Net Zero & Industry News

Key aspects of the Autumn 2024 Budget for the energy and infrastructure sector include:

• Increase in Energy Profits Levy to 38% and removal of 29% investment allowance, but 66% decarbonisation allowance and tax relief for payments into carbon capture and storage (CCS) decommissioning
• £3.9 billion for CCS projects between 2025 and 2026
• Carbon border adjustment mechanism from January 2027 will aim to reduce emissions in sectors such as steel and cement to protect the UK’s position in global markets
• Various measures and funding to support hydrogen infrastruct

The government has published a consultation on its 10 year plan industrial strategy, ‘Invest 2035‘. The strategy aims to “ease the investor journey and create long-term, inclusive, secure and sustainable growth”. The government has said it will channel support to advanced manufacturing; clean energy industries; creative industries; defence; digital and technologies; financial services; life sciences and professional and business services. The consultation is open until 24 November 2024.

The government has unveiled plans for a single infrastructure body, the new National Infrastructure and Service Transformation Authority, to fix systemic issues impacting the roll-out of a string of nationally significant projects. In related news, the government convened the inaugural meeting of the British Infrastructure Taskforce, as part of a new approach that involves government working with business to design policy that will unlock private investment and explore different options to support the government’s infrastructure goals.

The new National Energy System Operator (NESO) launched on 1 October. The launch complements the founding of Great British Energy and introduction of the Clean Energy Mission Control Centre. Paul Golby, Chair of NESO, said: ” NESO brings together critical roles and responsibilities under one roof, creating an environment that is essential for success. We will have a broad strategic oversight of both the electricity and gas systems, managing system planning, market operations, and ensuring that our energy infrastructure is secure, resilient, flexible, and future-proof.” Key publications to be provided by NESO over the next few years include:

• Strategic Spatial Energy Plan: The spatial plan will set out a coordinated approach for onshore and offshore energy infrastructure to 2050, to help cut grid connection waiting times and provide cost-effective energy generation. It will cover how to efficiently spread new energy projects across the country taking account of transport, water supply, the environment and other issues. The NESO will publish its consultation on methodology later this year. The first iteration of the plan will be published in 2026 and will focus on electricity generation and storage. One to watch.
• Future Energy Pathways report: The annual report will advise on how future energy demand and supply could be met by making changes to infrastructure, technology, innovation and consumer behaviour in line with net zero targets. It will build on the Future Energy Scenarios report that has been produced annually by the Electricity System Operator since 2011.
• Centralised Strategic Network Plan: The plan will provide a network blueprint for the country, mapping the demand and optimal locations for offshore and onshore transmission infrastructure to support a decarbonised energy grid. NESO will also work at a local level, with plans to deploy up to 13 regional energy system plans across the country over the next few years. These roles will work with local authorities and energy distribution networks to improve understanding of regional infrastructure needs, paving the way for new skilled jobs across the country.

Ofgem has published an open letter signalling further changes to proposed transmission-related connections reform. In addition to connection criteria already proposed (relating to projects having land secured and having a date for submitting a planning application), there will be new criteria relating to strategic need, including by reference to the project’s location and technology type.

On 5 November, NESO launched its Connections Reform project consultation on the reformed connections process and formation of the new queue. The consultation builds on ‘readiness’ proposals already being taken forward via relevant code modifications, and covers the 3 methodology documents that will underpin the connection reform process: (1) Gate 2 Criteria; (2) Project Designation; and (3) Connection Network Design. It’s open until 2 December 2024.

Also on 5 November, NESO published Clean Power 2030. This report provides the body’s analysis on the foundations for clean power, the core elements of a clean power system, our pathways, critical enablers and the benefits and costs.

Ofgem has announced the introduction of a new process which gives innovators more opportunities to apply or re-apply to the Strategic Innovation Fund.

Ofgem has opened a consultation seeking views on the framework for the next (i.e. from 1 April 2028) electricity distribution price control period (ED3). The consultation is open until 15 January 2025.

The TransiT Hub is a new national collaboration of eight universities and 67 partners across the transport, energy and digital sectors, focused on rapidly decarbonising transport in the UK. The hub will cover road, rail, air and maritime. It has already secured £46 million and will identify the lowest cost, least risky and most energy-efficient way to decarbonise transport by developing a digital twinning approach.

The Global Centre of Rail Excellence has announced a series of collaborations to enhance delivery of rail infrastructure, including through use of artificial intelligence.

