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Clean Energy, Technology and Carbon Investment
- Law and Policy Alert |
August 2008 | |
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Introduction
Welcome to this summer edition of our Alert. In this edition, we examine a wide range of subjects, itself illustrative of how legislators are widening the scope of laws away from power generation and into energy use and other areas of regulation. Thus, transport initiatives (both local and national) are discussed in articles relating to the automotive sector and how Italy is addressing issues of climate change.
At the European level, we look at the EU's energy reform package and discuss whether its attempts to address market failures in European energy markets will be successful. We also look at attempts in the UK to introduce legal requirements for companies to publicly report on their levels of greenhouse gas emissions, and at some of the issues faced by biofuel producers when patenting their products.
Finally, in the last of a three-part series, Linda Fletcher examines the laws and regulations affecting the real estate and construction sectors, including the proposed Carbon Reduction Commitment, part of the UK's Climate Change Bill.
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STOP PRESS:
Aviation and the EU ETS
On 8 July 2008 the European Parliament voted in favour of including aviation emissions in the EU Emissions Trading System. This would mean all GHG emissions from flights to, from and within the EU would be included from 2012 regardless of the nationality of the airline. The proposals, albeit voted in by a large majority, were a compromise with a number of items being watered down. The European Council is expected to give formal approval to the Directive at one of its next meetings. A number of industry groups have criticised the move with the IATA, for example, stating that the EU has "taken the wrong approach, with the wrong conditions at the wrong time" and has commented that only a global scheme could work. The US has warned that it could take legal action against the EU if it goes ahead with its plans to include foreign airlines in the ETS.
Spanish Solar Tariffs
Spanish Government to reform legal framework in solar energy
The Spanish solar energy market is facing important changes as a result of recent proposals made by the Ministry of Industry to modify the current regulation on tariffs for solar projects and installations. This proposal has also been supported by the National Energy Comission. The new regulation is expected to be approved in autumn.
The new regulations, in brief, are:
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Use of power goals on a year-per-year basis instead of an overall accumulated value, up to 300 MW of overall installed power in the first year, rather than the 1000 MW of total power installed this year since January to date.
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New economic framework, decreasing the tariff from €0.44 per kw to €0.30
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Creation of the Retribution Assignment Registry, aimed at giving legal certainty to investors at an early stage of a project regarding the retribution to be obtained once the installation is working.
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New rules for inspection and penalties for non compliance.
Both the Photovoltaic Industry Association (ASIF) and Renewable Energy Producers Association (APPA) comment that the new regime is likely to cause paralysis in the Spanish energy market, preventing new investments and jeopardising those carried out, to an estimated amount of €4.5 billion. | |
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Feature article
The Automotive sector: are market forces sufficient to reduce GHG emissions, or must regulation step in?
Amy Williams and Linda Fletcher
Road transport is the second largest source of greenhouse gas (GHG) emissions in the EU, after power generation. The automotive sector currently contributes one fifth of all man-made carbon dioxide (COČ) emissions in the EU of which approximately 12% is produced by private motor cars in the EU on the road today.
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The average COČ emissions for new cars are approximately 185 grams per kilometre (g/km) but there are plans to reduce this to 100 g/km3 by 2020 - a reduction of nearly half in little over a decade. The proposal does not originate in the recent oil price surge. It does not appear to derive from known consumer preferences. Law and regulation are driving profound changes in the markets.
The Stern Report described climate change as "the greatest and widest-ranging market failure ever seen." The automotive sector could be seen as an example of such failure, in that manfacturers' and consumers' interests do not of themselves lead to more environmentally-friendly vehicles. | |
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Energy sector focus
The EU's energy reform package - dealing with known unknowns
Jeremy Robinson
Summary
The EU's January 2008 energy package is an ambitious attempt to combine three different policies in one. The simplicity of calling it "the EU energy package" belies fearsome legal, technical and economic complexity. It would be rash to assume that lawmakers, whether in the EU or in EU Member States, can achieve what they want merely by legislative act. In dealing with multiple market failures, the EU has challenged itself to resolve many "known unknowns", and it will need the help of EU business - the traditional and the renewable energy industries and their advisers - to work together to do so.
Background
In January this year we published an analysis of the EU's energy package, which was abridged for the March edition of this Alert. We noted that it was important to see the proposals, which span energy policy, internal market and environmental policy, as a coherent whole. We also contended that together these reforms would substantially change how we do business, and how we live our lives.
