Infrastructure & Energy Horizons
Climate change is a key issue of our time. The need to cut carbon emissions and switch to clean forms of energy and associated infrastructure represents one of the greatest present challenges for businesses.
What do businesses need to be thinking about to meet climate change targets? How can you look to decarbonise your business operations? What are the latest developments in infrastructure and energy legislation and how will this affect your business?
Our I&E Horizons Series of publications below offer guidance to navigate the ever changing landscape of the infrastructure and energy sector, the potential impact on your business and how Walker Morris can help.

I&E Horizon Scanner
Welcome to our quarterly Infrastructure & Energy horizon scanner. The purpose of this is to […]
Welcome to our quarterly Infrastructure & Energy horizon scanner. The purpose of this is to keep you abreast of key legal and regulatory developments.
-> Read the Infrastructure & Energy Horizon Scanner here.
In this issue we are covering:
- Net Zero & Industry News
- Renewables and Green Energy
- Hydrogen and CCUS
- Waste and Resources
- Construction/Development
- General / In-house Legal
If you have any questions or require any more information then please don’t hesitate to get in touch with us.
If you would like to receive this and other similar updates direct to your inbox, please click the link here.

Solar farms: Tax considerations for landowners
In this article, Nicola Parkinson and Kathryn Brook, specialist lawyers from Walker Morris’ Tax and […]
In this article, Nicola Parkinson and Kathryn Brook, specialist lawyers from Walker Morris’ Tax and Infrastructure & Energy teams respectively, highlight potential tax issues associated with solar farm developments. This note is intended as a guide to facilitate initial negotiations between developers and landowners at the outset of a development, and to prompt and inform discussions between landowners and their advisors.
Solar project legal structure
This article is predicated on the typical solar farm legal structure whereby the developer will be the initial lessee of the site. It assumes that the solar farm site will be leased to the developer or an investor, and the developer will fund the application for planning permission and construction of the solar farm. The landowner will be entitled to rental income from the project which is likely to be linked to revenue from the site. The lease term is likely to be around 25 to 40 years. The article focuses, in particular, on the tax issues relevant to farmers or land/estate owners who currently use the land for the purpose of an agricultural trade – a particularly common scenario.
It is worth noting, however, that the landowner tax issues are substantially the same where the developer constructs the project for an investor lessee.
Landowner tax issues
Farmers and other agricultural users can carry on their activities through a variety of structures and the impact of tax issues will depend very much on the particular structure, the size of the project relative to the farming activities and whether the landowner has already undertaken business and estate tax planning.
The following general summary of issues is particularly relevant to agricultural landowners who own the land individually, rather than through a company or trust.
Farmers carry on a trade in relation to their agricultural activities. A site which becomes a solar farm ceases to be used for the purposes of that trade and this has potential tax implications.
Farmers may want to continue with grazing the site if that is possible but, even if grazing continues, the site will only be partly used for the farming trade and therefore the tax issues cannot be entirely avoided.
Farming and landowning businesses have a significant part of their value in the land they own. Such businesses will often be carried on by family members and the farm assets at some stage will be passed between family members. A significant tax issue for farmers is therefore how tax liabilities can be managed on transfers of land relating to family business or wealth restructuring, and the potential impact of tax on the death of a landowner.
Land used for a farming trade benefits from important tax reliefs:
- Inheritance tax (IHT): IHT potentially applies to the value of land owned at death of the owner and to lifetime gifts of land where the land is transferred less than 7 years before the death of the owner. Land used for the purposes of farming or other agricultural trade benefits from Agricultural Property Relief (APR) which exempts the agricultural value of such land from IHT. Farming land is also likely to benefit from Business Property Relief (BPR) which provides a similar exemption from IHT for land and other assets used for the purposes of a trade*. In contrast to APR, BPR is not limited to the agricultural value of the land.
- Capital gains tax (CGT): CGT applies to capital gains made on gifts or sales of land. Gifts of land between family members will usually be treated as made at market value. Land used for farming benefits from CGT holdover relief. This relief applies to gifts of assets used in a trade* and allows the gain on a gift to be transferred to the recipient and effectively deferred until the recipient disposes of the asset. Holdover relief is particularly important on gifts of farmland as it avoids a tax charge arising on a gift where there are no sale proceeds to fund the tax.
These exemptions and reliefs will generally cease to apply to the land used for a solar farm, as the land will no longer be used for the farming trade.
If grazing is allowed, IHT APR relief may be available but will be limited to the agricultural value (that is, excluding the additional value created by the project or any associated planning permission).
BPR may also be available if solar farm rental income forms only a small part of the income of the farm trade, but this depends on the specific facts and is only likely to be relevant on very small projects.
The loss of these IHT and CGT reliefs will increase tax costs on future gifts of the land as part of family business or succession planning, and will increase the IHT liability on death of the landowner.
What practical advice arises?
To mitigate the potential tax cost of the loss of reliefs, landowners may be well-advised to take some of the following steps before entering into a solar farm project:
- Ensure that grazing can continue on the site to retain the benefit of APR on the agricultural value of the land.
- Transfer some or all of the site to family members or to a company before planning permission for solar farm use is obtained. This has a dual purpose/benefit: (1) to allow the landowner to implement business and family succession planning in relation to the site while the IHT and CGT reliefs applying to agricultural land apply; and (2) in relation to CGT holdover relief, to ensure held-over gain is based on the lower site value before planning permission for the site is obtained.
- Seek tax advice early! We recommend that landowners should identify their individual tax requirements at an early stage, not least because issues arising at a later stage can delay or even stop a project. Discussion between landowners and their tax advisers about the project and the potential tax implications at the outset can help to ensure that any potential issues are anticipated, and pre-emptive tax-planning solutions can be implemented.
