by Hardwick Legal | Apr 26, 2019 | Purpose Built (LexisNexis)
This week’s edition of Energy highlights includes the Council of European Energy Regulators’s (CEER) report on ‘accepted market practice’ in the energy sector under the regulation on wholesale energy market integrity and transparency (REMIT), Office of Gas and Electricity Markets’ (Ofgem) consultation on its five-year review of the Capacity Market Rules, publication of the final draft contract documentation for the Contracts for Difference (CfD) third allocation round and publication by Ofgem of a new Direction to make modifications to the Regulatory Instructions and Guidance (RIGs) for RIIO-ED1. The Office for Nuclear Regulation (ONR) has published its corporate plan for 2019 to 2020 and the The Nuclear Decommissioning Authority (NDA) has published its five-year research and development plan for 2019 to 2024.
Electricity and gas market regulation and licensing
CEER NOTE ON REMIT AND ‘ACCEPTED MARKET PRACTICES’ IN THE ENERGY SECTOR
CEER has published a note on ‘accepted market practice’ in the energy sector, and the framework, definitions and rules under REMIT (Regulation 1227/2011/EU). See: LNB News 18/04/2019 73.
OFGEM’S NEW DIRECTION MODIFIES RIGS FOR RIIO-ED1
Ofgem have published a new Direction to make modifications to the RIGs for RIIO-ED1. On 8 March 2019, Ofgem sought views on version 4.0 of RIGs. Following feedback, the modifications outlined in the Directive aim to clarify existing RIGs reporting requirements. Version 5.0 of RIGs, which includes these modifications, took effect from 1 April 2019. See: LNB News 23/04/2019 22.
Capacity market, balancing services and energy system flexibility
CONSULTATION LAUNCHED INTO REVIEW OF THE CAPACITY MARKET RULES
Ofgem has announced a consultation on its five-year review of the Capacity Market Rules. The consultation considers discrete areas of the rules or framework and proposes changes that Ofgem aim to implement to simplify the capacity market in the short term. The consultation is the first phase in aiming to develop longer term changes to the rules and to how Ofgem’s capacity market rules changes process operates. The consultation closes on 28 May 2019. See: LNB News 18/04/2019 63.
Renewable energy
CFD ALLOCATION ROUND THREE FINAL DRAFT DOCUMENTATION LAUNCHED
The Department for Business, Energy and Industrial Strategy (BEIS) has published the final draft versions of the CfD Standard Terms and Conditions, the Generic Agreement and contract variants for CfD Allocation Round 3. BEIS has also published a supplementary response alongside the final draft contract documents. This explains the changes to the CfD standard terms. Changes to the CfD contract are shown using tracked changes. See: LNB News 18/04/2019 38.
STATE AID: COMMISSION APPROVES 385M LITHUANIAN SUPPORT FOR RENEWABLY-SOURCED ELECTRICITY PRODUCTION
On 23 April 2019, the European Commission announced it has approved under EU State aid rules a scheme to support electricity production from renewable energy sources in Lithuania (SA.50199). The Commission found that the scheme—open to all types of renewable generation—will contribute to EU environmental objectives without unduly distorting competition. From 1 May 2019, Lithuania will provide State aid support to installations generating electricity from renewable sources, such as wind, solar or hydropower. See: LNB News 23/04/2019 69.
GOVERNMENT POLICY ACTION IN A ‘CLIMATE EMERGENCY’
Claire Perry, the Minister of State for Energy and Clean Growth, has made an oral statement in the House of Commons on the climate change protests and the government’s climate change policy. Perry highlights a number of key legislative and policy actions the government has undertaken, including a new waste strategy and investment in the offshore wind sector. See: LNB News 24/04/2019 58.
Nuclear energy
NEW CORPORATE PLAN
ONR has published its corporate plan for 2019 to 2020. The plan sets out the ONR’s aims and aspirations for 2019/20 and outlines to some of the challenges, risks and opportunities for the year ahead. According to the document’s executive summary, the regulator’s ‘overarching priority is to continue to deliver efficient and effective regulation of the nuclear industry, holding it to account on behalf of the public’. See: LNB News 23/04/2019 61.
