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PHILIPPA WOOD PROVIDES AN UPDATE ON GENDER PAY GAP REPORTING REQUIREMENTS

This year has seen the 100 year anniversary of women getting the right to vote.  Serena Williams recently jumped up in defence of women’s rights in the face of criticism of her recent behaviour towards an umpire. We have never been so aware of the alleged differences between the treatment of men and women.

Philippa Wood, from Prospect’s employment team, provides an update on gender pay gap reporting.

Reporting Obligation

Reflecting this mood is the ECHR, introducing for the first time last year obligations on employers with 250 employees or more to report after each full year on any “gender pay gaps” in their workforces. This year, the results are still coming in, with some companies still (for some reason!) resisting publishing their reports. However, in the main they already reveal an unfortunate and continuing trend.

Gender pay gap reporting requirements hit their one-year deadline last month (September 2018), kicking in what are now mandatory duties for larger companies to disclose the difference in earnings of men and women.

Findings to Date

The UK has been revealed to have one of the highest gender pay gaps in Europe. The median across the economy is 18% in favour of men, with pay gaps of over 40% not uncommon in some sectors.

Whatever the reasons – outdated attitudes, differences in education, domination of men in the highest paid sectors of the economy – the report highlights that businesses also need to take responsibility for “the impact of their own policies, practices and culture” and recommends that the reporting obligations go even further in the future and require organisations to explain gender pay gaps and action plans to overcome them.

“Organisations cannot rely on excuses about societal attitudes and trends to avoid examining their own contribution, conscious or otherwise, to their gender pay gaps and the effectiveness of their measures to address them. They must take responsibility for closing these gaps by taking effective action.”

In light of evidence that the gender pay gap is higher in smaller businesses the report also recommends that the Government “widens the net of organisations required to publish gender pay gap data to those with over 50 employees”.

Economic Effects & Sanctions

The reasons for the report are widely debated. However, the government maintains that it is of vital importance to the economic health of the country that these gaps are narrowed. Influential studies, including Kinsey, maintain that there is a high economic cost in failing to “secure and reward the contribution of women in the workforce”, estimating that, were the gender pay gap to close, this could add £150 billion to GDP in the next 7 years.

With regards to compliance, reporting obligations were found to have been (in general) effectively enforced by the ECHR, although there was a lack of clarity over the sanctions, which arguably are not effective enough to put people off ignoring their responsibilities.

The present sanctions are argued to be too weak and some organisations (Allen & Overy being the worst offender) delayed publication, opening the door to criticism of the powers of the EHRC.

If the report is heeded, many more organisations should in the future be under no doubt that the Government appears serious about closing this gap, or at least getting full disclosure from businesses to arm it with the means to start doing so.

In conclusion, the report is clear in its support of continued and widened reporting obligations, stating: “Increased transparency should, over time, improve fairness. And a more equal role for women in the workplace will contribute to economic growth.”

About the Author

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

Philippa Wood is a solicitor with many years’ experience advising on all areas of contentious and non-contentious employment law. Her clients include individuals and companies of all sizes from entrepreneurs to global brands. Philippa qualified as a solicitor in 2005 after working for 13 years in the media, most notably being part of the start-up team for two national cable television stations in the 1980s and 90s. 

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For any questions about equal pay or concerns over or queries about possible sex discrimination claims, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here

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RISK MANAGEMENT IN UK NEW NUCLEAR – EXPANSION OR EXPLOSION?

As HMG grapples with challenging decisions on how best to sustain energy security in the UK through potential investment in new nuclear power generation, ultimately it is appropriate risk management approaches that should remain at the heart of such decisions.

Mark Vickers, from Prospect’s Project Finance team, sets out an introduction to the issue.  

Risk Management & Nuclear New Build

There are few major infrastructure projects which share the fiendish complexity, costs and regulatory matrix of a new build nuclear power station.  Whether the UK public purse (and electricity consumers) end up supporting directly (or indirectly) SMRs or large-scale reactors (or a combination of technologies), the allocation and management of risk is a fundamental driver of how these projects should be developed.

The risk allocation is not simply between public and private balance sheets but also between the UK and overseas governments. As part of a comprehensive risk management approach, insurances can play an important role in this process, during design, construction, commissioning, operation and decommissioning phases.

In common with other safety critical industries, nuclear power developments are very closely controlled through national and international regulations, which govern all critical safety and security aspects. However, even the most comprehensive legislation and stringent supervisory  regimes can prove susceptible to human error, poor management culture and inappropriate behavioural standards.  No amount of insurance can remove these risks. Indeed, continuing corporate governance and accounting failures in non-nuclear industries, such as at Carillion and Tesco, demonstrate that the poor general business risk management lessons of the past need to be relearned with greatly sustained and continuing effort. The apparent or proximate cause of a failure of risk management processes may not in fact be the root cause.

Approach

So, against a more dynamic risk environment, whether arising from emerging cyber, domestic terrorism or climatic risks (or simply the changing nature of traditionally well understood nuclear risks), what risk management approach might HMG now adopt?

The environment for high risk investments in new nuclear (as indeed in many other infrastructure sectors) can increasingly be characterised as being “VUCA” (i.e. volatile, uncertain, complex and ambiguous).   As both promoter and steward of the UK’s industrial strategy, it is encouraging that HMG recognises the place for new nuclear developments in the National Policy Statement.  Nevertheless, a more holistic, less industry specific and non-siloed approach to nuclear risk management would seem appropriate for the modern age.

