Macfarlanes' Paul Davies and Michael Green round up the issues set to keep environmental lawyers busy this year

2013 presents an exciting horizon for environmental lawyers, both domestically and internationally. Unsurprisingly, natural resources remain the focus; securing access to these resources is the key to growth, particularly in the fastest-developing economies. However, such growth comes at a cost – Deepwater Horizon, Bohai Bay and Fukushima are just a few examples. 

The globalisation of these issues has inevitably resulted in the globalisation of environmental law. It is no wonder that we face such a changing landscape. So what can we expect for the rest of 2013? 

Shale gas fracking

One of the most contentious developments is shale gas fracking. The cheap supply of shale gas in the US has fundamentally changed the investment model of major industrial companies. In the UK, the moratorium on shale gas fracking was lifted in December 2012. 

Shale gas now lies at the heart of the Government's 'dash for gas' strategy, and ministers recently announced in the Budget a tax support regime, including a new field allowance for shale gas. Further details of such tax incentives and a consultation on the measures are expected in due course.  

But there are several challenges facing the commercial viability of this fledgling industry, not least the potential obstacles of planning decisions – where challenges from local residents are likely to be vocal – the cost of extraction and the uncertainty surrounding European Union regulation.

This is at a time when the development of new nuclear power stations is facing significant difficulties, despite repeated warnings relating to energy security in the UK (as coal-powered stations are turned off). 

Green Deal

Notwithstanding the dash for gas, the Government continues to push green initiatives, with the launch of the Green Deal in January. This aims to improve the energy efficiency of the UK's existing building stock, by offering consumers energy efficiency improvements at no upfront cost. The financing is recovered through a charge in instalments on the energy bill, with repayments funded by the resulting savings on energy costs. 

The success of the initiative remains to be seen, after details of controversially high interest rates – potentially more than 9% – on Green Deal plans were published. A further complication is the government proposal that by April 2018 (or potentially earlier) there will be a restriction on the letting of properties unless they meet a minimum energy efficiency standard. Landlords with considerable portfolios of non-energy efficient properties will need to start acting soon. 

Noise nuisance

Keeping the focus on the UK, the law of nuisance is in the spotlight ahead of a Supreme Court decision later this year. The appeal concerns a noise nuisance claim brought by local residents against the owners and operators of a motorcross stadium (Lawrence v Fen Tigers).

The Court of Appeal found that although a planning authority could not authorise the commission of a nuisance, the grant of planning permission and its implementation had changed the character of the locality. Given the decision by the Court of Appeal in Barr v Biffa, there remains some confusion as to the effect of planning permissions and permitted activities in the context of the law of nuisance.

International action 

Internationally, the end of 2012 saw the signing of the extension to the Kyoto Protocol in Doha, Qatar, and developments in climate change and carbon reduction initiatives are set to continue in 2013. The Kyoto Protocol has been extended to 2020 and was agreed by nearly 200 nations, including Australia and those in Europe. 

Meanwhile, the two largest economies in the world are looking at their own domestic policies on climate change. In the US, Barack Obama announced in his recent State of the Union address that he will take action on climate change (with or without Congress), with measures that include a "market-based solution".

In China, the administration has introduced seven regional pilot emissions trading scheme projects, which have the potential to significantly reduce carbon emissions on a global scale and dramatically alter the climate change market.

The globalisation of environmental law has catalysed and encouraged the development of certain global voluntary standards, particularly in the finance industry. The Equator Principles have been adopted by the vast majority of banks and other financial institutions, and have particular application to natural resource-focused projects. The latest revision of the principles is expected this year and will see an increase in the number of loans that will be subject to these voluntary standards. 

Moreover, the previous redrafting of the OECD Guidelines for Multinational Enterprises has resulted in greater scrutiny of the supply chains and investments made by global corporations.

This sweeping summary of environmental law in 2013 unashamedly concentrates on the challenges faced in the natural resources sector. Finite supply, the cost of energy and climate change are set to become increasingly significant issues on the global agenda. The key issue for companies is to respond appropriately, keeping both investors and stakeholders updated. 

The most successful companies will be those that understand how environmental issues affect not only where they do business, but the way in which they conduct their business. 

Paul Davies is a partner and head of the environment practice and Michael Green is a senior litigation lawyer at Macfarlanes.