A Guide to the Environment Act 2021

Key information
  • The Environment Act establishes a new 'green watchdog': the Office for Environmental Protection (OEP). This new body will be responsible for holding government bodies to account but its independence remains under question.
  • A mandatory 10% Biodiversity Net Gain is being introduced on developments. The Environment Act enshrines and supports this commitment, furthering those set out in the NPPF.
  • The new Act brings in large amounts of legislation to protect the environment, including habitats, waterways and rainforests. However, its language fails to exert huge pressure onto many major institutions, such as the Treasury.

What is the Environment Act?

The Environment Act, which received Royal Assent on 9th November 2021, creates a framework for protecting and enhancing the natural environment through long-term, legally binding targets.

The Act will deliver targets to:

  • Increase biodiversity
  • Improve air quality
  • Improve water quality
  • Reduce waste
  • Increase recycling
  • Improve resource efficiency

The Act also introduces:

  • A target on ambient PM2.5 concentrations in the air, the most damaging pollutant to human health
  • A target to halt the decline of nature by 2030
  • Environmental improvement plans including interim targets
  • Environmental monitoring and reporting to be made part of domestic policymaking
  • The Office for Environmental Protection (OEP), created to uphold environmental law

Government stance

Environmental principles are at the heart of the Act. In a statement on 10th November 2021, DEFRA Secretary George Eustice said that the Act will “deliver the most ambitious environmental programme of any country on earth. It will require new developments to improve or create habitats for nature and tackle deforestation overseas. It will halt the decline of species by 2030, clean up our air and protect the health of our rivers, reform the way in which we deal with waste." DEFRA is now required to set these long-term, legally binding environmental targets by late 2022 and they must be in place for at least 15 years. The government must also publish a 25-year Environmental Improvement Plan (EIP) and has pledged to set interim targets for each five-year period; while these have been criticised for being non-legally binding targets, the government has stated that they will be monitored and the planned improvement measures are to be clarified.

What the Act establishes:

The Office for Environmental Protection (OEP)

This `green watchdog’ has been established to enforce the new legally binding environmental targets; it will hold the government and public bodies to account by providing independent oversight of the government’s progress. However, not everyone is convinced of its independence despite Environment Minister Lord Goldsmith verbally committing to its operational independence in the final stages of the debate over the Environment Bill. The government said that it needed some guidance power over the OEP to ensure its accountability and will decide its budget, board and enforcement strategy. Managing director of ecological consultancy Arbtech, Robert Oates criticised this development, commenting: “The new 'independent' watchdog (OEP) for environmental protections and climate change is actually still under the government's thumb because it retained the power for ministers to issue it with guidance.”

Nature and Habitat

 To help reverse the decline of endangered species, the Act includes a legally binding target on species numbers for 2030 and aims to help biodiversity by encouraging larger, better connected key areas of natural habitat to boost nature recovery. Local Nature Recovery Strategies (LNRS) will be introduced to help build a national Nature Recovery Network to benefit nature; a responsible authority will be appointed by the Environment Secretary to lead each LNRS area, and they will identify the most valuable existing habitat and create proposals for its improvement; the aim is to ensure developers avoid the most valuable habitat and plan habitat creation where it is most needed. Species Conservation and Protected Site strategies will be part of NLRS to protect species and a Protected Site Strategy will work on same basis for sites. These measures put a duty on local planning authorities to cooperate with Natural England and other local authorities and public bodies. Local authorities must produce a Biodiversity Report every five years, detailing action taken, its impact and a summary of Biodiversity Net Gain (BNG) activity.

The Act formalises Conservation Covenants - an agreement between a landowner and a public body to `do or not do something’ on their land for a conservation purpose – they must now be executed as deed rather than `in writing signed.’ The aim is to prevent large UK businesses from using commodities linked to large scale deforestation; regulated businesses must set up due diligence systems for each regulated commodity used in their supply chain. Powers for amending the Habitats Regulations are also included in the Act, raising concerns that protection for some rare species and habitats will be eased, enabling developers to obtain consent on constrained sites.