Whistleblowing & IT Security

For example, whistleblowing policies in nuclear projects will only prove effective if staff have the moral courage to challenge openly their leaders’ decisions where they believe such decisions clearly erode the integrity of risk management, safety or security standards. Further, the risks of embedded design faults, malevolent IT technology malware or inadequate staff background checks may require closer integration with national cyber security strategy and relevant expert agencies such as GCHQ.

Conclusion

New nuclear is certainly no exception to the typical infrastructure risks such as construction delays and cost overruns. These are present in all major infrastructure projects.  However, nuclear project risks increasingly exist alongside other, complex and emerging societal risks, which demand a more sophisticated analytical understanding and approach, especially so where the public purse is the ultimate risk taker.

About the Author

Mark Vickers is an experienced public and private sector complex risk consultant, with a focus on financing projects in energy and infrastructure. He was Director of Project Finance for NuGen’s planned 3.8GW new nuclear plant in Cumbria in the UK and is a director of a new energy start up technologies platform. Mark was previously a commercial & investment risk advisor at The Crown Estate, focused on new marine energy technology investments in UK waters, such as wave & tidal power, floating wind turbines and offshore transmission grids.

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here

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AN ANALYSIS OF THE CONSULTATION ON AN ENVIRONMENTAL PRINCIPLES AND GOVERNANCE BILL: PART II

Perhaps unnoticed, Defra’s consultation on ‘Environmental Principles and Governance after the United Kingdom leaves the European Union’, is probably the most important consultation affecting environmental laws to be introduced for at least the last ten years. It goes right to the heart of how environmental laws will, or should, or may not be, enforced, after the UK leaves the EU.

The second part of this series addresses losses the UK may suffer in terms of environmental law enforcement once it leaves the EU, as well as the likely aims of bodies set up under the Environmental Principles and Governance Bill  and environmental justice concepts  in operation in  the USA.

What the UK will lose in terms of environmental law enforcement on leaving the EU

On top of the existing failures to deliver effective enforcement of existing laws, the U.K. will now, after Brexit, lose:

  • Treaty obligations reinforcing environmental laws;
  • enforcement by the European Commission;
  • enforcement by the Court of Justice of the European Union;
  • the ultimate sanction of Member States risking fines for continuing
    breaches of EU law;
  • the legal requirement upon government to ensure that penalties for
    breaches are “effective, proportionate and dissuasive”; and
  • the right of individuals to activate enforcement of EU environmental laws, at no cost, by raising complaints with the European Commission.

Environmental governance                                                                                              

Any body, or set of bodies, set up, under the U.K. government’s proposed Environmental Principles and Governance Bill and/or parallel legislation in the devolved Parliaments will need to aim to deliver a consistent approach to environmental law enforcement across the UK; to be independently financed, established by statute and answerable to Parliament(s); to have the right to take up and investigate individual citizen complaints of breaches or non-enforcement of environmental laws without the prohibitive costs of judicial review; and to be able to hold government and public bodies to account.

Issues of Environmental Principles

With respect to the principles covered by section 16 of the European Union (Withdrawal) Act 2018 , as a minimum:

(a) government and public bodies at all levels should have regard to them  when discharging their functions; and

(b) where they are already embedded in retained EU law, there should be a commitment by government to reflect that, and not to dilute their application.

Environmental Justice

In America, there are much better developed concepts of environmental justice in the way in which environmental laws and regulation are applied. As an example, the Presidential Executive Order for 1994 stated that:

…”to the greatest extent practicable and permitted by law…each Federal agency shall make achieving environmental justice part of its mission by identifying and addressing as appropriate disproportionately high and adverse human health or environmental effects of its programs, policies and activities on minority populations or low-income populations.

Another way that this was explained to the author of this article, by Professor Robert Kuehn of Tulane University Law School was as follows:

The observation that most community environmental struggles are not won solely through the hands of lawyers is profoundly accurate. If equal enforcement of environmental laws is to be achieved, then all aspects of the enforcement process need to be opened up to residents of affected communities – their participation in making enforcement decisions must be sought out, their opinions and desires respected and addressed, and their ability to protect their own communities and police the facilities in those communities enhanced.”

Concepts of environmental justice, and the approach to law making and enforcement recommended there by Professor Kuehn, might well have helped to avoid some of the worst aspects of the Grenfell fire disaster. It may be time to consider what lessons there are to learn from American approaches to environmental justice when considering environmental governance in the UK.

The fundamental structures of enforcement of environmental laws are being re-designed from scratch. At a time of some legislative and constitutional turmoil, environmental lawyer, and those interested in effective environmental laws, need to identify what really matters, and to speak up for it.

Prospect Law Ltd, September 2018

About the Author

William Wilson is a specialist environmental, regulatory and nuclear lawyer with over 25 years experience in government, private practice and consultancy. He worked as a senior lawyer at the UK Department of the Environment/DETR/Defra, and helped to build up the environmental and nuclear practices at another major law firm, as well as running his own environmental policy consultancies. William has experience of all aspects of environmental law, including water, waste, air quality and industrial emissions, REACH and chemicals regulation, environmental protection, environmental permitting, litigation, legislative drafting, managing primary legislation, negotiating EU Directives and drafting secondary legislation.

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here

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CREATING SHARED VALUE IN COMPLEX ENVIRONMENTS: PART II

Part II of this series will focus on a company’s internal structures and external relations department, and the impact these can have on a company’s relations with its community stakeholders. There will also be discussion of the promotion and protection of human rights in the context of a social license to operate.

