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The UK’s cross-cutting Net Zero Strategy – Natural Resources, Waste and Fluorinated Gases3 May 2022

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In the sixth sector article of our Net Zero series, our team looks at what the UK’s Net Zero Strategy (“the Strategy”) means for industry stakeholders in the Natural Resources, Waste and Fluorinated Gases sector.

Chapter 3vi of the Strategy sets out how the UK Government plans to transform the way we use natural resources, farm our land and manage our waste. The overarching purpose of this chapter is to help harness nature through  preservation and conservation. The commitments made in chapter 3vi have the potential to create both opportunities and jobs, as well as additional responsibilities and increased costs for stakeholders involved in the waste, construction, property, renewables, farming, horticulture and food sectors but only if those commitments are actually delivered by government.

"According to the Strategy, UK net emissions from NRWF sectors comprised 20% of the UK total in 2019, having decreased by 45% between 1990 and 2019."

WHY DOES THIS MATTER?

There is an urgent need to reduce greenhouse gas (“GHG”) emissions from all sectors including natural resources, waste and fluorinated gases (“NRWF”). There is also a need to change land use so that more natural carbon sinks are created. According to the Strategy, UK net emissions from NRWF sectors comprised 20% of the UK total in 2019, having decreased by 45% between 1990 and 2019. Emissions from agriculture, mainly stemming from livestock, agricultural soils and farm machinery amounted to 11% of UK emissions in 2019. Forestry and woodlands currently act as carbon sinks and, in 2019, captured only 4% of UK emissions. By 2035, NRWF emissions are expected to reduce between 39-51% compared to 1990, provided the goals set out in the Strategy are both attainable and attained.

NATURAL RESOURCES: KEY COMMITMENTS AND PROGRESS TO DATE

Key commitment: Introducing farming schemes, including the new environmental land management schemes, which will provide a powerful vehicle for achieving net zero and 25 Year Environment Plan goals.

This was set out in the June 2021 update of the Farming is Changing Strategy (first published August 2019): “these schemes are intended to provide a powerful vehicle for achieving the goals of the 25 Year Environment Plan and our commitment to net zero emissions by 2050” (page 10).

Progress to date: In January 2022, the Department for Environment, Food and Rural Affairs (“Defra”) launched two new environmental land management schemes that will reward farmers and landowners for actions which benefit the environment, such as creating wildlife habitats, planting trees or restoring peat and wetland areas. These pilot projects are expected to deliver the creation of 10,000 hectares of restored wildlife habitat; carbon savings between 25 to 50 kilotonnes per year – roughly equivalent to taking between 12,000 – 25,000 cars off the road; and improved status of around half (45-57%) of the most threatened species in England, including the Eurasian curlew, sand lizard and water vole. Data generated from the pilot projects will be instrumental in shaping future environmental land management schemes.

Key commitment: Increasing investment in industry-led research and development into solutions to help deliver net zero in agriculture and horticulture, including through the Farming Innovation Programme.

Whilst that programme did indeed kick off in October 2021, it was promised in the November 2020 Agricultural Transition Plan 2021 to 2024 (page 58).

Progress to date: Between October 2021 and March 2022, £17.5m was allocated as part of the Industry-led Research and Development Partnership Fund across three competitions. On 30 March 2022, £20.5m funding was made available across two new competitions in the Farming Innovation Programme in partnership with UK Research and Innovation (“UKRI”). Those interested should consider applying for grants from the following: the Farming Futures Research and Development Fund (climate smart farming) and the Large R & D Partnership Projects.

Key commitment: Trebling woodland creation rates by the end of this Parliament (a repetition from a May 2021 press release) and maintaining new planting of at least 30,000 hectares per year from 2025 onwards.

This target was set out in a June 2021 House of Commons Briefing Paper, (Tree Planting in the UK).

Progress to date: Anyone who plans to create woodland in England may be eligible for a grant from the Forestry Commission. The application process involves demonstrating that the woodland creation design plan meets the requirements of the UK Forestry Standard (“UKFS”). The UKFS is the reference standard for sustainable forest management across the UK and applies to all woodland irrespective of ownership. The UKFS is due to be updated by the end of 2022. A Guide to Planning New Woodland in England has also been created to assist applicants. The Woodland Creation Planning Grant (“WCPG”) provides funding to help cover the costs of producing a UKFS compliant woodland creation design plan. Applicants are eligible for up to £150 per hectare, plus a 70% contribution to any specialist surveys that are needed, capped at £30,000 per project.