NUCLEAR DECOMMISSIONING PLAN SET TO EXPAND RESEARCH & DEVELOPMENT PORTFOLIO
NDA has published its five-year research and development plan for 2019 to 2024, setting out the intention to extend its portfolio following successful investments over the last five years. The NDA’s intention is to provide information to stakeholders about what they are aiming to fund in that time. Significant developments, such as the Industrial Strategy and the Nuclear Sector Deal, have changed the nuclear decommissioning research and development landscape—the NDA has taken these into account when creating its plan. See: LNB News 23/04/2019 30.
Conventional power, waste to energy, biomass and combined heat and power projects
HANNOVER RE JOINS OTHER REINSURERS IN MOVE AWAY FROM COAL
Reinsurer Hannover Re SE, has said it will scale back the coverage it provides to new coal-fired power plants or coal mines, joining a growing industry move away from fossil fuels. See Law360 article: Hannover Re joins other reinsurers in move away from coal.
Source: LexisNexis Purpose Built
Energy weekly highlights - 26 April 2019
by Hardwick Legal | Apr 12, 2019 | Purpose Built (LexisNexis)
‘Fast fashion’—what is it?
Buttanshaw and Dorotheou both agree that the key components of fast fashion are:
- a quick manufacturing process
- a flexible production that allows manufacturers to quickly increase production if items are selling well
- low cost
Buttanshaw adds that: ‘Garments are aimed at consumers who want to change their wardrobe on a regular, trend driven, basis but are budget conscious. It has been argued that this combination of low-price points, focus on short term trends and the speed of production results in garments which are of low durability and not intended to last.’
This point has been argued strongly in the Environmental Audit Committee’s report, ‘Fast fashion: clothing consumption and sustainability’, which states that ‘the way we make, use and throwaway our clothes is unsustainable.’ See further: LNB News 19/02/2019 107
Dorotheou notes how long this has been going on as well as some examples of retailers: ‘This practice started in the 1980s and has since become a very popular part of the UK’s retail industry.’
Impacts and issues
When looking into the background of this inquiry, the outcome seems like it was inevitable the spotlight would eventually be shined onto fast fashion.
Dorotheou says that the ‘UK’s love of fashion has resulted in an increasing demand for clothes’ and therefore retailers produce ‘more products to meet demand’. However as this has gone on Buttanshaw says that there has been ‘a growing public consciousness of the potential adverse impacts of consumerism and a ‘throw-away’ culture.’
The Committee’s report is filled with various facts:
- the UK buys more clothes per person than any other country in Europe.
- 300,000 tonnes of textile waste ends up in household black bins every year.
- less than 1% of material used to produce clothing is recycled into new clothing at the end of its life.
There are countless examples with the Committee claiming that ‘fashion shouldn’t cost the earth—but the fashion industry has marked its own homework for too long.’ According to the report, this has come about due to the risk of being caught cutting corners being low.
These facts are why Buttanshaw says that ‘there has been a feeling that fashion is the logical next area for scrutiny, and a series of recent papers (including an influential report by the Ellen MacArthur foundation in 2017, ‘A new textiles economy: Redesigning fashion’s future’) have been highlighting challenges in the sector.’