Biodiversity Net Gain

A mandatory 10% Biodiversity Net Gain is being introduced on developments; due to the delay between the Environment Bill being presented to Parliament and it becoming environmental law, many Local Planning Authorities (LPAs) have already introduced planning policy requirements to secure BNG on developments. The National Planning Policy Framework (NPPF) already required planning decisions to provide net gains for biodiversity and stipulates that Local Plans should pursue opportunities for securing measurable net gain through biodiversity. The local policy position has varied between LPAs mainly due to Local Plan reviews and adoptions at differing stages; some LPAs introduced policy which was ahead of the legislation by making their requirement for a minimum net gain of 10% clear and have been specific enough to refer to the DEFRA metric for assessing BNG. They can now rely on the Environment Act (EA) as further support for the policies which have been adopted or are indeed emerging within Local Plan reviews. Local Plans already include policy requiring this and BNG has been accepted by developers over the last two years.

Eleni Randle of the Eldnar Consultancy commented: “BNG seeks to facilitate measurable improvements in biodiversity as a result of development.  Previously, a development would essentially be required to provide a strategy which would outline what the mitigation and/or compensation would be for that development; this left a lot down to the professional opinions of ecologists, leaving room for debate between parties as to whether net gain was being achieved. One of the key changes now is the provision of a mechanism which specifically measures Biodiversity Net Gain or loss via a metric.”

“The minimum 10% gain must now be achieved within applications for consideration during the planning process. There are several ways to achieve this; developers must assess the most cost-effective, viable way to both deliver BNG and maximise their site. Whatever options developments have, developers will not want to compromise their developable area, with the most common objective being to get the maximum amount of return out of a site. Biodiversity could be retained within the development site i.e., allocating areas for BNG within the green space, which many sites are in any case obligated to provide, but there is also the opportunity for offsite BNG.” 

“Offsite BNG is an interesting prospect for developers and landowners as it creates a market for biodiversity units which developers can purchase and/or trade to deliver the required level of BNG for their proposals. Forward planning is needed to secure appropriate compensation which is, ultimately, only 10%. It is important to take early advice, which should involve all the usual consultants who deal with site delivery, such as ecologists, arboriculturists, archaeologists and planning consultants. The combination of this advice will be key to working out policy drivers and site constraints to establish what a site can deliver and consider viability. Assessment of viability will involve calculating whether it is most cost-effective to purchase credits off-site to deliver BNG or, alternatively, work within the site and possibly tie-in with other site constraints including, but not limited to, ancient woodland or archaeology. It may be beneficial to strategically bring sites forward together to maximise potential on one site for over-delivery of BNG which could then be traded for use on nearby sites elsewhere between developers.”

From a valuation perspective - and viability is acknowledged as key within the NPPF to sites being deliverable - it is likely that the opportunity to create BNG credits could drive up general land values: some agents are advising clients not to sell land until the value that can be captured through the creation of BNG credits is assessed. Despite this, BNG could potentially impact negatively on development land values, when considering residual valuations based on gross development value versus the cost of delivering that development. BNG will often add cost to delivering development given that, depending on the site, it could reduce developable area (if delivering BNG on site) or add physical costs in the form of the purchase of credits off-site, plus ongoing management costs depending on the habitat. Advice may be necessary, and it is available from companies such as Addland, which is a marketplace for BNG credit sales.

Eleni Randle noted that while councils are working at differing speeds across the country, some have actively adopted Local Plans which include their policy requirement for a 10% BNG, and others are even actively securing low-quality sites to improve, therefore creating BNG credits to purchase. There is an immature market, however, it is evident that the requirement for BNG could potentially create costly issues for those that have failed to plan ahead, forcing them to find credits elsewhere; this could mean the difference between sites coming forward and being deliverable or not. Credits are likely to vary in price depending on what it is worth to those who need them to unlock sites.