Key commitment: Restoring at least 35,000 hectares of peatlands in England by 2025, through the Nature for Climate Fund and restore approximately 280,000 hectares of peat in England by 2050 with the aid of funding from the new environmental land management schemes.

Further details can also be found in the May 2021 England Peat Action Plan.

Progress to date: Between 18 December 2021 and 18 March 2022 Defra ran a consultation on whether to end the use and the sale of peat and peat containing products in horticulture in England and Wales. Defra is in the process of analysing the feedback received and further details on next steps will follow in due course. Peatlands are considered the UK’s largest stores of carbon. They also provide vital ecosystem services including supplying UK drinking water, decreasing flood risk, and providing food and shelter for rare wildlife. A number of retailers have already set themselves targets to reduce peat sales but not end them. Around 90% of Travis Perkins’ compost sales were peat-free in 2020 and the retailer is planning to go 100% peat-free during 2021; Wickes plans to phase out peat by 2025 whilst B&Q, Hillier and the Blue Diamond group of garden centres said they were committed to phasing out peat completely but gave no date.

Key commitment: Mobilising private investment into tree planting, including through the Woodland Carbon Code (published July 2018), with the support of government’s Woodland Carbon Guarantee (published November 2019), and into peat restoration through implementing a package of reforms to the Peatland Code.

The Peatland Code (version 1.1) was published in March 2017 and planned updates were signalled in February 2021 with the aim of publishing version 2.0 by the end of 2021. Unfortunately, that target was missed.

Progress to date: Version 1.2 of the updated Peatland Code has not yet been published and is expected later in 2022.

Key commitment: Developing a policy roadmap to increase the use of timber in construction in England and creating a cross-government and industry working group tasked with identifying key actions to safely increase timber use and reduce embodied carbon.

The Government had already committed to this early in May 2021 via the England Trees Action Plan (page 19).

Progress to date: Timber is considered a light and recyclable material that efficiently absorbs carbon dioxide from the atmosphere. Thus, it provides an opportunity to reduce embedded carbon. In order to boost the uptake of timber in construction the Timber in Construction Innovation Fund (“TiC”) has been set up to increase the volume of carbon stored in the built environment. Through the fund, up to £1.5m will be made available by March 2025 to support the development of innovative timber products, supply chains, and ways of working with English wood. By supporting projects that will increase and facilitate the use of English timber in construction, the TiC aims to increase demand for domestically produced timber and, by extension, encourage areas of previously unmanaged woodland into active management.

Key commitment: Through the Environment Bill, legislating for Local Nature Recovery Strategies (“LNRSs”) – a new system of spatial strategies that will map proposals for improving or creating habitat for nature and wider environmental benefits.

These strategies were first launched in pilot form in August 2020 and the Environment Bill (first read before Parliament in January 2020) received royal assent on 9 November 2021, becoming the Environment Act 2021.

Progress to date: Defra recently launched two new consultations in relation to LNRSs. The first consultation (which opened 16 March 2022 and closes 11 May 2022) entitled “Nature Recovery Green Paper: Protected Sites and Species” is seeking views on how to restore nature and halt the decline in species abundance by 2030. The aim is to create more protected sites and to place more duties and responsibilities on developers.

The second consultation, entitled “Environmental Targets Public Consultation” which has been the subject of much criticism since its launch on the 16 March 2022, consults on the setting of legally binding environmental targets, in accordance with the Environment Act 2021, in relation to water quality, biodiversity, waste and air pollution. However, the latter consultation has been heavily criticised for its lack of essential detail on how the targets were conjured up. With this consultation also due to close on 11 May 2022 the essential details such as risk assessments, evidence packs and minutes of meetings are yet to be published by Defra, thus rendering any responses valueless if vital information is not available to inform those responses. It is highly likely that the deadline for submitting responses to the consultation will be extended. Agreement over air quality targets will likely be the most challenging in view of the fact that the UK Government has not only faced infringement proceedings from the European Court of Justice for breach of air quality limits but also three judicial reviews by Client Earth.[i]

WASTE: KEY COMMITMENTS AND PROGRESS TO DATE

Key commitment: To support the government’s commitment to explore options for the near elimination of biodegradable municipal waste to landfill from 2028, the government are bringing forward £295m of capital funding which will allow local authorities in England to prepare to implement free separate food waste collections for all households from 2025.