Buttanshaw also lists the key impacts associated with fast fashion:
- carbon—the greenhouse emissions currently associated with producing and distributing clothing have been estimated to be greater than international flights and shipping combined
- waste—recycling rates in the industry are low, leading to huge volumes of clothing going to landfill
- water and land usage—particularly high for grown fibres. For example, by some estimates, one kilogram of cotton can take up to 20,000 litres of water to produce
- water pollution—the Ellen MacArthur Foundation estimated that 20% of industrial water pollution can be attributed to textiles (for example, discharge of dyes). Synthetic fabrics also shed plastic microfibres when washed. A recent study by the University of Plymouth found that each cycle of a washing machine could release over 700,000 plastic fibres into the environment
- social—poor working conditions, including safety risks, poor pay and long hours in circumstances which amount to servitude, and child labour, are considered endemic within industry supply chains. This is an issue not only for production facilities abroad, but also the UK—with numerous instances of pay below minimum wage being reported in the emerging textiles manufacturing hub in Leicester, for example
These issues are seconded by Dorotheou: ‘Large amounts of waste pollution which are produced during manufacturing processes, a severe strain on natural resources to support the growth of cotton, labour exploitation and unsafe working conditions that are common along the supply chain, the great difficulty in disposing of waste clothing or unsold stock, with around 300,000 tonnes of clothing sent to landfills or incinerators every year. These issues are more pronounced within the fast fashion industry, given the large volumes of cheap, disposable clothing produced.’
Recommendations
There are number of key recommendations that the Committee’s report makes:
- mandatory environmental targets for any fashion retailer whose turnover is above £36m
- an Extended Producer Responsibility (EPR) scheme to reduce textile waste that should reward companies that design products with lower environmental impacts and penalise those that do not. It suggests the introduction of a 1p charge for every item of clothing produced
- the tax system should be used to shift the balance of incentives in favour of reuse, repair and recycling
- the government should reduce VAT on repair services as Sweden has done
- lessons on designing, creating, mending and repairing clothes should be introduced into the school curriculum
Buttanshaw also lists a key recommendation as: ‘Publish a publicly accessible list of retailers required to release a modern slavery statement under the Modern Slavery Act 2015 (MSA 2015) and increase penalties for those companies who fail to comply. Supply chain due diligence should be made mandatory under MSA 2015, and company reporting obligations in annual reports strengthened to specifically include slavery issues.
Dorotheou scrutinises these: ‘The Committee’s recommendations unfortunately feature very few immediate and practical steps for brands to implement to improve their environmental impact. There are numerous requests for the government to legislate, undertake further research or provide funding for regulatory bodies, all of which are unlikely to be acted upon in the short term. As climate change is such a critical issue, reliance on government action and the lack of practical recommendations is disappointing.’
Buttanshaw echoes that these ‘may not be as radical as they first seem’: ‘Nevertheless, the importance of the Committee Report is perhaps not the specific content of its proposals (none of which, individually, may be ground-breaking). Rather it is its consolidation of so many different strands of the environmental and social challenges posed by the industry into a single and pointedly urgent call for action. It will be interesting to see how government responds.’
Challenges
Due to these recommendations being ‘disappointing’, the legal and regulatory challenges faced may well be all the more pronounced.
Dorotheou notes that these challenges may affect companies that want to do business in the UK: ‘While legislation may be required to drive good behaviour, the government will need to be mindful of not rendering those companies, which do comply with their sustainability requirements, at a competitive disadvantage to their competitors. The fashion industry is big business in the UK (worth £32bn to the UK economy in 2017) and so any changes to improve sustainability will need to avoid the UK becoming an undesirable place to do business.’
Buttanshaw states the challenges may well be threefold—process, product and supply: ‘In terms of process, the report focuses on reducing the environmental and social impact of production—tackling issues such as slavery and pollution. An obvious challenge here is that a lot of production is outsourced overseas and not directly subject to UK regulation (and local law requirements may be considered insufficient by UK standards, or may not be enforced).
‘In terms of product, the report suggests changes are needed to garments so that they are easier to recycle/repair, and micro plastic shedding reduced. To date, efforts in this area have been based on voluntary business initiatives. Translating this into regulatory requirements will be challenging and can create economic tensions.’
‘This can be seen from experiences in the field of electrical appliances—while there has been some success in ensuring more energy-efficient products are placed on the EU market and that consumers are more informed in this respect, efforts to encourage designs which allow for durability, reparability, upgradeability and design for disassembly have been much more difficult to legislate for. Hence the Committee Report refers vaguely to the need to incentivise progress in this area but is less clear on any associated regulatory reform.’
