waste and energy - em lawshareemlawshare.co.uk/.../2019/02/waste-and-energy.pdf · exemptions under...

Waste and Energy

Simon Colvin, Partner, Weightmans

Laura Brealey, Senior Associate, Bevan Brittan

What’s Hot in the World of

Waste? Simon Colvin – Partner

Weightmans LLP

0161 233 7356/07766 366096

[email protected]

@envlawyer

mailto:[email protected]

mailto:[email protected]

www.emlawshare.co.uk

Summary

• Circular Economy

Package & Brexit

• WRAP Collections

Project

• Separate Collections

and TEEP

• Extended Producer

Responsibility

Schemes

• Transfrontier

Shipment of Waste

• Recycling Credits

• Duty of Care

• Non-compliant

operations

• Residual liability for

historic sites

• Contractual

considerations


Questions?

• Responsible for waste collection/treatment

services?

• Considering redesign of services?

• Considering amending or varying existing

contracts?

• Suffer from fly tipping/waste crime?


Quiz

• What does TEEP stand for?

• Current estimated cost of waste crime to UK

economy?

• What is the overall revised 2030 CEP target?

• Number of fly tipping incidents across England in

2016?

• Cost savings to LAs if producers responsible for

cost of collecting litter?

• Approximately how many tonnes of recycled

material did the UK export in 2016?


Circular Economy Package (1)


CEP (2)

• 2 Dec ’15 published by EC (round 2)

• 4 new legislative proposals – waste generally,

packaging, landfill and WEEE

• Improve waste management practices in line

with waste hierarchy

• Long term vision and strategy to guide

investment


CEP (3)

• revised EU targets for recycling 65% of municipal

waste and 75% of packaging waste by 2030

• new binding target to reduce landfill to a

maximum of 10% of total waste by 2030

• improve waste management, new investments in

recycling capacity, avoid overcapacity in

incineration and mechanical-biological treatment

• But Brexit?

– New directives in 2017 - yes EU work plan

– Part of transitional arrangements?


CEP (4)

• Hot off press (14/03) MEPs approve stricter

targets:

– 70% municipal waste by 2030

– 85% packaging waste

– 5% prepared for reuse

– 10% packaging reuse

• UK opposed, now to MS for approval


CEP (5)

• If not CEP, then what?

– More EfW – FCC

– Extended producer responsibility schemes

– Our own CEP

– TEEP revision

– Industrial Strategy – very limited information

– DEFRA 25 year Environment Plan? Spring

2017

– Strategic waste plan?


WRAP Collections Project (1)



October 2016

• >100 different approaches

• DEFRA commission WRAP

study

• All households recycle

same core set of materials

• Fewer collection and sorting

systems

• Common container colour

system



• 5 point plan – report back Spring’17


Separate Collection/TEEP

• Requirement for separate collection

– EU – WFD

– UK – 2011 Waste Regulation (E&W)

by 1 January 2015, to set up separate

collections of paper, plastic, metal and

glass

• But only if TEEP

• 4 out of 321 councils in England no changes on

basis not TEEP

• CEP plans to remove TEEP/Brexit


Extended Producer

Responsibility Schemes (1) • 2020 50% recycling target for municipal waste

(>65% by 2030)

“by 2020, the preparing for re-use and the recycling of waste materials

such as at least paper, metal, plastic and glass from households and

possibly from other origins as far as these waste streams are similar to

waste from households, shall be increased to a minimum of overall 50

% by weight”

• Recent DEFRA data suggests going to miss this

target


Extended Producer

Responsibility Schemes (2) • England:-

– Focus on low grade commercial waste and not

higher grade household waste

– Also income generated not fed back into local

authorities via PRN system

– Minimum required to comply

– No full cost recovery

– PRN price fluctuations very difficult to

accommodate (e.g. risk allocation in contracts)

– No additional funding – Scotland and Wales


Extended Producer

Responsibility Schemes (3) • Germany, Ireland and others focus on household waste,

the income generated goes back into municipal collections

with better results, full cost recovery and limited fluctuation

so limited risk

• English solution – EPR schemes

– True cost recovery

– Sliding scale tax levy – more then pay more etc…

– Funding back to Local Authorities and focus on

household collections

– Focus on litter – levy on producers with funding direct to

local authorities

• Welsh model – 65% target


Transfrontier Shipment of

Waste • Chain of responsibility

• Green List

• Notifiable

• Volumes and quality

• Contamination

• EU/Global alignment?


Recycling Credits (1)

• The recycling credits scheme was introduced by the

Government in 1990 through s52 of the Environmental

Protection Act 1990 (EPA). Subsequent amendments

to the scheme were included in s49 of the Clean

Neighbourhoods and Environment Act 2005 (CNEA.

• The EPA places a duty on the County Council, as a

Waste Disposal Authority (WDA), to pay waste

disposal credits to the District Councils as Waste

Collection Authorities (WCAs) when they divert and

retain waste from the household waste stream for

recycling



• The credit payment represents a portion of the net

saving of expenditure for the County Council where

such waste has not been disposed of through the

household waste stream (e.g. to landfill)

• The EPA (section 48(4)) allows the WDA to object to a

WCA retaining waste for recycling where the WDA

has made arrangements for that waste to be recycled.

Under sections 48(1) and (1A) of the EPA, the WCA

must deliver waste to such places as the WDA directs



• Issuing Objection and Directions Notices under

Sections 48 and 51 of the Environmental Protection

Act 1990

• Consultation with WCAs – act reasonably

• Together, or not?

• If not, how far apart?