"It remains to be seen whether any concrete proposals will be put forward in the near future to facilitate not only free separate food waste collections but also the ban on waste exports."

Progress to date: The government is yet to publish details of how the separate waste collection target is to be achieved and how exactly this will be funded. The waste industry is concerned also that the biggest challenge is not so much the collection of waste but the scarcity of suitable waste infrastructure to deal with its treatment post-collection. The government’s existing Resources and Waste Strategy, published in 2018, stated that “the primary aim is to process more waste at home”.

“By 2050, we will have met the 25 Year Environment Plan (25YEP) commitments to eliminate all avoidable waste, including plastic, and to double resource productivity” (page 172 of the Strategy)

To put this into context, 6.6m tonnes of UK biodegradable municipal waste was sent to landfill in 2019. Further to this, in 2020, the UK exported 537,000 tonnes of plastic waste. According to Greenpeace, the top three countries for UK waste exports were Turkey (39%), Malaysia (12%) and Poland (7%) with low recycling rates and a serious problem with plastic waste being dumped or burned illegally. It is interesting, therefore, that the Strategy steers clear from reiterating the commitment to ban waste exports. It remains to be seen whether any concrete proposals will be put forward in the near future to facilitate not only free separate food waste collections but also the ban on waste exports. The Resources and Waste Strategy is due to be supplemented in 2023 by a new Waste Prevention Programme which sets out the government’s plans for a circular economy and extended producer responsibility. Further details on the consultation that ran between 10 June 2021 and 18 March 2022 can be found here.

FLUORINATED GASES: KEY COMMITMENTS AND PROGRESS TO DATE

Key commitment: Completing a review of the F-gas Regulation and assessing whether we can go further than the current requirements and international commitments.

Progress to date: Fluorinated gases (“GHGs” which can be used in systems such as heat pumps and air conditioning units) accounted for 3% of UK emissions in 2019, with 93% of these coming from hydrofluorocarbons (“HFCs”). In 2017 the UK became one of the first countries to commit to cutting HFC consumption by 85% by 2036, ratifying the Kigali Amendment to the UN Montreal Protocol. The government has commenced a review of the Fluorinated Greenhouse Gases Regulation 2015 which is due to complete by December 2022. The review will be used to assess whether the UK can go further than the current requirements and international commitments, including by looking at what additional reductions in fluorinated gas use can be made to help the UK meet net zero by 2050. Defra intends to engage with stakeholders later in 2022 and assess the opportunities for faster and further action in phasing down fluorinated gas use.

WHAT ARE THE RISKS AND OPPORTUNITIES?

The biggest risk is inaction and the devastating consequences that this would have on land, biodiversity, natural resources and emissions. There is a real danger that this long-winded strategy will be a mere collection of words rather than a series of actions. Another big risk is lack of funding to affect the scale of change that is required. Some of the allocated funding such as £1.5m allocated for timber product development or a £30,000 cap per woodland creation project does not exactly scream that the government is prepared to ride or die for net zero. The third key risk is lack of detail on how the Strategy will be delivered and how progress will be measured. In this sense Europe is better prepared and much clearer on the detail when it comes to measuring and disclosing impact of our activities on nature. This is not only evident in the EU Taxonomy framework but also in the EU Farm to Fork¹ and EU Biodiversity Strategy² (part of the European Green Deal³) (see also our recent article entitled “The EU Taxonomy for Sustainable Investments – Agriculture and Forestry (Soft Commodities)” and our article entitled “The EU Taxonomy for Sustainable Investments – Mining, Metals and Minerals”. As pointed out by Friends of the Earth, who were granted permission on 2 March 2022 to judicially review the Strategy in the High Court, the government has failed to quantify how net zero will be achieved and by when. At this stage, the Strategy is but another long strategy in a long list of strategies which promise a great deal but deliver very little.

In terms of opportunities, the Strategy promises new employment opportunities across the UK. For example, the Strategy estimates that afforestation in England could support up to 1,900 jobs in 2024 and 2,000 jobs in 2030. In real terms these numbers are not huge. The Strategy also promises to mobilise additional public and private investment of approximately £30bn by 2037 and to invest £75m on net zero related R&D across NRWF to inform the pathway to 2037. Monies are also expected to be generated from revenues from nature-based solutions – a rapidly emerging market – which the government promises to regulate more strictly in the future: “we will seek to establish a robust market framework, with arrangements to ensure additionality, transparency, and traceability of carbon credits, so that regulators and the public can be confident that carbon savings are verified and also guaranteed against future issues such as forest fires or disease” (page 172).

