At the end of last year, we set out some of the key developments in markets and legislation for water, waste and energy. At the same time, business confidence for the year ahead plummeted to COVID-19 level lows against the backdrop of Labour's first budget.
2025 will be similarly challenging as businesses deal with increased taxes and regulatory uncertainty.
Here, we set out some considerations for what to keep on your watchlist for 2025 and if you ever need any help navigating the year ahead, just get in touch.
Let's start with the Circular Economy
Simpler Recycling
The Government finally confirmed its default position for waste collections in England under the Simpler Recycling regime. This year, waste management organisations and Local Authorities/councils will have flexibility to determine and implement a collection practice that is most suitable and appropriate for community needs. By 31st March 2025, all businesses and other non-household premises with 10 or more full-time employees must separate dry mixed recyclables (DMR) and food waste from general waste.
Get in touch today and we can guide you to achieve compliance with these new waste management laws.
Packaging Extended Producer Responsibility (pEPR)
pEPR is in its final stages of development, taking into account the assessment criteria for the Recyclability Assessment Methodology, fee modulation for all in-scope materials, as well as the overarching governance structure for the “Producer Responsibility Organisations” (PRO).
Local Authorities are due to receive payments from pEPR fees, generated mainly via fee modulation, in October 2025 (the first half of payments), and the remaining installments in early 2026 (January and March respectively). The aim of pEPR is to encourage designing for recyclability, as well as shift the burden of the cost of household packaging waste collection, sorting and recovery away from Local Authorities and on to producers.
Deposit Return Scheme (DRS)
This is still intended to be delivered for England and Northern Ireland, despite Wales announcing they will no longer be participating in November 2024. Defra has submitted draft regulations and are still intending to implement a DRS according to the revised timeline (i.e. by October 2027). This will require clear decisions in 2025 to prepare the logistics.
Note that if a DRS is not fully implemented by 1 January 2028, the regulatory backstop will kick in meaning that all in-scope containers due for DRS compliance will be caught under pEPR legislation (and therefore be subject to pEPR fees per container).
Other key areas to keep an eye on:
Spending Review
Spending reviews are how the government establishes and announces departmental spending plans for the year(s) ahead. The next review, expected in late spring, will be essential for delivering on Labour’s manifesto promises for both investment and reforms. Departments without explicit links to the Prime Minister's ‘mission-led’ plans or ‘milestones’, may face difficulty making a success of their remits as they may see significant cuts to their budgets.
Climate Change Committee Advice
The Climate Change Committee (CCC) is due to publish their advice to the government on how to meet the Seventh Carbon Budget. The budget covers UK net emissions of greenhouse gases over the years 2038 to 2042. We can expect challenging targets, in line with the recently recommended 81% reduction in territorial emissions from 1990 to 2035 for the UK’s Nationally Determined Contribution.
Water Reform
The water sector also faces a big year ahead. The Independent Commission into the water sector and its regulation is expected to report back to the Government with recommendations on how to tackle key issues across the sector. We can expect this in the Summer against the backdrop of the Price Review which was announced on 19th December last year. The Price Review set out a £104bn programme of spending over the next five years. It also set out that household bills will rise on average of £31 per year.
Industrial Strategy
After launching the ‘Modern Industrial Strategy’ Green Paper and consultation, we can expect the subsequent Sector Plans to be published, directing longer-term growth objectives for the government's 8 priority sectors. The work and engagement of the Industrial Strategy Advisory Council, led by Clare Barclay, CEO of Microsoft UK, will help shape the outputs.
Heat Network Consumer Protection
Consumer protections will be introduced over time, starting with the commencement of the Consumer Advocacy and Advice functions in April 2025, supported via Citizens Advice and the Energy Ombudsman. DESNZ and Ofgem are currently seeking consultation on consumer protection requirements around such things as obligations for fair pricing and protecting vulnerable consumers, all in an effort to restore public trust in the energy sector.
Carbon Reporting
New sustainability reporting standards will be adopted by the UK in 2025 with the aim to improve environmental, social, and governance (ESG) reporting in line with international standards. These standards will be developed and set by the International Sustainability Standards Board. This builds on the existing frameworks set by the existing Taskforce on Climate-Related Financial Disclosures.
Electricity Market Reform
The still long awaited decision on the outcome of the Review of Electricity Market Reform will continue to dominate debate in energy markets in 2025 as the government nears a decision. Reforming energy pricing has the potential to have significant implications for generators and suppliers and the National Energy System Operator will be cautious through 2025 how they establish other reforms to meet ‘Clean Power 2030’.
Trade Relations
We can anticipate a reset in EU relations during 2025. The end of 2024 saw political turmoil for both French and German governments, making any reset potentially more difficult. However, upcoming talks for both goods and services may substantially impact your business operations. UK willingness to find alignments to the EU for the incoming Carbon Border Adjustment Mechanism is a demonstration of the intention to create easements for businesses. The backdrop to this EU relationship reset will be how the UK seeks relations with a new US Administration.
What’s Next?
Green policy isn’t a zero sum game. There are growth opportunities across the vital water, waste and energy sectors - if the right policy frameworks are in place. At Veolia, we will be playing a key role in supporting the development of the breadth of issues discussed in this note by sharing our knowledge and expertise directly with policy makers to lobby for change that will shape a greener future.
Throughout all this, we will provide our customers with regular updates and most importantly, listen to you to ensure your voice is heard and our actions help your business and the environment thrive in this evolving and often complex landscape.
Change can be difficult to manage though, so whether this is unknown territory or you are looking to improve your understanding, please do not hesitate to reach out to your account manager or contact us directly below: