Last reviewed 1 July 2016
Environment ministers and regulators have been quick to reassure businesses that Britain’s exit from the EU will not undermine government policies on energy, climate change and environmental protection. John Barwise has been testing the reaction from businesses and trade bodies and the likely fallout for the UK green economy.
At the time of writing the country is in chaos — the Prime Minister is resigning, the leadership of the opposition is being challenged, the pound has fallen to its lowest level in 30 years and the markets are in turmoil. All these events were predicted by the Remain camp if Britain decided to leave the EU, and were ridiculed as negative campaigning by those who wanted us out. Those organisations that campaigned for Britain to stay on environmental grounds are now fearing their own predictions will go the same way.
We are where we are and the political elite are not really in a position to say, with any certainty, what happens next. However, those whose job it is to protect our environment and energy supplies, and the thousands of jobs in the environmental goods and services sector have been seeking to reassure the markets and the electorate that things can only get better.
In a recent speech to the Business & Climate Summit in London, the Energy Secretary Amber Rudd admitted that the UK’s role in dealing with climate change has been made harder by the vote to leave the EU, but said the UK would not turn its back on Europe or its international commitments.
“Our relationships with the United States, China, India, Japan and other European countries will stand us in strong stead as we deliver on the promises made in Paris. At the heart of that commitment is the Climate Change Act,” she said.
However, on the big question of energy trading relations between the UK and the rest of Europe, Rudd conceded there were “a host of questions” still to be answered, concerning the gas and electricity interconnectors linking our energy supplies with mainland Europe, and on which the UK is becoming increasingly dependent. However, she added: “The economic imperative that drove those relationships has not changed, an openness to trade remains central to who we are as a country.”
Speaking at the same conference, Christiana Figueres, Head of the UN Climate Change Framework, said the transition would cause “uncertainty and volatility for at least two years”, particularly for the rest of the EU who will now have to recalibrate the bloc’s combined climate change commitment, now that the UK’s contribution will not count. Urging the UK and the EU to remain calm over their collective leadership role on climate change, Figueres said, “We need to remember that the Brexit vote was not about climate change, it was not about the UK’s modernisation of industries and it wasn’t a vote on innovation — which is fundamentally the opportunity that we have by acting on climate change.”
In a separate meeting, Energy Minister Andrea Leadsom, who campaigned to leave the EU, has strongly denied that investor confidence in the UK’s clean energy sector has been shaken by Brexit. This follows an announcement from Siemens to freeze new investment in the UK wind sector and a further announcement from DONG Energy that it intends to wait for “further clarity”, following the result.
Speaking to the Energy and Climate Change (ECC) committee, Leadsom insisted UK energy policy would not change and rejected claims about investor confidence. “I do speak with those developers and I don’t agree with your assertion that their confidence is extremely low,” Leadsom told ECC Chair Angus Macneil. “Our energy trilemma remains the same. We are committed to keeping the lights on, we are committed to decarbonisation at the lowest cost to consumers.”
In an effort to reassure both the markets and our international partners, the Energy Secretary has also announced that the Government will adopt recommendations from the Committee on Climate Change (CCC) on the UK’s fifth carbon budget, which will see UK carbon emissions fall by 57% from 1990 levels from 2027 to 2032. The CCC’s own report claims progress on meeting carbon budgets had been slowing, but the Government’s renewed commitment should keep the UK on track to meet the Climate Change Act target of an 80% reduction in emissions by 2050.
Claire Jakobsson, Head of Energy and Environment Policy at EEF, the manufacturers’ organisation, said government commitment to the fifth carbon budget would be welcomed not least by those manufacturers sitting in many of the UK’s low carbon supply chains. “With the unprecedented level of uncertainty created by last week’s referendum result, it is essential that the Government looks to provide stability and continuity where it is able to. Confirming the Fifth Budget at this level provides a positive signal that whatever the UK’s future relationship with the EU is to be, the scale of our emissions reduction ambitions and the direction of travel will remain unchanged,” she said.
