As in previous years, we have produced a summary of the developments in the previous year in environmental law and a look ahead to expected developments in the current year.   This year there is far too much to cover in one piece so the article below is more of a snapshot.  We will be covering other areas which did not make it into this summary in future posts - look out for these!

Overview

In July 2024, the UK held a long-awaited general election.  Therefore, as expected in our 2024 lookahead, much of early 2024 was dominated with pre-election build-up with key policies and decisions delayed.  The period after the election has seen a number of announcements on anticipated environmental law changes and consultations/reviews underway, but limited legislation to formalise these proposals has been introduced as yet.  As a result, we expect 2025 to bring with it some significant developments in environmental law.  Due to the range of expected developments, this year’s lookahead is a snapshot only, and considers the following key areas:

• Reform of water sector regulation
• Defra regulation review
• Climate change and greenwashing
• Nature markets and planning
• Circular economy

Water sector regulatory system

The water sector has been a key area of focus for the new Labour Government and its predecessor. Shortly after the general election, the Water (Special Measures) Bill was introduced. The Bill is intended to strengthen the power of water industry regulators in the UK – holding water companies to account "where they have failed to deliver for the environment and customers and begin to restore trust in the industry".

The Bill proposes to, amongst other things:

• give Ofwat the right to prevent a water company from giving senior personnel bonuses if it deems that the water company has failed to meet certain standards; 
• introduce criminal liability for water bosses where their companies breach the law; 
• include a duty on the Environment Agency to impose automatic fixed monetary penalties for certain offences including pollution control and offences relating to water resources; 
• lower the standard of proof required for certain offences from the criminal standard ("beyond reasonable doubt") to the civil standard ("on the balance of probabilities") to enable the Environment Agency to issue fines more rapidly for those offences; and
• introduce an obligation on water companies to prepare and publish a pollution incident reduction plan before 1 April each year. 

More widely, an Independent Commission has been appointed to review the water sector regulatory system.  The Commission will consider the stability of the industry, the regulatory framework and the role of Ofwat (among other things) and will provide a report including proposals on next steps by the second quarter of 2025. 

These developments are set against the backdrop of the recently announced final determinations for the 2024 Price Review (PR24), which saw Ofwat approve £12 billion of funding to be spent on nearly 3,000 projects which aim to reduce spills from storm overflows. It is possible that 2025 could see some challenges to the PR24 determinations.

Defra Regulation Review

In October 2024, Defra announced that it had appointed economist Dan Corry  to carry out an internal review into the regulation and regulators at the Department for Environment, Food & Rural Affairs..  The review will examine whether the inherited regulatory landscape is fit for purpose and develop recommendations to ensure that regulation across the Department is driving economic growth while protecting the environment. Whilst Defra has not announced when the review is expected to conclude, we may see some development on this during the course of 2025. 

Climate change and greenwashing 

UK CBAM: As trailed in our 2024 lookahead, UK CBAM was expected to be implemented by 2027.  In October 2024, the Government published its response to a policy design consultation held in early 2024, which confirmed that UK CBAM will be introduced on 1 January 2027.   The Government response also confirmed that UK CBAM will place a carbon price on some emissions-intensive aluminium, cement, fertiliser, hydrogen, iron and steel goods imported into the UK.  Glass and ceramics will not be included from 2027 on the basis that they are less exposed to carbon leakage risk but will be considered for future inclusion in UK CBAM.  We expect to see affected businesses seek to understand their obligations under UK CBAM during the course of the next year or so and make preparations before the regulations come into effect. 

UK ETS: In early 2024, the UK ETS Authority consulted on proposals to expand the UK ETS to include energy from waste and waste incineration from 2028.  Further details on that consultation are set out in our post here.  The UK ETS Authority is currently considering the feedback it received.  In October 2024, the UK ETS Authority also consulted on a proposed move of the start of the second free allocation period from 2026 to 2027, to align it with the introduction of UK CBAM.  The outcome of the consultation is awaited, but it seems likely that the second free allocation period will be pushed back.

Sustainable aviation fuels: The SAF Mandate came into effect on 1 January 2024, having been introduced in late December 2024. The SAF Mandate is “the UK’s key policy mechanism to secure demand for SAF” and places a legal obligation on fuel suppliers in the UK to increase the amount of SAF they supply over a period of time.  Certificates will be provided to suppliers which reflect the amount of SAF they supply and the level of greenhouse gas emissions reductions which they secured as a result. In 2025, 2% of fossil jet fuel supplied by each fuel supplier must be SAF, and this will increase annually to reach 10% in 2030 and 22% in 2040. The SAF Mandate also includes a ‘power-to liquid’ obligation which will be introduced in 2028 and is designed to “accelerate the development” of power-to liquid fuels.

Climate change liability and greenwashing: 

Climate change litigation: 2024 saw some significant Court decisions in relation to climate-related liability, including the UK Supreme Court’s decision in the Finch case, which concluded that scope 3 emissions should be assessed by planning authorities when considering whether to grant planning permission, and the Dutch Shell case in which the Court of Appeal of the Hague held that whilst Shell has a duty of care to reduce its greenhouse gas emissions to combat dangerous climate change, it does not have a specific emissions reduction obligation.  We expect 2025 to be another pivotal year for climate-related litigation, with the number of cases likely to continue to grow. A key ruling to look out for is the advisory opinion of the International Court of Justice (ICJ) on the obligations of states to address climate damages.

