Energy: Power nous

The 2007 energy white paper brings with it new hope for a future of reform, but now is the time for action, says Marcus Trinick

The publication of the 2007 energy white paper in May followed closely that of the Planning White Paper 2007 earlier that month. Both were preceded by the Marine Bill White Paper in March. All of these envisage large-scale reform to the UK’s approach to the development of energy generation.

The energy white paper sets out three main objectives: ensuring security of supply; reducing carbon emissions; and continuing the development of a decentralised electricity grid.

Increased energy
The private sector will be extremely busy creating solutions to achieve these objectives. The sheer number of energy projects likely to come into the planning system demonstrates that the energy sector will continue to be one of the growth areas in the UK. Some law firms have reported 20 per cent growth in energy sector work in the last year. The Royal Town Planning Institute’s legal survey estimated that energy development work will increase by 15 per cent within five years and law firms that cross-sell their various skills well will be able to ensure that they are involved with a project throughout its life.

Those involved in procurement, licensing and the contracting side of energy are also likely to see an increase in work. However, those working on the development of generating plants will see an increase in the emotive and controversial side of their work. The reiteration of the Government’s approach to nuclear confirms this.

Supporting new electricity generation are the proposed planning reforms for large infrastructure. These options are designed to address the tensions and delays that are present within the current planning system. Currently there are more than seven gigawatts of windfarms awaiting a consent decision.

Since the Government published its statement of need on renewables, only one out of nine appeals on wind farms has been allowed. It is obvious that a new approach is needed and hopefully the move towards national policy statements for energy, combined with the proposed use of an independent planning commission for major infrastructure, will provide this. Strict time limits on both the consultees and the decision-makers should help to bring speedier decisions. Developers are likely to see increased costs as they comply with strict guidelines on applications and consultation.

Planning reforms
Arguably the most important and controversial parts of the energy white paper are the planning reforms that will apply to large energy infrastructure projects. There will be plenty of scope for lawyers to advise clients, ranging from large utilities to small developers, on the changes to primary and secondary legislation necessary to implement the proposed changes. Increasingly lawyers are advising clients from the inception of a project right through to post-consent work. Lawyers will also be advising on strategy, which will be increasingly important, especially for those less experienced in the planning system, as well as advising on environmental impact assessment, compulsory purchase orders and advocacy at inquiries.

Objectors are becoming increasingly sophisticated in their approach to development and in their understanding of the law, so there has been an increase in challenges designed to frustrate developments, including judicial review. This means more work for those acting for the developers to ensure applications and appeals are as watertight as possible. Similarly, those representing third parties on the objections and challenges have seen this area of their work increase. Large controversial projects, such as the Whinash Windfarm, illustrate this.

While the energy white paper does not herald a complete sea change in the work energy lawyers can expect to see, it is likely that, if its proposals are implemented, the future of energy as a growth sector will be ensured.

Implementing policy
Publication of this white paper is to be welcomed. For too long the UK has been in a state of flux on its energy policy. It was only in 2003 that the last energy white paper was published. Since then we have seen two energy reviews and numerous consultations surrounding more focused issues. While it is recognised that the latter are often needed to gain industry insight on matters, it is time for the Government to call a halt on large-scale reviews and focus on implementing the policies it has now outlined. Industry needs certainty to bring forward development, and large-scale reviews and policy changes do not provide an attractive climate for investment.

There will be a residual concern that aspects of the white paper lack coherence. If new nuclear generation is shown to be economically viable and is progressed, the Government needs to ensure that this is not at the expense of renewables and that investment continues in both sectors. The white paper places great weight on the desirability of a decentralised electricity network, yet at the same time building new nuclear power stations is likely to reinforce the current centralised arrangement of electricity generation in the UK.

The new recommendations for the Infrastructure Planning Commission indicate that public inquiries for major infrastructure projects will in the future be less adversarial. This could see a move away from the use of specialist advocates and is clearly designed to facilitate a more inclusive process. However, in practice clients are likely to continue to seek the best possible representation to ensure their investments are protected. Projects that will have development budgets of millions will easily be able to accommodate experienced and specialist lawyers.

A long way to go…
If implemented, the white paper reforms will undoubtedly bring about some changes, but some of these have been anticipated for a considerable time. In some respects the white paper does not go far enough. There is speculation on how the Government is going to meet the ambitious EU targets of 20 per cent generation of all energy coming from renewable sources by 2020. This target lends some weight to the possibility of EU supergrids powered by vast offshore wind farms, but the white paper is silent on the interface with other European countries on energy generation.

The Government has decided to strike a delicate balance between forging ahead with its energy policies and ensuring that standards of consultation are met. The white paper is peppered with future consultations and formulations of new outlooks, perhaps the most prominent of which is the consultation on nuclear following Greenpeace’s successful judicial review. This decision has no doubt ensured that the Government takes a second look at its energy policy and implementation, although this will not benefit from unnecessary procedural delays. The Government must get the balancing act right by limiting its consultations to those detailed issues where public and industry input can really provide benefit. That said, the white paper produces a platform from which the UK can push forward, and it should do so right away.

Marcus Trinick is a partner at Bond Pearce