‘EPR schemes have had some success in other fields but they can be relatively complex to implement, including how to define which person(s) should be responsible in a complex distribution supply chain, setting qualification thresholds etc. We have also found enforcement and compliance with those regimes to be patchy. Moreover, it is questionable how meaningful an impact this will have given the difficulties there is in recycling in the industry.’
Developing the law
Changes to the law in this area are on the horizon. For the government to really combat this, the Committee suggests that the way certain products are manufactured may need to change.
Dorotheou discusses how this may affect washing machine manufacturers: ‘The Committee made the interesting suggestion of collaboration between retailers, water companies and washing machine manufacturers to investigate further the problem of microfibre pollution. Once we know more about microfibre pollution, a potential change could be to oblige washing machine manufacturers to have an appropriate filter in machines to minimise this.’
Buttanshaw focuses on the changes to law that may be brought about from labour exploitation reform: ‘Interestingly, in terms of labour exploitation reform, the Committee report referred to the recently published ‘Labour Market Enforcement Strategy’ (from the Director of Labour Market Enforcement). This called for relevant labour legislation to be amended so that those at the top of the supply chain (e.g. a fashion retailer) are legally responsible for labour exploitation breaches further down the supply chain (e.g. by a contracted manufacturer).’
‘This would effectively create a ‘failure to prevent’ type offence, similar to that seen in the anti-bribery and anti-tax evasion fields (and which government has been considering extending to other economic crimes), blurring the lines of corporate legal responsibility. Industry would be sure to object to the prospect of being liable for persons who they may arguably have more limited control and visibility over.’
Changing the public opinion
This is an extremely important step of the process of reducing the harm that fast fashion can do. The UK buys more clothes per person than any other country in Europe. The Committee report states that 17% of young people said that they would not wear an outfit again if it had been on Instagram. Consumers are also more like to buy new clothes rather than repair them. The call for changes to school curriculums may well be intended to help try and shift public opinion and both Dorotheou and Buttanshaw have touched on how fast fashion has grown through public demand and consumption.
Buttanshaw adds to this that ‘there needs to be a shift from a throwaway culture to one focused on sustainability and longevity’ and that ‘government may also be able to support, through fiscal incentives but potentially also through funding and other forms of support, businesses which are focused on renting, repair and recycling of clothes in a more circular model.
Dorotheou supports this shift: ‘Consumers’ perception of clothes needs to change, so that clothes are not seen as single use and disposable items.’ However, Dorotheou also believes that ‘there needs to be a generally accepted and objective definition of ‘sustainable’ and what is needed to fulfil this definition.’
Next steps
The environment is a topic that can be controversial and fiercely debated by many. Regardless, it is a topic that will continue to be divisive and talked about as governments and bodies move to support or reject various recommendations and changes. The Committee’s report is now in the hands of the government and it will be interesting to see what the next steps that come out of it are. This sentiment is echoed by both Dorotheou and Buttanshaw, to use Buttanshaw’s wording: ‘Many of the report’s recommendations are already under consideration in some form, and so it seems likely that the government will simply reaffirm this, and state that it will continue to consult and review reforms in the area.’
In the short term, Dorotheou identifies increased public awareness as the next likely step: ‘More initiatives to increase public awareness and appreciation of the true environmental cost of our love of fashion are welcomed, as this will help to encourage better brand behaviour.’
Buttanshaw believes the short term will focus on the potential introduction of higher consequences: ‘Potential changes in law to introduce offences for ‘failing to prevent’ breaches in the supply chain is an area to watch in the short term. Otherwise further meaningful change may require greater technical/industry consensus on solutions to recycling of fibres etc. Efforts in these areas may therefore need to be the focus.’