Internal Management Issues and the Acquisition of a Social License to Operate

Attempts to acquire a SLO will succeed to the extent that its core purpose is conducive to the acquisition of a SLO. Initiatives which create Shared Value among relevant stakeholders will succeed to the extent that they are fully integrated into core commercial decision-making policies, designed to deliver sustainable, long term success.

Commercial decisions that resolve societal problems are fundamental to the achievement of an effective SLO.

There is clear evidence that the manner in which the internal departments of a company are structured, and relate to each other, has a direct impact on the success of a company’s relations with its community stakeholders. The way a company conducts its day to day core activities is more important than its community relations programmes in determining how the company is perceived by local stakeholders.

Fundamentally, it is the behaviour of the Company as a whole, not just its external relations department, that drives people’s perceptions of the Company.

It is essential that policies conducive to the acquisition of a SLO are integrated into the decision-making cycles of all departments. For example, the HR Department determines who gets hired, the Contracts Department sets policies that can favour local contractors and suppliers, or make it difficult for local businesses to benefit from the corporate presence. The Accounting Department can facilitate administrative procedures and ensure speedy payment of compensation, or set complicated and delaying administrative requirements.

All the best efforts of an external affairs department can have little impact if the hiring procedures of a company are seen as unfair, security policies are seen to be oppressive or local contractors are not paid on time.

External Engagement – A Concern for All Departments

Safety issues are regarded as the responsibility of everyone on the workforce, regardless of their particular role. Similarly, external relations should be regarded as a responsibility of all, rather than just the External Affairs Department – which should coordinate rather than implement.

When an external relations department is the sole location for community relations experts, this often means that their expertise is required to resolve community problems only after they have already occurred.

It is essential to ensure that ways are found whereby external relations can be transformed from a fire-fighting role, to one of internal service provision. It is also important that ways are found to broaden the ownership for external relations within the organization:

Communities should be approached as partners, rather than as potential risks to be mitigated;

  • Every member of the company should receive training in community affairs skills;
  • Representatives from all departments should be invited to participate in community meetings;
  • The quality of the company’s relationship with local stakeholders should be incorporated into performance reviews for all staff – the number of community related incidents might be linked to the determination of bonuses, or to provide company wide awards for staff of departments that are judged to have made a positive contribution to company-community relations;
  • Ways should be identified to develop in-house capacity in conflict-resolution skills.

Guidelines for the building of a SLO in complex environments

Human Rights (VPSHR)

VPHSRs state that risk assessments are vital to the promotion and protection of human rights. These risk assessments must consider the available human rights records of public security forces, paramilitaries, local and national law enforcement as well as the reputation of private security. Awareness of past abuses and allegations will help companies avoid recurrences as well as promote accountability going forward.

Companies must take care to ensure that their partners are consistent with the protection and promotion of human rights. The following measures will help ensure this:

  • Regular consultation between stakeholders about the impact of security arrangements on those communities, and clear communication between all stakeholders about the need for ethical conduct and respect for human rights by public service providers;
  • The primary role of public security agencies should be to maintain the rule of law, including the safeguarding of human rights, and deterrence of acts which might threaten personnel and facilities;
  • Individuals credibly implicated in human rights abuses must not be allowed to provide security services, and force should only be used when strictly necessary and to an extent proportional to the threat, and the rights of the individual should not be violated while exercising the right to exercise freedom of association and peaceful assembly, the right to engage in collective bargaining or other related rights of employees– as recognised by the Universal Declaration of Human Rights and the ILO Declaration on Fundamental Principles and Rights at Work;
  • Companies should ensure the holding of structured meetings with public security on a regular basis to discuss security, human rights and related work-place safety issues. Support should be given to the host nation governments to provide human rights training and education for public security, as well as in their efforts to strengthen state institutions to ensure accountability and respect for human rights;
  • In respect of allegations of human rights abuses there should be active monitoring of the status of any on-going investigation, and pressure for proper resolution of these issues, in consultation with host nation government and relevant NGOs. The security and safety of sources must be protected and additional or more accurate information that may alter previous allegations must be made available as appropriate to concerned parties;
  • Companies must ensure that private security companies observe company policies in regard to ethical conduct and human rights, the law and professional standards of host nations, emerging best practice developed by the industry, civil society and governments and the promotion of the observance of international humanitarian law. In particular private security contractors must act in a lawful manner, exercising caution and restraint in a manner consistent with international guidelines on the use of force, including the UN Principles on the Use of Force and Firearms by law enforcement officials and the UN Coode of Conduct for Law Enforcement Officials as well as emerging best practice.
  • Furthermore, private security companies must have policies regarding appropriate conduct and the use of force, which are capable of being monitored. Such monitoring should encompass detailed investigations into allegations of abusive or unlawful acts, the availability of disciplinary measures sufficient to prevent and deter, and procedures for reporting allegations to relevant local law enforcement authorities when appropriate. All allegations of human rights abuses by private security must be recorded, and credible allegations investigated. Once those allegations have been forwarded to the relevant law enforcement authorities, companies should actively monitor the status of investigations and press for their proper resolution.

Part 3 of this series will cover corporate engagement with NGOs and the need for formal engagement, at the outset, between NGOs and corporates on various CSR initiatives. There will also be an overview of the indications of a positive NGO-Corporate relationship, as well as discussion of the need to integrate a grievance procedure when consulting local communities.