WHAT DOES THIS MEAN FOR:

Landowners, farming and agriculture

The Strategy recognises that the UK has a limited amount of land and delivering net zero will require changes to the way land is used. Sustainable land use provides both energy sources and natural carbon sinks. Careful planning and specialist technical support will be essential for landowners and farmers who intend to use their land for multiple purposes (e.g. agroforestry – meaning agriculture incorporating the cultivation of trees – and peat restoration). It will be important to ensure that land use for decarbonisation purposes is balanced with other demands, such as housing development and food production. Any available grant schemes, as discussed above (e.g. WCPG or the Farming Futures Research and Development Fund) should be utilised before funds run out.

Developers

Sustainable land use reform will also impact developers who will have their own set of new standards and requirements to grapple with as part of the net zero transition. Perhaps the most important change impacting developers in the UK is biodiversity net gain (“BNG”). The government recently ran a consultation on the BNG requirement of at least 10% which will apply to developments from 2023 onwards. BNG complements and works with the biodiversity mitigation hierarchy set out in the National Planning Policy Framework paragraph 180a which enshrines the principle that environmental harm resulting from a development should be avoided (through locating development where there will be less harmful impacts), adequately mitigated, or, as a last resort, compensated for. The biodiversity gains and losses of a development will be measured in ‘biodiversity units’, using a metric which uses habitats as a proxy for biodiversity and calculates units by taking account of the type, extent and condition of habitats. Natural England has recently published version 3 of its BNG Metric which, subject to further consultation and any further updates, is expected to be the metric specified for mandatory biodiversity net gain.

Construction

The Strategy makes a compelling case for boosting safe use of timber in construction of low-rise buildings in a wide range of commercial and non-residential settings, on the basis that timber has the lowest embodied carbon of any mainstream building materials. The Strategy also recognises that fire safety and structural safety considerations will be key. Those who are interested should take advantage of the £1.5m that is to be made available by March 2025 to support the development of innovative timber products, supply chains and ways of working with English wood. Further details on how the government plans to support timber in construction can be found on pages 178-179 of the Strategy.

"The key measure of success will be substantiated evidence of consistent and steady reduction of emissions in the NRWF sector based on the commitments made in the Strategy and on whether those commitments are actually delivered."

Waste treatment

As previously mentioned, there is a need for waste treatment infrastructure not only to facilitate free separate food waste collection from 2025 but also other types of waste. Currently the government is dragging its feet on plastic waste as well as on waste exports. However, it is conceivable that outside pressure will force government to legislate to ban waste exports. This creates obvious opportunity for waste treatment infrastructure and financing.

Refrigeration, heat pumps and air conditioning

The government will continue to restrict and ban the uses of F-gases (e.g. HCFs). Most F-gases are already banned from air conditioning units, commercial refrigeration and heat pumps. A review of the UK F-gas Regulation is currently underway and is due to complete at the end of 2022. It will be interesting to see how the government balances its Strategy plans for installing 600,000 heat pumps a year by 2028 with the fact that many market-ready heat pumps are currently heavily dependent on HFC refrigerants such as R410A, R134a or R407C. We recommend that those who are involved in the manufacture and import of heat pumps, air conditioning, aerosols, insulating foam, refrigerants and fire protection equipment closely monitor any changes that are regularly updated on the government F-gas page here. Exemptions for certain uses are also available or can be granted in special circumstances.

HOW WILL PROGRESS BE MEASURED?

The key measure of success will be substantiated evidence of consistent and steady reduction of emissions in the NRWF sector based on the commitments made in the Strategy and on whether those commitments are actually delivered. The take up of the government incentives on offer and continued investment by funds and other investors in NRWF sectors will also speak volumes as will the actual number of green skilled jobs that are generated to show whether the market in this area is growing as predicted.

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[1] https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal/actions-being-taken-eu/farm-fork_en
[2] https://ec.europa.eu/environment/strategy/biodiversity-strategy-2030_en
[3]https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en
[i] ClientEarth has previously brought and won three cases in front of the courts in the UK and on these three occasions, the courts have found the UK Government to be breaching the law on NO2 pollution and have ordered ministers to produce new compliant air quality plans to tackle the problem.

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