Features | Buildings and Design

UK energy legislation has changed greatly over the last few years to reflect the country’s necessity to meet projected energy demands as well as carbon emission reduction targets. With the UK Energy Act 2008, the Climate Change Act 2008 and the Planning Act 2008 all now published, these important legislative changes indicate the country’s commitment to the UK’s 2006 Climate Change Programme, which sets a framework for domestic policy initiatives in the final years of the Kyoto agreement to 2012.

More recently, the UK Government published the Low Carbon Transition Plan, which plots how the UK will meet the 34% cut in emissions on 1990 levels by 2020. According to the UK Department of Energy and Climate Change (DECC), the plan “sets the standards for others in the run up to crucial global climate change talks in Copenhagen in December this year”.

Finally, last month witnessed the introduction of the Infrastructure Planning Commission (IPC), an independent, non-departmental public body established by the Planning Act 2008, which aims to fast track planning consent for nationally significant infrastructure projects (NSIPs). The IPC will replace the eight former planning systems, which were viewed as cumbersome. The new single process will aim to cut the time needed to secure planning consent for NSIPs from as long as seven years to around one year.

The IPC will cover a range of industries from energy to transport and water, but it will have an initial focus on the energy sector as Britain is forced to replace one third of its electricity generating capacity over the next twenty years to meet projected energy demand and carbon emission reduction targets.

The first chairman of the Commission, Sir Michael Pitt – a former chairman of the National Health Service South West, has stated that the IPC intends to examine just over fifty projects by 2011. Projects are likely to include wind farms, other renewable installations, fossil fuel power stations and transmission systems. But sustainable development is at the heart of the new planning regime as the Government tries to increase reliance on renewable energy.

National policy statements (NPSs) covering each sectors lie at the centre of the new regime and will be the principal policy documents which the IPC will use in making decisions. NPSs will set out the national need for particular types of infrastructure and provide the principal basis for the IPC’s decision making. Twelve NPSs are currently being prepared by the relevant Government departments; six of which by DECC. The first will provide the context for energy policy and the other five will define NPSs for renewable energy, fossil fuels, oil and gas supply and storage, electricity networks and nuclear power.

The IPC will be able to receive applications from the energy and transport sectors from 1 March 2010 irrespective of whether the relevant NPS has been designated, so to begin with the IPC will be advisory only. If the relevant NPS is not available when a particular application reaches decision stage (late 2010 at the earliest), the IPC will make a recommendation to the Secretary of State rather than take the decision itself. In this situation, the Planning Act 2008 allows the Secretary of State a maximum of three months to make the development consent decision.

While business leaders, such as the CBI, support the IPC, which they see as encouraging investment in NSIPs in the UK, the future of the IPC already looks vulnerable.

With an impending UK Government election to take place in early June next year, the opposition Conservative Party has announced that it will abolish the IPC if it wins the next election. The Conservative view is that the IPC will slow down the planning process rather than speed it up, lacks accountability and is undemocratic. Labelling the Commissioners that will staff the IPC as “unaccountable quangocrats”, the Conservatives argue that the new planning regime will be governed by ministers, which could lead to legal challenges in the High Court and the European Court of Justice. Instead, the Conservatives say they would focus on material planning considerations rather than questioning the appropriateness of the project in principle, thus handing NSIP applications back to the Secretary of State. As a result, the IPC planning team would be redeployed as a special projects team to the Planning Inspectorate.

If there is a change in the UK government in the next year, there will not be sufficient time for any application submitted to the IPC to be determined before the potential abolition of the Commission. The uncertainty in the future of the IPC comes at a time when the UK will most likely have to reduce its CO₂ emissions by more than current targets following the Copenhagen Climate Change Summit in December this year.

Perhaps the UK Government should be concentrating not just on the methodology to bring new energy, and particularly renewable, projects to market by fast-tracking the planning process through the IPC, but also on the source of power (such as nuclear) and project and corporate funding of appropriate projects. The first report from the UK’s Committee on Climate Change, published in December last year, recognised the need for focus while times are difficult in terms of the British economy. Since that time, the UK’s GDP has fallen along with interest rates, inflation and sterling.

Industry leaders and experts are urging the UK Government to place more emphasis on nuclear energy. The CBI says that the UK “urgently” needs nuclear as well as wind power to bolster energy supply and cut carbon emissions. With the Sizewell B nuclear power station taking six years to achieve planning permission, for example, fast-tracking planning applications only goes some way to addressing the larger problems of security of supply and emissions reduction.

In the current financial market it is also clear, and significantly problematic, that companies struggle to find the capital to invest in new clean energy projects in the UK. This has recently been underlined by E.ON delaying its plans for a clean coal plant at Kingsnorth until 2016, while EDF announced earlier this month that it requires another investor to help build its planned four nuclear stations in Britain.

It is inevitable that the energy market is set for revolutionary change and the UK Government has come some way through legislation to address this. But it is also clear that the IPC is only a small part of more fundamental issues such as the identification of power sources to replace our reliance on dwindling North Sea oil and gas reserves, as well as access to equity and debt funding at levels enabling projects to make a viable return.

The first report of the UK Industry Taskforce on Peak Oil and Energy Security concluded that the phasing out of older nuclear power stations is a necessity but that a revival of nuclear power should only be taken if there is no other alternative. The Taskforce encouraged investments in renewable energy and energy efficiency, offering a better and more sustainable return and helping the British manufacturing and construction industries out of recession. The Taskforce commented that “the urgent challenges of the 21^st century require a smart, systematic approach….offering a common, coherent vision linking government, industry and citizens….”

If there is a change of Government in the UK within the next nine months and the IPC is abandoned, the conclusions of the Taskforce requiring a “smart, systematic approach” will be even more pressing. This will be more central following the ramifications of the Copenhagen Climate Change Summit at the end of the year.

A prolonged lack of debt funding in the banking system will, however, continue to hamper the UK’s development of renewable energy assets at a time when the country will be required to increase its commitment to cutting carbon emissions while securing alternative power supply.

Deborah Mills
Partner, Head of Projects
Howard Kennedy

For further information:

Energy Act 2008,

www.opsi.gov.uk/acts/acts2008/ukpga_20080032_en_1
 

Climate Change Act 2008,

www.opsi.gov.uk/acts/acts2008/ukpga_20080027_en_1
 

Planning Act 2008,

www.opsi.gov.uk/acts/acts2008/ukpga_20080029_en_1
 

Low Carbon Transition Plan,

www.decc.gov.uk/en/content/cms/publications/lc_trans_plan/lc_trans_plan.aspx
www.decc.gov
www.cbi.org.uk/
www.conservatives.com/
 

UK Industry Taskforce on Peak Oil and Energy Security.

The Oil Crunch – Securing the UK’s energy future

. (October 2008),

peakoiltaskforce.net/