03/10 Local authorities legal news round up

In this briefing for those working for Local Authorities and the public sector, we take a look at:

• Part 2A Judicial Review outcome 
• What you need to know about the Carbon Reduction Commitment Energy Efficiency Scheme which starts on April 1st.

Part 2A Judicial Review

In our previous newsletter we reported on the outcome of the St Leonard's Court Sandridge appeal. Recently the potential Appropriate Persons sought to judicially review the Secretary of State's decision. The court has ruled that there was no arguable case for allowing the judicial review to proceed further. The outcome demonstrates that a regulator using the contaminated land regime, who acts reasonably, will find that their decisions are upheld if they are challenged.

This case has been a long running saga that hopefully will now see those responsible remediate the groundwater. While Part 2A is complex this case demonstrates that with careful planning even the most complex of sites can be remediated using Part 2A.

Carbon Reduction Commitment Energy Efficiency Scheme

The CRC Energy Efficiency Scheme (CRC) starts on 1 April 2010.  A local authority will be a participant in the CRC if it meets the qualification criteria of using 6,000 MWh of electricity a year.

The Government wants to reduce the UK's greenhouse gas emissions by at least 80% by 2050. It is estimated that buildings account for approximately 40% of the carbon emissions in the UK, with non-domestic buildings responsible for approximately half of this. The energy efficiency of buildings is therefore the focus of the CRC, a new compulsory emissions trading scheme.

This scheme will involve around 5,000 public and private sector organisations, including banks, universities, hotels, offices and local authorities. Those who fall within the CRC need to start dealing with the implications now as not being prepared may have a significant financial impact.

For administrative purposes, the scheme is divided into set time periods referred to as 'phases'. The first phase is the "Introductory Phase", which runs for three years from 1 April 2010 to 31 March 2013. Subsequent phases last for seven years each.

Participants will have to monitor their UK-based emissions and report on them each year, taking into account energy supply from electricity, gas, coal and any other fuel types (such as oil and diesel), but excluding energy from transport, domestic accommodation and unconsumed fuel supplies. Emissions that are already covered by a Climate Change Agreement or the EU Emissions Trading Scheme will not be included in a participant's CRC emissions.

Participants will be required to buy allowances each year to cover their emissions.

During the Introductory Phase, the Government will sell an unlimited number of allowances during a particular month in every year of that phase, starting from April 2011. Participants will be able to buy allowances they need to match their projected emissions for that coming financial year. For example, allowances bought in April 2011 will be to cover projected emissions for April 2011 to March 2012. One allowance will represent the right to emit 1 tonne of carbon dioxide and allowances sold during this phase will be at a fixed price of £12 per tonne. Extra allowances required through the year can be obtained on the secondary market (where their price will not be fixed) or participants can ask the scheme administrator (the Environment Agency for those in England and Wales) to issue additional allowances through a "safety valve", where the Environment Agency will obtain allowances through the EU Emissions Trading Scheme. There will be a charge for each transaction made through the safety valve and safety valve allowances could cost more than £12 each.

During subsequent phases, there will be a cap on the number of allowances available from the Government and these will be sold by auction. There will also be a cap on the number of allowances each participant can buy in the auction. The price of allowances will depend on demand each year. Again, participants will be able to buy or sell allowances on the secondary market.

Participants will earn money back from the Government each year in proportion to their emissions reductions. In other words, the greater the reduction in their emissions, the more money they will get back.

A league table will be published of participants' performance in reducing their emissions. Participants' position in the table will affect how much money they will get back from the Government.

For CRC purposes, a local authority will also responsible for the emissions from all schools maintained by it and any Academies and City Technology Colleges that are geographically located in the area for which the local authority exercises educational functions. Special rules also apply for PFIs and joint ventures.

Local authorities may have interests in companies, in which case complex rules on groups of companies will apply. For example, a company that is wholly owned by a local authority will be grouped with the local authority for CRC purposes.

Local authorities may also act as landlords or tenants, in which case the specific rules concerning landlords and tenants are relevant.