How we can help
Walker Morris’ Infrastructure & Energy team can support both landowners and developers with solar projects, in particular with the negotiation and documentation of land and commercial arrangements. Whilst Walker Morris’ lawyers cannot provide inheritance tax advice, for example in relation to landowners’ succession or estate planning, we are happy to make introductions to appropriately experienced advisors/accountants.
For further advice or information in relation to solar farm developments and/or tax issues more generally, Kathryn or Nicola, who will be very happy to help.
*That is, any trade which can include farming trade

I&E Horizon Scanner
Welcome to this first edition of our quarterly horizon scanner. The purpose of this is […]
Welcome to this first edition of our quarterly horizon scanner. The purpose of this is to keep you abreast of key legal and regulatory developments.
-> Read the Infrastructure & Energy Horizon Scanner here.
In this issue we are covering:
- Net Zero & Industry News
- Renewables and Green Energy
- Hydrogen and CCUS
- Waste and Resources
- Construction/Development
- General / In-house Legal
If you have any questions or require any more information then please don’t hesitate to get in touch with us.
If you would like to receive this and other similar updates direct to your inbox, please click the link here.

EV charge points response paves way for mass[...]
The Department for Transport has published its response to the consultation on EV charge points […]
The Department for Transport has published its response to the consultation on EV charge points in residential and non-residential buildings (available here). This is seen as a vital step towards decarbonising England’s transport system and will pave the way for the mass transition to zero emission vehicles.
Regulations to be published later this year will introduce the following new measures:
- Every new home, including those created from a change of use, with associated parking within the site boundary will be required to have an electric vehicle charge point.
- Residential buildings undergoing major renovation, which will have more than 10 parking spaces within the site boundary after the renovation is complete, will be required to have at least one electric vehicle charge point for each dwelling with associated parking within the site boundary and cable routes in all spaces without charge points.
- All new non-residential buildings with more than 10 parking spaces within the site boundary will be required to have a minimum of one charge point and cable routes for one in five of the total number of spaces.
- All non-residential buildings undergoing a major renovation which will have more than 10 parking spaces within the site boundary after the renovation is complete, will be required to have a minimum of one charge point and cable routes for one in five spaces.
The proposed requirement for one charge point in all existing non-residential properties with more than 20 parking spaces will not be introduced. Instead, the Government will work to introduce a more tailored approach.
The response contains final technical details, such as charge point standards, and exemptions.
For further information, please contact Infrastructure & Energy specialists Judith Pike or Paul Dinning

Achieving Net Zero: What businesses need to know
On 19 October 2021, ahead of COP26, the UK government published its Net Zero Strategy. In […]
On 19 October 2021, ahead of COP26, the UK government published its Net Zero Strategy. In this briefing, Walker Morris’ Head of Infrastructure & Energy, Ben Sheppard, summarises key policies across a range of sectors. For further information or advice on any aspect, please do not hesitate to get in touch with Ben or any member of the Infrastructure & Energy team.
Industry Power
Take action so that, by 2035, all our electricity will come from low carbon sources, subject to security of supply. This brings forward the government’s commitment to a fully decarbonised power system by 15 years.
Accelerate deployment of low-cost renewable generation, such as wind and solar, through the Contracts for Difference (CfD) scheme by undertaking a review of the frequency of the CfD auctions.
Deliver 40GW of offshore wind, including 1GW of innovative floating offshore wind, by 2030.
Implement the Dispatchable Power Agreement (DPA) to support the deployment of ‘first of a kind’ power carbon capture usage and storage (CCUS) plant[s].
Secure a final investment decision on a large-scale nuclear plant by the end of this Parliament, whilst taking measures to inform investment decisions during the next Parliament on further nuclear projects.
Adopt a new approach to onshore and offshore electricity networks to incorporate new low carbon generation and demand in the most efficient manner, taking account of the environment and local communities.
Deliver the actions in the recent Smart Systems and Flexibility Plan and Energy Digitalisation Strategy to maximise system flexibility.
Provide £380m for the UK’s world-leading offshore wind sector, investing in supply chains, infrastructure and early-coordination of offshore transmission networks.
Reform system governance so that the whole system can achieve net zero ambitions and meet consumers’ needs.
Drive market-wide rollout of smart meters with a new four-year policy framework that introduces fixed minimum annual installation targets for energy suppliers from 1 January 2022.
Consider whether broader reforms to market frameworks are needed to unlock the full potential of low carbon technologies to take the UK all the way to net zero.
Ensure that consumers pay a fair, affordable price for their energy, and can engage with a retail energy market that offers the products and services required to make choices that support net zero.
Ensure the planning system can support the deployment of low carbon energy infrastructure.
Explore the system need and case for further market intervention for long duration storage and hydrogen in power.
Fuel Supply & Hydrogen
An ambition for 5 GW UK low carbon hydrogen production capacity by 2030.
Set up of the Industrial Decarbonisation and Hydrogen Revenue Support (IDHRS) scheme to fund new hydrogen and industrial carbon capture business models. The UK government will be providing up to £140m to establish the scheme, including up to £100m to award contracts of up to 250MW of electrolytic hydrogen production capacity in 2023, with further allocation in 2024.
Implement the £240 million Net Zero Hydrogen Fund and finalise the Hydrogen Business Model and the Low Carbon Hydrogen Standard in 2022.
The UK government will work with the sector to help develop a low carbon fuel strategy for transport for publication in 2022, as announced in the recent Transport Decarbonisation Plan, and deliver commitments on sustainable aviation fuels.
Work with stakeholders to address barriers to electrification of oil and gas production by Q4 2022 and continue to drive down routine flaring and venting.
Regulate the oil and gas sector in a way that minimises GHG emissions, notably through the revised Oil and Gas Authority (OGA) strategy, which empowers the OGA to assess operators’ plans to reduce their emissions levels against effectively a net zero test, and establish a climate compatibility checkpoint for future licensing on the UK Continental Shelf.
