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Posted on: 18 June 2019
Environmental Law News UpdateTweet
In this latest Environmental Law News Update, William Upton QC, Christopher Badger and Mark Davies consider the UK’s commitment to be carbon neutral by 2050, the end of the road for the M4 relief road project and substantial financial penalties for an oil refinery operator and contractor following an explosion in 2011.
Carbon neutral by 2050
Theresa May may not have achieved Brexit but she is seeking to create some form of legacy by enshrining in law a commitment from the UK to reach net zero carbon emissions by 2050. In doing so, the UK will be the first major economy to take that step. The commitment will be made by way of a change to the Climate Change Act 2008 by virtue of the snappily titled draft Climate Change Act 2008 (2050 Target Amendment) Order 2019.
Philip Hammond reportedly warned Theresa May against this step, highlighting concerns about its cost. The Committee on Climate Change has estimated that the cost of meeting the net-zero target will be 1-2% of GDP (£20 – 40 billion a year), the same figure as was previously predicted for the current 80% target found in the Act, due to what it said were rapid cost reductions in key technologies such as offshore wind. However, the Department for Business, Energy and Industrial Strategy estimated that the cost would be in excess of £1 trillion (or £70 billion per year), prompting a letter from Philip Hammond warning that this would mean less money for schools, police and hospitals. He also warned that some industries would become “economically uncompetitive” unless other countries that the UK competes with also follow suit and adopt the target.
Green campaigners highlight that the figures for costs do not include any figures for benefits resulting from the change, which are likely to include new jobs in new green industries and cleaner air and it also ignores the potential significant cost of inaction.
A full impact assessment has not been produced. The explanatory memorandum confirms that the Secretary of State has obtained the advice of the Committee on Climate Change, and took into account representations made by the Scottish Ministers, the Welsh Ministers and the Department of Agriculture, Environment and Rural Affairs in Northern Ireland. The devolved administrations did not raise any issues with the amendment proposed.
Interestingly, the UK is currently seeking to host COP26, due to be staged in December 2020. The decision on venue will be made on 27 June in talks at Bonn. Italy, Belgium and Turkey also want to host the climate summit. Setting the net-zero target may tip the balance in favour of post-Brexit Britain.
In addition, Theresa May has rejected the CCC’s advice on international carbon credits. John Gummer, the CCC Chair, had said that it was “essential” that such credits were not used. However, the Government has stated that use of international carbon credits will ensure that the UK maximises the value of each pound spent on climate change mitigation.
So expect the following:
Hitting the target will not be an easy task. The UK is not currently on track to hit the 80% goal and so the change to net-zero will require ambitious policy changes. The CBI has stated:
“Some sectors will need clear pathways to enable investment in low-carbon technologies, and it is vital that there is cross-government coordination on the policies and regulation needed to deliver a clean future.”
These tough decisions, however, seem to be for another day. For instance, critics may remember that one of grounds of challenge in the Heathrow judicial reviews was that the new draft Airport NPS is based on the 80% figure, and not the figure of 100% that the Paris Agreement would expect the government to adopt. The proposed answer is that we can deal with that later:
“… For now, therefore, we will continue to leave headroom for emissions from international aviation and shipping in carbon budgets to ensure that emissions reduction strategies for international aviation and shipping can be developed within International Maritime Organisation and International Civil Aviation Organisation frameworks at the appropriate pace, and so that the UK can remain on the right trajectory for net zero greenhouse gas emissions across the whole economy.”
The end of the road?
After years of preparation, and a year-long public inquiry, the First Minister of Wales has refused to confirm the Schemes, Line Order, Side Road Orders and Compulsory Purchase Orders needed to allow the 14 miles of the M4 Relief Road around Newport to be built (see link here).
The headlines have emphasised that the Minister attached greater weight than the inspector did to the adverse impacts that the project would have on the environment, in particular the protected Gwent Levels and their historic landscape. This will no doubt encourage those who are arguing against the proposals such as those for the A303 tunnel at Stonehenge, the A27 Arundel bypass or the new road in the Oxford-Cambridge growth corridor. But it would be wrong to see this decision as spelling the end of new road building in the name of the environment. The main reason actually looks to be a more traditional reason – finance. On its face, there were many good reasons for this project and the Minister did not question the Inspector’s conclusion that it would constitute at least sound value for money, and in all probability good value for money. But the Welsh Cabinet decided in April not to fund the Project in the context of the Welsh Government’s overall capital budget. This “fundamental change of circumstances from those considered by the Inspector” meant that the Minister concluded that there was now no prospect of the Project being implemented in the foreseeable future, which took away the argument that there was a compelling case to expropriate the land that was subject to the CPOs or that it would be appropriate or expedient to make the other Schemes and Orders. Having failed to satisfy those basic questions, it would have been surprising if the overall balancing exercise had not also changed fundamentally.
Oil refinery operator and contractor fined following explosion in 2011
Valero Energy UK and B&A Contracts have both been fined for breaching health and safety legislation following an explosion at the Pembroke Refinery in 2011. The explosion occurred when employees were cleaning a chemical storage tank and flammable gases that had built up inside it ignited. The subsequent explosion killed four people and severely injured a fifth. The fines handed down provide an interesting comparison to those meted out in environmental cases.
The court was reportedly told in the sentencing hearing of five broad areas of failure, which were referred to as ‘overlapping systemic failures’, with the risk of the accumulation of hydrocarbons in the storage tank failing to have been foreseen and acted upon.
Valero Energy UK were fined £5 million plus prosecution costs of £1 million whilst B&A Contracts were fined £120,000 plus prosecution costs of £40,000.
That is not, however, the full story as the fine and prosecution costs to be paid by Valero are being borne by Chevron, the owner and operator of the refinery at the time of the explosion. This no doubt raised interesting issues for the sentencing court who will have had to address the turnover and operating profit of a company substantially larger than the company actually before it.
To which end, with systematic failures having been noted (and nothing to suggest that the judge did not accept the submission), the fine of £5 million for Chevron, the company bearing the fine and one with (presumably) a turnover into the billions of pounds and (say when compared with a water utility company being sentenced for environmental offences) a relatively healthy operating profit, one might question whether this level of fine meets the step three test of being sufficiently substantial so as to have a ‘real economic impact which will bring home to both management and shareholders the need to comply with health and safety legislation’.
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