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Report

Energy National Policy Statements to be reviewed following High Court challenge

Lee Gordon provides insight on the implications for Nationally Significant Infrastructure Projects (NSIPs).

The government’s legal department has recently confirmed that the Secretary of State has taken the ‘provisional’ decision to review the energy National Policy Statements (“NPSs”). This follows a judicial review claim made by The Good Law Project in March 2020 which has yet to be determined by the court. Importantly, the Secretary of State has indicated that the NPSs should not be suspended during this time though. The Good Law Project have therefore confirmed that they will continue to pursue the judicial review claim to seek to compel the government to suspend the NPSs or relevant parts of the NPS which they allege “forces a presumption in favour of fossil fuels and fails to take into account a number of commitments by the Government to tackle the climate crisis, including in the Paris Agreement and the Net zero by 2050 commitment enacted by Parliament in 2019”

We take a look at the context to this and some of the potential implications for Nationally Significant Infrastructure Projects (“NSIPs”) and energy policy.

Background

The energy NPSs were adopted by government in July 2011. They form the primary basis for decisions in respect of development consent order (“DCO”) applications for NSIPs. 

The NPSs are now looking a little dated and would benefit from a review in any event. We understand the government had intended to review the NPSs in the future, but has been in no apparent rush to do so and, any such review would follow consultation on the delayed Energy White Paper (“White Paper”).  Publication of the highly anticipated White Paper has been repeatedly delayed and we are told it is now due to be published this autumn.

There has been significant recent litigation in respect of NSIPs in a climate change context. The judicial review claim by the Good Law Project follows hot on the heels of the high profile quashing of the Airports NPS by the courts, in particular due to a failure by government to have regard to the Paris Agreement when adopting the Airports’ NPS. An appeal is being made to the Supreme Court by Heathrow Airport and is due to be heard imminently on 7 and 8 October 2020. 

The claim by the Good Law Project also follows Client Earth’s legal challenge to the Secretary of State’s decision to grant a DCO for new gas-fired units at the Drax Power Station. Helpfully for promotors, the High Court in that case dismissed the claim and, in doing so, noted that the need for new generating stations is established by Energy NPS EN-1 and that the Secretary of State appropriately gave substantial weight to the need for fossil fuel energy developments. The court noted that NPS EN-1 does not require projects to undertake a quantitative assessment of need on a case by case basis. At the time of the judgment, the claim by The Good Law Project in respect of the energy NPS had been lodged and the judge in the Drax case noted that any legal challenge to the merits of the energy NPS should properly be brought in respect of the NPS and not a decision to grant a DCO for Drax in reliance on the NPS. The current claim by the Good Law Project seeks to do just that and the impact of the claim has potentially significant consequences as discussed below. 

The Importance of NPSs for decisions in respect of NSIPs

Whilst currently being somewhat dated in certain respects, the NPSs can generally be considered a success from the perspective of promotors and investors in terms of improving the speed and predictability of planning decisions for energy NSIPs.

Where an NPS has effect, then pursuant to s.104 of the Planning Act 2008 (“PA 2008”), DCO applications should be determined in accordance with the relevant NPS, unless certain limited exceptions apply, including where adverse impacts from a development would outweigh benefits.  This creates a presumption in favour of decisions being taken in accordance with an NPS which has been very helpful to promotors of energy NSIPs in practice, with the vast majority receiving development consent since the commencement of the PA 2008 procedures. In particular, the position on need set out within the NPSs has been particularly beneficial and has greatly contributed to the speed and consistency of planning decisions for energy NSIPs. In this regard, policy EN-1 establishes the need case for all types of energy infrastructure and currently provides that:

“3.1.1 The UK needs all the types of energy infrastructure covered by this NPS in order to achieve energy security at the same time as dramatically reducing greenhouse gas emissions.

3.1.2 It is for industry to propose new energy infrastructure projects within the strategic framework set by Government. The Government does not consider it appropriate for planning policy to set targets for or limits on different technologies.

3.1.3 The IPC [now Secretary of State] should therefore assess all applications for development consent for the types of infrastructure covered by the energy NPSs on the basis that the Government has demonstrated that there is a need for those types of infrastructure and that the scale and urgency of that need is as described for each of them in this Part. 3.1.4 The IPC should give substantial weight to the contribution which projects would make towards satisfying this need when considering applications for development consent under the Planning Act 2008”

Where an NPS does not apply (including where it is suspended), then decisions are taken pursuant to s.105 of the Planning Act 2008. With no presumption in favour of proposals which accord with an NPS, s.105 provides scope for greater weight to be given to grounds raised by objectors. It also potentially makes the need case more challenging for promotors of NSIPs. This is important not just in terms of the overall merits of potentially controversial projects, but also in satisfying other tests under relevant legislation. For example, energy NSIPs (particularly those located offshore or in coastal areas) often have the potential to impact on European sites protected under the Habitat Regulations. If significant impacts to protected habitats cannot be ruled out then this can require satisfaction of fairly onerous tests relating to “imperative reasons of overriding public interest” and “no satisfactory alternatives” tests. In addition, energy NSIPs often require compulsory purchase powers in which case there must be a “compelling case in the public interest” and no reasonable alternative for achieving the schemes objectives. Clearly, an NPS which establishes an urgent need for the energy infrastructure can greatly assist in satisfying these tests and securing a DCO approval for a project.

