Environment Matters S2:E1 – Special Edition: Looking ahead to 2025

Vitoria Barnes, Associate

I’m Mike Barlow, and I’m the head of the Environment team. I’m delighted today that I’m being joined by Victoria Barnes, a senior associate in the team, and Helena, a solicitor in the team.

Helena Sewell, Solicitor

Hi Mike.

Victoria

Hi Mike. Good to be chatting again.

Mike

Yeah, great to be here again. [Music]

So, in our first series of podcasts we discussed a range of topics including, greenwashing, natural capital, variable monetary penalties, and much more. You can listen back to these episodes on your favourite streaming platform or the Burges Salmon website.

Today we’re kicking off the second series with a discussion on what to expect from environmental law in 2025, and this builds on our recent article blog post, which you can get from our website or our LinkedIn posts. And I think it’s fair to say that we expect 2025 to bring with it some significant developments in environmental law. In fact there’s too many for us to cover in this short recording, but we will be covering other ones in future posts and podcasts so please do look out for these.

So, what we’re going to cover today substantially is the changes to regulation around the water sector, particularly in relation to environmental issues. We’re going to talk about circular economy and what’s happening there and then lastly climate change and greenwashing. But just before we get on to those three topics, Victoria I think you wanted to just say something about the DEFRA regulation review which is also coming up in 2025.

Victoria

Yeah, that’s right Mike. So, many of our listeners will be aware that in October last year DEFRA announced that it had appointed the economist Dan Corry to carry out an internal review into the regulation and regulators at the Department for Environment Food and Rural Affairs. Now the review as we understand will examine whether the inherited regulatory landscape is fit for purpose and will then, having carried out that review, develop some recommendations to ensure that regulation across the department is driving economic growth while still protecting the environment.

Mike

Yeah, and Victoria we’re recording this on the 17th of January and I think it’s fair to say that the regulators were at 10 Downing Street yesterday, weren’t they? Talking about how they might encourage growth so I think this is all part of the piece about using the regulators to encourage economic growth while still looking to protect the environment and I think that’s a really difficult challenge.

Victoria

Yeah I agree Mike, and certainly it’ll be really interesting to see what comes out of this review. We don’t know when it is expected to conclude exactly but I’m sure we’ll see developments during the course of this year on that.

Mike

Yeah, no well thank you, and we definitely we’ll keep our listeners updated on that review. Yeah I think it’s really interesting how this Corry review is going to pan out, specifically when it’s looking at the role of environmental regulators and how that exactly tallies with the budget cuts. Because we do understand the review’s not looking to weaken existing rules which protect the environment, but how they can be better applied and used to promote growth, so trying to do more and better with less is always going to be challenging I think.

Victoria

Yeah I agree, so watch the space on that front.

Mike

So just with that introduction then, turning to the first of our main topics which is the reform to water sector regulation. On the 23rd of October last year the UK and Welsh governments announced the launch of an independent commission into the water sector and its regulation and that’s marking the largest review of the water industry since it was privatized in 1989. It’s going to be chaired by Sir John Cunliffe, who’s the former deputy governor of the Bank of England. And the commission forms part of the Government’s and then this is a quote: “long-term approach to ensuring we have sufficiently robust and stable regulatory framework to attract the investment needed to clean up our waterways, speed up infrastructure delivery, and restore public confidence in the sector.”

The commission itself is going to draw upon a panel of experts from across the regulatory environment: health, engineering, customer, investor, and economic sectors. And a key aspect is going to be consider systemic issues in the sector. Following the review we’re expecting them to provide recommendations to the UK and Welsh governments in spring of this year, 2025, and the recommendations are anticipated to help establish a clear vision for environmental, public health, economic and customer outcomes, strategic catchment based approaches to planning, and improved and more stable regulation of the sector, leading to better outcomes for both the environment and for customers.

And any recommendations from the review, which the UK and Welsh governments might take forward, they’re also expected to form the basis for further legislation and therefore the outcome of the review is going to be of key interest to those in the water sector and beyond. And I think it’s really notable as well that the Government’s refused to rule out taking significant measures such as abolishing Ofwat, the economic regulator, and also reforming the environment agency as the environmental regulator following any recommendations. However, it has confirmed that it’s not considering re-nationalizing the whole sector.

