private negotiations for access rights fail, a developer can seek to acquire ancillary rights for oil and gas extraction under section 7 of the Petroleum Act 1998 and section 4 of the Mines (Working Facilities and Support) Act 1966. This involves applying to the Secretary of State, who can refer the matter to the High Court. 

Negotiating with individual landowners can be a time-consuming and costly process, vulnerable to the objections of a single landowner. Appealing to the Secretary of State provides a potential solution, but the process is complex and the developer must show that it is not reasonably practicable to obtain the necessary rights by private negotiation. This option is not, however, available in respect of geothermal energy, where landowner opposition can stall an entire project. 

The government’s aim is therefore to streamline the underground access regime by legislating so that the existing law of trespass does not apply below 300 metres, though it will continue to apply above. It argues this merely places the existing situation on a statutory footing, as a court making a decision under the appeal process outlined above would be likely to find in favour of the developer in any case. This is because extraction would be judged expedient in the national interest – a criteria that must be considered under the 1966 Act. 

The proposals hinge on the depth of extraction rather than the particular technology employed (i.e. they could potentially have a wider application than fracking). 

Despite the public opposition to the proposal - 99 per cent of respondents responded negatively – the government is pressing ahead on the basis that most objections were in response to the general issue of fracking, rather than to the specific proposals around underground access. The introduction of the legislation into parliament is likely to prompt further debate as - Scottish ministers have already criticised the proposals.

CRC – annual report publication to remain in current format 

The government has released its response to the discussion paper issued at the start of the summer on proposed changes to the structure and content of the CRC Energy Efficiency Scheme annual report publication. It has decided not to implement the proposed changes given respondents’ calls for stability following the other changes to the CRC scheme as part of the simplification process. 

For more details on the contents of the discussion paper see our July edition here

The government’s response indicates that there was very little support from respondents for the changes proposed. Responses included concerns around making further changes to the CRC scheme, before the other, wider ranging, simplification measures had a chance to bed down, that releasing energy use and supply data could see commercially confidential information on production volumes being available to competitors and publishing information on renewables could dilute the focus of the scheme on energy efficiency and be confusing.