19 January 2007
Public sector bodies look set to face new rules and responsibilities as part of the government's attempt to cut carbon emissions. Proposals now out for consultation offer both challenges and opportunities
Climate change is fast becoming a major issue for the public sector. In fact, it has the potential to touch almost every area of public sector operation. For example, it could include councils' roles as social housing providers; as regulators via building control and planning; and as community leaders and 'place shapers'. For hospitals, it could cover everything from procurement and energy consumption to building infrastructure.
While public sector bodies are generally strong supporters of all things environmental, they will soon be subject to new rules on carbon emissions, which will be introduced via legislation and are likely to be backed by tough sanctions.
Far from being another rod for the back of public sector organisations, however, these planned rules could help them to increase their influence over climate change in their area, and earn some revenue into the bargain.
The proposals are set out in a consultation paper published in November by the Department for Environment, Food and Rural Affairs, the Welsh Assembly Government, the Northern Ireland Administration and the Scottish Executive.
The consultation, which closes on January 31, is a result of the government's self-imposed target to reduce carbon emissions by 20% by 2010. It makes proposals affecting large commercial and public sector organisations, which together account for 15 million tonnes of carbon emissions.
Local authorities, hospitals, universities and central government departments are included in the group of large non-energy intensive organisations to which these new rules would apply.
The main proposal is an energy performance commitment (EPC), which would operate on a similar basis to the EU emissions trading scheme as a 'cap and trade' regime. This would mean that those covered by the scheme would be required to purchase allowances corresponding to their emissions from energy use and then surrender them to a co-ordinator.
It is proposed that after two or three years, when the price of allowances would be fixed, the overall cap would be set by the government, with individual organisations setting their own limits within this.
There would be a 'carrot and stick' approach, with which the public sector is familiar. Organisations reducing their carbon footprint would be rewarded with a rebate and ranked higher in an emissions reduction league table. Those seen as being carbon inefficient would experience negative publicity from being at the bottom of the league and receive less of a rebate.
Two key issues arise from this for the public sector. The first is the legislation that will introduce the new rules. This is unlikely to come into effect for a couple of years yet but will be generic in nature, in that it will apply to all relevant organisations. In these circumstances, the public sector community will need to scrutinise the wording of the relevant Bill very carefully to check that there are no hidden problems arising from the fact that the legislation has wider application.
The second point is related, and that is how the organisations that are to be covered by these new provisions will actually be defined. It will not be easy for the parliamentary drafters to settle on a definition that has the desired effect.
The other area of concern to the public sector is the sanction regime that will accompany these provisions. We have commented before on the fact that new criminal sanctions are now creeping up on public sector bodies, with significant consequences. The proposals on corporate manslaughter are a good example.
And more are likely here. The proposal is that there would be both a civil (financial) penalty for failure to surrender sufficient allowances, equivalent to the penalty under the EU emissions trading scheme (€100 per tonne of C02), and criminal offences for failing to register in the scheme and report data.
Many public sector bodies will be focusing not on the negative aspects of these proposals but on the positive ones. In particular, if an organisation complies fully with the requirements, it could be in a strong position to influence others in the community via its leadership. More to the point, when you operate under a 'cap and trade' scheme, if you continuously improve the level of your own emissions, then you benefit from being able to trade some of your allowances to others.
While this issue is not on the 'insomnia radar' of public sector managers yet, it should certainly feature in the 'ones to watch' category.
Stephen Cirell is head of local government and Professor John Bennett is a consultant solicitor with Eversheds. They are authors of Best Value: law and practice, published by Sweet and Maxwell. John Bennett is also co-author of EC public procurement law and practice
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