Helena

Thanks Mike. That’s really interesting, and another key development in the water sector is the launch of the Water (Special Measures) Bill. Can you perhaps briefly touch on that?

Mike

Yeah I can, thanks Helena. I mean it is all part of the Government’s strategy in relation to the water sector, which does all come from the environmental issues that have arisen and this Bill’s currently going through Parliament and is intended to strengthen the power of the water industry regulators that I just mentioned. Basically intending to hold the water companies to account, and again this is a quote: “where they have failed to deliver for the environment and customers and to begin to restore trust in the industry”, and the bill proposes a number of things that it’s going to take forward.

The first of them is to give Ofwat the right to prevent water companies from giving senior personnel bonuses if it deems that the water companies failed to meet certain standards, including environmental standards. It’s also going to introduce criminal liability for water bosses where their companies breach the law. It’s going to include a duty on the environment agency to impose automatic fixed monetary penalties for certain offenses, including pollution control and offenses relating to water resources. And I think this is an interesting one, it’s going to lower the standard of proof required for certain offenses from the criminal standard which is the usual one in environmental offenses of ‘beyond reasonable doubt’ to the civil standard which is on the balance of probabilities, to enable the environment agency to issue fines more rapidly for those offenses. And then lastly in this context, it’s going to introduce an obligation on water companies to prepare and publish a pollution incident reduction plan, before the 1st of April each year. These are published voluntarily at the moment but it’s going to introduce an obligation to do so.

And that’s doing quite a lot of different things, and Victoria you and I have, I know, talked in the past about that and particularly how some of those elements are looking to change the existing environmental law in enforcement, particularly in relation to the sector, you know this one sector, and I don’t know if you want to just let us know your thoughts on that?

Victoria

Yeah exactly Mike, I agree it’s a really interesting development and this is a kind of prime example of legislation that’s not changing the rules of the game for all, or for all sectors, it’s just targeting one group, the water sector and I think that brings with it issues around ad hominem legislation, you know, equality before the law type argument and I’m far more comfortable when environmental regulations are made on principle applying to all, whereas here we’ve got very much a sector and particular companies being singled out.

Mike

Yeah I agree, it makes me nervous too from a from a sort of purist legal angle. But I think it’s fair to say that the sector’s facing many challenges, not just in delivering the water services that it has with the budgets that it has at the moment and just following the price review from at the end of last year, but also in relation to all of these environmental issues and the and the changing regulatory landscape. I could talk for a long long time on all of those topics but in the interest of moving this podcast on I think we’ll leave it there for the time being.

So I think then that brings us on to our second topic second main topic which is the circular economy and Helen, are you going to just give us an brief introduction to what’s going on in the circular economy at the moment?

Helena

Yeah, thanks Mike. I think we can expect to see a lot of development in the circular economy space over the next year or so. Whilst Labour’s Manifesto contained a commitment to reducing waste by moving to a circular economy, it’s only really now that we’re starting to see concrete developments in this area.

One of those key developments is the establishment of a circular economy task force which was set up in November of last year. So the task force is an independent expert advisory group which will support the Government in developing a circular economy strategy for England, and the strategy will then be underpinned by a range of so-called ‘road maps’ which will set out how different sectors of the economy will be reformed. According to the task force’s terms of reference the strategies intended to reduce emissions and support the drive towards net zero, whilst also creating jobs and driving economic growth in sectors that support technologies and infrastructure, enabling resource circularity. But it’s also worth noting that this piece of work feeds into a much larger missions orientated picture across the UK Government, which will apparently be underpinned by the upcoming industrial strategy, carbon budget delivery plan, and an industrial decarbonization strategy.

Mike

Yeah, thanks for that Helena. I mean circular economy is one of those phrases that’s been been around for a long time and it’s interesting to see that this task force is actually now being set up. When do you think we’re going to see any outputs from it?

