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General Committees

Debated on Monday 14 November 2016

Delegated Legislation Committee

Draft Environmental Permitting (England and Wales) Regulations 2016

The Committee consisted of the following Members:

Chair: Ian Paisley

† Ansell, Caroline (Eastbourne) (Con)

Austin, Ian (Dudley North) (Lab)

Beckett, Margaret (Derby South) (Lab)

† Burns, Sir Simon (Chelmsford) (Con)

† Coffey, Dr Thérèse (Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs)

† Cunningham, Mr Jim (Coventry South) (Lab)

† Duddridge, James (Rochford and Southend East) (Con)

† Fuller, Richard (Bedford) (Con)

† Hart, Simon (Carmarthen West and South Pembrokeshire) (Con)

† Hoare, Simon (North Dorset) (Con)

† Kawczynski, Daniel (Shrewsbury and Atcham) (Con)

Lewis, Mr Ivan (Bury South) (Lab)

† Maskell, Rachael (York Central) (Lab/Co-op)

† Poulter, Dr Daniel (Central Suffolk and North Ipswich) (Con)

† Smith, Nick (Blaenau Gwent) (Lab)

† Spencer, Mark (Sherwood) (Con)

Gail Bartlett, Committee Clerk

† attended the Committee

Second Delegated Legislation Committee

Monday 14 November 2016

[Ian Paisley in the Chair]

Draft Environmental Permitting (England and Wales) Regulations 2016

I beg to move,

That the Committee has considered the draft Environmental Permitting (England and Wales) Regulations 2016.

It is a pleasure to serve under your chairmanship, Mr Paisley. Copies of the draft regulations are available in the room. The draft regulations consolidate and update the rules on environmental permitting in England and Wales, reducing the administrative burden on businesses while continuing to protect the environment and human health. As right hon. and hon. Members know, businesses that carry out potentially damaging activities—involving, for example, incinerators, sewage treatment plants or radioactive waste discharges from nuclear power stations—require environmental permits to operate. When the regulator—the Environment Agency or the local authority—grants such a permit, it permits an activity subject to conditions to avoid environmental harm.

The draft regulations consolidate the previous regulations, the Environmental Permitting (England and Wales) Regulations 2010, to which there have been 15 sets of amendments. The consolidation will make it easier for businesses to access, understand and apply the legislation. That is consistent with good administration and the Government’s policy on better regulation, and allows us to focus on protecting the environment at a lower cost to business and regulators but not the environment. The majority of the previous statutory instruments in this area —in particular the 2010 regulations and the 15 amending instruments—will be revoked by the draft regulations, reducing the size of the statute book and making the legislation more accessible and transparent.

The Government conducted a public consultation exercise on the proposed consolidation between August and October 2015. Industry representatives and local authorities made comments and raised queries, including about specific drafting points, and those were taken on board or cleared by correspondence. The UK Environmental Law Association welcomed the consolidation.

The draft regulations contain few changes that affect business, as they are a primarily administrative exercise to improve the accessibility of the legislation and bring it up to date. However, we have taken the opportunity to make two specific substantive changes. First, we have restricted the number of fluorescent lamps containing mercury that may be crushed under an exemption from a requirement to hold a permit. That amendment is needed to protect the environment and human health, and follows a positive response to consultation with the industry earlier this year. As a result of the change, some companies that crush such lamps will have to apply for a permit. At the moment, we know of only one business that is considering doing so, it having responded positively to the consultation.

The second change is to correct a previous amendment to the 2010 regulations and reinstate the exemption that allows the Canal & River Trust and other statutory undertakers to dredge in England without a permit. Under the previous flood defence consent system, organisations with a statutory function to undertake dredging were not required to hold a permit. As was made clear in the Government’s response to the consultation on flood defences, we intended to replicate that in the environmental permitting regime. Unfortunately, the amendments made in April this year inadvertently brought those statutory undertakers into the permitting scheme. We want to rectify that, so this amendment reinstates those undertakers’ previous position.

This permitting system will make it easier for regulators to do their job of protecting the environment and for businesses to comply. The draft regulations were widely supported by respondents to the consultation, and I commend them to the Committee.

It is a pleasure to serve under your chairmanship, Mr Paisley. I note the consultation exercise on the draft regulations undertaken by the Welsh Government and the Department for Environment, Food and Rural Affairs and the responses to that.

The draft regulations will amend the Environmental Permitting (England and Wales) Regulations 2010, which replaced the original environmental permitting framework that Labour introduced in 2007. That framework in turn updated the Pollution Prevention and Control (England and Wales) Regulations 2000. As we have heard, the 2010 regulations have been amended some 15 times.

