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2012 - a game changer?

By Andrew Whitehead on Dec 31, 12 02:27 PM in Law

2012 ended as it started, with a notable announcement by the Energy Secretary.

Back in January 2012, inboxes were choc-a-bloc with announcements, consultation responses and intensive lobbying around feed-in tariffs, and the government's bungled efforts to keep a lid on the feed-in tariff budget in the face of an overheated solar PV sector.

And now, with 2012 at an end, Edward Davey has used the publication on 27 December of the 2012 update to the Renewable Energy Roadmap to proclaim that renewable energy is powering forward in the UK.

Based on the 12 months period July 2011 to July 2012, the latest Roadmap shows that the UK, as expected, is on track to meet its EU target of sourcing 15% of all energy (electricity, heat and transport) from renewables by 2020.

In the main, progress has come from the electricity generation sector, which has seen a 27% increase in overall renewable electricity generated and a 40% increase in renewable generation capacity, with a notable contribution to that capacity from offshore wind (up 60%) and solar PV (a five-fold increase).

We've seen that in my own law firm, with 2012 our busiest year yet for renewable energy deals. These included the sale in October of the 168 turbine Dudgeon offshore wind farm scheme which will see that project built out by Norwegian companies Statoil and Statkraft, and financial close for a £21m organic waste facility in east London, which will generate electricity for 2,000 homes.

Indeed, it's difficult not to (at least tentatively) conclude that the UK's renewable energy sector has turned something of a corner. With a politically turbulent 2012 now behind us, we are left with a more stable feed-in tariff regime, and an Energy Bill heralding significant levels of support for large-scale low carbon energy schemes.

Uncertainties remain, of course, not least a fractured coalition with a Chancellor seemingly intent on blunting the Lib Dem's green ambitions with a dash for gas. Add to that the growing debate about whether the transformational impact of shale gas in the US might ever be replicated on any meaningful scale here in the UK.

For businesses, 2012 has also seen a growing acceptance of sustainability as a key to future growth - albeit in many cases driven by energy efficiency initiatives in response to rising energy prices.

For large listed companies, this will be underpinned in 2013 by mandatory carbon reporting, which for the first time - anywhere in the world, I believe - will see a requirement to include carbon emissions data in annual reports.

And for many more businesses, increased energy efficiency will remain a key compliance issue in the context of the CRC Energy Efficiency Scheme, which will be simplified during the course of 2013 and 2014.

More generally, this sustainability agenda in business sits alongside a growing recognition of the importance of climate risk management.

Here in the UK, it seems to have been raining persistently since the summer, and indeed on December 28 the Met Office announced that 2012 was England's wettest year on record - ironically, a year which began with talk of drought and water shortages.

Further afield, 2012 has ended with extreme cold in Russia, balmy conditions in southwest France, and a deadly tropical storm in the Philippines. And 2012 was, of course, the year of Hurricane Sandy (aka Frankenstorm), which swept through the Caribbean and up the east coast of the US in October with devastating consequences.

Whilst it would be wrong to use every extreme weather event to justify a change in climate, I wonder whether we'll nonetheless look back on 2012 as the year when we first began to see climate change taking place before our eyes.

A recent report by Jarraud's World Meteorological Organisation documented severe floods, droughts and heat waves, with the first 10 months of 2012 the ninth warmest since records began in the mid-19th century.

All the more disappointing, then, that the late-November annual UN climate conference, this time in Doha, once again delivered so little.

So, here are a few modest predictions for 2013.

Firstly, despite the collateral political noise surrounding gas, the government's Renewable Energy Roadmap should be seen as a vote of confidence in low carbon energy for the UK, and we should start to see greater benefits delivered in terms of jobs and investment.

Secondly, 2013 should see even more businesses taking action to identify and reduce their environmental impact (including energy usage), as the compliance agenda gathers pace combined with increasing pressures from end consumers and supply chain partners.

And finally, I believe we are already seeing a growing acceptance of climate change, and more attention on adaptation risks particularly in the context of business continuity planning.

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