Helena

Yeah, so like you say the task force is already up and running and it’s expected to complete it’s work over 2025, so over the course of this year. At the moment that work is split into two phases. Phase one which will run until sometime in January, involves the task force identifying definitions, metrics, and targets, and the task force is also expected to identify an order of priority for sectors requiring intervention and make recommendations to the Government as to what financial support may be required.

And then phase two, which is expected to run from January until October, will involve the development of the circular economy strategy itself and that strategy will include final metrics for measuring circularity, targets to drive progress over the next 10 years, a final position on which sectors should be prioritized for intervention, and those road maps which I mentioned earlier.

It’s worth noting that the strategy will only apply to England, however the Government has stated that if accepted the task force’s recommendations are likely to come with policy and delivery implications for devolved governments and cover areas where devolved governments could share relevant research or experience of implementation. So I think the message here really is, watch this space.

Victoria

And Helena, aside from the task force are there any other areas of development in the circular economy space which we and our listeners should be aware of?

Helena

Absolutely, and there are far more than we have time to cover here unfortunately. But one development that I think it’s worth touching on is the introduction of a new set of producer responsibility regulations, in respective packaging and packaging waste. As many of our listeners will already be aware, the extended producer responsibility for packaging regime was previously spread across a number of different regulations. The new regulations consolidate those pieces of legislation and amend some of the obligations on producers. They also now cover the whole of the UK.

Mike

That’s interesting, Helena. And so what are the key differences really from the previous regime?

Helena

So the core obligations to gather and report packaging data and pay an annual fee based on that data will remain, however there are some significant changes to the previous regime which producers need to be aware of. I think one of the key changes which I would pick out is the introduction of the concept of liable producers, effectively these are large producers who supply household packaging and are either brand owners, packers or fillers, importers, or first UK owners, distributors, online marketplace operators, or service providers. And producers who fall into this category will be required to assess the recyclability of household packaging they have supplied, keep records of those assessments and report them to the appropriate agency, and pay annual disposal and administration fees for each year they meet the definition of liable producer.

Mike

And lastly, when are we likely to see these changes coming in?

Well, the new regulations actually came into force on the 1st of January of this year, but there are various transitional arrangements which mean that some of the key changes will be introduced over the next year or so, whilst the previous regimes are phased out.

Guidance published by the Government sets out the various deadlines that producers must comply with over the transition period, so I’d suggest consulting that in the first instance for any headline date involved. However, producers really need to get to grips with the detail of the new regime now to ensure continued compliance with their extended producer responsibility obligations moving forward. At the end of December, the Environment Agency published its packaging producer responsibility monitoring plan for 2025, so I think it’s certainly going to continue to be an area of interest for regulators.

Mike

That’s fantastic, thanks Helena, that’s a really good update on a really key change that’s coming already in 2025. So then just turning to our last of our three key subjects then, climate change liability and greenwashing, and Victoria I think you were going to pick up the substance of that topic.

Victoria

Yeah, that’s right Mike, and well there’s a lot on the radar under the broad bucket of ‘climate change’. On the policy and legislation side this year we’ll see the roll out of the UK’s carbon border adjustment mechanism, or UK CBAM and this is as we move towards the implementation date, which is the 1st of January 2027, UK CBAM is about targeting the risk of carbon leakage associated with the UK’s action on industrial decarbonization to meet net zero. It will do this by placing a financial liability on importers of certain products, based on the greenhouse gas emissions intensity of the product and the gap between the carbon price applied in the country of origin and the carbon price that would have been applied had the product been produced in the UK.

There’s also the expansion of the UK’s emissions trading scheme, which is expanding into the energy from waste and waste incineration sectors. UK ETS came into operation in 2021 and it’s a key contributor to the UK’s net zero emission strategy as it places limits on emissions in the sectors within its scope and ensures appropriate pricing measures are in place. The UK ETS Authority is seeking to expand the scope of the scheme into these new sectors to increase its influence over the decarbonization of the UK.

More broadly though Mike, 2025 in my view is a really pivotal moment, it marks the halfway point between the start of the century and the 2050 Target date for net zero. And at the same time just as we really need to accelerate progress towards that target, which the new Labour Government has recognized, the UK economy is faltering and that really has, you know, people questioning whether does that put in jeopardy the pathway to net zero and decarbonization in terms of the funding and project delivery aspirations? And does it mean the UK won’t be able to move as fast towards those targets as it would like to? Can the Labour Government really deliver on its new clean power 2030 action plan? And so how the new Government answers those bigger questions in the coming months will have implications for climate change policy and regulation generally.