The Guardian and the Financial Times have reported that the Treasury is investigating a possible private finance initiative deal to fund the new Lower Thames Crossing.

The Department for Energy Security and Net Zero (DESNZ) has opened a consultation on new environmental guidance for oil and gas firms to provide industry stability, support investment, protect jobs, deliver economic growth, and meet climate obligations as the North Sea transitions to its clean energy future. This follows the Supreme Court ruling in R (on the application of Finch on behalf of the Weald Action Group) v Surrey County Council [2024] UKSC 20, which requires regulators to consider the impact of scope 3 emissions and burning oil and gas in the Environmental Impact Assessment for new projects. The consultation closes on 8 January 2025.

The Climate Change Committee (CCC) has advised the UK government to target an 81% reduction in emissions by 2035. The CCC issued the advice ahead of the UK’s Seventh Carbon Budget, which is due to be published in February next year and will set out legally binding targets on reducing carbon emissions for 2033 to 2037.

The UK Business Climate Hub has published its UK Net Zero Census 2024 to assess net zero measures and initiatives being implemented by UK organisations and provide a benchmark for industry progress. The report aims to aid decarbonisation efforts by identifying critical challenges and areas where additional support is required.

The Glasgow Financial Alliance for Net Zero published both its consultation (open until 27 January 2025) on nature in net-zero transition plans, and its consultation (open until 9 January 2025) on index guidance to support real-economy decarbonisation.

The Corporate Sustainability Due Diligence Directive (CSDDD) has been formally adopted and will, on a staggered basis between 2027 and 2029, introduce mandatory human rights and environmental due diligence requirements for large EU companies, and non-EU companies operating in the EU. In-scope companies must take various steps to manage actual and potential adverse impacts of their/their supply chain partners’ activities on human rights and environmental matters. A key requirement will be the putting into place of a climate transition plan. Watch out for Walker Morris’ forthcoming briefings on the CSDDD and climate transition planning.

On 16 October 2024, DESNZ published its response to the 2023 consultation on proposals for a new six-year climate change agreements (CCA) scheme to follow the existing scheme from 2025. The response indicates a new, separate CCA scheme, which will require sectors and operators to enter into new CCA agreements and to meet new targets.

Plans to build the first new coal mine in the UK in 30 years have been quashed by the High Court. Then levelling up secretary, Michael Gove, approved the mine’s development in December 2022. The High Court has accepted the majority of grounds of challenge brought by South Lakes Action on Climate Change and Friends of the Earth. It found that the proposal to mitigate Greenhouse Gas (GHG) emissions via purchase of credits from off-sets arising outside the UK was contrary to policy; and that the secretary of state had acted in breach of the Environmental Impact Assessment regulations in deciding that the GHG emissions from the burning of coal were not a significant effect of the proposed development. The court also stated that the argument that the mine’s coal would be a substitute for coal that would otherwise be extracted elsewhere in the world, so that there would be no net increase in global carbon emissions, was flawed. The planning application will now have to be reconsidered.

The COP29 Presidency has written to all conference parties and stakeholders to set out details of its “Action Agenda”, ahead of the summit in November.

ENDS (16 September 2024) has reported that an unpublished paper from the Environment Agency has found that the cost of remediating high-risk ‘forever chemicals’ sites in England could range from £31bn to £121bn. The issue is likely to be ‘one to watch’ as a key question for landowners, investors and developers will be “who pays?”. Some insurers are reportedly refusing cover for PFAS contamination.

ExxonMobil has said global oil demand will remain virtually unchanged by 2050 and warned that, if companies failed to keep investing to match that demand, crude prices could quadruple as a result of supply shortfalls. (The prediction contrasts with BP, which expects oil consumption to decline to 75mn b/d in 2050 and the International Energy Agency, which projects oil demand would fall to 54.8mn b/d if governments met their climate pledges.)

The government has reached a settlement with Chris Packham in respect of his legal challenges against decisions, made by the previous Conservative government, to remove or delay certain environmental policies. The settlement is on the basis the government will reconsider the decisions as it updates its carbon budget delivery plan.

In a case heard in July this year, Friends of the Earth and two co-claimants argued that the current National Adaptation Plan 3, which is intended to protect UK citizens from the impacts of the climate crisis, is “unlawful” by virtue of various breaches of the Climate Change Act 2008. The High Court has now dismissed the case on all grounds.

The government has settled (for an undisclosed amount) the claim of mother of nine-year-old Ella Kissi-Debrah. In 2020, Ella became the first person in the world to have air pollution noted on their death certificate.

Renewables, Green Energy and Carbon Capture, Usage and Storage (CCUS)

British recycling firm Altilium and Jaguar Land Rover will build and test battery cells made using recycled materials from old Jaguar i-Pace electric vehicles in a pilot project to demonstrate recycled battery production is possible at scale.

The government has pledged up to £21.7bn to develop two massive CCUS hubs in the North West and North East of the UK. In related news, Offshore Energies UK has published new research outlining the transformative potential of CCUS technologies in achieving net zero targets and highlighting the UK’s unique potential to lead globally in CCUS.

In R (on the application of Dr Andrew Boswell) v Secretary of State for Energy Security and Net Zero [2024] EWHC 2128 (Admin), the claimant applied to judicially review the decision of the Secretary of State for Energy Security and Net Zero to grant development consent for a new gas-fired electricity generating station with post combustion carbon capture at Teesside – the UK’s first full-chain CCUS scheme. (This claimant has also challenged a number of other nationally significant infrastructure projects on climate change grounds.) The court dismissed the application, providing a reminder that judicial review challenges to such decisions can only proceed on points of law – they are not a forum for challenging policy.

The first public consultation in connection with the River Mersey tidal scheme has launched.

Space Solar and Transition Labs have announced an agreement to provide Reykjavik Energy with electricity from the first-ever space-based solar power plant. The plant, set to be operational by 2030 with an initial capacity of 30 MW, will use a cutting-edge solar power system that will orbit Earth, harnessing solar energy and transmitting it wirelessly via safe high frequency radio waves to ground-based stations. The stations will convert the energy into electricity and feed it directly into Iceland’s power grid, providing clean, renewable energy 24/7, regardless of weather or cloud cover, and with electricity costs similar to intermittent renewables.

enfinium has successfully launched the UK’s first carbon capture pilot at an energy from waste site.

The EA, HM Revenue & Customs, Revenue Scotland, the Welsh Revenue Authority and the Joint Unit for Waste Crime are asking businesses to be wary of illegal waste management by “criminal gangs”.

The Water (Special Measures) Bill was introduced into Parliament on 4 September 2024. It’s intended to strengthen the power of the water industry regulators and address failing water companies. The Bill will increase the regulatory powers of Ofwat and aims to: block bonuses for executives who pollute waterways; bring criminal charges against persistent lawbreakers; enable automatic and severe fines for wrongdoing; ensure monitoring of every sewage outlet. Measures to ensure fines paid out by water companies are ring-fenced for environmental improvement, the imposition of a statutory requirement for firms to create pollution reduction plans, and requirements to ensure greater transparency by utilities companies, have been tabled for inclusion.

The government has launched a new independent commission tasked with carrying out an independent review of the water sector in England and Wales.

The Supreme Court has handed down an interesting judgment (In the matter of an application by Noeleen McAleenon for Judicial Review [2024] UKSC 31) concerning alleged nuisance odour, toxic emissions, breach of statutory duties, regulatory failings, human rights impacts; and what is the appropriate cause of action and legal procedure. (The judgment came out on 16 October, just one day after publication of a BBC article on the Hafod landfill near Wrexham, the odour from which local residents are complaining is making their lives a misery.) The judgment is likely to have significant implications for the formulation and process of nuisance and environmental impact claims – potentially opening the floodgates to a spate of judicial review applications against authorities and regulators.

In related news, businesses and residents in south Devon have launched the first community-led legal claim of its kind, against South West Water. It follows the Supreme Court’s decision, of earlier this year, in the Manchester Ship Canal case (see Walker Morris’ briefing). The claim alleges that operations by the water company responsible for sewage pollution in Exmouth have led to a fall in tourism and other activities in the area, which has affected local residents and businesses. It seeks to hold the water company accountable for pollution and seeks compensation for businesses and individuals.

The BBC has found and reported that United Utilities illegally dumped sewage into Lake Windermere, and failed to report it, over a 3 year period.

Thames Water has launched a £3bn fundraising drive to help pay off some of the struggling utility’s large debt pile.

Construction/Development

A review led by a leading planning barrister, Lord Charles Banner KC’s Independent review of Legal Challenges to Nationally Significant Infrastructure Projects, sets out recommendations for speeding up handling of legal challenges to major infrastructure projects. The government has opened a call for evidence, open until 30 December 2024, seeking views on the review’s findings and recommendations, and to gather additional suggestions for addressing delays arising from judicial reviews against Development Consent Order decisions.