Prospect Law Ltd, 7th September 2018

About the Author:

Mark Jenkins advises clients on Corporate Social Responsibility (CSR), security and risk management issues affecting the viability of on and off-shore energy, mining and infrastructure sector projects in Europe, the Middle East and Africa. Mark’s experience has been focussed on creating reliable community support for projects through the development of a Social License to Operate (SLO) based on effective CSR initiatives. The success of these initiatives has been based on a thorough understanding of local environmental, commercial, and cultural dynamics, especially Islamic ones.

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here

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TIME TO “GO WITH THE FLOW”? FLOW BATTERIES – A NEW ALTERNATIVE TO LITHIUM ION?

Unlike Lithium, Sodium Ion and other solid-form batteries, Redox (Reduced Oxygen) Flow batteries employ a liquid electrolyte to store the electric charge. Ions are exchanged across the membrane separator (or exchanger) whilst two liquids are pumped around their next-together doughnut shaped chambers.

Introduction

The latest generation of Vanadium Redox Flow batteries might be regarded by some today as ‘state of the art’. However, the Flow battery itself has a long-established history and, importantly, a track record of safe and reliable performance.  Pioneered in the 1970s at Harwell Research Laboratories, the first Flow batteries were first deployed for NASA moon space missions, although they are now embedded within larger-scale power plants and transmission grids. Today, Flow batteries are increasingly seen as the energy storage system of choice for wind power & solar PV grids; as well as for resilience projects and emergency power supply applications.

Whilst demand for this kind of battery has increased, the renaissance of the Flow battery itself was seeded in a technological breakthrough: the use of Vanadium as the electrolyte instead of other metallic-acid compounds. The discovery was being able to use exactly the same (Vanadium) compound in both chambers for the first time, only at two different states of oxidisation. Previous Flow battery designs used two chemically different (typically Bromide) compounds, with one in each chamber. This solved a long-standing cross-contamination problem associated with two chemically-different liquids, which could seep into the adjacent chamber through the separator, impairing performance and reliability. Vanadium electrolyte has been shown to resolve the problem and Vanadium Redox Flow batteries today can offer endurance and reliability virtually unmatched by any solid-form battery.

As Vanadium has a lower energy density than Lithium, a typical containerised Flow battery will occupy a larger footprint than its Lithium ion counterpart. However. as Flow batteries are not prone to overheating like Lithium ion units, their containers can be stacked on top of each other up to three decks high, in order to partially offset this disadvantage, although the final footprint is still larger.

As discussed below, Flow batteries can offer the end-user cost savings, trading and flexibility advantages. Also, they can offer improved business resilience for renewables and emergency back-up projects which need longer-duration storage, and prices in the demand side response auction and private-wire markets with utilities are already beginning to reflect this.

Flexibility Benefits

  • Flow battery cells do not degrade as fast and round-trip efficiency (the energy loss every charge or discharge) is roughly constant at circa 75%. Lithium cells on the other hand can deteriorate rapidly, reducing efficiency over time, although their starting-point efficiency is significantly higher, at circa 85% +.
  • Flow batteries are more flexible in that they can charge up and discharge to any 0% to 100% State of Charge (SoC) level, at any time and any number of times without damaging the battery. Thus, almost all 100% of the ‘boilerplate rated’ MWh storage capacity purchased can be used. This contrasts with many Lithium ion batteries, which cannot safely self-interrupt or reverse-flow mid cycle. The charging or discharging is often governed by strict SoC parameters set by the manufacturer, typically 20% to 80% lest it damage the battery cell or invalidate the warranty. Consequently, Flow batteries may be the better choice for rental or short-term leasing operators.
  • Lithium batteries will drain power and run flat if left unused over time, wheras Flow batteries will always hold their charge and can cold start at any time, even if unused for days, months, years even on end. This makes Flow batteries especially suited for business critical, isolated wind and solar facilities, as well as emergency back up facilities.
  • Flow batteries are modular so that, crucially, the storage (kWh) and power (kW) components can be separated. It is possible to increase a Flow battery’s storage capacity retrospectively, simply by adding new tanks. Likewise, power rating may be upgraded by fitting extra cell-stacks. This ‘retro-fit flexibility’ can project risk and configuration costs and in many cases avoid wastage and further cut capital expenditure at the outset. In theory, a Flow battery site can store an unlimited reserve of electricity.

Economic Benefits 

  • In some instances, a Flow battery can work out significantly cheaper than a Lithium Ion battery after capital costs, operating costs, depreciation losses, and warranty and battery disposal are all taken into account. Although the initial CAPEX cost for a Flow battery will be higher.
  • For example, OPEX may be lower as Flow batteries are more robust and relatively ‘maintenance free’. They may not need such extensive monitoring, ‘hands on’ management or elaborate ‘fire protection’ systems.
  • Flow batteries are longer-lasting. Built to last 25 years with option to extend life to 45. Lithium ion batteries have a shorter or more variable lifespan, perhaps 8 – 12 years. Or possible less, subject to usage and degradation. This is one reason why Flow batteries have lower capital depreciation costs.
  • This 25 year lifespan will often match the intended project life of the micro-grid asset which the Flow battery used to optimise. This natural investment match can lead to more accurate and potentially higher NPV valuations for a project overall.

