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Brexit: The Environmental Fallout

July 2016

Brexit.

So it concludes.

A majority of voters in the United Kingdom have turned out in favour of departure from the European Union, and we are plunging into uncertain territory for our nation.

Uncertainty can foster innovation, necessity being the mother of invention. Yet uncertainty can also lead to hesitation and missed opportunities. In the environmental sector at this incredibly important time – teetering on the edge of irreversible climate change – missed opportunities may just lead to missing island nations on future world maps.

Brexit, as with any other upheaval to our political and economic landscape, is likely to have significant impacts on our carbon emissions and reduction targets, and national sustainability agenda. Understanding the position of our industry during this unbalanced time is critical so we can take appropriate action.

This article contains a summary of the predicted environmental impacts of Brexit, featuring opinions from industry experts, media coverage and XCO2’s in-house wisdom. Its purpose is not to labour on points of depression or to celebrate success – as cathartic as that exercise may be. We hope to report the facts as we now know to offer a sense of clarity and present a realistic idea of how Brexit may impact our environment.

 

Energy and Infrastructure

From an energy perspective, there are two major consequences of Brexit.

Reduced investment in clean infrastructure

In order to meet our domestic carbon reduction targets, associated with reducing our contribution towards global climate change, an estimated £20 billion of annual investment is needed in UK clean energy infrastructure. This infrastructure will, quite literally, fuel the transition from fossil fuelled power stations towards clean and renewable energy supplies.

The likelihood of this investment occurring has dropped for two major reasons:

  • The uncertainty of the UK market reduces investor attraction

We have been one of the most successful EU member states in attracting investment in renewable energy. We’ve also benefited hugely from EU support – the largest ever investment in offshore wind from the European Investment Bank is backing the Beatrice offshore wind project in Scotland. Without EU support, we’re much less appealing. This unhappy precedent has already been set, with Siemens announcing a freeze in new wind power investment in a post-Brexit UK.

  • The falling value of the British pound has increased the cost of imports

Upgrading to cleaner technologies has suddenly become much more expensive, with borrowing rates to facilitate this looking less than favourable in the wake of the UK’s sliding credit rating. The move away from fossil fuels is now much more of a challenge.

The question of the IEM and the rising cost of fuel

One of the biggest uncertainties relevant to both the environmental industry, and all of us who pay energy bills, is whether a Brexit-ed UK will remain within the EU’s Internal Energy Market (IEM).

Inclusion within this union (without being an EU member state) ties the UK into complying with the EU energy regulations and future tariffs and taxes, without having a say on any of them. Exclusion removes a key market for the UK’s wind and tidal energy resources and eliminates the security of a larger market needed to create a smooth two-way, renewables-heavy energy transmission network between the UK and the continental Europe. It seems a lose-lose choice, but based on the fate of renewable energy subsidies over the term of the current Government, it seems unlikely that the new leaders will agree to EU energy tariffs in order to protect Britain’s renewable energy potential.

Option B, exclusion, and the pursuit of an isolated energy system, is likely to be a far more expensive solution. This system would provide less energy security, and a reduced contribution of large-scale renewable energy generation. If gas, the source of two thirds of our energy, continues to be imported – at a higher price post-sterling crash – the cost of energy is only going to go one way.

 Predicted outcomes are threefold:

  • Higher cost of energy reflected in customer bills
  • Increased cost of imported gas boosts UK drive to source gas domestically, likely from fracking
  • Lack of stable investment opportunities, willing investors and increased cost of clean infrastructure could reduce capital spending on renewables and increase our reliance on fossil fuel generation

A rapid decision on whether we remain within the European Economic Area, like Norway, with access to the IEM or not is imperative to providing stability in the energy sector.

 

Laws of Environmental Protection

The extraction of the United Kingdom from the European Union also removes us from EU Laws of Environmental Protection. The removal of these regulations, described by our Farming Minister (a Brexit advocate) as “spirit-crushing”, do undoubtedly leave the pathway open for more nuanced environmental regulations and subsequent improvement. However, with the belief across the industry that environmental protection will be one of the casualties of the post-Brexit agenda, there is certainly reason for concern.

Within the past 43 years of EU membership, the natural environment of the UK has benefited from a host of EU-led regulations. Habitat directives have provided protected areas for birds, created measures for endangered species and implemented the clean-up of beaches across the UK. Compulsory obligations for water and air quality have been brought in – and as a possible sign of things to come, the UK was responsible for blocking the proposed improvement of air quality standards to protect the dairy sector from measures opposing ammonia-based fertilisers.

