How to tackle environmental compliance in a decentralised energy market

• 4 years ago (2019-11-01)
• Junior Isles

Decentralised energy 5

---

By Macolom Gray

Over the past decade, the UK’s energy supply has diversified substantially, from primarily coal-powered to a mix of energy sources including off grid generation such as micro-renewables and onsite heating and cooling. Largely driven by legislation and a need to pivot our energy infrastructure to a more sustainable, less fossil fuel-based generation capacity, we are seeing large-scale power plants shutting down in favour of more flexible, smaller decentralised generators.

The risk to the UK’s outdated energy infrastructure and its lack of resilience were highlighted with last month’s power shortages due to concurrent outages at a large power station and offshore windfarm. Smaller, more agile configurations with a breadth of generation methods are modernising the energy market and diversifying it. These recent shifts in approach to energy in the UK are part of a global trend to source alternative energies that shows no sign of stopping.

However, with the decentralisation of the energy market, different methods of generation have differing legislation and regulations. Legacy legislation is becoming increasingly outdated by the shift in methods of energy generation and whilst legislation is driving change at a fast rate, the legal knowledge to accompany this is poor. Many regulations relate to the ‘old way’ of doing things, so as they are being addressed, they are changing, such as the old policies on combustion plants being replaced by the Industrial Emissions Directive. Even recently introduced policies have caused widespread confusion, such as the suspension of the newly introduced Capacity Market. Importantly, decentralized energy production, such as wind and solar, brings with it a broader, more complex range of environmental and health and safety regulations, that are newly created to address a more distributed energy solution.

Other policies such as the Climate Change Levy, the Carbon Reduction Commitment, Gas Supply Emergencies and the recent Energy Savings Opportunity Scheme (ESOS), are impacting the adherence and reporting required. The latter can issue fixed penalties of up to £50,000 per breach and has recently published the names of large businesses who have been fined for non-compliance and subsequent failure to rectify this, with 26 firms owing more than £ 240,000 to the Environment Agency to-date.

Compliance is made of three crucial elements; understanding which protocols apply to an organisation, managing operations in order to comply with these regulations and auditing operations to report against them. With the introduction of new protocols and an increasingly diverse spread of different sites, possibly across different countries, ensuring compliance is an increasingly complex and constantly changing target. Environment, Health & Safety (EHS) policies can be a jungle for risk and compliance professionals to try and navigate, and whilst each is regulated separately, they are interlinked.

The sanction for breach of most environmental laws is prosecution of an individual or company by the relevant regulator in the criminal courts varying from fines right up to five years’ imprisonment[1]. However, knowing the legal obligations that a business faces – let alone the compliance status – has to-date remained very difficult, time consuming and expensive, particularly multiplied across numerous locations and countries in these growing multi-jurisdictional businesses.

Partnering with a legal specialist and leveraging new technology that can provide automated information on your relevant legislation, and how to comply with the multitude of laws, is crucial for businesses. Removing any doubt or uncertainty, and with that removing the risk associated with non-compliance, allows energy generators to focus on their business and removes the headache of trying to understand the law and ensure compliance.

The first element of compliance – understanding – is particularly challenging. The complexity and ever-changing nature of energy legislation coupled with the multiple jurisdictions that sites may sit across, exacerbates this problem. Identifying this challenge, a team of international lawyers and technical specialists developed Libryo as a solution. Libryo is an automated, cloud-based platform that helps organisations know the law that applies to their business, in every jurisdiction. Using this platform provides accuracy and efficiency for those responsible for compliance and removes any potential confusion by providing the legislation relevant to each specific site, regardless of its location or country.

Law is poorly organised, changes regularly, is not searchable and is written in complicated phrases. Libryo’s solution enables a business to pull up a specific site or operation and review the requirements, rather than being faced with a mammoth task of wading through reams of legislation to see if it needs to adhere to certain regulations, and then to work out if it does comply.

With global clients such as a speciality chemicals company, engineering firms and the National Metrology Institute of South Africa, Libryo operates all over the world helping more than 9,000 users across 130 organisations. Operating since 2016 and headquartered in London, Libryo makes it easier to know the law by filtering, configuring and tracking unique legal registers, enabling people to quickly navigate regulatory complexity with clarity and certainty.

The evolution of the energy market is only increasing in its haste, as is the legislation to accompany each element. With both the ongoing decentralisation and geographical spread of energy companies and their sites, compliance will continue to be a challenge and it’s crucial that energy generators ensure compliance to avoid hefty fines or even prison sentences.

[1] https://www.gov.uk/government/publications/environment-agency-enforcement-and-sanctions-policy/environment-agency-enforcement-and-sanctions-policy