Industry
Ambition to deliver 6 MtCO2 per year of industrial CCUS by 2030, and 9 MtCO2 per year by 2035.
Set up the IDHRS scheme to fund new industrial carbon capture and hydrogen business models (as above).
Support the deployment of CCUS through the £1 billion CCS Infrastructure Fund.
Following Phase 1 of the Cluster Sequencing process, the Hynet and East Coast, clusters have been confirmed as Track 1 clusters.
Support the installation of energy efficiency and on-site decarbonisation measures through the £315 million Industrial Energy Transformation Fund (IETF) (£289 million for England, Wales and Northern Ireland, £26 million for Scotland).
Support the increased requirement for fuel switching to low carbon alternatives, with an ambition to replace around 50 TWh of fossil fuels per year by 2035.
In collaboration with the Steel Council, consider the implications of the recommendation of the Climate Change Committee to set targets for ore-base steelmaking to reach near-zero emissions by 2035, and the business environment necessary to support the transition.
Develop several Resource and Energy Efficiency (REEE) measures with ambition to achieving the anticipated requirement of 11 MtCO2e worth of savings by 2035, including up to 3 MtCO2e of potential abatement in the Iron and Steel sector.
Incentivise cost-effective abatement in industry at the pace and scale required to deliver net zero, through the UK ETS by consulting (in partnership with the devolved administrations) on a net zero consistent cap.
Explore opportunities for faster decarbonisation of dispersed sites in the 2020s.
Heat & Buildings
Levelling up through supporting 175,000 green skilled jobs by 2030 and 240,000 by 2035 – resulting in £6 billion additional GVA by 2030 and with a focus on the areas that need investment most.
Making the transition to low carbon buildings affordable and achievable for all by:
- Aiming to phase out the installation of new and replacement natural gas boilers by 2035 in line with the natural replacement cycle and, once costs of low carbon alternatives have come down, including any hydrogen-ready boilers in areas not converting to hydrogen, to ensure that all heating systems used in 2050 are compatible with net zero.
- Making heat pumps as cheap to buy and run as a gas boiler by growing the heat pump market to support 600,000 installations per year by 2028 and expanding UK manufacturing – with the ambition of working with industry to reduce costs by at least 25-50% by 2025 and to parity with gas boilers by 2030 at the latest.
- Supporting households in making this transition with a new £450 million Boiler Upgrade Scheme providing £5,000 capital grants and a new market-based incentive for heating system manufacturers, whilst investing £60 million in heat pump innovation – making them beautiful, smaller, easier to install.
- Consulting on phasing out the dirtiest and most expensive fossil fuels first – new oil, coal and liquefied petroleum gas heating – and replacing with low carbon alternatives in non-domestic buildings from 2024 and homes from 2026, following natural appliance replacement cycles.
- Committing to action on addressing distortions in fuel prices to ensure that low carbon technologies are no more expensive to run than fossil fuel boilers.
Helping households and businesses reduce their energy bills while making buildings healthier and more comfortable benefiting from warmer, comfier, more valuable buildings through:
- Upgrading fuel poor homes to EPC Band C by 2030 where reasonably practicable and providing additional funding to the Home Upgrade Grant and the Social Housing Decarbonisation Fund – investing £1.75 billion.
- Consulting on phasing in higher minimum performance standards to ensure all homes meet EPC Band C by 2035, where cost-effective, practical and affordable.
- Setting long-term regulatory standards to upgrade Privately Rented Homes to EPC C by 2028 and considering setting a long-term regulatory standard for Social Housing, subject to consultation.
- Reducing the energy consumption in commercial and industrial buildings in England and Wales by 2030, using measures including regulations and a performance-based measurement scheme.
- Investing a further £1.425 billion in the Public Sector Decarbonisation Scheme, with the aim of reducing direct emissions from public sector buildings by 75% by 2037.
- Setting a minimum energy efficiency standard of EPC Band B by 2030 for privately rented commercial buildings in England and Wales.
Establishing large scale trials of hydrogen for heating to take decisions in 2026 on the role of hydrogen in decarbonising heating, and consult on the case for enabling or requiring hydrogen-ready boilers and broader heating system efficiencies.
Continuing to grow and decarbonise the UK Heat Network market through the £338 million Heat Network Transformation Programme of which at least £270m will go towards the Green Heat Network Fund, introducing sector regulation and new heat network zones by 2025.
Launching a new world-class policy framework for energy-related products to ensure products use less energy, reducing emissions and household bills.
Transport
End the sale of new petrol and diesel cars and vans from 2030. From 2035, all new cars and vans must be zero emission at the tailpipe.
Introduce a zero emission vehicle mandate setting targets for a percentage of manufacturers’ new car and van sales to be zero emission each year from 2024.
Take forward the pledge to end the sale of all new, non-zero emission road vehicles by 2040, from motorcycles to buses and HGVs, subject to consultation.
Ensure the UK’s charging infrastructure network is reliable, accessible, and meets the demands of all motorists. Later this year, the UK government will publish an EV infrastructure strategy, setting out its vision for infrastructure rollout, and roles for the public and private sectors in achieving it.
Building on the £1.9 billion from Spending Review 2020, the government has committed an additional £620 million to support the transition to electric vehicles. The funding will support the rollout of charging infrastructure, with a particular focus on local on-street residential charging, and targeted plug-in vehicle grants.
Build a globally competitive zero emission vehicle supply chain and ensure the UK’s automotive sector is at the forefront of the transition to net zero.
Lead by example with 25% of the government car fleet ultra low emission by December 2022 and all the government car and van fleet zero emission by 2027.
