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What to Expect – Clean air and the Environment Bill

What to Expect – Clean air and the Environment Bill

Author: Jason Torrance, Clean Air Cities Director, UK100

 

On 18 July 2018, Prime Minister Theresa May, announced that the Government would introduce a wide-ranging Environment Bill that will cover sectoral environmental regulation and standard setting in areas such as air quality, wildlife and habitats, better management of resources, water and waste. As the first dedicated environment bill for over twenty years this is a momentous commitment by Government and one that has the potential to transform environmental legislation and the policy that supports it.

 

Although the timing of the introduction of the proposed legislation into UK Parliament is not certain, the need for strong and ambitious environmental legislation is critical. There is a consensus that existing legislation needs to be updated and wider, more ambitious legislation is required to maintain protection for our environment after leaving the European Union.

 

At present the full draft legislation has not been published – and will enter the public domain upon entering Parliament. So far, we have seen publication of the ‘Draft Environment (Governance and Principles) Bill 2018’, an ‘Environment Bill: policy paper’ and various other documents.    

 

Current understanding is that air quality will feature prominently within the proposed legislation with many of the measures proposed already outlined out in the Government’s Clean Air Strategy 2019. Commitments are set out in the strategy to introduce an up to date legislative framework for tackling air pollution at national and local level, and to strengthen local authority powers with respect to air quality.

 

For clean air – the Bill will seek to build upon The Environment Act 1995 which established The Environment Agency as well as the designation of Air Quality Management Areas. It will also integrate and update the Clean Air Act 1993, introduced to address air pollution from smog caused by the widespread burning of coal for residential heating and by industry. These two current pieces of legislation will provide a key base from which the Bill will be able to expand upon.

 

Formal scrutiny of the draft Environment (Governance and Principles) Bill has been carried out in the UK Parliament by both by The Environment, Food and Rural Affairs Committee and also The Environmental Audit Committee – both raising significant concerns. Local leaders have also advocated for the strongest environmental protections and necessary resources for their delivery – together with environment groups, and many in business and industry.

 

At the second National Clean Air Summit, February 2019, local leaders agreed a series of priorities that need to be included in the upcoming Environment Bill in order to improve air quality across the U.K. If taken forward, the priorities have the potential to transform environmental legislation and the policy that supports it, and put in place measures that will deliver clean air for generations to come.

 

For further information take a look at our more detailed Clean Air Legislation briefing.

Barclays support for local energy projects

Barclays has a keen interest in Renewable Energy and Green Finance and we are working today to engage both our client base as a whole, and the local authority sector, to support the transition to the low carbon economy. Barclays is a great supporter of financing local projects and continues to be the largest UK banking provider to the local authority sector with some form of relationship with 70% of all local authorities. We have 8 Relationship Directors with a local authority sector specialism and these bankers provide day to day transactional banking to 108 local authorities.  Barclays’ commitment to the sector is further demonstrated clearly through £4 billion of lending facilities that we extend to local authorities.

In this context we have insight into the challenges we see in the sector through our discussion with our local authority client base. One such example is central government funding with estimates suggesting there could be an overall funding gap of £5bn in local authority finances. At the same time LAs are under significant pressure to increase their investment in housing, with homelessness an increasing problem across the U.K.  Add to this significant social and funding challenges and it’s not altogether surprising that there are challenges allocating cash to the development of potential renewable energy projects.

Nonetheless, the need to do so is pressing. We are seeing a response and although individual local authorities may differ, their environmental strategy generally centers around 5 pillars of sustainability – Air Quality; Transport; Waste Management; Energy Efficiency; Planning and Development.

Some of the recent, innovations actions we have seen local authorities putting into place include:

 

  • Barking and Dagenham Council, launched its own greener energy provider on 21st Beam Energy, which is a not-for-profit company and will help residents save money whilst using 100% green electricity from certified UK based solar and wind generators

Why are Barclays interested?

Banks and financing partners have a role to play in mobilising the capital to meet this generational challenge. But the financial incentive alone does not tell the full story of our interest – regulation, reputation and commercial drivers all impact our client base.

When we view the broader issues through this lens having a clear, coherent and comprehensive strategy around sustainability is not optional for successful organisations.

What are the issues Barclays faces in rolling out Green Finance?

One issue facing Barclays is a lack of information. Not knowing where to go in a fragmented market if you want to do something delays and prohibits investment reaching the desired recipients. A second issue is a lack of demand and awareness of Green Finance.  There are lots of projects and concepts that are not getting to the stage that they require confirmed financing and a lack of projects to finance leads to fewer projects being funded.

Other issues include:

  • We don’t know what we don’t see – we know that lots of projects are out there but don’t get through the development phase so never reach us to request debt financing
  • Not a priority for businesses or other investment programmes
  • Project development costs and understanding of technology are a key inhibitor.
  • Insufficient incentivisation in the banking products – presently there is no capital benefit, no incentive to dilute our returns in a highly competitive and regulated market.

What are Barclays doing?

In order to best ensure that these projects are funded Barclays is taking a number of steps. We are speaking to our clients and providing thought leadership through events e.g. our Green Frontiers Conference. We are changing our own operations and setting science-based targets, while we now also employ sustainability coordinators on new-to-market sustainable or green banking facilities. These actions, amongst many others, are helping to ensure Barclays is able to fund local energy projects as effectively and responsibly as possible.

 

What does the future hold?

There are several expectations that Barclays currently has for the future.  We anticipate successful and well established IPF  business – supporting the financing of the renewable energy sector for many years.  We also anticipate an exciting period with billions spent in offshore wind in 2018, 2019.

We expect new waste-to-energy plants to open in 2019 and it may also be the year that we see subsidy free schemes in onshore wind and solar that are genuinely commercially viable and replicable.

Energy storage will remain a key topic for the industry as will unsubsidised solar and of course we await the emergence of new and disruptive technologies as we see the mass roll out of EVs and associated infrastructure in the coming years.

Therefore, we feel that there is a lot for us to do. And we are developing the tools to help us meet these needs.

 

Author:

Ross Taylor, Barclays Industry Director – Manufacturing, Transport and Logistics