1. The Environment Bill

The Environment Bill is a key piece of legislation that establishes a post-Brexit environmental governance framework for England. It is the first Environment Bill for over 25 years and makes other significant changes, such as introducing mandatory biodiversity offsetting into the planning system. The fact that it failed to become law by the end of the Brexit transition period leaves a significant gap in the government’s accountability for the environment.

Having been introduced into Parliament in January 2020, the Bill quickly progressed to its committee stage in the House of Commons, but then made no further progress for over 200 days as the government’s attention shifted to tackling the Covid-19 pandemic. It only resumed its progress in November 2020 and the government has just announced that it will not become law in the current session of Parliament and will need to be ‘carried over’ to the next session. It now seems unlikely to become law until Autumn 2021 and the Office for Environmental Protection (OEP), the new body that the Bill creates to hold the government to account on the environment, is unlikely to come into existence until the end of this year.

As a stop-gap measure the government has set up the Interim Environmental Governance Secretariat, which can take complaints, but it cannot deal with them and can only collate them for the OEP to deal with when it comes into existence. Most of the Bill’s other provisions also require bringing into force and that now looks unlikely to happen until late 2021 or even 2022.

2. Climate change and COP 26

The UK was due to host the COP 26 climate change conference in Glasgow in November 2020. The conference has now been postponed until November 2021. As the host and chair, the UK will be keen to promote its credentials as a global leader in decarbonisation, so we can expect to see climate change featuring strongly in the government’s policy agenda this year.

More details about the government’s Ten Point Plan for a Green Industrial Revolution are expected to emerge this year.

• Consultations are expected on the introduction of more stringent supply chain plan requirements for offshore wind and the Aviation Decarbonisation Strategy.
• The government is expected to publish its Hydrogen Strategy and a green paper on the UK’s post-EU emissions regulations and petrol and diesel car and van phase-out dates.
• The government is also expected to publish details of a revenue mechanism to bring through private sector investment in industrial carbon capture and hydrogen projects.
  
  

3. Review of environmental assessment

The government’s August 2020 Planning for the Future white paper criticised the existing frameworks for considering environmental factors as part of the planning and development process – environmental impact assessment, strategic environmental assessment and sustainability appraisals. It proposed simplifying them and promised a consultation in the autumn of 2020 on how to take advantage of opportunities for environmental improvements while also meeting domestic and international obligations for environmental protection. That consultation failed to materialise, but we can expect to see it published this year.

4. Energy efficient buildings

The December 2020 Energy White Paper announced the implementation of the Future Homes Standard ‘as soon as possible’.  On 19 January 2021 the government finally published its response to the 2019 consultation on the Future Homes Standard, together with a consultation on a ‘Future Buildings Standard’ to cover both domestic and non-domestic buildings.

Although the requirement for new homes to be ‘zero carbon ready’ will not come into effect until 2025, this year is likely to see changes made to the Building Regulations requiring an interim uplift of a 31% reduction in CO2 from new dwellings, compared to current standards.

5. Sustainable finance and climate risk reporting

Some aspects, but not all, of the EU Taxonomy Regulation (which sets out conditions that an economic activity has to meet in order to qualify as environmentally sustainable) came into force before the end of the Brexit transition period on 31 December 2020. The UK therefore faces a decision this year – does it align itself with EU rules that come into force in the future under the Taxonomy Regulation, reject them, or develop its own rules? The last of these options looks most likely, but it also seems likely that any UK rules will not diverge too far from the EU rules, at least initially.

In the longer term, any divergence between the UK’s and the EU’s respective approaches to implementing the Taxonomy Regulation could cause complexity for financial institutions operating in both the UK and the EU, for example, funds marketing to investors in both the UK and EU would need to comply with different sets of rules depending on where they are based.

In terms of climate risk reporting, the government has already announced its intention to make the Task Force on Climate-related Financial Disclosures mandatory across the economy by 2025, with a significant portion of mandatory requirements in place by 2023. This year may see the introduction of mandatory reporting for occupational pension schemes with assets exceeding £5bn, banks, building societies, insurance companies and premium listed companies.