The ambition of the regulations is to require operators of industrial and waste activities to protect the environment and human health. That is achieved with a tight regulatory framework that requires operators to obtain a permit to manage their operations. The draft regulations are focused on tidying up the amendments made over the past six years and do not detract from the requirements set out in the EU directives. The draft regulations cover everything from asbestos, volatile organic compounds, ionising radioactive substances, landfill waste, groundwater management and water discharges to waste from the extractive industries, disposal of batteries, industrial emissions and pollution prevention and control, and energy efficiency. Those are covered by 15 EU directives.

No activity on the disposal of those noxious substances should take place without the relevant permissions being granted. The Opposition believe it is vital that the Government continue to focus on how to reduce waste from all of those pollutants while actively seeking to use the research arena to find alternative materials or substances that can be used to reduce pollutants, to actively draw more into the circular economy and to reduce consumption of those pollutants. On a recent visit to Dunnington, just outside my constituency, I observed how the Biorenewables Development Centre—BDC—makes provision for applied research into the reuse and repurposing of natural materials. The Government’s scale of ambition to focus on future alternatives has been seriously lacking. Investment in research, such as at the BDC, and scaling that to industrial processes needs urgent attention so that a real difference can be made to the levels of waste.

Far more also needs to be done to remove and dispose of current pollutants, such as asbestos. We know from the Asbestos in Schools campaign the impact that asbestos has on the environment, and that teachers and the sensitive lungs of children continue to be exposed to fibres each time a staple is extracted from a board, for example. The draft regulations sadly do not address the opportunity, nor expedite vital work, for reduction in pollutants, but merely address the disposal of waste as things currently stand. Alongside disposal, we must continue to identify alternative opportunities to reduce consumption. At the same time, it is vital that the environment and those working in the waste industry receive maximum protection. This is a missed opportunity for a Government who have developed a narrative that they want to improve the environment, as these regulations do not reflect that ambition and just maintain current practice.

The Opposition note the separate consultation, undertaken as part of the preparation for these regulations, concerning the crushing of fluorescent tubes and the additional restrictions put in place, the management of the materials from that process and the recommendation that mobile crushing units are now to be subject to a permit regime. That seems to be a sensible way forward. The regulations are expected to simplify and consolidate regulations, and thus cut costs to businesses, voluntary organisations and public sector bodies. That should make the framework easier to understand and simpler to use. The Opposition also note the change in permissions for the Canal & River Trust, and believe they are also sensible, although their progression must be monitored.

The draft regulations will provide for a single permit for work on a particular site, and each element will be controlled according to risk. That is a sensible tidying-up exercise that the Opposition support. It will reduce the work for the applicant for a permit and administration costs, yet will not see the watering down of any environmental protections; it is purely administrative.

The Opposition are satisfied with the processes outlined for the granting, revocation and surrendering of a permit and any variation of the rules. Enforcement criteria are clearly set out under the EU directives under which these regulations sit. There is no latitude by which the Government can relax the environmental standards required, nor would we want them to in future—quite the reverse. The appropriate regulator has a duty to enforce the standards and, where necessary, issue an enforcement notice, should the directives and subsequent regulations be breached, or in serious cases, a suspension notice stating the action that needs to be taken and the time period in which it should be taken. Should a penalty need to be paid, it must be or a criminal offence will have been committed, and the outcome of that will be determined in a court of law.

Low-risk activities will be undertaken without a permit, but one will be required for areas of high risk. The Opposition want to ensure that careful monitoring takes place, so that any cumulative impact of multiple low-risk activity is recorded. How will the Government undertake that? In addition, the draft regulations will require the Secretary of State to order a review of the regulations. Will the Minister state when the Secretary of State plans to do that, especially in the light of negotiations around leaving the EU, since the draft regulations state that the first report must be published before the end of December 2019? Can she set out whether she envisages any changes being made to the regimes as set out with the transposition of the directives or the regulations themselves on the UK leaving the EU? How will she consult on that? I note that the new regulations are due to come into force on 1 January 2017.

I thank the hon. Member for York Central for her broad support for the measures. She recognises that they provide not only an opportunity to have more regulation, but to consolidate existing legislation. She made that point herself.

I would expect the Environment Agency, or other regulators as may be necessary, to consider the cumulative impact assessments in their approach to the matter. Given that the British people voted to leave the European Union, and given the Government’s intention to trigger article 50 by March 2017—I do not have a precise date for when we intend to leave the European Union—the Prime Minister has been clear that we intend to bring into UK law any matters that are currently part of EU law. She has also been clear that we want to ensure a smooth transition as we leave the EU.