When considering the short term however, we must be careful to remember the current situation the UK is in, as highlighted by Dorotheou who states that ‘hopefully this will not get lost among the current Brexit efforts, given the substantial investigation undertaken by the Committee to investigate this area.’
This was first published in LexisPSL. LexisPSL Environment includes a dedicated subtopic with practical guidance and legal news items on Responsible business, human rights and sustainability. Click here for a free trial of LexisPSL.
Source: LexisNexis Purpose Built
Fast fashion - the environmental impact
by Hardwick Legal | Apr 12, 2019 | Purpose Built (LexisNexis)
<br><img src="[images%7COpenAccessDataProvider]fd967909-39fa-4ceb-8272-d00812b37b37" sf-size="100"><p><b> </b></p><p><b></b><b>This week’s edition of Energy highlights includes analysis on the call for evidence on ‘helping businesses to improve the way they use energy’, and the impact of the government’s response and proposed next steps, and the Office of Gas and Electricity Markets’ (Ofgem) decision for National Grid Gas (NGG) to undertake consultation activities required by Article 26 in regards to transmission tariffs. Also this week, BEIS has published an update to guidance on applying for an exemption or compensation for a proportion of the indirect costs of funding the contracts for difference (CfDs), renewables obligation (RO) and small scale feed-in tariffs (FIT);</b> <b>the Office for Low Emission Vehicles (OLEV) has provided new guidance for local authorities on grants to provide on-street residential chargepoints for plug-in electric vehicles; and HM Treasury has produced an alternative schedule to the decommissioning relief deed (DRD) under the Transferable Tax History (TTH) mechanism.</b></p><h2></h2><h2>Electricity and gas market regulation and licensing<b></b></h2><h5><b>Ofgem instructs NGG to implement regulation (EU) 2017/460</b><b></b></h5><p>Ofgem has set out its decision instructing NGG to undertake consultation activities required by Article 26, and the cost allocation assessment calculations required by Article 5, of the European Network Code on harmonised transmission tariff structures for gas—<a data-sf-ec-immutable="" href="https://www.lexisnexis.com/uk/lexispsl/energy/citationlinkHandler.faces?bct=A&service=citation&risb=&EU_REG&$num!%2532017R0460%25">Regulation (EU) 2017/460</a>. Ofgem’s decision document sets out its reasons for its decision and the action it has allocated for NGG. See: <a data-sf-ec-immutable="" href="https://www.lexisnexis.com/uk/lexispsl/energy/linkHandler.faces?ps=null&bct=A&homeCsi=412012&A=0.5522625809449847&urlEnc=ISO-8859-1&&remotekey1=DIGEST-CITATION(LNB%20News%2010/04/2019%2076)&remotekey2=All%20Subscribed%20Current%20Awareness%20Sources&dpsi=0S4D&cmd=f:exp&service=QUERY&origdpsi=0S4D">LNB News 10/04/2019 76</a>.</p><h5><b>Financial associations respond to eu energy market initiative</b><b style="color:#999999;font-size:1rem;text-transform:uppercase;background-color:initial;"></b><b></b></h5><p>The Futures Industry Association (FIA) has published its response on the European Commission initiative to strengthen the role of the euro in energy markets. FIA commented jointly with the International Swaps and Derivatives Association and the Global Financial Markets Association and stated that there are visible benefits in expanding the use of the euro in EU energy markets. However, the associations believe that currency choice should be driven by commercial reasons and not enforced through regulation, claiming that this would ultimately lead to increased risk. See: <a data-sf-ec-immutable="" data-sf-ec-immutable=""></a data-sf-ec-immutable="" ></p>
Source: LexisNexis Purpose Built
Energy weekly highlights - 12 April 2019
by Hardwick Legal | Apr 10, 2019 | Purpose Built (LexisNexis)
<p><img src="[images%7COpenAccessDataProvider%7Ctmb%3Acarouselth]0bded6f0-c0f8-4e95-92bb-74dafc61cd5f" style="background-color:initial;font-size:inherit;" sf-size="100"><br></p><div><p>The recent case of <i style="font-size:inherit;background-color:initial;">Russell v Stone (trading as PSP Consultants)</i>
<a data-sf-ec-immutable="" href="https://www.lexisnexis.com/uk/legal/docview/getDocForCuiReq?lni=8V75-DT32-D6MY-P43M&csi=316762&oc=00240&perma=true&elb=t" target="_blank" style="font-size:inherit;">[2019] EWHC 831 (TCC)</a> concerns a professional negligence claim against a firm of quantity surveyors (PSP) in relation to a residential project that was beset with problems. The general thrust of the claim was that PSP’s alleged negligence caused the claimants
to spend significantly more on their property than they ought to have done. In particular, it was alleged that PSP failed properly to manage and/or advise on the tender process.