A new technical standard has been launched to help UK construction achieve net zero carbon buildings. The free-to-access UK Net Zero Carbon Buildings (NZC Buildings) Standard specifies the criteria a building must meet to be verified as net zero. The requirements encompass construction quality and building performance metrics, and cater to all significant building sectors, including new constructions and existing structures.

The Royal Institution of Chartered Surveyors (RICS) has published materials, including a webinar, on the subject of ESG in real estate. Experts from the webinar highlighted the following key points: the industry still has a long way to go in achieving resilience against ESG risks, which are becoming critical for property value and marketability; ESG standards need incorporating into everyday operations; technology is vital to assess, manage, and report ESG risks in real estate.

In a letter to housing minister Matthew Pennycook, a cross-party group of 35 MPs and peers and more than a dozen fuel poverty charities and environmental organisations have called on the government to introduce the new Future Homes Standard without delay, and to ensure the upcoming regulations mandate solar panels for all new-build homes.

DESNZ has announced a pilot scheme for England’s first heat network zones. Six towns and cities, including Leeds, Plymouth, Bristol, Stockport, Sheffield, and two in London, have been selected to develop the country’s first heat network zones and will receive a share of £5.8m in government funding, with construction expected to commence in 2026. See Walker Morris article on heat network zones and what businesses need to know. Heat network zones work particularly well in urban areas. Types of buildings that could connect include those that are already communally heated, and large non-domestic buildings, such as hospitals, universities, hotels, supermarkets, and office blocks.

Five more projects have been awarded over £57 million from the Government’s Green Heat Network Fund. These projects, integral to comprehensive urban renewal plans, will provide sustainable, low carbon heat to 17,000 new homes, commercial spaces, and public buildings, contributing to vibrant, future-proofed communities.

A battery energy storage facility has been granted permission on green belt land separated by a motorway from a West Midlands conurbation after an inspector found very special circumstances in national energy policy support for low carbon infrastructure to assist in achieving net zero, energy security and energy flexibility.

The Ministry of Housing, Communities & Local Government (MHCLG) has launched a policy paper seeking views on the introduction of “Brownfield Passports” designed to facilitate and expedite development on brownfield land.

The Department for Science, Innovation and Technology has announced that data centres powering the economy will be classified as Critical National Infrastructure alongside energy and water systems. In related news, proposed changes to the NPPF include a direction for the positive determination of planning applications for data centres above and beyond the usual presumption in favour of sustainable development, and speculation is mounting that data centres could be permitted through the Nationally Significant Infrastructure Project route. (See this Savills’ briefing and the Financial Times, 18 September 2024).

The Welsh Government has launched a consultation on the process for infrastructure consents for specified types of major infrastructure projects under the Infrastructure (Wales) Act 2024. The consultation closes on 13 December 2024.

Also in Wales, the Welsh government has announced a new £10 million capital grant scheme to support the development of Smart Local Energy Systems across Wales. The grant scheme is open to community energy organisations, social enterprises, public sector bodies, and small and medium-sized enterprises. It aims to encourage innovative projects that integrate local energy generation, storage, and infrastructure, to make energy systems more efficient and deliver tangible local benefits, including lower energy costs.

CBRE has published an article on ‘Addressing resource challenges and accessibility through AI in planning’.

The government has updated its guide to the types of development that will be exempt from BNG requirements.

ENDS and PlanningResource are apparently seeking confirmation of reports that the government is considering broadening the range of developments that are required to comply with BNG, under plans to resolve ‘loopholes’ in the policy. One to watch.

Environment Bank has recently announced that it’s working in collaboration with Barclays to support greater visibility and adoption of BNG among housebuilders and England-based farmers.

£45 million will be provided to support seven councils in delivering nutrient neutrality mitigation. In a letter to council leaders, Matthew Pennycook confirmed the government’s intention to bring forward changes to the nutrient neutrality system via its forthcoming Planning and Infrastructure Bill. Legislation, expected to be published in the new year, should provide “an opportunity to accelerate housebuilding and infrastructure by using development to fund nature recovery where currently both are stalled, creating a win-win outcome for both the economy and for nature”. Pennycook also announced £2 million in “capacity support funding allocations” and £2 million under the Nutrient Support Fund, awarded to the 20 largest nutrient neutrality catchments.