Take action to increase average road vehicle occupancy by 2030 and reduce the barriers to data sharing across the transport sector.
Maximise carbon savings from the use of low carbon fuels, including by increasing the main Renewable Transport Fuel Obligation (RTFO) target.
Increase the share of journeys taken by public transport, cycling and walking.
Support decarbonisation by investing more than £12 billion in local transport systems over the current Parliament.
Invest £2 billion in cycling and walking, building first hundreds, then thousands of miles of segregated cycle lane and more low-traffic neighbourhoods with the aim that half of all journeys in towns and cities will be cycled or walked by 2030. As announced in the Transport Decarbonisation Plan, we will create at least one zero emission transport city.
Invest £3 billion in the National Bus Strategy, creating integrated networks, more frequent services, and bus lanes to speed journeys, and support delivery of 4,000 new zero emission buses and the infrastructure needed to support them.
Electrify more railway lines as part of plans to deliver a net zero rail network by 2050, with the ambition to remove all diesel-only trains by 2040.
Plot a course to net zero for the UK domestic maritime sector, phase out the sale of new non-zero emission domestic shipping vessels and accelerate the development of zero emission technology and infrastructure in the UK. Engage with industry to explore establishing a UK Shipping Office for Reducing Emissions (UKSHORE) to transform the UK into a global leader in the design and manufacturing of clean maritime technology.
Become a leader in zero-emission flight, kick-starting commercialisation of UK sustainable aviation fuels (SAF), and developing a UK SAF mandate, to enable the delivery of 10% SAF by 2030. Support UK industry with a £180m funding to support the development of SAF plants.
Natural Resource, Waste & F-Gases
75% of farmers in England will be engaged in low carbon practices by 2030, rising to 85% by 2035. The UK government is introducing farming schemes, including the new environmental land management schemes, which will provide a powerful vehicle for achieving net zero, and goals of the 25 Year Environment Plan.
Increase investment in industry-led research and development into solutions to help deliver net zero in agriculture and horticulture, including through the Farming Innovation Programme.
Treble woodland creation rates by the end of this Parliament, reflecting England’s contribution to meeting the UK’s overall target of increasing planting rates to 30,000 hectares per year by the end of this Parliament and maintain new planting at least at this level from 2025 onwards. Explore a long-term statutory tree target in England within the public consultation on Environment Bill targets.
Boost the existing £640 million Nature for Climate Fund with a further £124 million of new money, ensuring total spend of more than £750 million by 2025 on peat restoration, woodland creation and management. This will enable more opportunities for farmers and landowners to support net zero through land use change.
Restore at least 35,000 hectares of peatlands in England by 2025, through the Nature for Climate Fund. Restore approximately 280,000 hectares of peat in England by 2050, including via funding from the new environmental land management schemes.
Mobilise private investment into tree planting, including through the Woodland Carbon Code, with the support of government’s Woodland Carbon Guarantee, and into peat restoration through implementing a package of reforms to the Peatland Code.
Work with key stakeholders to develop a policy roadmap to increase the use of timber in construction in England, and create a cross-government and industry working group tasked with identifying key actions to safely increase timber use and reduce embodied carbon.
To support the commitment to explore options for the near elimination of biodegradable municipal waste to landfill from 2028, the UK government is bringing forward £295 million of capital funding which will allow local authorities in England to prepare to implement free separate food waste collections for all households from 2025.
Complete a review of the F-gas Regulation and assess whether we can go further than the current requirements and international commitments, including by looking at what additional reductions in F-gas use can be made to help the UK meet net zero by 2050.
Through the Environment Act, legislate for Local Nature Recovery Strategies – a new system of spatial strategies that will map proposals for improving or creating habitat for nature and wider environmental benefits, helping to deliver net zero objectives.
Biodiversity co-benefits and other environmental objectives are maximised alongside decarbonisation.
Greenhouse gas removals
Set the ambition of deploying at least 5 MtCO2/year of engineered removals by 2030, in line with CCC85 and National Infrastructure Commission assessments.86
Deliver £100 million innovation funding for Direct Air Carbon Capture and Storage (DACCS) and other greenhouse gas removals (GGRs).
Develop markets and incentives for investment in GGR methods, by consulting on preferred business models to incentivise early investment in GGRs, in 2022.
Working in partnership with the devolved administrations, aim to launch a call for evidence in the coming months exploring the role of the UK ETS as a potential long-term market for GGRs.
Explore options for regulatory oversight to provide robust monitoring, reporting and verification (MRV) of GGRs, following the recommendations of the BEIS-led MRV Task & Finish Group involving experts from industry and academia.
Seek an amendment to the Climate Change Act to enable engineered removals to contribute to UK carbon budgets.
How we can help
The focus on net zero and climate change presents risks for businesses operating in the energy sector and the wider economy. By preparing now and taking a long term perspective, however, businesses can position themselves for the challenges and opportunities of a sustainable future.
As a multi-disciplinary commercial law firm, with specialist lawyers experienced in all aspects of the net zero agenda, Walker Morris can help with specific practical tasks, such as contract reviews and reviewing/improving policies and procedures, as well as carrying out net zero due diligence, assisting clients to secure ‘green finance’ or investments based on climate change criteria, delivering low carbon, sustainability and other green projects, and assisting with measuring and reporting of energy, carbon and climate risks.
Walker Morris can also provide comprehensive, cross-disciplinary advice and transactional assistance, as well as risk management and dispute resolution strategies if/when any strategic litigation queries or concerns arise.
Finally, Walker Morris can provide tailored training to staff at all levels within a business on any net zero-related area or issue.
For further information or advice on any aspect of the UK Government’s Net Zero Strategy and how it will impact your business, please do not hesitate to get in touch with Ben Sheppard or any member of the Infrastructure & Energy team.

Freeports: A melting pot for innovation – Don’t[...]