Environment, Fire Risk and Business Resilience Considerations

  • As well as Lithium itself, such batteries typically entail the mining and refining of Cobalt, Neodymium, Terbium, Lanthanum and Dysprosium – most classified as scarce ‘rare earth’ metals which are becoming ever more costly in human as well as financial terms. Vanadium, on the other hand, is a relatively cheap, produced in many different countries by large mining corporations.
  • Lithium is unstable. Although very rarely, Lithium ion batteries have a documented history of catching fire, invariably followed by an explosion. Should they over-heat (possibly due to an impurity causing a short circuit, especially if near one of the terminals) then thermal runaway can taka hold quickly. Any resulting fire can be very destructive and can burn for days. Elaborate fire prevention systems may be built into the battery container but no ‘fire prevention’ system is true to its word. Furthermore, once the system kicks in, thebattery down, cutting the power and undermining the resilience it was supposed to provide. In all cases, such risks may affect insurance premiums and underwriters will certainly need informing either way lest cover be voided after any type of battery is installed.
  • Vanadium is a safe and benign metal. Dissolved in dilute sulphuric acid, this liquid electrolyte has a PH value akin to that of a standard car battery. Although it exists the fire risk is very much smaller and the risk of runaway or an explosion is zero. Another reason why Flow batteries may be more suitable to micro-grid, emergency generation or rental companies. Especially micro-grid project developers in very hot or humid countries, military installations and solar arrays situated out in the dessert where the chance and financial consequences of a fire may be high.
  • Just like there is no such thing as a true ‘fire prevention system’, there is no such thing as a ‘recyclable lithium battery’ either. Spent Lithium remains toxic. It is also expensive to dispose of. Financial models need to consider this extra cost vs. Flow or other batteries although not all of them do. The Vanadium on the other hand can truly be recycled (to the tune of 99%): the electrolyte can be returned for use in the same battery from whence it came, over and over again losing 1% each 5 or so years the liquid needs replenishing. And once the 25 or 45 year life is up, the waste disposal cost for a Flow battery is significantly less.

Conclusion

Flow batteries are not optimal for every application, and are significantly more expensive to buy than most Lithium ion batteries. However, once lifetime running, servicing, warranty and fuel cell (stack) replacement costs are taken into account, Flow batteries can work out cheaper and cost almost half the levelised-lifetime cost of the equivalent Lithium ion system, where the battery is cycled twice a day or, as is often the case with wind, solar PV and especially network projects, more frequently still.

About the Author:

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts. 

This article remains the copyright property of Prospect Law and Prospect Advisory and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

Prices quoted are indicative and may be based on approximate or readjusted prices, indices or mean levels discussed in the market. No warranty is given to the accuracy of any view, statement or price information made here which readers must verify.

Dominic Whittome is an economist with 25 years of commercial experience in oil & gas exploration, power generation, business development and supply & trading. Dominic has served as an analyst, contract negotiator and Head of Trading with four energy majors (Statoil, Mobil, ENI and EDF). As a consultant, Dominic has also advised government clients (including the UK Treasury, Met Office and Consumer Focus) and private entities on a range of energy origination, strategy and trading issues. 

For more information or assistance with a particular query, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

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CREATING SHARED VALUE IN COMPLEX ENVIRONMENTS: PART I

Part I of this series will focus on the three categories for understanding and analysing company-community relations – Benefits Distribution, Accountability for Impacts and Appropriate Behaviour. There will be analysis of how these categories combine in the building of the kind of relationships necessary for the building of an effective Social License to Operate (SLO).

I am often asked to share thoughts on how corporates can Create Shared Value in complex environments, thereby reducing the significant risk posed to their operations by loss of a Social License to Operate.

Company – Community Relations

A schematic representation of how the three relationships work is below:

 

 

 

 

 

 

Accountability for Impacts

An effective SLO plan will acknowledge the positive and the negative side effects of mining operations on local, and national communities. When a community sees that a company is concerned by, and accepts responsibility for the unintended and long term side effects of its operations, then they will interpret this as a sign that the company cares about them and their lives.

Acceptance of responsibility for any negative effects of commercial operations, such as the Curse of Resources/Dutch disease, is a good example of such acknowledgement. Crucial to the acceptance of accountability for impacts is the need to discuss a long term vision with communities, listen to their concerns about possible negative impacts and provide long term contracts and training plans.

Fair Benefit Distribution

The right approach to benefits distribution is based on the principle of fairness.

Fairness refers to how people in communities perceive the distribution of benefits and their share of these benefits. Unsurprisingly, the key is to ensure that deserving people get what they deserve, and those who do not deserve rewards do not get them. Furthermore, many communities assign value to immaterial and intangible things such as historical and traditional hierarchies, social relations and spiritual qualities. SLO strategies must ensure that people feel they receive non monetary benefits – as well as payments – as a result of a company’s presence. If communities believe the company is fair, it will be reassured. This will reduce needless competition and fear, as well as reinforcing the long term view over short term gains. Transparency is a key component of fairness. A divider and connector analysis will guide ways in which a SLO plan can emphasize and reinforce common and collective interests, among communities.

Appropriate Behaviour

How a company behaves towards communities sends messages about respect and disrespect, trust and mistrust and whether or not it cares, or does not care about them. The behaviour of a company, including its contracted agencies, has a direct impact on how communities view the company. More messages are communicated to local communities by company behaviour than by words or publications. Getting it right involves the showing of respect, trust and care for the communities affected by a company’s operations – respect, trust and care sets the tone for company community relationships, and mitigates risk.

There are many ways in which a company can display these qualities, including:

  • good social interaction;
  • identification and mapping of culturally important sites;
  • open engagement;
  • minimization of overt displays of security;
  • following through on commitments;
  • responsiveness to community inquiries;
  • acceptance of corporate accountability to local communities.

