MPs and industry struggle to understand Brexit’s effect on energy and environment
David Thorpe | 25 July 2016
The UK is struggling to understand what it has voted for when opting to leave the EU. Will Brexit be a good thing or a bad thing for energy and the environment in the UK and Europe?
The new government
In the wake of Brexit, Theresa May’s new government has already abolished the Department for Energy and Climate Change. While there were predictable cries of outrage from environmentalists, other commentators believe it might mean that climate change will become more integrated into general government legislation within the newly created Business, Energy and Industrial Strategy department.
After all, the Climate Change Act is now well established and the government has accepted the 5th carbon budget recommendation from the Committee on Climate Change, so climate change policy will not change. The new department’s Secretary of State Greg Clark once wrote a policy paper on the low carbon economy and its Minister of State Nick Hurd was a member of the Conservative Party’s quality of life policy group, so they will be aware of the issues, unlike the last time energy shared a department with business.
Prominent Leave campaigner Andrea Leadsom has been appointed environment secretary. Whereas before the campaign began (in what seems like another era – November 2015) she was welcoming proposals to “achieve a greater co-ordination and harmonisation of EU energy capacity markets” and agreeing that there is “a need for detailed, transparent and credible long term National Energy and Climate Plans that help to increase predictability for investors”, now there is no such predictability.
Quite the opposite. Everyone is struggling to understand the implications of Brexit.
The Foreign Affairs Committee has slammed the previous government’s negligence in failing to conduct contingency planning for Brexit saying it “has exacerbated post-referendum uncertainty both within the UK and amongst key international partners, and made the task now facing the new government substantially more difficult”.
Chair of the Foreign Affairs Committee, Crispin Blunt, said: “The UK needs to give clear signals to our allies across the world that Britain is determined to assert our place in the world post Brexit. This is not just about trade in the EU or with the rest of the world – although that represents a significant challenge. This is about the UK’s international reputation. The Brexit challenge requires a fully staffed and resourced Foreign and Commonwealth Office.”
This is the department that will be mainly responsible for negotiating Brexit’s effects, and Blunt is blunt about the fact it is under-resourced and underprepared for all the effort that will be required.
MPs in scramble to understand
Other cross-party parliamentary committees are looking into the implications for UK energy policy and UK climate policy and the extent to which the government’s energy policies have been driven by the EU, and the priorities in deciding which EU-led energy policies and legislation should be retained.
There are questions of whether the UK remains part of the EU Emissions Trading System and the implications of the UK’s exit from the EU on both the UK’s and the EU’s COP21 pledges.
And it’s not just about energy. The Environment, Food and Rural Affairs Committee wonders whether the Rural Payments Agency should keep its commitment to paying 90 per cent of farmers their full Common Agricultural Policy entitlements? And what will happen to that and the Fisheries Policy after Brexit?
EU membership has been a crucial factor in shaping UK environmental policy on air and water pollution, and biodiversity. The chair of the Environment Audit Committee Mary Creagh has said: “Inside the EU we can influence and improve EU environmental law. Our voice at the Paris climate change conference was louder because we were part of a club of 28 countries.”
The overwhelming majority of witnesses to an enquiry by the EAC said there were benefits to solving some of our environmental problems multilaterally, and that the UK’s membership of the EU had ensured that the UK environment was better protected.
“Environmental problems don’t respect borders. When it comes to protecting our natural environment and dealing with global problems like climate change, the overwhelming evidence is that EU membership has improved the UK’s approach to the environment and ensured that the UK’s environment has been better protected,” Ms Creagh said.
That report was published before the vote to leave and had negligible impact on the majority of voters. The environment and energy hardly figured in the debates.
The academics’ view
But the committees still continue their work. An EU Sub-Committee on Energy and Environment is taking evidence from senior academics on the impact of Brexit on environmental policy.
Martin Nesbit, senior fellow and head of the environment and climate governance programme, Institute for European Environmental Policy, who produced another unread report saying Brexit was a bad idea for the environment during the run-up to Brexit, told the committee at a hearing on Wednesday that he “struggles to find the positives about Brexit”.
“We don’t know what the negotiations will be like and how they will play out,” he said. “It will depend on whether the UK remains part of the single market or not. Once the Article 50 process is triggered, there is no guarantee it will reach agreement in two years or be continued after then, or agreed by everyone. It feels like a significant risk for the continuity of investment planning. We need better contingency planning.”
Dr Charlotte Burns, senior lecturer, University of York on European Environmental policy, said climate change research was “profoundly influenced by EU membership”.