In the March 2021 budget eight new Freeports were announced: East Midlands Airport, Felixstowe and […]
In the March 2021 budget eight new Freeports were announced: East Midlands Airport, Felixstowe and Harwich, Humber Region, Liverpool City Region, Plymouth, Solent, Thames and Teesside. The UK had a small number of Freeports before 2012 including Liverpool, Southampton and the Port of Tilbury, but the creation of eight new Freeports represents a bold step towards the United Kingdom forging its own trade path post Brexit.
A Freeport is a secure customs zone located at a port (air, rail, or sea) which benefits from relaxed or reduced customs regime, taxation and administrative requirements despite being located within a jurisdiction’s land and regulatory border.
Freeports were a key focus of the Johnson campaign in 2019 for the post Brexit era. The EU does not prohibit Freeports, but the EU legal framework places limitations on the operation of a Freeport within the EU customs union. Freeports also form an important part of the levelling up agenda.
Most are expected to become operational by 2022 but much of the regulation in this area is still evolving. In particular, changes to the planning process applicable to Freeports remain to be published. Guidance is expected in areas of governance, security, planning, procurement, technology, customs and tax.
Freeports have been referred to as melting pots for innovation, as a result of their potential to attract innovative and green and cleantech businesses into clusters. What does this mean for companies operating in the Infrastructure and Energy (I&E) sectors?
The following main advantages flow from this concept:
- Decarbonisation of Ports – the push to decarbonise the Freeport zones (aided by streamlined planning processes) will result in enhanced opportunities to participate in the quicker development of ‘green port’ infrastructure such as EV charging points, hydrogen and ammonia fuelling, battery storage and grid balancing facilities and shoreside power including solar and wind. Further, multi modal ports could support a decarbonised logistics centre.
- Innovation – flexible or reduced regulation will allow Freeports to operate as a “regulatory sandbox” providing space and the opportunity for innovation and experimentation and the co-location of supply chains and processes from generation through to storage, export and carbon capture. They are an ideal home for cleantech businesses which will thrive and grow together in clusters, for example as part of a hydrogen gas network.
- Renewable Energy Projects – the suspension of duties on goods imported to Freeports and the establishment of industrial ‘clusters’ at Freeport sites means that those involved in the construction of renewable infrastructure and technology will only be required to pay tax on a final, assembled product upon its entry to the UK market, rather than on each individual component upon importation. This has major implications for the delivery of cheaper renewable energy projects particularly if coupled with strong supporting infrastructure. It will also incentivise companies in the renewable energy sector to locate their supply chain in the UK, if they do not already do so.
- Access to innovation funding – the government is especially interested in private sector-led innovation ambitions that contribute to the decarbonisation agenda or Net Zero.
There are also the practical benefits of operating in a Freeport Zone:
- Suspension of VAT
- Zero Rate NICs – in addition to the availability of work forces in Freeport areas, employers operating in a Freeport will pay 0% employer NIC on the salaries of any new employee working in the Freeport tax site. This rate will apply for 3 years on earnings up to a £25,000 per annum threshold with an employee being required to work 60% or more of their working hours in the Freeport. The relief is intended to be available for up to 9 years from April 2022 although the Government intends to review whether it should be continued up to 2031;
- Business Rate Reliefs – the Government intends to offer up to 100% relief from business rates to newly formed business and those relocating to a Freeport from 1 October 2021. It is intended that the relief will apply for 5 years from the receipt of the first relief, which must be by 30 September 2026;
- Local Retention of Business Rates – the councils in which Freeports are located will retain business rates for 25 years to support growth and investment in the area above an agreed baseline;
- Enhanced Capital Allowances – to provide enhanced tax relief for companies investing in qualifying new plant and machinery assets. This relief allows companies operating within a Freeport to reduce their taxable profits by the full cost of qualifying investment where this investment occurs between 1 October 2021 and 30 September 2026;
- Stamp Duty Land Tax Relief – to apply on all land purchases for qualifying commercial activity within a Freeport site between 1 April 2021 and 31 March 2026;
- Enhanced Structures and Buildings Allowance – providing enhanced tax relief for companies constructing or renovating structures and buildings for non-residential use.
How we can help
The aims of the UK government’s new Freeports commitment and the levelling up agenda are clear and there are likely to be significant commercial prospects which could benefit well-informed and progressive businesses within the I&E sectors over the coming years. However the regulatory landscape is still evolving. Walker Morris is monitoring closely and will report on key developments.
Walker Morris also offers comprehensive and cross-discipline legal support to companies looking to locate within one of the UK’s new Freeports, or to otherwise capitalise upon the opportunities that Freeports may afford.
If you would like any information, advice or training in relation to planning, construction, international trade, supply chain and logistics, commercial contracting and/or infrastructure and energy issues, please do not hesitate to get in touch.

UK’s post-Brexit path to Net Zero: Navigating challenges[...]
It is well known that the impacts of Brexit will be far reaching, but what […]
It is well known that the impacts of Brexit will be far reaching, but what does Brexit really mean for the UK Infrastructure and Energy (I&E) sector?
In some areas Brexit will result in little regulatory change; in others substantial deviation from the status quo has occurred, or is imminent. However, consistent themes with which those in the I&E sector will be familiar are that, not withstanding Brexit, the UK remains committed to existing Net Zero commitments and economic recovery is a central goal of the UK’s National Infrastructure Strategy. (This is, of course, particularly crucial for government as we emerge from the coronavirus pandemic.)
In this article, Walker Morris’ Infrastructure and Energy specialists Ben Sheppard and Jake Smith consider what businesses need to know to help capitalise on I&E opportunities following one of the most turbulent economic times in living memory?