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Real Estate & Banking News
Built to Last, part 3 - "Lean, Mean and Green"
Linda Fletcher
So far, the articles in this series have examined (a) the policies leading to the introduction of Energy Performance Certificates for buildings and (b) the important relationship between the owner and the occupier of a building regarding its operation and use and (c) the rise of the "green" lease.
Whatever your connection to real estate, whether as an owner, occupier, funder or manager, the use of premises (whether office, industrial or otherwise) should be looked at as being part of your business's comprehensive approach to sustainability.
This article summarises two items of increasing importance for the real estate sector: sustainability and the proposed Carbon Reduction Commitment. Those businesses which have a large real estate portfolio should take particular note of the spread of "green" regulation in this area, and take advantage of the opportunities to become truly "lean, mean and green".
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Corporate
The Climate Change Bill: more reporting burdens on companies?
Alistair Crellin and Russell Williamson
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In March 2008 the House of Lords inserted a new clause 80 in the Climate Change Bill, the intended effect of which is to require UK companies to publicly report on their emissions. Such reporting requirements may be onerous and impose significant cost burdens on a wide range of UK companies. The Bill returned to the Commons (in Committee) in July and the Government removed Clause 80 from the Bill, but inserted new provisions the purpose of which is to provide guidance on the measurement of greenhouse gas emissions. In this article we look at the current method of environmental reporting by UK companies; at the rationale behind the House of Lords' clause 80; and at the Government's alternative.
It is expected that the Bill will become law in late 2008.
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Italy
Climate change: legislation and political initiatives in the Energy and Transport sectors
Claudia Crupi
This article outlines and discusses some initiatives at local level in the energy and transport sectors flowing from Italy's ratification of the Kyoto Protocol. Future articles will discuss in detail the legal and commercial problems that arise from the Kyoto Protocol for these and other sectors in Italy.
Background
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In 2002 the Italian legislature ratified the Kyoto Protocol on Climate Change committing Italy to reduce its emissions of greenhouse gases by 6.5% between 2008 and 2012, as against 1990 levels.
In April 2006, Italy ratified the EU Emissions Trading Directive, which instituted a system of trading of emissions of greenhouse gases within the European Union. |
In particular, the law provided, pursuant to the EU Emissions Trading Directive, that:
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From 1 January 2005 all plants which fall within the scope of application of the Directive may emit COČ only if authorised by the competent authority; and
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The operators of such plants must annually supply figures for COČ emissions to the National Committee for managing and achieving the aims of the Directive.
However, the National Registry for Greenhouse Gas Emissions in Italy noted in 2006 that for 2004 the total emissions of greenhouse gases (580.7 million tonnes of COČ equivalent) had increased by 11.8% as against 1990 levels.
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Technology and intellectual property
Biofuels: politics and patents
Lorna Brazell
Change leads to debate. For the biofuel sector, the debate ranges from whether biofuel production competes for land resource with food production to whether biofuel production damages the environment by, for example, converting rainforest to farmland.
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Some of these problems are eminently solvable. Methods for converting bio-wastes such as used cooking oils avoid competing for land altogether, while different biofuel crops can be developed to grow on land of insufficient quality for arable croplife: algae, and grasses such as Miscanthus are current favourites among this second generation. Similarly, inefficient processes are nothing unusual in an early-stage technology, and innovation driven by competition can be expected to improve both the yields and the energy consumption over time. This work is already in progress, as evidenced by the increasing number of patent applications being filed for biofuel-related inventions: improvements of gasification, for instance, can both increase efficiency, reduce production of unwanted side-product pollutants and, with a net product in gaseous form, offer the option of transportation by pipeline rather than by freight. Indeed, biologically derived products are under development to substitute for petroleum derivatives in other areas of clean tech - for instance, the use of biomaterial as backing for solar cells is in development at BioSolar, Inc and is the subject of a pending patent application. |
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Contact us
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Call or email us with questions you want to have answered in future editions and we shall do our best to accommodate your requests. Please contact any of our Clean Energy,Technology and Carbon Investment team whose details are provided here>> |
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www.twobirds.com |
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This update gives general information only as at the date of first publication and is not intended to give a comprehensive analysis. It should not be used as a substitute for legal or other professional advice, which should be obtained in specific circumstances.
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