Environment | UK Regulatory Outlook November 2024

Draft Greenhouse Gas Emissions Trading Scheme (amendment) (No2) Order 2024

On 22 October 2024, the draft Greenhouse Gas Emissions Trading Scheme (Amendment) (No2) Order 2024 was laid in Parliament along with a draft explanatory memorandum. 

This draft order aims to amend the UK Emissions Trading Scheme (UK ETS) by incorporating carbon dioxide venting in the upstream oil and gas sector, reducing free allowances, and introducing a deficit notice along with other enhanced enforcement powers.

Draft Environmental Permitting (Electricity Generating Stations) (Amendment) Regulations 2024

On 30 October 2024, the draft Environmental Permitting (Electricity Generating Stations) (Amendment) Regulations were laid in Parliament along with a draft explanatory memorandum and are due to come into force on 28 February 2026.

Key features of the draft regulations:

• They will amend the Environmental Permitting (England and Wales) Regulations 2016 (SI 2016/1154) and replace the Carbon Capture Readiness (Electricity Generating Stations) Regulations 2013 (SI 2013/2696) in England, with transitional provisions.
• They introduce a requirement for operators of new and substantially refurbished combustion plants in England to include a decarbonisation readiness report in their environmental permitting application; moving away from the planning consent process.
• Plants must be designed to allow future decarbonisation, either by converting to hydrogen-firing or retrofitting carbon capture technology.

Independent commission on the water regulatory system

The UK and Welsh governments have launched an independent commission on the water sector regulatory system in England and Wales (IWC). This was published on 23 October 2024, and has eight key objectives:

• Set clear objectives and a long-term vision for the water industry.
• Implement strategic spatial planning for water management across sectors and scales.
• Ensure regulatory stability to attract investment and support economic growth.
• Simplify requirements for better environmental and economic outcomes.
• Empower effective regulators to hold companies accountable.
• Enhance delivery capacity and promote innovation.
• Protect consumer interests and ensure affordability.
• Ensure operational and financial resilience of water companies.

The IWC is part of the government's water strategy, which includes the Water (Special Measures) Bill that was introduced earlier in the year.

Updated policy paper on delivering 30by30 on land in England

The Department for Environment, Food and Rural Affairs (Defra) has published an updated policy paper outlining how the government will achieve its target to protect 30% of the UK's land for biodiversity by 2030.

The paper specifies three criteria that land must meet to contribute towards the "30by30" goal in England: purpose, protection and management. Additionally, the government will develop a process to include additional land beyond Protected Sites, either through landowner self-assessment or Defra internal assessment.

This 30by30 commitment aligns with the target adopted at COP15 in 2022 as part of the Montreal Global Biodiversity Framework.

How did the Autumn Budget 2024 have an environmental impact?

The chancellor of the exchequer presented her Autumn Budget to Parliament on Wednesday 30 October 2024. Among its array of announcements, there were a number of changes with a direct environmental impact.

Response to consultation of UK carbon border adjustment mechanism

HM Treasury and HMRC have published the government response to the March 2024 consultation on the design and administration of the proposed UK carbon border adjustment mechanism (CBAM). The response confirms that UK CBAM will be introduced on 1 January 2027 and will place a carbon price on some of the most emissions-intensive industrial goods imported to the UK. These goods will affect the aluminium, cement, fertiliser, hydrogen and iron and steel sectors, which are at risk of carbon leakage.

Plastic packaging tax rates confirmed

The government announced that the UK plastic packaging tax rates will increase with CPI inflation for 2025-2026. This tax applies to the import and production of plastic packaging that has less than 30% recycled content.

Increase in landfill tax rates

The government has confirmed that increased landfill tax rates will take effect from 1 April 2025, aligning with the retail price index (RPI). The policy aims to decrease the amount of material being disposed of at landfill sites and the incentivise the use of alternative, non-landfill options.

These changes will only apply in England and Northern Ireland and will increase the standard rate to £126.15 per tonne and the lower rate to £4.05 per tonne. The new rates will be implemented by the Finance Bill 2025.

Climate change levy and carbon price support rates from 2026

Finally, the Autumn Budget announced that the main rates of the Climate Change Levy (CCL) for gas, electricity, and solid fuels will be adjusted in line with the retail price index (RPI) for 2026 to 2027. However, the main rate for petrol will remain frozen. The reduced rates of CCL will continue to be an unchanged fixed percentage of the main rates.

Climate Change Committee publishes letter advising the government on nationally determined contribution to climate action

On 26 October 2024, the Climate Change Committee (CCC) published a letter to the government providing advice on the level of the UK's Nationally Determined Contribution (NDC) under the Paris Agreement.

Key messages from the letter:

• The CCC recommends that the UK's NDC commits to reducing territorial greenhouse gas emissions by 81% from 1990 levels by 2035.
• Achieving this target, along with the 2030 NDC, requires rapid action which could boost investment and create jobs in the UK.
• It is recommended that international aviation and shipping emissions are excluded from the headline NDC target.
• The government should aim for an ambitious and fair contribution in its COP29 agreement.
• Clear objectives and measurable targets should be established in a programme.
• The UK should develop a plan to align the delivery of the NDC with its international and domestic goals, as well as with key international initiatives such as the Breakthrough Agenda and Climate Leaders' Partnership.

On 12 November 2024, the prime minister announced the UK's new climate target for 2035, committing to the recommendations of the CCC's letter. Thus, the new NDC means the UK must reduce its territorial greenhouse emission by 81% from 1990 levels by 2035.

Finance Bill 2025 published

On 7 November 2024, the first version of the Finance Bill 2025 was published, along with explanatory notes. From an environmental perspective, the bill contains provisions on the rates of environmental taxes, following those that were announced in the Autumn Budget 2024 on 30 October.

Environmental taxes:

• Rates of climate change levy (clause 74);
• Rates of landfill tax (clause 75);
• Rate of aggregates levy (clause 76);
• Rate of plastic packaging tax (clause 77);
• Future carbon levy, no rate included, to help prepare for the introduction of CBAM (clause 83).

Environmental Agency publishes consultation on proposed new charges for waste operators

The Environmental Agency has published a consultation on proposed new charges on waste operators. The purpose of the consultation is to fund regulatory work targeting waste crime with a deadline to respond of 20 January 2025.

The proposals include:

• Waste exemption charges to prevent them being used for illegal waste activities.
• Fees for intervention to cover costs of investigating unauthorised waste operations and resolving breaches.
• A 10% waste crime levy on annual subsistence charges for certain waste permits to combat waste crime.
• Updated hourly rates reflecting current costs for managing environmental permits and new regulatory work.

Businesses should review the contents of the consultation and determine whether they have anything specific to say on the proposals put forward.

FAQS published on sustainability reporting requirements under CSRD

Please see ESG.

European Commission publishes consultation on a draft Regulation to establish the EU CBAM registry

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FCA provides pre-contractual disclosure examples to meet SDR requirements

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EU Deforestation Regulation delayed by a year and goes back to trialogue

Please see ESG.

Strategic Framework for International Co-operation Engagement published in relation to EUDR

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EUDR Information System open for registration

Please see ESG.