Greenwashing: Greenwashing and climatewashing are anticipated to receive continued attention into 2025 from regulators and consumers alike, as the public’s (and NGOs) awareness and targeting of green claims and willingness to challenge those claims continues to grow. 

Until recently, the main consequence of greenwashing has been negative publicity/public censure, largely trailblazed by the Advertising Standards Agency (ASA).  However, from April 2025, the Competition and Markets Authority (CMA) will have the power to impose fines for breach of consumer law. The Digital Markets, Competition and Consumers (DMCC) Act, which was enacted in Summer 2024, will give the CMA the power to impose fines of up to 10% of a company’s global turnover for breaches of consumer law.

There were further greenwashing regulatory developments occurring both at home and in Europe during 2024, including the FCA’s introduction of its anti-greenwashing rule and guidance and the EU’s Empowering Consumers Directive, which amends the provisions of the Unfair Commercial Practices Directive and the Consumer Rights Directive to introduce obligations to provide clear and relevant information concerning environmental or social claims and circularity aspects of products.  With the EU’s Green Claims Directive likely to reach final agreement this year, we may well see more specific anti-greenwashing regulations in the UK in the near future, which will most likely be implemented by way of the DMCC Act.

Nature markets and planning

Biodiversity net gain: Mandatory biodiversity net gain was introduced in 2024 and has received international attention.  Some researchers have raised concerns around most habitat creation occurring on development sites rather than in areas of strategic importance throughout the UK.  Concerns have also been raised around capacity gaps and the monitoring and enforcement of the delivery of BNG.  In late December, Mary Creagh, the Nature Minister, reportedly told a session of the Environmental Audit Committee that DEFRA is reviewing the policy and whether it is working as intended.  Therefore, this may be an area of development in 2025. 

Biodiversity standards: DEFRA’s Green Finance team has recently been consulting on a new Biodiversity Standard from the British Standards Institution (BSI).  The standard will enable nature project suppliers to sell biodiversity credits which have been assessed against a quantifiable standard, therefore increasing the integrity of those credits. With over 20 biodiversity schemes in the UK already and the deadline for Net Zero drawing closer, 2025 is likely to bring more focus on these schemes.

30by30: The Government recently published its vision for delivering on the UK’s 30by30 target and the criteria that can help the UK meet this target.  For more information on the relevant criteria, take a look at our article here.  Much of the detail around how 30by30 will be delivered is yet to be provided and a 30by30 strategy is expected soon.  Further details on how related Labour manifesto promises will be brought forward, such as the introduction of three new National Forests, are also awaited. 

Nutrient neutrality: In December 2024, the Government published the ‘Planning Reform Working Paper: Development and Nature Recovery’.  The paper proposes a new approach to development: to utilise funding from developments to provide environmental improvements at a larger scale and to move responsibility for identifying ways to address environmental impacts from project-specific assessments to wider strategic assessments.  The state would assume responsibility for delivering any strategic actions identified.  The Government is seeking views on the plans outlined in the paper so it is likely that discussions around the new proposals will continue into 2025.

Circular economy

Circular economy: The circular economy is a stated focus of the new Labour Government. In November 2024 the Circular Economy Taskforce was established. The Taskforce is required to produce a circular economy strategy for England. The strategy will be underpinned by roadmaps for reform in respect of different sectors. The first phase of the Taskforce’s work, which involves agreeing definitions, metrics and priority sectors for intervention is expected to conclude in January 2025.  Phase two, which involves preparing a circular economy strategy for the next ten years, is expected to complete in October 2025. 

Extended producer responsibility for packaging waste: On 1 January 2025, The Producer Responsibility Obligations (Packaging and Packaging Waste) Regulations 2024 were made.  The regulations are intended to consolidate the packaging regulatory framework into one piece of legislation and clarify areas of ambiguity, whilst also incorporating some significant changes to the current packaging EPR regime.  Notwithstanding this, the same key obligations remain to: (i) gather and report packaging data and (ii) pay an annual fee based on that data.  There will be a period of transition between the new regulations and the old regime, and therefore previous obligations on businesses (required in England under The Producer Responsibility Obligations (Packaging Waste) Regulations 2007 and The Packaging Waste (Data Reporting) (England) Regulations 2023 may continue to apply to certain producers for a certain period of time.  Businesses should make sure that they are aware of their obligations under the new regulations and are able to comply.  

Waste incineration: The Government has announced that new waste incinerators must meet stricter environmental conditions before they are granted planning permission, after figures indicated that almost half of waste collected by local authorities in 2022 to 2023 was incinerated.  It is also anticipated that, as other circular economy schemes progress, the need for new incinerators will reduce.  New projects must demonstrably help lower the amount of non-recyclable waste sent to landfill and they must be built Carbon Capture ready.  Existing obligations around air pollution and other environmental standards must also continue to be met. It remains to be seen how these conditions will be implemented in 2025.

Permitting reform: As trailed in our 2024 lookahead, reform of the waste carriers, brokers and dealers’ registration regime has been expected for a number of years.  These changes are still awaited and we see some movement on this front in 2025 as waste crime has begun to receive more of a regulatory focus.  In the meantime, other developments have been brought forward in England, including proposed changes to waste charges - our article here contains more information on those proposed changes. 

As is evident from the topics outlined above, 2025 is likely to bring significant developments in environmental law across all four nations of the UK.  If you have any questions or would like further information on how these developments may impact you please contact Michael Barlow, Victoria Barnes or another member of the Environment team.