Prior to the UK’s departure from the EU on 31 January 2020, the I&E sector was subject to extensive EU regulation. With over 18 months having passed since the UK’s departure, how has regulation of the I&E sector changed compared to the pre-Brexit regime and how can businesses capitalise on I&E opportunities in the coming years?
From an I&E perspective, many aspects of the framework governing the UK’s post-Brexit relationship with the EU will be familiar:
- The framework seeks to ensure that neither the UK nor the EU reduce climate change commitments that were in place at the end of the implementation period;
- Rules must be maintained (and continue to be enforced by independent regulatory authorities) to enable the efficient operation of gas and electricity systems, which will include (a) ensuring sufficient energy storage, dispatch and demand-side response solutions (which will be important to ensure efficient integration of renewables infrastructure with existing networks); (b) continued regulation of the production, generation, transmission, distribution or supply of electricity or natural gas; and (c) ensuring that wholesale pricing of electricity and natural gas continues to be reflective of supply and demand; and
- Competition rules to address anti-competitive arrangements and market abuse remain largely unchanged. Post-Brexit rules relating to the grant of government subsidies will also remain similar to the pre-Brexit regime. However, the UK government has introduced some new concepts which will be relevant for those who operate within the scope of the UK subsidy regime [1].
Despite the above familiarities, the post-Brexit I&E landscape is not entirely certain, with the UK’s withdrawal framework confirming that both the UK and EU have the right to adopt, maintain and enforce measures necessary to pursue public policy objectives. Notable changes in the I&E regulatory landscape include:
- A Specialised Committee on Energy (a joint forum between the UK and EU) is now tasked with monitoring the implementation of energy matters agreed as part of the UK’s withdrawal. The Committee will aim to ensure the stability of co-operation between existing agencies post-Brexit. The establishment of this forum may be seen as a positive step in ensuring momentum is not lost in implementing legal measures aimed at combatting climate change and facilitating innovation in the I&E sector.
- The UK is required to have an effective system of carbon pricing, covering greenhouse gas emissions from electricity generation, heat generation, industry and aviation. An example of change in this area is that the UK is no longer a member of the EU Emissions Trading Scheme. From 1 May 2021, UK entities who wish to continue trading in the Scheme must open a trading account in another EU member state. Alternatively, the UK implemented a domestic Emissions Trading Scheme on 1 January 2021. Energy intensive users should familiarise themselves whether recent changes in this area impact their business and whether action is required to remain compliant with applicable regulations.
- Renewable Energy Guarantees of Origin (REGOs), which are used to validate an energy supplier’s renewable/non-renewable fuel mix, will no longer be recognised in the EU if they are issued in the UK. The UK will continue to recognise REGOs originating in the EU. REGOs may potentially become an increasingly important hallmark for funders moving forward.
- The availability of funding for projects in the I&E sector is a rapidly changing area, warranting consideration of both the availability of public sector funding as well as institutional investors becoming ever-more ‘climate conscious’. Watch out for our further publications in respect of financing I&E projects.
So, to what extent is it ‘business as usual’ for the I&E sector post-Brexit? Whilst aspects of the post-Brexit I&E landscape are comparable to pre-Brexit regimes, some present reasons for business to be both optimistic about opportunities in the I&E sectors, whilst also remaining mindful of changing regulatory obligations and challenges.
How we can help
In this article we have touched on only a selection of themes relevant to the UK’s post-Brexit path to Net Zero. However our I&E team would be very happy to speak to businesses who are keen to explore new opportunities in the I&E sector, and to ensure their operations remain compliant with current and fast-changing legislation. Please do not hesitate to get in touch.
[1] See our related article for more information on this subject.

Net Zero: Legal and regulatory challenges
The UK’s ‘Net Zero’ commitment imposes a legally binding duty on the UK (enshrined in […]
The UK’s ‘Net Zero’ commitment imposes a legally binding duty on the UK (enshrined in law under the Climate Change Act 2008) to ensure that by 2050 it removes from the atmosphere all greenhouse gases it emits.
A more ambitious government target – to reduce emissions by 78% compared to 1990 levels by 2035 – was to be (but has not been) enshrined in law by the end of June 2021. To add to the picture, a variety of more detailed regional targets across the UK have been set by city regions such as Bristol City Council and Greater Manchester Combined Authority, and further pledges may be announced at the upcoming 2021 UN Climate Change Conference (COP26).
While the aim of Net Zero is well-known, the legal and regulatory landscape is uncertain and constantly evolving. As recognised by Ofgem, meeting the UK’s ambitious climate change goals requires a transformation of the energy system at unprecedented scale and pace, to design and deliver a much smarter, more flexible, and better integrated energy system.
How will the role of the regulator need to change? How will future energy systems be operated and regulated? Will climate change continue to be a ground for strategic litigation?
The role of the regulator
Much of the regulatory framework of EU law on energy and the environment has been retained following Brexit. This includes that the regulator (Ofgem) must be independent and cannot take or seek instructions from Government and other entities [1].
Much of the domestic regulation of the energy sector comes from the Electricity Act 1989. Section 3A(1) sets out Ofgem’s principal objective in carrying out its functions: to protect the interests of existing and future consumers in relation to electricity conveyed by distribution systems or transmission systems. Ofgem has made it clear that this includes making sure that vulnerable consumers are not left behind in the transition to low carbon energy [2].
Given its independence and proactive duty to take actions that promote effective competition, what then is the role of Ofgem with regard to Government strategy on Net Zero? Although the requirement for sustainable development is enshrined in the Electricity Act, this is in the context of Ofgem’s principal objective. The Secretary of State is required to issue guidance about how the regulators can achieve social or environmental policy goals, but ultimately such guidance cannot influence regulator independence. Therefore, in the absence of statutory limitations on its power, Ofgem has wide discretion to act in accordance with its functions and is likely to rely heavily on cost-benefit analyses of Net Zero strategies to promote competition and protect the interests of customers over time.