Reviews of NPSs

Section 6 of the PA 2008 provides that the Secretary of State must review each NPS whenever the Secretary of State “thinks it appropriate to do so”. In deciding whether to review an NPS the Secretary of State must consider whether there have been material changes since an NPS was published or reviewed and whether the change would have impacted on the policy published at that time.

There is consequently some discretion as to when a review may be undertaken. However, such discretion must be exercised reasonably by the Secretary of State in accordance with usual public law principles. This would include behaving rationally and, one would expect, having due regard in considering the need for a review to the Paris Agreement on climate change of December 2015 and the Net Zero commitment enacted in 2019. In addition, section 10 PA 2008 provides that the Secretary of State must exercise the review functions under section 6 with the objective of contributing to the achievement of “sustainable development”, and must, in particular, have regard to the desirability of mitigating and adapting to climate change. Interestingly, Section 10 does not apply though to the “suspension” of NPS functions under Section 11 PA 2008 discussed below.

The Secretary of State appears to have now conceded that a review will indeed be undertaken of the NPS’s. However, no details or timings of this review have been made publically available as far as we are aware. A witness statement is intended to be prepared on behalf of the Secretary of State to confirm the position in respect of the review, but we have not had sight of this at the time of writing this note.

If the NPS is to be amended or replaced, then there will need to be consultation and the new NPS will need to be laid before Parliament so this will not be a fast process. The Secretary of State has a degree of discretion over the consultation considered appropriate.

It would seem logical for any review of the energy NPS to be informed by the on-going work which industry hopes has been taking place within government in respect of the much delayed White Paper. Much will depend on the stage that work has got to. It is hoped that the forced early review of the NPS will serve to accelerate this work and bring a real urgency within government to setting energy policy which is fit for the future and able to capitalise on the significant opportunities in the UK in respect of low carbon developments and new technologies. 

No Suspension of NPS Planned

As noted above, crucially the Secretary of State does not intend to suspend the operation of the NPS pending the outcome of the review. The presumption under section 104 of the PA 2008 will therefore continue to apply in favour of DCO applications which accord with the existing NPS. No doubt objectors will seek to argue though that the weight should be reduced for fossil fuel developments pending the outcome of the review.

The judicial review by The Good Law Project will therefore continue to run in respect of the alleged failure of the Secretary of State to suspend the NPS. 

The power to suspend an NPS is contained in section 11 PA 2008. The power contains considerable discretion for the Secretary of State who “may” suspend part or all of an NPS during a review in circumstances where there has been a significant change since publication of this NPS which would have made a material difference to the policy.

The witness statement relating to the decision of the Secretary of State to review but not suspend the energy NPS will make interesting reading and, I would suggest, will need to be carefully drafted.  If the Secretary of State accepts that the policy requires amendment due to material changes relating to climate change commitments, it will be interesting to see how the Secretary of State then rationally justifies the entirety of the NPS continuing to have effect, including the need section for fossil fuel development and the associated presumption under section 104 in favour of fossil fuel DCO’s which accord with the current NPS. 

The risk of at least part of the NPS being suspended either through settlement or by order from the court cannot be ruled out altogether at this stage. The legal advisers for the Good Law Project have written requesting that the Secretary of State adopts a middle ground by suspending only those parts of the NPS relating to fossil fuel generation which they allege are clearly of date. On the face of it, this approach has some merit as it will at least ensure important aspects of the NPS which are vital to all energy developments, including renewables projects, continue to have effect during the review.

Conclusions

The earlier than planned forced review of the energy NPSs provides a welcome opportunity to ensure our energy policy is fit for the future. It will hopefully bring a much needed urgency around the work relating to the delayed White Paper and updating of the NPSs. There is a real opportunity for the UK to become a world leader in low carbon and renewable energy, including in respect of innovative technologies such as tidal, hydrogen, nuclear and carbon capture. However, clear policy and government support is required. The White Paper and updated NPSs are crucial pieces in the jigsaw to give industry the necessary confidence to invest and if we are to meet climate change commitments. 

Promotors of energy NSIPs which are either making their way through or preparing to enter the DCO process will no doubt be relieved that the Secretary of State does not intend to suspend the NPSs during the review. However, the risk of a partial suspension of the NPS (at least) being forced upon the Secretary of State through the judicial review claim cannot be ruled out. Promoters will be well advised to at least consider working up evidence in further support of their need case (even if this is held in the back pocket for the time being) rather than overly relying on parts of an NPS which could potentially be suspended in the future should the judicial review claim be successful. This is particularly the case for fossil fuel NSIPs.

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