Creation of Shared Value (CSV)

John Browne, a former CEO of BP, has emphasized the risk posed to corporates by having the wrong relationship with society, of neglecting those aspects of their activity that go beyond narrowly legal requirements. For Browne, activities that make a social contribution should be construed as being part of a company’s central purpose.

Browne argues that companies should engage with society in a radical, rather than a grudging and episodic manner. He says that the “definition of purpose” is changing for many organisations, with an increasing acceptance that shareholder value should be seen as an outcome, rather than the goal of commercial activity. Browne says that the integration of Corporate Social Responsibility (CSR) and sustainability into core business activity is tough, but that there is a clear business imperative for the extractive industry to improve its relations with host communities. Across the world extractive communities lose billions of dollars each year as a result of community strife. In particular Browne advocates:

  • Building a portfolio of strategic programmes with long term economic development strategies, rather than making one-off, reactive investments;
  • Creating processes which integrate social investment staff into core business decision making;
  • For a switch from incentivizing on-time, low cost delivery to incorporating social performance into compensation packages;
  • Measuring investments in communities by dollars spent to measuring investments in communities by societal and business outcomes;
  • Building relationships with governments/NGOs and community leaders to help solve societal problems.

Part II of this series will focus on a company’s internal structures and external relations department, and the impact these can have on a company’s relations with its community stakeholders. There will also be discussion of the promotion and protection of human rights in the context of a social license to operate.

Prospect Law Ltd, 21st August 2018

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LEGAL ADVICE FOR BUSINESSES ON ‘NO-DEAL BREXIT’ PLANNING

The European Commission published a briefing on ‘no-deal Brexit planning’ on 19 July 2018, followed by sector briefings covering many different industries and areas, and emphasised the need for all organisations and businesses to be prepared for all outcomes when the UK leaves the EU on 29 March 2019.

The UK government is due to start publishing its own technical notices about preparations for a no-deal Brexit as part of its contingency planning, and the notices will start appearing between 23 August and the end of September 2018. Sources suggest that these notices will cover 83 or more different topics, many of them of critical importance to our clients, such as chemicals regulation, civil nuclear power, electricity trading, environmental standards, nuclear research, oil and gas, renewable electricity and so on.

Prospect Law Ltd is already advising on many aspects of Brexit and will be following these developments closely. Please continue to monitor our social media for additional updates.

For further information, advice on how these developments may affect your business or to be referred to a specialist member of the team who can help, please contact Edmund Robb on er@prospectlaw.co.uk or 07930 397 531 or Edward de la Billiere on edlb@prospectlaw.co.uk or 07824 506 022.

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AN ANALYSIS OF THE CONSULTATION ON AN ENVIRONMENTAL PRINCIPLES AND GOVERNANCE BILL: PART I

Perhaps unnoticed, as people head to the beach in August, Defra’s consultation on ‘Environmental Principles and Governance after the United Kingdom leaves the European Union, which closed on 2 August 2018, is probably the most important consultation affecting environmental laws to be introduced for at least the last ten years. It goes right to the heart of how environmental laws will, or should, or may not be, enforced, after the UK leaves the EU.

It proposes a new Bill, to set up a new body with the essential task of holding government and public bodies to account for environmental law enforcement, in place of enforcement of EU law by the European Commission and Court of Justice of the European Union.

The Bill will also address how the key environmental principles which underpin EU environmental laws should be reflected in UK laws after Brexit. The new Bill will only apply to England, as responsibility for the environment is a devolved matter, but similar issues will arise for each devolved administration. Debates continue over the workability of having four separate enforcement bodies, or a single body for the UK applying consistent standards but (and this is now a pressing need) taking real and full account of the concerns in each of the UK’s constituent parts.

In this article, the author argues that given the current failures of enforcement under existing legal structures, there now needs to be a legal duty upon all levels of government“ to secure the effective enforcement of environmental laws” for which they are responsible. He also argues that government and public bodies must, as a minimum, have regard to environmental principles when discharging their functions, and must commit not to dilute the existing application of those environmental principles where already reflected in EU law; and that it is time to introduce the principle of environmental justice to UK law.

Issues of non enforcement of existing EU environmental laws

The consultation does not address the really serious issue of non-enforcement of existing EU laws under existing structures. Examples of this are as follows.

Volkswagen and ‘defeat devices’

Volkswagen placed 590,000 vehicles containing defeat devices to mislead emissions tests on the US market. After investigations by Congress, State Attorneys General, the FBI, the Department of Justice, the State of California, Volkswagen in 2017 agreed to plead guilty and to pay $4.3 billion in criminal and civil penalties, ($2.8 billion criminal and $1.5 billion civil penalties). Six executives and employees were named and indicted.

Volkswagen placed 1.2 million cars fitted with similar devices on the UK market. Initially, the then Transport Secretary wrote to the European Commission saying that he hoped they would “investigate this matter thoroughly and take appropriate action to avoid a recurrence”. On 8 December 2016, the European Commission opened infringement proceedings against 7 states, including the UK and Germany “for failing to set up penalties systems to deter car manufacturers from violating car emissions legislation, or not applying such sanctions where a breach of law has occurred.” Since that time, it does not appear that any UK enforcement authority has taken any enforcement action of any description against Volkswagen for this matter.

Air quality and the ClientEarth cases

The UK’s non- compliance with EU air quality legislation, and the ClientEarth series of cases in different jurisdictions to try to enforce it, are a matter of record. Successive UK governments must know quite well what EU laws require on air quality; but ClientEarth has been obliged to go back and back to court to obtain one ruling after another that the UK government is in breach.