Emerging policy challenges
A number of policy challenges are surfacing in the area of Net Zero. For example:
- How does the way in which electricity network costs are recovered affect regional renewable energy projects?
- Should the Capacity Market [3] reflect the wider locational benefits that generation can bring to the electricity system including resilience and security of supply?
- Can the Contract for Difference [4] mechanism and the next auction round in 2021 unlock a wide geographical spread of renewable investments?
- What further support is needed for small scale renewable electricity generation?
- What measures are needed to encourage regulated energy network companies to engage in local energy planning processes?
- What role should the oil and gas sector continue to play in the UK’s energy mix?
A major question is how should the energy system be operated to facilitate Net Zero while maintaining energy security and protecting the interests of consumers?
Future system operator
Calling for a radical re-structuring of the energy system [5], BEIS and Ofgem propose an independent Future System Operator (FSO) which is able to look holistically at long term electricity and gas challenges to support the transition to Net Zero, taking a stronger role in network planning and providing expert advice across the energy (gas and electricity) system on how to deliver Net Zero ambitions. Its roles and functions would include:
- system planning and network development
- driving competition in energy networks
- energy market design
- coordination with distribution networks
- heat and transport decarbonisation
- energy data
- engineering standards and energy code development
- hydrogen
- CCUS
The consultation raises interesting questions on what organisational structures could bring proper oversight in place of the current private shareholder mechanism that is accountable to the market. It proposes two alternative models:
- a standalone privately owned model, independent of energy sector interests (incentivised through its profit to drive performance); or
- a highly independent corporate body model classified within the public sector, but with operational independence from government (not be driven by shareholder or profit interest).
Under both models the FSO must be independent of central government influence and free from conflicts of interest, and will need strong relationships to energy market participants, consumers, regulators and other organisations with energy interests, especially where objectives cannot be delivered without cross-sector co-operation.
Climate litigation
In a climate change environment there is a rising tide of litigation relating to climate and the energy transition.
Strategic litigation is increasingly being used as a mechanism for influencing climate governance by holding government and businesses to account or testing a legal point that would apply to other cases, create awareness, encourage public debate or spark policy change. Examples include challenges to the Heathrow expansion, the Good Law Project’s challenge of the Energy National Policy Statements, a challenge to the Drax Power Station and Transport Action Network’s challenge to the Road Investment Strategy.
This is a trend that looks set to continue, with recent case law indicating an expansion in the types of organisations which could be targeted, and the variety and reach of claims which could be brought [6].
How we can help
The focus on Net Zero and climate change together with the transformation of the regulatory and technological landscape present risks for companies operating in the energy sector and the wider economy. By preparing now and taking a long term perspective on these risks businesses can position themselves for the challenges and opportunities of a sustainable future.
As a multi-disciplinary commercial law firm, with specialist lawyers experienced in all aspects of the Net Zero agenda, Walker Morris can help with specific practical tasks, such as contract reviews and reviewing/improving policies and procedures, as well as carrying out Net Zero due diligence, assisting clients to secure ‘green finance’ or investments based on climate change criteria, delivering low carbon, sustainability and other green projects, and assisting with measuring and reporting of energy, carbon and climate risks.
Walker Morris can also provide comprehensive, cross-disciplinary advice and transactional assistance, as well as risk management and dispute resolution strategies if/when any strategic litigation queries or concerns arise.
Finally, Walker Morris can provide tailored training to staff at all levels within a business on any Net Zero-related area or issue.
Please do not hesitate to get in touch.
[1] Article 35 of the Electricity Directive (Directive 2009/72/EC)
[2] https://www.ofgem.gov.uk/news-blog/our-blog/role-consumer-achieving-net-zero
[3] A mechanism introduced by the UK government to ensure that electricity supply continues to meet demand as more volatile and unpredictable renewable energy generation comes online, the Capacity Market provides a regular payment to reliable forms of energy to ensure capacity is available when needed. See BEIS’ Capacity Market consultation, open until 18 October 2021
[4] The UK government’s Contracts for Difference scheme incentivises investment in renewable energy to support low-carbon electricity generation
[5] Energy Future System Operator Consultation
[6] See our recent briefing for practical solutions in the face of rising strategic litigation risks

The UK Subsidy Control Regime – Familiar But[...]
Although hyped as “the most important bit of post-Brexit legislation yet”[1], the Subsidy Control Bill […]
Although hyped as “the most important bit of post-Brexit legislation yet”[1], the Subsidy Control Bill published by the UK Government on 30 June 2021 (the Subsidy Control Bill) largely builds on commitments made by the UK under the EU-UK Trade and Cooperation Agreement (TCA), which have had effect since the end of the Brexit transition period. The draft legislation nevertheless provides some useful clarity on key aspects of the proposed regime that is expected to come into force in 2022.
The Current Position
From 1 January 2021, the EU state aid rules ceased to apply to funding and support measures granted to businesses by UK public authorities – save where a measure affects trade in goods (and/or wholesale electricity) between Northern Ireland and the EU. Since then, the subsidy control provisions of the TCA have applied, having been incorporated into domestic law by the European Union (Future Relationship) Act 2020.
The framework for subsidy control agreed under the TCA largely replicates the EU state aid regime in substance. The definition of what constitutes a “subsidy” broadly mirrors the EU definition of “aid”. In common with the state aid regime, the TCA prohibits certain types of subsidy (e.g. subsidies for restructuring an ailing or insolvent business without a credible restructuring plan) and exempts certain others (e.g. “de minimis” subsidies and subsidies to compensate for natural disasters or other exceptional non-economic occurrences such as Covid-19).