“It is unknown what Brexit means to this.”
Already funding sources are drying up for many branches of scientific research as pan-European consortia of academics look elsewhere on the continent for partners eligible to apply for EU funding.
Professor Andrew Jordan, professor of environmental policy, Tyndall Centre for Climate Change Research, University of East Anglia, said: ”The environment didn’t feature in the settlement negotiated by Cameron before the referendum, nor did it feature much in the referendum campaign. The sector is worried that it is not going to be properly reflected in the discussion on Brexit.
“It’s not just about policy but the institutions. Long-term support for the sector has been available from the EU Environment Agency and other bodies. We in the UK will need more institutions to replace those we will lose, especially for scrutiny of policy and of the government carrying out its promises.”
He added that since Brexit, “We can see a chilling of investor confidence in the short term, a reluctance on the part of the EU in taking forward enforcement of regulations in the UK, and a brain drain of capacity in the sector.”
Who are the investors who are losing confidence?
“They are those whose business models are premised on environmental legislation, such as energy and water companies, or any environmental organisation depending on the Habitat Directive, for example,” he said.
The effect on EU policy
But as well as Brexit affecting the UK, it will also affect EU policy. For example, the UK has led on such issues as climate change, greening other areas of policy, reform of the Common Agricultural Policy, and better regulation.
“Without the UK fighting hard for these in the EU, they may look rather different,” Professor Jordan said.
”Coming up it’s mostly about reforming existing policy – such as the chemicals directive REACH. Wouldn’t the UK want to influence this, as it is about the trade of chemical products? The circular economy package, which is about waste treatment, affects the waste industry and the UK will now be unable to influence this. On emissions, the effort-sharing scheme allocates all European emissions throughout all the EU-27 nations. How will it be shared out now, especially since the UK was one of the best performers?”
Nesbit agreed and said that with the UK not being part of negotiations, this may make it less likely that the Paris Agreement is fully adopted.
“Moreover it is unclear what the UK will now take from the Agreement. Members of the EU in Eastern Europe will have to carry more weight in terms of reducing emissions and they are less enthusiastic.
“But on the positive side, some areas may be opened up. For example, environmental taxes may be taken up by the European Union, which the UK has always opposed. On the Renewable Energy Directive, the UK has always argued against this setting of national targets. We believe they are essential for investment certainty and they may now be adopted.”
Then there is the Emissions Trading Scheme. Burns thinks that this is another area of uncertainty.
”Will the UK set up its own scheme and sell into the European one, for example? We have no idea what the effect will be on the carbon price.”
In the longer term, it all depends on what Brexit settlement is adopted.
“If we go down the Norway model route, we will remain in the European Economic Area and we will continue with the directives except for fisheries, CAP and Habitat. If we go for a complete exit then it becomes much more complicated,” Professor Jordan said.
“Any EU laws adopted by primary legislation in the UK would continue to apply until they were reviewed. But for those adopted under the European Communities Act, once it ceases to apply, there would be a regulatory gap – several thousand gaps in fact.”
One suggestion is that there is a holding Act, to preserve these regulations in law until the gaps are examined and addressed. But Jordan said that such a tactic would result in “zombie legislation” remaining in enforcement limbo, as it would have no political push behind it.
“Whole areas of policy could become inert,” said Jordan. “The enforcement capacities will not be there, so national bodies and courts must be able to take up the slack.”
However, in one bright spark of hope Swedish energy firm Vattenfall has announced that it is to press ahead with constructing a £300m 11-turbine wind farm off the coast of Aberdeen, despite uncertainty over whether it will still receive a €40 million grant from the European Union following the Brexit vote.
US presidential candidate Donald Trump had fought to halt the project, saying it spoiled the view from his golf course, but his legal challenge was rejected by the UK’s Supreme Court in December.
It looks as though the only certainty is that there will be uncertainty from now on.
David Thorpe is the author of:
- Best Practices and Case Studies for Industrial Energy Efficiency Improvement (with Oung, K. and Fawkes, S. UNEP, 2016)
- A London Conversation: Business Briefing on Green Bonds (The Fifth Estate, 2015)
- The One Planet Life (Introduction: Jane Davidson. Routledge, 2015)
- Earthscan Expert Guide to Energy Management in Buildings (Earthscan, 2013)
- Earthscan Expert Guide to Energy Management in Industry (Earthscan, 2013)
- Earthscan Expert Guide to Solar Technology (Earthscan, 2011)
- Earthscan Expert Guide to Sustainable Home Refurbishment (Earthscan, 2010)