From a planning perspective, it is not clear how this will impact on housing delivery going forward, but there is concern that some of the Act’s provisions could affect developable areas and therefore restrict housing numbers coming forward. Eleni noted that for LPAs without a five-year housing land supply, this could cause further issues and debate surrounding the tilted balance, triggered when Council policies are out of date and/or they have failed their obligations or housing delivery or housing land supply in the context of the NPPF. There is also concern that LPAs lack resources or access to appropriate expertise to assess the supporting BNG information submitted with applications as well as the capacity and legal teams to secure the required BNG through the mechanisms, such as covenants and management plans, as part of developments. The key challenges ahead within the wider planning system will be the inconsistency of approach across the country between LPAs, which could reduce predictability of outcome, particularly for LPAs lagging in housing delivery and with dated Local Plans, as well as the relationship of BNG to general development viability.

Managing director of ecological consultancy Arbtech Robert Oates commented: “The two-year transition period for BNG is likely to be a confusing mixture of various LPAs and county councils doing their own thing, making life difficult for consultants and potentially frustrating clients. While county councils are technically going to be the regulators for BNG credits, individual LPAs determine their own BNG targets - Lichfield is 20% for example - and the speed at which they enforce mandatory net gain.” Arbtech are a knowledgeable resource on the topic of BNG and offer advice on land developments by formulating effective Biodiversity Net Gain plans.

Claire Cogar, director of archaeology at Iceni Projects said: “The relationship between archaeology and the environment has always been a fundamental one. We are developing a drawing board to boots-on-the-ground collaboration between archaeologists, agriculturalists and ecologists to utilise our understanding of historic landscapes to shape the way we address and engage with environmental considerations, and the way we design and develop our future settlements.”

The Rainforest

In line with the environmental principles underpinning the Act, a further aim is to prevent illegal deforestation linked to UK demand for products including cocoa, soya, rubber, and palm oil; protecting the rainforests is essential to avoid global temperature rises and biodiversity loss. Traceability and sustainability will be built into UK supply chains by working in partnership with other countries. Legislation will make it illegal for large businesses to use products which do not comply with local laws to protect natural areas; it will also support farmers to move to sustainable land-use systems.

Waste

Recycling systems will be boosted, business will be encouraged to create sustainable packaging, household recycling will be made easier and plastic waste will no longer be exported to developing countries. The Act introduces extended producer responsibility (EPR) which allows national authorities to make regulations requiring manufacturers to contribute to the disposal costs of the products they produce, starting with plastic packaging. Other measures include a deposit Return Scheme for single use drinks containers; charges for single use plastics to encourage the use of sustainable items; improved consistency in recycling collections in England and electronic waste tracking to crack down on waste crime along with better access to evidence and improved powers of entry. While there are legally binding targets for reducing waste, such policy changes will be subject to secondary legislation which could be a lengthy process. Measures are also included to combat fly-tipping and littering; improve labelling about recycling, and the durability of products and the shipment of hazardous waste is to be regulated.

Water

Public anger about vast quantities of sewage going into rivers and seas led to late amendments; the Act imposes a new duty on water companies and the Environment Agency to publish data on storm overflow operation annually and there is a new duty on water companies to publish near real-time information, within an hour, on the operation of storm overflows and to monitor the water quality upstream and downstream of storm overflows and sewage disposal works.

