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DCO Weekly: 21 March 2019

Latest developments including plans for the proposed 'Missing Link’ highways scheme linking the midlands and south west, Public Health England report recommends embedding of 'net health gain' principle in national planning policy, "A plan for Wales’ renewable energy future: Essential actions to re-energise Wales by 2035", a new report "UK Marine Energy 2019: a new industry", new "Future of mobility: urban strategy", water shortage warning highlights urgency of resilience, consultation on the future of infrastructure finance and a short EU ETS compliance deadline extension announced.

Select a story to read more:

Comment by Gary McGovern, Energy & Infrastructure Partner
"'Missing Link' proposal unveiled for route linking Midlands and South West
Government agency recommends embedding of 'net health gain' principle in national planning policy
Wales' 100% renewable energy challenge
New report "UK Marine Energy 2019: a new industry"
Government announces new "Future of mobility: urban strategy"
"Water shortage warning highlights urgency of resilience", according to NIC
Spring Statement: UK consults on future of infrastructure finance
Short EU ETS compliance deadline extension announced

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Comment by Gary McGovern, Energy & Infrastructure Partner

Hot on the heels of the Offshore Wind Sector Deal reported in the last edition of the DCO Bulletin, this week sees the publication of a further report which should make interesting reading for those with an interest in the development of the marine energy sector: UK Marine Energy 2019. As reported below, it sets out the scale of opportunity and the positive role that the UK's marine energy industry could play in our energy system, and the associated economic benefits which may accrue for 'UK plc', in addition to the obvious benefits in terms of reducing UK carbon emissions.

Notable facts and figures abound. The UK is apparently home to 22 tidal device developers and 23 wave developers, with some 1,287MW of leased tidal stream sites, including the world’s first tidal arrays. More wave and tidal energy devices have been deployed in UK waters than in the rest of the world combined, but we have over 1 GW of consented tidal sites in UK waters yet to be built out. Analysis is cited to suggest the number of people employed in the sector could - with the right conditions - rise from 1,700 people to somewhere north of 20,000 by 2040 and to over 40,000 by 2050. For some, the location of such economic activity will matter as much or more as the numbers: it is suggested that over 50% of the benefit in terms of jobs and GVA would be focused in or around coastal areas, many of which are in need of investment and regeneration.

Of course, the fundamental purpose of setting out the scale of the opportunity is to make the case to Government that more strategic, proactive support is needed - principally in the shape of a clear and accessible route to market - in order to pump prime the private sector investment needed to drive the industry forward to new heights. Interestingly, to bring marine energy to a cost competitive position, but to allow technology to progress sustainably, the paper proposes three revenue support models, with the opportunity to move through the models based on increasing levels of commercialisation. Projects up to 5 MW in scale could benefit from an Innovation Power Purchase Agreement (IPPA); projects up to 100MW could benefit from the Innovation Contract for Difference (iCfD), essentially a new 'pot' within the CfD framework which is envisaged as a bridging mechanism; while large and fully commercialised technology would compete in the current CfD mechanism.

The report anticipates the inevitable 'how much will this cost?' and 'how will this be funded?' questions and responds with a range of suggested criteria to control costs and various funding options designed to minimise if not avoid the cost to the public purse. For example, it suggests costs arising from the IPPA mechanism could be funded by providing off-takers a tax rebate when buying marine energy, whereas the iCfD could be funded through unspent funds in the £557 million allocated to future CfD rounds.  

Though highly contingent and based on manifold assumptions, the report suggests the average annual cost to the UK balance sheet could be in the order of £141 million. Not insignificant granted, but fairly modest in the grand scheme of Government spending. Given the Government’s recent ability to unearth "magic money trees", this is perfectly possible, if the will exists.

"Missing Link' proposal unveiled for route linking Midlands and South West"

Highways England has announced its planned improvement scheme for the A417 that will "upgrade the last stretch of single carriageway of the road linking the M5 with the M4 - commonly known as the 'Missing Link' - to dual carriageway", which is  near Gloucester.

The improvement scheme will require development consent as it meets the thresholds for a Nationally Significant Infrastructure Project (NSIP) under the Planning Act 2008 regime.

Senior Project Manager at Highways England, Michael Goddard, said that this scheme will make "journey times more reliable, reducing rat-running through neighbouring communities" and will also "improve the lives of people who live close to the route and make it easier for drivers, walkers and other local road users to get around".   

Read more on the A417 Missing Link scheme web page.

Government agency recommends embedding of 'net health gain' principle in national planning policy

A report by government agency, Public Health England, has recommended that a "net health gain" principle should be embedded in national planning policy to ensure that new developments do not contribute to the problem of air pollution.  

"Review of interventions to improve outdoor air quality and public health" suggests that action is needed to address the "unacceptable, serious and avoidable source of harm to our health. We all have a role to play in helping to make sure that the air that we, and future generations, breathe is clean air".