Chemical and pesticide bans have improved the quality of our soil and groundwater, and fishing quotas have reduced the threat of over-fishing and species extinction by allowing stock replenishment. The ‘Natura 2000’ scheme has protected green sites like the Durham Coast, Epping Forest, Morecambe Bay and Glen Coe from development. The introduction of Environmental Impact Assessments has required a consideration of the environment for determining which developments do go ahead. Waste management and recycling schemes have been championed by the EU, and steps towards implementing a circular economy of resource use have been made.

Perhaps these regulations will be transferred into British law, perhaps they may even be improved upon. Industry forecasts and the UK’s past actions in EU negotiations, however, cast doubt on the likelihood of these claims.

 

Green Politics on the National Agenda

Given the persuasive powers of ‘Leave’ campaigners in the previous months, it would be naïve not to consider how the climate change sceptics who are now enjoying political prominence could now influence the environmental industry and our aims.

Former Mayor and no-longer-next-Prime Minister, Boris Johnson, has been known to use his lucrative newspaper column to dismiss the science of anthropogenic warming. His collaborator, UKIP leader Nigel Farage, has widely critiqued investment in renewables and is an open climate change sceptic. Another notable pro-Brexiteer, Michael Gove, infamously attempted to remove climate change from the national secondary school curriculum and barred the Conservative Climate Change Minister from attending UN climate change talks. With these individuals playing a dangerous game of pass the parcel with our reformed government, issues of environmental sustainability will surely slip further down the agenda.

In London, we will benefit from the counter-balancing impact of an environmentally conscious Mayor, who has the power to dictate environmental policy through his forthcoming London Plan. Previous precedent has shown that successful environmental policies implemented in London Boroughs and the London Plan have filtered into policy on a national level. Sadiq Khan has an opportunity to put forward bold and progressive environmental policies and hope that they set a positive precedent across the rest of the nation. His statement of intent for a ‘zero-carbon city’ is certainly a shining light for climate optimists.

Nationally, it’s a point of relief that the UK will remain committed to the emissions reductions targets of the 2008 Climate Change Act – a minimum of 80% in 2050 from 1990 levels.

On an international agenda, the UK is, as part of the EU, committed to the Paris climate goals agreed last year. The Paris Agreement is currently in the process of ratification. The International Panel on Climate Change stated prior to the referendum that a vote in favour of Brexit would require “recalibration” of the existing treaty. What is agreed within this ‘recalibration’ remains to be seen, but given that removal of environmental targets and carbon goals were a key focus of Leave campaigners, it’s a prickly issue. Our hope on this front is that Cameron will choose to ratify the UK contribution to the agreement as a matter of urgency before his departure, making it near-impossible for his successor to backtrack upon.

Key points:

  • Major ‘Leave’ figureheads notably anti-climate change
  • London has the potential to use localised policy as a positive environmental force
  • Contributions to the Paris agreement uncertain, but the UK is committed to carbon cuts regardless

 

Beyond Brexit: The Bigger Picture

For all working in favour of an environmentally conscious future, it is clear that there are some challenges in store. However there is also opportunity – for growth, for innovation and for improvements with the freedom to write our own rules. The UK is considered a world leader in environmental performance, and we must hope that existing momentum powered by industry support will prevent our reputation from stagnating.

The unstable financial situation will hamper and upset across the board. What this will mean in terms of tangible cuts remains uncertain, and slow decisions could damage this sector further. At this moment expansion and growth in the renewables sector at the very least is likely to be compromised until a more stable environment thrives.

But perhaps the ultimate environmental damage that Brexit could cause is a precedent of avoiding collaboration. Climate change is a challenge that is international by nature. Divisions and isolationist strategies are not the solution to a global problem. Brexit or no Brexit, we need to continue to tackle climate change alongside our allies within the EU, greater Europe, and the rest of the world.

British EU membership has lasted 43 years. In the timeframe of global climate change that’s just another drop in an ever-rising ocean. As industry professionals within the forthcoming period of change, we must continue to lobby for our agenda to sustain its importance within the public (and political) eye. When the time comes for the environmental rulebook to be re-written, we can only hope that loud voices help shape positive policy choices for the future of our nation, and the rest of the world.

 

 

 

 

 

 

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One response to “Brexit: The Environmental Fallout”

  1. Thank you for this well written summary of what Brexit could mean from an environmental point of view. I am encouraged by the positives in London and the opportunities that may exist but I remain very concerned that environmental issues will fall down the political agenda. Without cooperation and collaboration with the EU our voices need to be even louder!

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