Water companies that discharge sewage into rivers, waterways will be penalised and there is a legal obligation to ensure that they progressively reduce the impacts of sewage pollution from storm overflows. The government is also required to publish plans to reduce sewage discharges from storm overflows by 1st September 2022, and keep Parliament informed on progress. The Act also includes measures to tackle pollution, reduce demand for water, secure a supply of clean and sufficient water and take flood protection measures. Drainage and sewerage management planning is to become a statutory duty and water companies must collaborate through statutory water management plans; minimise damage to the natural environment from water abstraction and update the way water and sewerage company licence conditions are altered. Critics are concerned that the Act weakens former rules on sewage pollution and query how new rules will be enforced, however, the government states that the Act will work with the existing enforcement regime in the Water Industry Act 1991 and Ofwat can issue stringent enforcement notices, while the OEP will be able to take enforcement action against the EA, Ofwat or even government. The Act gives the Environment Secretary power to update the list of priority substances used to assess the chemical status of water bodies; in the last assessment of water bodies reported in 2020, all of England’s rivers failed to meet legal standards of chemical health. While a water quality target will be put in place, it does not appear in the Act.

Clean Air

 A target will be introduced on ambient PM2.5 concentrations which damage human health. The government resisted calls to match World Health Organisation (WHO) air quality guidelines from campaigners and the House of Lords; it also avoided a firm commitment to adopting a target on fine particulate PM2.5 pollution that was less than or equal to the WHO guideline level of 10 micrograms per cubic metre as an annual average before 2030. However, the Act introduces a duty on government to bring forward at least two air quality targets by October 2022 for consultation; the first one being to reduce the annual average level of PM2.5 in ambient air, the second to be a long-term target, looking at a minimum of 15 years ahead, to encourage long-term investment and provide certainty for businesses and stakeholders.

The Act amends the Clean Air Act 1993 to give local authorities more power to reduce pollution from domestic burning; enforcement measures are to be simplified in smoke control areas. Vehicle manufacturers will also be compelled to recall vehicles which do not comply with environmental standards.

Wildlife Licencing

 The Act amends the Wildlife and Countryside Act 1981 to introduce an additional purpose for granting a protected species licence in relation to development, which is `for reasons of overriding public interest.’ It also introduces two more tests for the granting of such licenses: that there is no other satisfactory solution and that it would not be detrimental to the population of the species concerned.

Conclusions

While broadly accepted as a landmark piece of legislation, there is concern that the OEP, set up to oversee the Act, is not fully independent and therefore cannot call the government and public bodies to account. Last month, MPs voted against amendments voted for by the House of Lords which would have included greater protection for ancient woodland; restrictions on ministers’ powers to dilute habitat regulations, a legal duty on water companies to reduce raw sewage discharges and moves to guarantee the independence of the OEP, all of which would have greatly strengthened the Act.

A further perceived weakness is that while the Act requires organisations to put more focus on environmental principles, particularly pollution, the Ministry of Defence and the Treasury are both exempt from this, despite a House of Lords attempt to include both.

Although the Act seeks to give local authorities power to oversee their assets, planning departments are chronically understaffed and under-resourced, leading to fears that developers’ proposals will be accepted without detailed examination of sites’ existing biodiversity. Likewise, there are concerns that there will not be a satisfactory investigation of BNG proposals. So, while the Act brings in a huge amount of legislation to protect the natural environment, it has backed off from really exerting pressure on major organisations. Its success will depend on implementation and enforcement, and the level of impartial clout that the OED actually has, remains to be seen.

References

Parliament UK. 2021. Environment Act 2021. [Online]. Available from: https://www.bills.parliament.uk/bills/2593 Accessed 10th November 2021

Ends Report. 2021. Environment Act 2021. [Online]. Available from: https://www.endsreport.com/article/1732807/environment-act-2021 Accessed 10th November 2021

GOV.UK. 2021. Environment Act 2021. [Online]. Available from: https://www.gov.uk/government/ Accessed 11th November 2021

Parliament UK. 2021. Environment Act 2021. [Online]. Available from: https://publications.parliament.uk/pa/bills/  Accessed 11th November 2021

Edie. 2021. UK’s environment bill. [Online]. Available from: https://www.edie.net/news/11/UK-s-Environment-Bill Accessed 11th November 2021

 

Arbtech
Published: 22 November 2021
Last updated: 22 November 2021

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