The hon. Lady will be aware of my previous recitation of the fact that the Government intend to leave the environment in a better state than we found it for future generations. She should not worry that we intend to try to dampen or reduce any environmental protection. I would like to think that the regulations are a sensible consolidation of activities. They also make a minor correction to help the Canal & River Trust and tighten the T17 exemption for mercury lamps. On that note, I encourage all members of the Committee to support the motion.

Question put and agreed to.

Committee rose.

draft Contracts for Difference (Allocation) (Excluded Sites) amendment regulations 2016

The Committee consisted of the following Members:

Chair: Mrs Madeleine Moon

† Allen, Heidi (South Cambridgeshire) (Con)

† Benyon, Richard (Newbury) (Con)

† Chalk, Alex (Cheltenham) (Con)

† Courts, Robert (Witney) (Con)

† Coyle, Neil (Bermondsey and Old Southwark) (Lab)

† Debbonaire, Thangam (Bristol West) (Lab)

De Piero, Gloria (Ashfield) (Lab)

† Kennedy, Seema (South Ribble) (Con)

† Kinnock, Stephen (Aberavon) (Lab)

† Leslie, Charlotte (Bristol North West) (Con)

† Morton, Wendy (Aldridge-Brownhills) (Con)

† Norman, Jesse (Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy)

† Pincher, Christopher (Tamworth) (Con)

Sharma, Mr Virendra (Ealing, Southall) (Lab)

† Vaizey, Mr Edward (Wantage) (Con)

† Whitehead, Dr Alan (Southampton, Test) (Lab)

Jennifer Burch, Committee Clerk

† attended the Committee

Third Delegated Legislation Committee

Monday 14 November 2016

[Mrs Madeleine Moon in the Chair]

Draft Contracts for Difference (Allocation) (Excluded Sites) Amendment Regulations 2016

I beg to move,

That the Committee has considered the draft Contracts for Difference (Allocation) (Excluded Sites) Amendment Regulations 2016.

It is a pleasure to serve under your chairmanship, Mrs Moon. The regulations amend a statutory instrument made under the Energy Act 2013. The instrument makes some technical amendments to the current regulations in respect of the so-called non-delivery disincentive, or NDD, mechanism—that is to say, the mechanism designed to disincentivise people who fail to deliver—found in those regulations.

As the Committee will be aware, last Wednesday, the Department for Business, Energy and Industrial Strategy announced the details of the second contracts for difference allocation round. The announcement reconfirmed our commitment to provide £730 million of support per year to new renewables projects and that we would be open for applications for the first auction, worth £290 million a year, in April next year. That should deliver enough new renewable energy to power around 1 million homes.

By making those announcements, the Government have given developers and the supply chain the certainty they need to move forward with bids. Continued investment in renewables drives forward our commitment to move to a low-carbon energy mix, help tackle climate change and meet our carbon budget requirements. It also shows that Britain is open for business, driving investment in green technology for decades ahead and bringing jobs and investment into communities up and down the country.

The draft instrument makes technical changes to support the flexible operation of future allocation rounds. I will outline those changes. The key change will extend the period of exclusion, by which I mean the period before which projects that have failed to fulfil their commitments having been awarded a contract in one round can apply for the next round. Currently, the exclusion period runs out 13 months after the notification date of the round when the exclusion was imposed. That is changed in the regulations to an exclusion from any round in the first 13 months after that notification date, plus the first of any rounds run in the following 11 months to a 24-month backstop date. That allows the flexibility to run rounds less frequently, while still having the protection that companies that fail to deliver on contracts awarded through the allocation process cannot just enter a future round without penalty. That was supported by respondents to a consultation run in connection with the proposed rule change.

In addition, we propose some relatively minor changes. First, the regulations clarify the description of the site to which the exclusion will apply to make it clear that the site to be excluded is limited to that of the main generating structures of what is referred to as the contract for difference unit that failed to deliver its project. A CfD unit includes part of an eligible generating station, hence the NDD may be applied, for example, to a project for a wind farm extension, so that the site of the extension only—not the site of the entire wind farm, including the extension—would be excluded in the event of a failure to deliver the project.

Secondly, the changes will encompass an emendation of the non-delivery case to bring the point at which a site becomes excluded by reason of non-delivery into line with the point at which a site becomes excluded by reason of failure to sign the CfD contract. The failure to deliver is a separate matter from the failure to sign the CfD contract, to make it simpler to understand how the mechanism works.

Thirdly, following changes to the change in law termination events in the CfD terms and conditions, the regulations will extend the exemption of protection to projects that have terminated due to a sustainability change in law. That allows for important protection for developers and was supported in the consultation.

The instrument was publicly consulted on between 26 May and 22 June 2016. There were 21 responses from a range of stakeholders, including independent renewables generators, trade associations and large integrated energy suppliers, as well as from an environmental group. The vast majority of respondents agreed with the changes, although a couple called for still more stringent powers.