Other trade bodies have been much less sanguine about the potential fallout from the Brexit vote, particularly on environmental goods and services. The green economy is one of the UK’s fastest growth sectors contributing more than 350,000 full-time jobs and adding over £26 billion to the economy every year. The Environmental Services Association’s (ESAs) Executive Director, Jacob Hayler said: “The referendum result will extend and intensify the uncertainty around both our industry and the UK more generally. The danger now is that the waste and recycling sector is placed at the bottom of the Government’s in-tray.”
Environment Secretary, Liz Truss, says Defra’s existing policies for environmental protection, food and farming will remain in place at least until the UK leaves the EU. In a statement issued by Defra, Truss, who campaigned to stay in the EU, said: “Defra officials will be working with a dedicated unit in government to look at a future package for farmers and the environment.”
“There clearly needs to be a system of agricultural support and British farming must remain profitable and competitive. Equally, Defra will continue to ensure the right policies are in place for a cleaner, healthier environment,” she added.
England’s environmental regulators, the Environment Agency (EA), together with their counterparts at Natural Resources Wales, are also forecasting business as usual. In a recent ENDS Report, the EA confirmed there would be no changes for now and their regulatory work is carrying on as normal. The message from Northern Ireland and Scotland is broadly the same, as UK regulators seek to reassure businesses that current environmental regulations and operational practices remain unchanged.
James Thornton, Chief Executive of environment law firm, ClientEarth, takes a different view, saying that while he respects the democratic decision to leave the EU, he was “shocked, disappointed and extremely concerned” about the future of environmental protections in the UK. “Now as the nation prepares to go it alone, we have no idea which laws will be retained since those who campaigned for Brexit did not have a united position,” he added.
The Chartered Institution of Wastes Management (CIWM) also remain sceptical, and said that leaving the EU was not what its members, or many environment sector professionals, had wanted. Chief Executive, Steve Lee said that EU membership had been “a strong positive force for the quality of our environment and the associated benefits for our health, well-being, jobs, skills, growth and general sustainability”.
Earlier this year, Lee criticised Defra for failing to introduce essential waste and resources policies in its revised five-year plan. “Stepping out of the EU brings financial, policy, legal and performance uncertainty, which may well threaten a slowdown or reversal of the improvements we have enjoyed in recent years,” he added.
One of the European Commission’s (ECs) flagship policies, the circular economy package, may well be one of the casualties of Brexit. The package, adopted by the EC in December 2015, covers the full lifecycle of material — from production and consumption to waste management, and helps stimulate the market for secondary raw materials. But that might not happen here, because of the Government’s lacklustre approach to waste management and recycling.
In a recent Institute of Environmental Management and Assessment (IEMA) webinar interview, Simon Colvin, Partner and National Head of the Environment Team at Weightmans, said that the circular economy package would have been a huge opportunity over the next 5–15 years, but said, “that’s just gone now really, in one fell swoop”. Talking about what happens next, he added: “We need new incentives for waste, those sorts of things can’t wait three years for the government to get their heads around them. If we wait then we’re adding problems into the system further down the line.”
The environmental professionals body, IEMA, which ran a number of surveys of its members in the run up the referendum, showing overwhelming support for the UK to remain in the EU, said that members were now concerned that environment and climate policies risked being watered down following the decision to leave the EU. Martin Baxter, Chief Policy Advisor at IEMA, said: “The vote raises significant questions for businesses, professionals and the wider public on environmental protection policy. The Government must commit to implementing an equivalent or enhanced level of environmental protection and climate policy in the UK when negotiating the terms of the UK’s exit from the EU.”
In the short term, the Government will focus on the protracted negotiations to ensure a smooth transition out of the EU. Article 50, which triggers the two-year exit process has yet to be invoked, and any major changes to UK environment and energy policy, other than those already planned, are unlikely to happen before 2018.
At the moment, it is too early to predict whether Britain will join the single market, but whatever new trade deal emerges between the UK and the rest of Europe, it is also likely that Member States will insist on UK environmental regulations matching those of the rest of the EU, as part of any new trading arrangements.