– Timing of own plans – firm

– WCAs arrangements

– ON first then DN – logical

– Circumstances/context


Duty of Care (1)

• Waste Crime - £1bn problem

• Role of duty of care – s34 EPA 1990

– applies to anyone who imports, produces, carries,

keeps, treats, disposes of, or are a dealer or broker

that has control of, controlled waste

– responsibility to take all reasonable steps to ensure

that when you transfer waste to another waste

holder that the waste is managed correctly

throughout its complete journey to disposal or

recovery


Duty of Care (2)

• If you transfer waste to a waste treatment

facility for preliminary treatment, you will

generally still be responsible for the complete

recovery or disposal operation – but impact of

mixing?

• Relevance of contractual obligations?

• DEFRA White Paper – Spring 2017

• Proportionate responsibility and strict

application of DofC


Non-compliant Operations

• Direct/Indirect liability

– Regulatory – Reg 38 EPR 2010

– Third party – nuisance/negligence

(NB have insurers been notified)

• Ability to compel compliance via contract?

– Additional monitoring/reporting obligations

– Greater oversight

– Financial penalties

– Termination


Residual liability for historic

sites (1) • Migration of landfill gas/leachate

• WDAs (operating) and WCAs (disposing)

• Statutory liability – Permits/Licences or

Contaminated Land Regime etc…

• Tortious third party liability e.g.

nuisance/negligence

• Contractual liability to former /current land owners

– leases/licences


Residual liability for historic

sites (2) • What, when, how, where, why?

• Other parties?

• Intervening acts?

• Costs of proposed action?

• Other sites/set a precedent?

• Too much or too little?

• Settlement agreements


Contractual considerations (1)

• Opportunities to terminate or vary existing

contract

– Sheffield

– Peterborough

– Bristol

– …

• SoPC4/SoPF2

• PPP Policy Note: Early termination of contracts –

HM Treasury June 2015 Link

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/436694/PPP_terminations_policy_note.pdf



– Authority default

– Contractor default

– Force Majeure

– Voluntary Termination

• Need for approval from sponsor department and

Treasury

• Approval only if - significant improvement in the

delivery of public value for money will be achieved

• Need for a business case demonstrating this



• Essentially a comparison of:

– the present value of future PFI unitary charge

payments from the Authority to the contractor,

assuming that the existing PFI contract continues to

term, against

– the cost of contract termination plus the present value

of the cost of future delivery of an equivalent or

modified service

• If voluntary termination stacks up – original deal was a

bad one, or there is something in it for the Contractor


Questions?

District Energy Networks

Laura Brealey, Senior Associate, Bevan Brittan LLP

16 March 2017


District Energy Delivery

Structures - Agenda • Introduction

• Why develop a Heat Network?

• How might a Local Authority be involved?

• Heat Network Delivery Structures

• Procuring a Heat Network


Why develop a Heat Network?

What are your objectives? Group Discussion


How might a Local Authority be

involved? • As landowner

• As heat off-taker

• As cash investor

• As lead Authority or working with others


Heat Networks – Delivery

Structures (1) • Authority model

• Contractor model

• Shared Risk model

– Contractual

– Joint Venture

• ESCo? HeatCo?


Delivery Structures (2) –

Authority model • Most risk, benefit and control

• Funder – borrow, grants?

• Heat demand – short term/long term

• Public sector – ESCo/HeatCo?

• Sub-contract discrete Works and O&M packages

to the private sector

• Risks retained within the ESCo/HeatCo

• Needs leadership and political support



Contractor model • Least risk, benefit and control

• Funding – more expensive?

• Private sector expertise and experience

• Long term contracts to underpin funding costs

• Heat demand – certainty?

• Private sector ESCo/HeatCo



Shared risk • … Somewhere in between …

• Authority leads on the areas where it has

experience, knowledge or can take risk

• Contractor leads on the other areas

• How?

– Commercial Contracts

– Joint Ventures


Joint Ventures

Benefits & Costs Benefits

• Share in profit

• Access to information

• Rights to participate in the control of Heat Co

Costs

• Initial investment

• Additional funding

• Administration and bureaucracy


Risk

• Heat uptake

• Heat demand

- Void risk

- Credit/collection risks

• “Normal” O&M risks

• Gas price risk

• Future regulation

• S.20 LTA

• Commercial risks


Procurement

What are you procuring? • Design and Build?

• Operate and Maintain?

• Supply of technology?

• Customer relationship management/metering?

• Your own heat/energy?


Which regulations apply and

when? • Utilities Contracts Regulations (UCR) may apply

– Basic principles – similar to the Public Contracts Regulations

(PCR), but simpler, more flexibility, more exemptions

– A “utility” engaging in a “utilities activity” can award contracts

under the UCR:

• Provision or operation of a fixed network providing a

service to the public re production, transport or distribution

of heat

• Supply of heat to such a network

• NB if procuring a partner who will form a separate JV entity or if

purchasing heat as a customer then Public Contracts

Regulations 2015 (PCR) likely to apply.


Exemptions under the UCR?

• Entities operating in competitive markets:

• Exemption for contracts for the supply of electricity and /

gas in England, Scotland and Wales. Exemption only

covers supply, not other activities such as distribution.

• Exemption for contracts awarded to enable electricity

generation in England, Scotland and Wales.

• Exemption for the purchase of energy and fuel for the production

of energy (e.g. purchase of fossil fuels in order to generate

electricity).


Procedures

• Open

• Restricted

• Negotiated

• Competitive Dialogue

• Frameworks?


Practical issues in a successful

procurement • Preliminary market engagement

• Establish the parameters of the competition –

Future proofing?

• Establish partnering with other public bodies early

• Timing

• Early consideration of evaluation criteria


Check out the website …


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