However, a key difference between the TCA and the state aid regimes is that, while state aid has to be notified to the European Commission for pre-approval, the TCA simply requires subsidies to be granted in accordance with six principles. The state aid regime also benefits from a General Block Exemption Regulation (the GBER) which exempts around 95% of state aid measures from the notification regime. With no domestic equivalent to the GBER and very little guidance available on how the six principles should be applied, a common complaint since the TCA provisions came into effect has been the legal uncertainty they have created for public authorities and the potential recipients of subsidies.
The New UK Subsidy Control Regime – what we know so far
The key elements of the proposed new regime are as follows:
- The overall scope of the new regime is broadly as prescribed under the TCA, save that the definition of a “subsidy” includes measures which have or are capable of having an effect on competition or investment within the UK – and not just on trade and investment between the UK and third countries. This introduces a new dimension to the regime, namely a desire to protect the UK internal market and, for example, avoid “subsidy races” between different areas.
- In a similar vein, a new prohibition has been added which covers subsidies granted on condition that the enterprise in question relocates all or part of its existing economic activities from one area of the UK to another in circumstances where it would not otherwise have done so.
- The “de minimis” threshold below which subsidies to a single enterprise will be exempt from the rules is set at £315,000 over a three-year period or £725,000 where the subsidies are for the provision of so-called Services of Public Economic Interest. In addition to the exemptions agreed under the TCA, exemptions are proposed for subsidies given to safeguard national security or to ensure the stability of the UK’s financial system.
- A seventh principle has been added to the six principles set out in the TCA with which a subsidy must generally comply. This provides that subsidies should be designed to achieve their specific policy objective while minimising any negative effects on competition on investment within the UK. Details of the seven principles (the Seven Principles) are as set out below.
- The assessment to which a subsidy must be subjected will depend on how it is categorised. The great majority of subsidies are expected to fall under the so-called “streamlined” or “baseline” routes; subsidies which are more likely to cause negative effects may be categorised as “subsidies of interest” or “subsidies of particular interest”.
- “Streamlined subsidy schemes” appear to be safe harbours similar to a block exemption which the Government says will be created for subsidies deemed to be low risk of distorting competition, trade and investment; that promote the Government’s strategic objectives; and which are seen as being compliant with the Seven Principles. Where a public authority can demonstrate that a subsidy meets the compliance criteria for a streamlined route, it will not have to carry out a separate assessment of its compliance with the Seven Principles.
- A public authority will have to assess “baseline” subsidies (either individual awards or schemes) against the Seven Principles. Guidance on the application of the Seven Principles will be issued in due course and public authorities will have a statutory duty to have regard to it.
- A public authority will have to seek approval from the new UK Subsidy Advice Unit within the Competition and Markets Authority in relation to the granting of “subsidies of particular interest” or where otherwise required by the Secretary of State. Further details of what constitutes a subsidy of particular interest are expected to be set out in regulations in due course and may make reference to the value of the subsidy and the sector in which the intended beneficiary operates. A short “cooling-off period” of five working days will apply once the Subsidy Advice Unit has provided its report, following which the public authority will be able to proceed to grant the subsidy (without necessarily following the Subsidy Advice Unit’s advice).
- Public authorities awarding subsidies of interest will be encouraged to undertake more extensive analysis as part of their assessment of compliance with the Seven Principles. There will also be an option for the public authority to request that the UK Subsidy Advice Unit reviews its assessment of compliance and provides non-binding advice on how that assessment and the design of the subsidy might be improved.
- It is intended that jurisdiction to judicially review the award of subsidies will be given to the Competition Appeal Tribunal. The time period within which an application for review must be made is short.
The Subsidy Control Principles
The Seven Principles are as follows:
- Subsidies should pursue a specific policy objective in order to— (a) remedy an identified market failure, or (b) address an equity rationale (such as social difficulties or distributional concerns).
- Subsidies should be proportionate to their specific policy objective and limited to what is necessary to achieve it.
- Subsidies should be designed to bring about a change of economic behaviour of the beneficiary. That change, in relation to a subsidy, should be— (a) conducive to achieving its specific policy objective, and (b) something that would not happen without the subsidy.
- Subsidies should not normally compensate for the costs the beneficiary would have funded in the absence of any subsidy.
- Subsidies should be an appropriate policy instrument for achieving their specific policy objective and that objective cannot be achieved through other, less distortive, means.
- Subsidies should be designed to achieve their specific policy objective while minimising any negative effects on competition or investment within the United Kingdom.
- Subsidies’ beneficial effects (in terms of achieving their specific policy objective) should outweigh any negative effects, including in particular negative effects on— (a) competition or investment within the United Kingdom; (b) international trade or investment.
The Energy and Environment Principles
In addition to the Seven Principles, the Subsidy Control Bill sets out an additional set of principles which are specific to the energy and environment sectors. The first of these principles is that subsidies must be aimed at and incentivise the beneficiary in “delivering a secure, affordable and sustainable energy system and a well-functioning and competitive energy market”, or “increasing the level of environmental protection compared to the level that would be achieved in the absence of the subsidy”.
The remaining energy and environment principles deal with a number of related factors including decarbonisation, liabilities for pollution and the UK meeting its obligations under the TCA.
Conclusion
Public authorities and businesses who receive, or are looking to receive, public support will welcome the fact that the proposed new subsidy control regime looks set to offer some greater certainty than they currently face when trying to comply with the provisions of the TCA. However, the scope of the streamlined subsidy schemes and the definitions of subsidies of particular interest and subsidies of interest will be critical to how the regime works in practice.
Walker Morris will continue to provide key updates on the Subsidy Control Bill as it passes through Parliament and as details of the supporting secondary legislation and guidance become available.
Further Information
For more information please contact a member of our team.
[1] ‘New UK laws to sweep away EU state aid rules’, 30 June 2021: https://www.bbc.co.uk/news/business-57656812