Illegal waste sites

It is becoming clear that in parts of the UK there may be hundreds of illegal waste sites that are not yet being tackled by the environmental regulators, who are somewhat given to complaining that they simply lack the resources to do more to enforce existing laws in the area. This gives rise to two questions. First, is there the will to enforce existing law? Secondly, if the issue is really about resources, what can and should be done, for example, to share more of the proceeds of crime recovered in waste cases with the regulatory agencies, instead of with the Treasury?

Enforcement of river pollution incidents

The current referral to the European Commission by Afonydd Cymru of the inactions by the NRW in enforcing existing river and nitrate legislation underlines both the availability at present of a European remedy to breaches of EU environmental law, and the importance of oversight of environmental regulators as a practical issue for environmental law enforcement.

Failure to enforce existing environmental laws, at a time when the UK is, on Brexit, removing many of the most effective powers and means for their enforcement, risks sending a signal that pollution pays, that compliance with environmental laws is for the little people, not large companies, and that regardless of public concern, there isn’t the political will to make enforcement effective. Again, if environmental laws are not going to be effectively enforced, it doesn’t greatly matter what they say.

What is needed to make enforcement of environmental laws effective is –

(i)        clearly drafted laws;

(ii)       a strong political message, from the top, that environmental laws are there to do an important job, and will be enforced, against individuals, and companies of all sizes;

(iii)      a proper statement of enforcement policy by regulators;

(iv)      properly resourced, adequately informed and skilled, independent and robust regulators; and

(v)        a legal duty on all levels of government “to secure the effective enforcement of environmental laws” – something which the new environmental regulator can focus on, and support.

The follow-up to this article will address losses the UK may suffer in terms of environmental law enforcement once it leaves the EU, as well as the likely aims of bodies set up under the Environmental Principles and Governance Bill and environmental justice concepts  in operation in  the USA.

About the Author

William Wilson is a specialist environmental, regulatory and nuclear lawyer with over 25 years experience in government, private practice and consultancy. He worked as a senior lawyer at the UK Department of the Environment/DETR/Defra, and helped to build up the environmental and nuclear practices at another major law firm, as well as running his own environmental policy consultancies. William has experience of all aspects of environmental law, including water, waste, air quality and industrial emissions, REACH and chemicals regulation, environmental protection, environmental permitting, litigation, legislative drafting, managing primary legislation, negotiating EU Directives and drafting secondary legislation.

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here

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SECTOR DEAL BETWEEN GOVERNMENT AND THE NUCLEAR INDUSTRY—KEY MESSAGES

This article was first published on Lexis®PSL Energy on 18 July 2018. Click for a free trial of Lexis®PSL.                                                                                                                                                                                            Energy analysis: Rupert Cowen, senior commercial and nuclear energy lawyer at Prospect Law, highlights some of the key messages of the sector deal between the UK government and the nuclear industry

Original news

£200m nuclear deal to secure UK energy mix, LNB News 28/06/2018 94

The Department for Business, Energy & Industrial Strategy (BEIS) has announced a £200m deal with the nuclear sector to secure the UK’s diverse energy mix and drive down nuclear energy costs. The deal includes £32m to kick-start a new advanced manufacturing programme to develop potential world-leading nuclear technologies like advanced modular reactors, and a commitment to increasing gender diversity in the civil nuclear workforce, with a target of 40% women in the sector by 2030.

What are the key messages and conclusions of the sector deal? Is there anything unexpected or new?

 To those of us old enough to remember the 1970’s, when the government of the day offered support to ‘the white-hot heat of technology’, the new industrial strategy is back to the future with its ‘grand challenges’ to put the UK at the forefront of the industries of the future.

Although the strategy promises government support in many sectors, it is a moot point whether nuclear can be said to be an industry of the future. Although, it is clear that some in this government believe that if the price of constructing generating capacity can be reduced, it does have a future in the UK.

As a mark of the confusion which reigns within the government authorities seeking to assist industry, even before the ink is dry on the nuclear sector deal, the National Infrastructure Council’s National Infrastructure Assessment cautions against a rush to agree government support for multiple new nuclear power stations, and proposes that after Hinkley Point C in Somerset, the government should agree support for only one more nuclear plant before 2025. This following on from the government’s refusal to support the Severn barrage.

Among the hyperbole of the nuclear sector deal, is the promise to ‘transform our future’. The deal does at least make good on the promise of financial support with confirmation of £56m for R&D in advanced modular reactors (AMRs), £85m to replace the funding Culham lost because of the withdrawal from Euratom; and other promises include £40m toward a facility to develop advanced nuclear technologies together with support for an advanced manufacturing program and a national supply chain programme.

The stand out point is that, although there will be government support for AMRs, that support does not extend to the small modular reactors (SMRs). Despite its disappointment, Rolls Royce—who would have been the main beneficiary of government support for SMRs—said that it continued to believe that ‘UK SMR can be a significant contributor to providing low cost, low carbon electricity’.

Nuclear energy supporters see AMR’s as a lower cost alternative to traditional reactors which are struggling to compete with the rapidly falling cost of renewables.

