Risk-based regulation
delivering for the environment

Catherine Wright, Head of Modern Regulation at the Environment Agency reflects upon its risk-based approach to environmental regulation.

The world is becoming a more competitive place. As emerging economies stake their claims on the world’s natural resources and markets, the established economies need to remain competitive. Despite many successes in the UK, the future environmental challenge is huge.

The EU has found that administrative burdens in the UK are the lowest in Europe and the Environment Agency is playing our part to keep it that way, while continuing to deliver for the environment. We want to achieve results for the environment and our modern, risk-based approach to regulation is key to encouraging the businesses we regulate to take a lead on their environmental performance.

Few would argue that by the late 1990s, we were dealing with a complex raft of environmental legislation. The way that we regulate businesses has had to change and a risk-based perspective is at the heart of our Modern Regulation approach. We want to achieve results for the environment so we concentrate on the businesses that don’t perform well. We have cut the number of site visits to low-risk operators by 50 per cent in the last four years, representing around 60,000 visits. This allows to us spend time on the issues that matter to the public and the environment, like dealing with criminal activity.

But the environment has not suffered. There are fewer releases of most air pollutants to the environment like sulphur dioxide, down by 50 per cent since 2000. Most of the sites we regulate are performing better, with over 50 per cent of companies regulated under Pollution Prevention and Control now achieving the highest performance rating under our Operator and Pollution Risk Appraisal scheme.

Our risk-based approach is reducing the burden on business. By 2010, our actions will save businesses about £25 million per annum. We also plan to save £10 million a year through waste protocols for waste producers, £1 million a year for 23,000 low-risk water abstractors who no longer have to register with us and £2 million a year for businesses who get advice from our NetRegs website instead of consultants.

We are cutting down on the paperwork that businesses need to fill in, making better use of online applications and reporting and processing permits more quickly. Waste permit holders are getting their permits in less than one-fifth of the time and with less than one-sixth of the paperwork compared to two years ago.

We have successfully introduced sector plans, which are drawn up in consultation with industry and set out the regulatory requirements for an entire industrial sector. They establish major objectives, performance indicators and improvement targets for environmental performance for the next five to fifteen years. Sector plans for the chemical, cement, nuclear, and waste sectors have already been published, helping the businesses within these sectors go beyond minimum levels of compliance.

Modern regulation needs to help us tackle future environmental challenges. Measures to reduce greenhouse gases, adapt to climate change and using resources more wisely are economic opportunities. Between 2003 and 2006, 1.96 billion Euros (£1.33 billion) was invested in 300 clean energy companies and £3 billion of operating costs could be saved by UK business annually through waste minimization and water efficiency. The Stern Review of 2006 highlighted that action taken now to tackle climate change makes far more economic sense than action taken later.
Our risk-based approach means we look for the best way to deliver results. As we deal with more complex environmental issues we are using a wide range of approaches to help manage environmental risk, from working with companies at Board level, EU Emissions Trading Schemes, partnership working to enable more waste to be re-used and re-cycled and working with water companies on the issues of water resource efficiency.

In April 2008, the Regulators Compliance Code came into effect. The Code sets out standards for how regulators should work, based on the Hampton principles of better regulation. We welcome the Code and are fully committed to continuing our modernization programme to improve businesses’ experience of regulation.
In the future, the environmental risks we face can only be managed by concerted effort from governments, business, regulators and consumers. Understanding the risks and how we manage them is key to ensuring the UK remains competitive in the face of the economic and environmental challenges of the future.

Catherine Wright is Head of Modern Regulation at the Environment Agency, the leading public body for protecting and improving the environment in England and Wales.

^