SEPA chief executive Terry A'Hearn on budget cuts, regulatory changes and Paris

Terry A’Hearn has clearly had a long week. The Australian, who took over as chief executive of the Scottish Environment Protection Agency (SEPA) last April, has spent part of it in London ingratiating himself with the immigration system. “I’ve now got permanent residency,” he says, a sense of relief evident in his voice.

As A’Hearn prepared to take in a first Christmas in his adopted home, though, hundreds of others were preparing to be evacuated from their own as the wettest month on record brought with it devastating consequences across Scotland.

As is often the case in such instances, the conversation quickly turned to money. Three days before A’Hearn sat down with Holyrood, Deputy First Minister John Swinney announced the agency would face a £2.4m cut – equivalent to around seven per cent – in the next financial year.

Amidst the squeeze on local government coffers, budgetary belt-tightening facing the country’s flood forecasting and risk management authority did not attract great media attention. Then Storm Frank picked up speed.

“It won’t affect what we need to do,” says A’Hearn when asked about the cut. “The Deputy First Minister had told agencies that, unfortunately, budget cuts were likely, and what we want to do is work out how to be innovative, to use the smaller amount of money we’ve got to deliver the same or more.

“This is a discipline for the 21st century. Of course, we would all like to have the same amount of money or more money; we want that in our personal lives, we want it in organisations. [With] that sort of budget cut, I am asking the business community and the general community to work with us on being really innovative to turn environmental issues from problems into opportunities.

"Getting a six to seven per cent budget cut, we have to have the same mindset: how does that become something that helps us drive innovation. So I would commit that we will be able to deliver the same or more with that budget cut.”

A’Hearn, the only individual to head up two national environmental regulators on these islands having spent two-and-a-half years in charge of SEPA’s Northern Irish counterpart, is a glass half-full type. The word ‘opportunity’ peppers many of his answers, though its use goes deeper than a sound bite. The Regulatory Reform (Scotland) Act 2014, which gave SEPA a statutory purpose, underpins his outlook.

“If you go to a party and you want to get rid of someone, tell them you work at a government agency and you’ve got a new statutory purpose,” he laughs. “But it is very powerful because the parliament has told SEPA that our job is not just to improve the environment, it is to improve Scotland’s social and economic outcomes – that’s very powerful. Now my job is to help the organisation use that and actually do what parliament has asked us to do.”

Doing so means a change in regulatory strategy. Whereas it was once focused solely on reducing the pollution billowing out of factories, A’Hearn suggests there is now a need for a more mature discussion that considers economic growth and environmental considerations in the round. The whisky industry, which relies squarely on a good quality water supply, is a case in point.

“Making sure the industry is top class at water management is critical,” he says. “So how do we think as a regulator, how do we cut down the time they have to spend on sending in data if they’ve now got to a point where they are largely fully compliant and we’re trying to get them to go beyond that? Do we need to torture them as much with requests for the same data that we were asking for 20 years ago?

“We need to have the same control. If they have an incident that means they deserve to be prosecuted, we will do that. But it will be about how you cut down the processes so they can put their time and effort into having the right data to go even further beyond compliance and work out the market advantage so they can be on the upward curve, not the downward one.”

The environment protection agency is in the process of finalising individual strategies tailored to each sector it regulates with rollout expected inside the next few months. That will be accompanied by the appointment of a specific lead within SEPA for each sector. Their job will be to work with industry players as well as agencies to identify the business opportunities beyond straightforward compliance.

“Our regulation will go from being grounded in the different sets of rules to being grounded in, ‘this is the sector, here is where it is on its journey, here are the powerful things we’ll do to solve the final set of compliance issues, and how we will help them go further’,” says A’Hearn. “That sounds like a mechanical thing but it’s a very different way of regulating than most EPAs use around the world.”

SEPA is better placed than most others to do so, according to A’Hearn, given the relationships that have been built with senior figureheads across a number of sectors. “We have an ability in Scotland to go to sectors and regulate in this way, whereas in other jurisdictions, those sort of building blocks aren’t in place. It is radically different… I would really encourage businesses and communities to approach us on this agenda.

"If they’ve got ideas on how to turn the environment from a problem into something that creates new employment or increases their profitability, we want to hear from them because, it’s a cliché, but unless we work together we won’t create what we need to create.”

Seeing water or waste management as economic and environmental bedfellows is an argument that could curry favour. Not all projects are as straightforward, though. Fracking, for instance, has provoked significant controversy, prompting the Scottish Government to impose a moratorium on underground coal gasification as well as fracking. One MSP even accused SEPA last month of “colluding with fracking cheerleaders” after participating in Whitehall meetings on the matter.

“SEPA is agnostic on fracking,” stresses A’Hearn. “What has happened is we have been caught trying to do our job of contributing to various processes. Our main contribution is that we have a lot of scientific expertise and where we have a role with UK Government processes or we have a role with Scottish Government processes, we contribute our expertise – that’s our job. Governments will make decisions at the UK level and at the Scottish level about whether fracking should take place and, if so, under what conditions.”

Of course, the environmental debate is not confined just to domestic matters. Last month, all countries committed to cut carbon emissions as two weeks of talks in Paris ended in a deal to try and limit global temperature rises. “The world changed with that Paris agreement,” insists A’Hearn.

“It’s like all decisions: two things make a good decision – there is making it and then there is implementing it. The agreement itself was a great decision. If it doesn’t get implemented, then it’s a failure. I wouldn’t take an optimistic or pessimistic view, what I would take is an opportunity view. The world in which every Scottish business operates changed with that agreement.”

The necessity now is to do the “hard yards every day to make it work”, he adds. The willingness to do that is seen in the efforts to root out organised crime within the waste sector, for instance, evidenced by the Environmental Crime Taskforce as well as work at the forefront of Interpol’s activities. “Criminals see the environment with more entrepreneurship than just about any sector, but it’s not the sort of entrepreneurship we want,” he adds.

Critics would suggest, however, that Scotland still has far to go on other fronts, having failed to meet its climate change target for four years running. The numbers belie the reality, claims A’Hearn, who spent 17 years with Environmental Protection Authority Victoria, the world’s second oldest environmental regulatory agency.

“If I contrast this with the country I originally came from, at the Kyoto Protocol meeting it wasn’t reported much but Australia signed up and got an agreement about how much it could increase its greenhouse gases. And we had been, in some ways, progressive and in a lot of ways lagging on climate change.

“I am much prouder being a resident of Scotland than a citizen of Australia coming out of Paris, even though Australia has signed up and committed to some stuff… It’s much better to set really ambitious targets and nearly get there than to set unimpressive targets and get there.”