The other stand out points were:

  • acknowledgement of the need for direct government advanced financial support to reduce the cost of construction of the existing planned nuclear development in the UK
  • the new facility to develop advanced nuclear technologies is possibly going to be located at Trawsfynydd with support from the Advanced Manufacturing Research Centre (AMRC)

In return, those members of the industry who canvassed the Nuclear Industry Council have made a commitment to:

  • reduce the cost of new nuclear build projects by 30% over the next 12 years
  • reduce the cost of decommissioning old nuclear sites by 20%—reference is made to the current debate on the proper end state for legacy nuclear sites and the BEIS consultation on funding decommissioning

To the more cynical reader, the relationship between end state and cost reduction will not be lost.

This announcement comes only days after EDF announced that the cost of constructing Hinkley Point C had increased by a further £1.5bn to over £20bn.

Are there any remaining unanswered questions?

The government has indicated in a vague and unsubstantiated way that in the case of Wylfa Newydd, it might consider attaching taxpayer funds to the construction of the site, but with the ambition of achieving a strike price for the electricity that will be about £15/MWh cheaper than for Hinkley. Such a strike price would be about £77.50/MWh. This price is still higher than the £57.50/MWh allocated for UK offshore wind contracts in September 2017.

Are there any other important points worth mentioning?

The sector deal does not help with the biggest own goal for the nuclear industry in the UK and ensuring it is not affected by Britain leaving the European Union, and to aim for continuity with Euratom arrangements to enable the nuclear industry to continue operating after 29 March 2019.

About the Author

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law and Prospect Advisory and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

Rupert Cowen has worked in various countries on nuclear projects and has drafted for and provided ongoing guidance to those creating or revising national legal regulatory frameworks. He is recognised as a leading expert in international nuclear law and regulation; he lectures on a frequent basis around the world and has published papers on various aspects of nuclear regulation, particularly nuclear waste strategies.

Prices quoted are indicative and may be based on approximate or readjusted prices, indices or mean levels discussed in the market. No warranty is given to the accuracy of any view, statement or price information made here which readers must verify.

For more information or assistance with a particular query, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

Prospect Law Ltd, July 2018

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PROSPECT LAW SUCCESSFULLY DEFENDS PLANNING PERMISSION FOR DERBY WASTE INCINERATOR

R (HILL) v. DERBY CITY COUNCIL [2018] EWHC 768 (ADMIN.)

In R (Hill) v Derby City Council, Mr Justice Supperstone considered a claim by a local resident that sought to quash the decision of Derby City Council to grant planning permission for an incinerator to Envirofusion Ltd (represented by Prospect Law).

Background:

Envirofusion is based on the former Hanson Concrete Works, off Alfreton Road, and applied to Derby City Council for permission to test its waste disposal system, which involves heating waste to a temperature of 1,000°C for 18 months.

The plant would process up to 2.75 tonnes of waste per hour, based on a maximum operational running time of up to 100 hours a week. Gases from the process would escape into the outside air up a 22-metre stack, after passing through a filtration system. The waste would then be oxidised to produce molten ash.

The proposals were controversial and attracted more than 450 letters of objection.

Ground of Challenge and Judgment:

Mrs Hill challenged the decision on three grounds:

  • the planning committee report was not made available online,
  • the planning committee report was misleading,
  • the Council did not have regard to material considerations.

Dr Ashley Bowes represented Envirofusion at the High Court hearing. Mr Justice Supperstone accepted his submissions and refused Mrs Hill permission to challenge the Council’s decision. In particular, it was held that:

  • There is no duty to publish a planning committee report online. The obligation within the Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012 only applies to decisions of a Council’s executive (see paragraph 4 of the judgment).
  • Health and safety matters, such as the risk of fire and explosion, were considered in the grant of the environmental permit. Accordingly, the Committee was entitled to leave those matters for the regulation of the permit (see paragraphs 14 & 15 of the judgment). This issue arises from time-to-time when planning committees determine new or experimental technologies such as fracking.

It is worth remembering the observations of Mr Justice Gilbart in R (Frack Free Balcombe Residents Association) v West Sussex County Council [2014] EWHC 4108 (Admin.) at [100] that “the Planning Authority may in the exercise of its discretion consider that matters of regulatory control could be left to the statutory regulatory authorities to consider”

Entitlement to Costs:

Mrs Hill disputed that Envirofusion were entitled to its costs. Notwithstanding the common practice of the High Court to award the costs of preparing and filing its acknowledgment of service, Mrs Hill argued that Bolton MDC v Secretary of State for the Environment [1995] 1 WLR 1176 is authority for the proposition that only one set of costs would normally be ordered and that further costs would only be granted in exceptional circumstances.

Mr Justice Supperstone rejected that submission, holding in a further judgment that the Bolton rule does not apply to costs incurred preparing an acknowledgment of service. The Judge rejected the submission that the judgment of the House of Lords costs officers in Berkley v Secretary of State for the Environment (21 January 2003), in which it was held that two sets of costs could not be recovered by respondents to applications for permission to appeal, compelled a different conclusion. Mr Justice Supperstone found that an appeal to the House of Lords concerned “a different regime under different circumstances”.

Please click here to see Mr Justice Supperstone’s order on costs

About the Author:

Ashley Bowes is a specialist planning barrister who frequently represents clients in planning inquiries and onto litigation in the courts, including up to the Supreme Court. He is a member of the Attorney General’s C Panel of Junior Counsel to the Crown, in which capacity he represents the UK Government in planning matters.  He is also the General Editor of Sweet & Maxwell’s Journal of Planning & Environment Law and the Author of Oxford University Press’ ‘A Practical Approach to Planning Law’ (14th. Ed.).

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

For a PDF of this blog click here