The long-awaited Environment Act was finally passed into law in November 2021, nearly three years after a bill was first proposed to govern environmental matters after the UK's departure from the EU. The Act's passage was accompanied by a degree of fanfare, with ministers describing it as "the most ambitious environmental programme of any country on earth". Looking beyond the rhetoric, this briefing considers what impacts businesses might expect to come out of the Environment Act ("the Act") in 2022.
The Environment Act 2021 - what to expect in 2022
The Act will enshrine into law 5 environmental principles which will underpin future government policy, contributing to the improvement of environmental protection and sustainable development. Mostly these principles are not new – polluter pays and the precautionary principle are both familiar concepts – but the need for ministers to have "due regard" to them when formulating non-environmental policy is new.
The Government consulted on a draft environmental principles statement in March 2021, several months before the Act was finalised. The interim Office of Environmental Protection ("OEP") provided advice to the Government in July 2021, and we now await the Government's final principles statement.
The draft policy statement clarifies that the need to keep in mind environmental principles applies at the policy level and not at the individual decision level. This could perhaps be a way of shielding the government from difficult situations similar to those it has found itself in recently, for example in relation to the controversial new Cumbrian coal mine or North Sea oil and gas exploration licences.
The OEP's advice letter recommends that the government refocuses the statement on the achievement of environmental benefit as well as the avoidance of environmental harm. Viewing each policy change as an opportunity for environmental improvement could make a significant difference to those individuals and businesses subject to them and bearing any costs associated with them.
The Environment Act gives the Secretary of State the power to set legally binding, longer-term, environmental targets lasting at least 15 years, across a variety of areas relating to the environment. More specifically, the Government must set at least one environmental target in each of four priority areas (being water, air quality, biodiversity and waste/resource efficiency), as well as on species abundance and fine particulate matter (PM2.5). Again ahead of the finalisation of the Act, the Government has consulted on two potential targets to reduce the annual mean level of PM2.5 in ambient air, and to reduce population exposure to PM2.5. Independent expert groups have been formed to advise the Government on the development of each of the targets; all had met to begin discussions on target setting by the end of 2021.
Any target is likely to be followed up by implementing measures to ensure the set targets can be achieved, and these detailed measures will be of most interest to businesses. Though we have no detail yet as to what requirements could look like, for air pollution, for example, building on the 2019 Clean Air Strategy, they may conceivably relate to engine performance for vehicles and machinery, further restrictions on traffic movement particularly around cities, or specifications for agricultural chemicals.
The Government is expected to run a consultation in February 2022 on the legally binding targets.
A more familiar area of law, the Environment Act increases the Government's powers to manage the impact of products throughout their lifecycle. The intention of the Act is to move away from "producer responsibility" towards "extended producer responsibility" ("EPR"), with producers bearing the full financial cost of managing products at the end of their life, incentivising durability, repairability and recyclability of materials.
The Government has already consulted on EPR for packaging and draft legislation should be brought forward later this year, with the aim of launching the EPR scheme in 2023. The proposal includes modulated fees, reflecting criteria such as the ease of recycling the material and other costs associated with managing the specific type of packaging. Producers under the revised scheme will include brand owners, importers, distributors, sellers, service providers for reusable packaging and online marketplaces – businesses could potentially be in more than one category. Online marketplaces is a new category of producer; its scope includes "businesses based in the UK who operate a website or any other means by which information is made available over the internet, through which persons based outside the UK, other than the operator, are able to offer filled packaging for sale in the UK (whether or not the operator also does so)". Marketplaces would bear a "waste management cost obligation" for sales they facilitated. It will be interesting to see whether the likes of eBay or Amazon make changes to their business model as a result of this development, or pass the costs on to the overseas business selling through the platform which could have the unintended consequence of limiting consumer choice and competition.
In a related consultation, the Government has also proposed a deposit return scheme for drinks containers. Such schemes have operated very successfully in other European countries for many years, but the UK has never had a wide-ranging deposit scheme and concerns remain about small retailers' abilities to handle returned containers. All drinks producers and importers would be required to engage with a new scheme administrator, the Deposit Management Organisation, before placing covered products on the market. Details to be determined by the Government include which materials will be in scope, covered sizes and which product containers are to be included. There are clear benefits to consumers of an inclusive deposit scheme, but this ignores the complexity for the organisations implementing it.
The Government has powers in the Act to introduce further EPR schemes for other product types, in addition to those already existing such as electrical and electronic waste, batteries and vehicles. Textiles, mattresses, paints and furniture are all potential candidates for future EPR schemes, but no further schemes have been proposed to date.
The Government has consulted on implementation of the Act's provisions regarding forest risk commodities, which aim to ensure that businesses in the UK are not contributing to illegal deforestation via their use of certain imported products. Though no draft legislation has yet been published, an outline of future requirements is set out in the consultation document. Please see our separate client alert.
In the area of biodiversity, a strong theme of the Act, DEFRA has again already begun consultations on implementation of the Act's framework provisions.
In August 2021, a consultation was launched regarding Local Nature Recovery Strategies ("LNRS"), primarily aimed at local authorities but also of interest to developers and indeed anyone owning or managing land under a LNRS, which will eventually cover the whole of England. LNRS is another area where, although early progress is being made, much of the detail impacting businesses remains to be determined at a later date, when the delineations have been made by the Secretary of State and the local authorities or other bodies have published their draft strategies.
DEFRA is also currently consulting on regulations and implementation of the Biodiversity Net Gain. The Act provides that all planning permission granted under the Town and Country Planning Act 1990 will be subject to a condition for biodiversity net gain that must be met before the development commences. The developer must submit and have approved a biodiversity gain plan showing how at least a 10% gain in biodiversity value will be achieved. Similarly, nationally significant infrastructure projects ("NSIP") will need to show a biodiversity net gain where set out in a "biodiversity gain statement", which recognises the considerable differences between types of NSIP. The Government has clarified that it proposes to formulate a core statement which will then be adjusted by project, unless the consultation reveals that bespoke statements will be needed. At present, biodiversity net gain is only expected to apply to NSIPs from 2025, and initially only onshore projects will be subject to it.
If 2021 was the year that climate change grabbed all the headlines, 2022 could be the year that biodiversity and nature protection come to the fore. With this in mind, the high level biodiversity targets and land and species strategies will be of interest and useful for benchmarking for organisations wondering how to integrate biodiversity matters into their investment or diligence processes.
The Government has set itself an ambitious timetable to conduct multiple workstreams for the more detailed implementation of the Act's provisions, reflected in the amount of work already done prior to the Act being signed into law. However, for organisations looking to translate the framework provisions into actionable requirements, there remains a good deal of uncertainty which will be clarified in due course via a further stage of consultation and draft legislation. We will continue to monitor and provide updates as this new body of environmental law evolves.