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UK CURRENT SURVEY 16[2006/2007]4 ULR 185

• The establishment of a Committee on Climate Change, a new statutory body to
provide independent expert advice and guidance to the government in relation to
achieving targets and staying within the carbon budgets.
• The imposition of reporting requirements on the government, which will be required
to report annually on current and predicted impacts on climate change and its proposals
and policies for adapting to climate change.
• The creation of enabling powers to introduce new domestic emissions trading schemes
through secondary legislation.

Oil and Gas offshore renewables The DTI has published a consultation paper on proposed changes to the decommissioning
21 June 2007 regimes for offshore oil and gas production and offshore renewables. It deals with a
number of changes to close what are seen as loopholes in the decommissioning schemes
for the two sectors. The offshore energy industry is currently in a period of rapid change.
The arrival of smaller players on the UKCS (United Kingdom Continental Shelf) offers
opportunities for extending the life of the basin but also raises issues of financial viability
which was demonstrated by the Ardmore partners’ collapse. The cost of decommissioning
of the FPSO (Floating Production, Storage and Offloading vessel) on this field was relatively
modest but has nevertheless been a wake-up call for the DTI. Many installations designed
to generate offshore renewable energy are likely to be relatively cheap to decommission
in comparison to oil and gas assets but the companies operating them may be small and
therefore vulnerable. The main changes proposed to the oil and gas decommissioning
regime under the 1998 Petroleum Act are:

• To enable the DTI to seek security for decommissioning costs at any stage of the life
of a development if the risk is judged to be unacceptable. Currently the DTI may only
seek security after a decommissioning programme has been approved but this tends
to be done late in the life of a field. The taxpayer is also exposed early in the development
when it is not clear whether production levels will meet expectations and therefore
justify the investment made;
• To extend the persons on whom a section 29 notice, imposing liability for
decommissioning may be served:
1. To enable notices to be served on the corporate members of a limited
liability partnership;
2. To allow section 29 notices to be served at an earlier stage than at present
when an activity is intended rather than just when it is being carried on;
3. To permit the DTI to serve a section 29 notice on the owners of an
interest in an installation even if the DTI is satisfied that other persons
have made adequate arrangements – this is currently constrained by the
terms of section 32(1) of the Petroleum Act 1998;
4. To allow section 29 notices to be served on the licensees or JOA parties
in respect of a pipeline, even if they do not own it;
• To permit the DTI to obtain information about the financial position of a company
before as well as after serving a section 29 notice;
• To ring fence funds set aside to provide for decommissioning against the insolvency of
the party providing those funds by disapplying the Insolvency Act 1986 by statute.

In relation to offshore renewable energy installations, the proposals to amend the Energy
Act 2004 are:

• To ring fence funds set aside to provide for decommissioning against the insolvency of
the party providing those funds by disapplying the Insolvency Act 1986 by statute;
• To enable the DTI to place decommissioning obligations on associated companies
(parent or sister companies) of those primarily liable, if the DTI is not satisfied with
the decommissioning arrangements made by those persons;
• To allow corporate members of limited liability partnerships to be made liable for
decommissioning where the LLP is the developer or associated with the developer;
• To permit the DTI to obtain information about the financial position of a company
before as well as after serving a decommissioning notice.

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