I welcome the views received as part of the consultation. We will continue to consider them as part of our wider work to evaluate and monitor the CfD scheme to ensure that the measures put in place remain effective and continue to represent value for money to the consumer. On that basis, I commend the draft regulations to the Committee.

I reflect the Minister’s pleasure at serving under your chairmanship, Mrs Moon. He made a good job of attempting to explain what on earth the draft regulations are all about. To the extent that there can be clarity, he has provided it, so we should not be detained too long by this business.

Labour Members welcome the thrust of the statutory instrument and the greater clarity that has been achieved regarding the questions I asked in a previous statutory instrument Committee about the next allocation round and the future of CfD allocations, and in the light of the publication that arose last Thursday, which sets out in greater detail what allocations will consist of and the support for future allocation rounds over the next period. We still have several questions about that arrangement, particularly about how it is going to relate to the overall progress of the levy control framework, but that is not really a discussion for today.

I have two specific questions on how the changes to the 2014 regulations are going to work in practice. First, the changes will considerably widen what was in the excluded periods in the 2014 regulations, which could give rise to substantial greater questions of possible interpretation about what it means not to have delivered within 13 months or to have been excluded from a further auction round for two years, given the circumstances in which that exclusion might have taken place. For example, someone wishing to put in an application for an allocation at a subsequent auction round may consider themselves to have been unfairly treated in how they were excluded by the widening of the regulations. Are processes in place that can provide for a legally robust way to ensure that that exclusion can be properly managed and that we are not going to open ourselves up to a series of actions that could be debilitating for the auction round when it comes to pre-qualifying for a subsequent auction and the process of putting in an auction bid? I would be grateful if the Minister clarified that.

Secondly, under the circumstances outlined, the regulations are not just about exclusions from future bidding, or an excluded period if someone has not either signed a CfD or undertaken the milestones in a CfD agreement previously. They are also about the extent to which otherwise frozen CfDs may be unfrozen for future use as a result of those people who are not taking up their CfDs in a proper way having perhaps put in a bid that was never realistic in the first place. It is a matter of making sure that the CfDs freed up by the implementation of that process are available for future auction processes.

As there is no impact assessment with the report other than the general impact assessment relating to the process overall, I wonder whether the Minister has looked at the circumstances where that release of CfDs might apply; whether he has made any assessment of what level that is likely to run at; and, if he has, what arrangements he might have in hand for ensuring that the CfDs will be recycled in an orderly manner when future auctions come up. It may be that they could be so significant as to lead to the possibility of further sub-auctions as the process develops. How significant might that part of the process be in carrying out the whole auction process in the most efficient way?

I thank the hon. Gentleman for his two questions and for the constructive spirit in which he has welcomed the changes we have announced today. He asked whether there is greater latitude for interpretation or contestability within the CfD framework as a result of the changes. He also asked about the unfreezability of frozen CfDs.

To take the first question first, in general, the criteria and milestone arrangements that have been put in place are not affected by the regulations as regards length. The process remains, broadly speaking, as robust as before. There are exemptions available to the NDD and, indeed, there are five grounds on which exemptions can be provided and exclusions mitigated. The first is when an applicant can demonstrate that a new site for which an application is intended is not materially the same as an excluded site, and those limits are set out in legislation.

The second ground for exemption is where an applicant can demonstrate that it held a property interest in a site prior to 14 October 2014, that being the date on which stakeholders ought to have been aware of the detail of NDD policy. The third is where an applicant can demonstrate that it agreed a relevant property interest in a site prior to that date.

The fourth ground for exemption is in relation not to a non-delivery case, but to a non-signature case, where an applicant can demonstrate that relevant court proceedings as defined in the instrument were ongoing at the time of the CfD signature, and that an applicant’s ability to comply with the terms of the CfD would have been materially adversely affected.

Finally, the fifth exemption ground is in a non-delivery case only, when the generator’s CfD is terminated as a consequence of a qualifying change in law. That, in this case, has been extended to recognise a sustainability change in law—again, a relatively well defined concept in the relevant law. Those are the circumstances and they remain well defined.

On the second question, about unfrozen CfDs, in general, as the hon. Gentleman will know, exclusions are time-limited. That is not to say that it is not an open and interesting question whether there may be some scope to recycle budget from one side to another. It may be worth pointing out that so far, where there have been exclusions, some bids have clearly been pitched at levels so low that it would not be possible to use any benefit even if the CfD were unfrozen. One other case was turned down in a judicial review process. However, the point is a proper and sensible one for us to consider further, and I thank him for raising it.

Question put and agreed to.

Committee rose.