Star legal writers: energy and environment

Commercial implications of prioritising the UK economy in Continental Shelf strategy, how new energy rules affect business, and bees, trees and pesticides – The Lawyer’s most popular briefings.

Shepherd & Wedderburn: Maximising economic recovery from the UK continental shelf: an update

By Gordon Downie and Tom Swan

In July last year the new UK Energy Bill started its passage through Parliament, beginning in the House of Lords. The Bill represents the second stage of the implementation of the Wood Review recommendations that a new strategy for maximising economic recovery from the UK Continental Shelf be developed and a new regulator be created with additional powers to facilitate the execution of that strategy.

The first stage of that implementation was the establishment of the Oil and Gas Authority (OGA) as an executive agency of DECC and the passing of the Infrastructure Act 2015.

Once passed, the Bill will, together with the amendments to the Petroleum Act 1998 which were made by the Infrastructure Act, provide the framework for the OGA’s operation and the transfer to it of DECC’s oil and gas regulatory functions, and the additional powers that the Wood Review recommended it should have.

The changes to the regulatory landscape in the UK Continental Shelf as a result of the Bill will
be significant for industry participants. In particular, the establishment of the OGA as a more active regulator, with a new mandate to maximise economic recovery from the UK Continental Shelf as a whole, is likely to mean that industry participants will wish to consider how they ­interact with it more closely than was previously the case. 

MER UK

A key theme of the Wood Review recommendations is that the pursuit of individual commercial interests by UK Continental Shelf licence holders, operators and infrastructure owners is likely to result in a failure to maximise economic recovery from the UK Continental Shelf for the benefit of the UK.

The objective to maximise recovery from the UK Continental Shelf as a whole (MER UK) has therefore been placed at the heart of the new regulatory framework. It is referred to in the Petroleum Act and the Bill as the “principal objective”. It is required to be achieved in particular through:

development, construction, deployment and use of equipment in the petroleum industry; and

collaboration among holders and operators of petroleum licences, owners of upstream infrastructure and persons planning and carrying out the commissioning of upstream infrastructure (UKCS stakeholders).

A more detailed strategy for enabling MER UK to be achieved is required to be put in place by April 2016. DECC is responsible for producing and consulting on the initial MER strategy and the OGA will be required to review and (if necessary) update it every four years.

Shoosmiths: Act now to avoid energy regulation fines

By Hannah Price

With the new energy saving regulations, businesses are at risk of financial penalties for non-compliance.

ESOS is a new piece of EU legislation which requires large enterprises to introduce a mandatory programme of energy audits. ESOS applies to your business if:

• the business employs 250 or more people, or
• has an annual turnover in excess of €50m (£38,937,777), and
• an annual balance sheet total in excess of €43m (£33,486,489).

It also applies to overseas companies with a UK registered establishment which has 250 or more UK employees (paying income tax in the UK).

Responses to the legislation by affected businesses have been alarmingly low with only 1 per cent so far declaring that they are compliant (at the time of publication). Non-compliance could amount to the EA taking enforcement action, including a financial penalty.

Top tips for business

Here are our top tips to help you through the process:

1. Appoint a strong project lead able to focus all if not much of the role’s attention on ensuring compliance by the deadline. The lead should be supported by a project team representing key stakeholders across the organisation that will assist with the compliance tasks.
2. Define and monitor progress against key milestones, factoring in extra time needed.
3. Ensure key departments are sufficiently briefed and involved to ensure various tasks are achieved – data gathering, verification, audits etc – for example, estates management, finance, HR, logistics.
4. With the support of a senior sponsor, escalate matters that need speedy resolution if delays occur.
5. Ensure senior management and the board are made aware of their role and any approvals that will be required.
6. There is detailed guidance available but do use the ESOS help desk to clarify any queries you might have.
7. Use the regulations to see how ESOS can reinforce your approach to energy efficiency and carbon reduction and cost reduction.
8. Determine priorities for improvement based on the audit findings and costings.
9. Communicate your approach across the organisation to highlight the important role teams and individuals also play in delivering the regulation’s aims.
10. For each part of the project think about what information you will store in your evidence pack in the event of any subsequent audit by the enforcement agency.
11. Think about new business as usual activities so that ESOS can help achieve ongoing organisational improvement opportunities rather than when future obligation duties fall due.

Ones to watch

AB & David Africa

Can Ghana go from power crisis to being a power hub?

Power shortages have hit South Africa, Ghana and Zambia to name just a few. The paradox is that Africa possesses most of the key ­natural resources to produce abundant energy, yet it has
the highest energy deficit.

GRATA Law

Financing ­renewable energy projects in ­Kyrgyzstan and Tajikistan

This briefing includes state support initiative, regulations for small and medium hydropower stations, bankability issues, plus an overview of the Tajikistan energy market.

Loyens & Loeff

Go-ahead for Dutch offshore wind energy plans

The Dutch Senate has passed an emergency bill amending the Electricity Act 1998. The formal name of the bill refers to the government objective to ensure timely realisation of goals set in the National Energy Agreement.

Anjarwalla

Africa: Kenya has the potential to fuel its own ­development

Energy provision is critical to resolving Africa’s development issues and investors are willing, but a good legal guide is essential to smooth the bureaucratic path.

Shepherd and Wedderburn

Solving the ‘energy trilemma’ with capacity market insurance

With a legacy of underinvestment in energy, and faced with a number of power stations scheduled to close by 2020 the Government has sought to stimulate investment in energy through the introduction of the Energy Act 2013.