The report is intended to provide "evidence-based advice, focused on actions available to local authorities and national actions required to support them, on the most effective practical actions to reduce air pollution and its impact on our health". It recommends that the "vision and aims of local and national planning and permitting strategies include creating places where people's exposure to air pollution is minimised" which would require a "fundamental shift in emphasis from the focus on meeting nationally set limit values".

Public Heath England's recommendation is that action to "improve air quality should include a range of intervention measures across all domains and pollutants" and should include "initiatives to engage the public and professionals to stimulate action".

"Policies and planning approaches aiming at reducing air pollution and improving public health outcomes will vary from region to region to accommodate differences in terrain, land use characteristics, pollution sources, populations and population density, movement and vulnerability", according to the report. As a consequence, intervention should be assessed on a "location-by-location basis". The government agency has developed an "aide memoire for Directors of Public Health to help them consider whether air quality plans adequately consider public health" which is set out in the report.

Wales' 100% renewable energy challenge

Wales could meet 100% of its energy needs from renewable sources by 2035, according to an "ambitious" new plan announced by the Institute of Welsh Affairs (IWA).

The plan urges the Welsh Government to allocate more of its budget to green energy. First Minister Mark Drakeford said Wales was making good progress and the IWA provided a "welcome insight" into what the future could look like.

The report "A plan for Wales’ renewable energy future: Essential actions to re-energise Wales by 2035" sets out ten "essential actions" which requires "shared public and political ambition". The actions include "future proofing" the grid, a coordinated approach to marine energy and floating offshore wind, harnessing the potential of bioenergy, decarbonising transport and a focus on delivery by ensuring adequate resource and expertise in key public bodies.

According to the IWA's calculations, Wales could create 20,150 jobs annually during a 15 year investment period, by switching to 100% renewable electricity by 2035. This change could also create £7.4bn in total Welsh gross value added - the measure of the value of goods and services produced in a sector - and have a substantial impact on the country's ability to meet its climate change targets.

New report "UK Marine Energy 2019: a new industry"

The report published by Scottish Renewables, the Scottish renewable energy body, sets out its views on the "role that the UK's marine energy industry can play in our energy system and our economy, its unique attributes and the rationale for government to adopt a coordinated and strategic approach to support the sector's development".

Supported by a number of renewable energy bodies and companies, the report suggests that in order to create a "fit-for-purpose, modern, low-carbon and secure energy system" ambitious action will be required "across the whole of the UK economy". It sets out the case for a UK marine energy industry and the "potential for UK technology development and projects".

The report highlights the UK's leading global role in developing "offshore renewable energy technologies" and that "pioneering companies from within the UK and across the world have been attracted to the UK's significant marine energy resource".

Government announces new "Future of mobility: urban strategy"

In a written ministerial statement to Parliament, Transport Minister, Jesse Norman, has announced a new urban transport strategy that sets out the government's approach to "working with innovators, companies, local authorities and other stakeholders in order to harness the developing benefits of new urban mobility technologies". This includes an "ambitious regulatory review" and programme of work. 

A new £90 million competition will fund projects and initiatives in cities across UK regions under the Transforming Cities Fund.

"Water shortage warning highlights urgency of resilience", according to NIC

The National Infrastructure Commission has commented on the Environment Agency's call for "action to address the threat of water shortages in England's water supply in the face of pressure from climate change and population growth". It follows a similar call by the Commission for action to "build a more resilient water infrastructure" in its National Infrastructure Assessment.

A spokesperson for the Commission said: "We look forward to seeing these themes reflected in the government's National Infrastructure Strategy later this year".

Spring Statement: UK consults on future of infrastructure finance

The UK government will use a variety of models to encourage private investment in public infrastructure in England once the UK leaves the EU, but will not seek a "like-for-like" replacement to the now-abolished Private Finance Initiative (PFI). The government published a wide-ranging consultation on the future of English infrastructure finance alongside the chancellor's Spring Statement.

The consultation does not make any formal proposals for new initiatives or new models. However, it states that "off-balance sheet" mechanisms demonstrating the same characteristics as PFI and its replacement, PF2, will not be considered. The consultation also addresses the likely "gap" in support for infrastructure once the UK leaves the EU and ceases to be a member of the European Investment Bank (EIB).

Read more on Out-Law.

Short EU ETS compliance deadline extension announced

The government has announced in a written ministerial statement that it will allow additional time for UK participants in the EU emission trading scheme (EU ETS) to meet their compliance obligations ahead of Brexit.

Clean growth minister, Claire Perry, announced that UK operators will be granted an 11 day extension to the deadline for surrendering their emissions allowances for 2018.

To meet their obligations, EU ETS participants are required to monitor their emissions during each calendar year, and at the end of each reporting year, surrender one emissions allowance for every tonne of carbon dioxide equivalent (CO2e) they have emitted. The UK's membership in the EU ETS post-Brexit is uncertain.

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