The republication of the carbon budget delivery plan, which Helena mentioned, which we understand will be published this May, will certainly be a key policy document to look at in that respect.

Mike

Yeah thanks for that, and as I mentioned already we’re recording this on the 17th of January and it’s announced today from the Met Office that we’re not on target to meet 1.5, so it’s a real challenge this particular topic and I think it probably then leads on to the last of the topics, which is sort of liability in relation to climate change issues and greenwashing topics. Do you think – we’ve seen quite a lot of development over the last few years on that Victoria, do you think we’re going to see more over 2025?

Victoria

Absolutely and I think, you know in my view anyway, 2025 is going to see this sort of climate change liability issues continue in the same vein. We had several important climate cases in 2024 which I think will make continue to make waves into 2025.

Those include the UK Supreme Court’s decision in the Finch case. In that case the Supreme Court concluded that the scope 3 downstream emissions should be assessed by planning authorities as part of an environmental impact assessment when it was considering the grant of planning permission for an oil and gas project. We expect the Finch case to have ramifications for a number of court decisions this year, including challenges to Shell’s Jackdaw gas field, and Equinor’s Rosebank oil field. The consent for both of those projects has been challenged by way of judicial review by environmental groups, so those decisions are likely to come this year.

Another, you know, significant case last year was the Dutch Shell case, in which the court of appeal of The Hague, in November last year, held that while Shell has a duty to reduce its greenhouse gas emissions to combat dangerous climate change, it does not have a specific emissions reduction obligation. That decision is significant, not only for the energy sector but future ESG litigation in the Netherlands and globally, so it’ll be very interesting to see how the broader implications of that decision develop this year.

Other cases to look out for, climate change related cases, both globally and at home, include the advisory opinion of the International Court of Justice on the obligations of states to address climate damages and we may well see a further legal challenge to the republished carbon budget delivery plan in May this year, as it’s already been challenged successfully on two occasions.

Helena

Thanks Victoria, so lots to look out for on the climate change litigation front over the course of 2025 then. I know you’ve also been following greenwashing developments over the last couple of years, are there any things that we should be looking out for on that issue this year?

Victoria

Yes, again absolutely, this is another area that we anticipate will continue to receive attention from regulators and consumers alike, particularly as the public’s, and NGOs in particular, their awareness and targeting of green claims and their willingness to challenge those claims continues to grow.

Importantly, until recently the main consequence of greenwashing in the UK has been sort of negative publicity or public censure, largely trailblazed by the advertising standards agency, however from April 2025 this year the Competition Markets Authority, the CMA, will have the power to impose fines for breaches of consumer law. The the Digital Markets Competition and Consumers Act, which was enacted in the summer last year will give the CMA the power to impose fines of up to 10% of a company’s global turnover for breaches of consumer law, and that would include for misleading consumers on green or environmental claims.

There were also 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. 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 Digital Markets Act.

For those that are interested in greenwashing and wanting to know more, although this is a bit of a shameless plug, I will be doing a- presenting on a greenwashing webinar with 39 Essex Chambers on the 4th of February which our listeners can register for and sign up for. Further information is on our website and on LinkedIn. So do listen into that in February if you are interested in knowing more on greenwashing regulation.

Mike

Thank you Victoria, I’m very much looking forward to that webinar, I will be signing up.

Victoria

Good to know.

Mike

So thank you very much to everyone, that’s all we have time for today. So that was just a quick introduction to the three topics of water regulation, the circular economy, and climate change and greenwashing.

[Music] Please take a look at our website, or get in touch with us directly if you’d like to learn more on any of those topics or any other environmental topics. We’ll be discussing a range of topical issues on this podcast going throughout 2025 so please make sure that you subscribe to the Environment Matters podcast and to our quarterly newsletter. So stay tuned for more episodes from the Burges Salmon’s Environment team coming up soon. [Music].