</p><div><p>The court held that PSP had not been negligent and, even if it had, the claimants’ case would have failed on the issue of causation. This blog post focuses on the difficulties the claimants faced in proving causation, a common theme
in claims against construction professionals. </p></div></div>
Source: LexisNexis Purpose Built
High Court dismisses professional negligence claim against quantity surveyor
by Hardwick Legal | Apr 10, 2019 | Purpose Built (LexisNexis)
<article data-sf-ec-immutable=""><section><p>Energy analysis: Scott McCallum, partner at Shepherd and Wedderburn LLP, discusses the background to the government’s recently announced Offshore Wind Sector Deal (the Sector Deal) and assesses the commitments it makes, what it means for the UK offshore sector, and its likely impact.</p></section></article><section><section><h2><mark id="CITEID_684598"></mark>Original news</h2><p>New offshore wind sector deal is a‘welcome step’ for the industry, <a href="https://www.lexisnexis.com/uk/lexispsl/environment/document/412012/8V4T-XNB2-8T41-D4F8-00000-00/linkHandler.faces?psldocinfo=Offshore_Wind_Sector_Deal_building_sustainability&ps=null&bct=A&homeCsi=412012&A=0.13765989999171746&urlEnc=ISO-8859-1&&remotekey1=DIGEST-CITATION(LNB%20News%2007/03/2019%20117)&remotekey2=All%20Subscribed%20Current%20Awareness%20Sources&dpsi=0S4D&cmd=f:exp&service=QUERY&origdpsi=0S4D" title="References to">LNB News 07/03/2019 117</a></p><p><i>The Department for Business, Energy and Industrial Strategy has published anew policy paper on the sector deal between the government and the offshore wind industry. This deal builds on the UK’s global leadership in offshore wind, maximising the advantages for UK industry from the global shift to clean growth.</i></p></section><section><h2><mark id="CITEID_684599"></mark>What is the Sector Deal and why has it been introduced?</h2><p>The UK government has established an industrial strategy with an overall objective of building aBritain ‘fit for the future’. A key component of the UK government’s industrial strategy is the creation of partnerships between the government and industry on sector-specific issues. The government points to the successes of the Auto Council and the Office for Life Sciences in demonstrating the gains that can be made to productivity, employment, innovation and skills through ajoined-up focus on sector-specific barriers and opportunities. The government wants to build on these successes—extending them to other parts of the economy—most recently in the form of the Sector Deal.</p><p>This much anticipated Sector Deal was announced on 7 March 2019 (see Claire Perry, Minister of State for Energy and Clean Growth’s <a data-sf-ec-immutable="" href="http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2019-03-07/HCWS1382/" target="_blank" title="Opens in anew window">written statement to Parliament</a>). The government believes that the global shift to clean growth offers abig opportunity for the UK. The UK already boasts the largest installed capacity of offshore wind (by some margin) and costs have fallen much faster than most anticipated. Offshore wind would therefore seem to offer agood foundation for the UK’s global clean growth ambitions.</p><p>While the UK has amarch on others in terms of </p></section></section>
Source: LexisNexis Purpose Built
Offshore Wind Sector Deal - building sustainability