The UK’s departure from the EU is posing significant challenges to the latter’s usually strict environmental policies and climate change mitigation strategies.
Brexit has usually been evaluated in terms of its economic, trade, security and diplomatic implications. It is significantly less well-analysed in relation to climate change impacts. This is likely to continue as long as climate change is not regarded as a security threat.
Brexit poses three major challenges to the EU’s environmental policy. Firstly, in attaining its greenhouse gas (GHG) emission targets. Secondly, its impact on the Emission Trading System (ETS). Thirdly, its impact on the EU’s green finance.
The UK has one of the most ambitious GHG reduction targets when compared to its European counterparts. The UK’s sixth carbon budget seeks to cut 78% of emissions by 2035, bringing it closer to its net-zero target by 2050. Furthermore, the Climate Change Act sets a legally binding emission reduction target of 80% below 1990 levels by 2050. Similarly, the EU is seeking to achieve net-zero emissions by 2050. The European Commission has adopted several legislative proposals, including an intermediate target of a 55% reduction in GHG emissions by 2030. The extent to which Brexit will affect the EU’s environmental ambitions will require a careful analysis in the coming years, however.
In the short run, it is unlikely that Brexit will affect the EU’s emission reduction goals, as Brussels managed to meet its 2020 targets without Britain. The long-term impact, however, is contested. The EU27 is expected to increase its GHG emission targets by 4.5%, amounting to over 138MtCO2 equivalent.
Both the EU and the UK’s climate policies so far have been shaped by their constructive interaction. Britain’s strong leadership in the EU has made the EU ETS and single energy market possible. The EU ETS is considered the cornerstone of low-carbon innovation and covers over 40% of EU27’s GHG emissions. Interestingly, the UK’s divorce from the EU ETS is estimated to hamper Britain’s own businesses. British businesses are spending over £75 (€90) per tonne of carbon emission, whereas companies in the EU are paying a carbon price of €85. The EU ETS is well-established with greater liquidity that covers all heavy industries, which makes it more cost-effective relative to Britain’s carbon policy.
Although the EU pioneered the low-carbon innovation policy, it now needs to enhance its own ETS to fulfil its 2050 ambitions. Brussels is posed with the twin challenge of amending the present ETS and incentivising its industries towards low-carbon emissions. Post-Brexit, the EU’s environmental leadership will be further tested due to its close association with negative environmental power. Negative environmental power refers to a country’s capacity to carry the potential to invariably harm climate mitigation strategies, for example by pursuing large-scale deforestation policies. According to an The European Environment – state and outlook 2020 report, Europe’s contribution to environmental degradation is greater than any other region in the world.
Going forwards, it is important for Britain and the EU to constructively engage in achieving climate targets through better coordination on two fronts: the emission trading systems and sustainable finance regimes.
In terms of the EU27, there has been a steady increase in renewable energy consumption and a steady decrease in fossil fuel based energy consumption since 2010. In 2020, renewables overtook fossil fuels in the EU27 market, a significant development in the green energy transition. Nevertheless, the impressive stride of the EU is still slow for achieving 55% GHG reductions and climate neutrality by 2030 and 2050 respectively.
The UK is not aligning itself with the EU’s Sustainable Finance Disclosure Regulation, creating its own green finance regime instead. The Government has stated its intention to make a more ambitious emission trading system than the EU that would make it stand out as a global climate leader. This has created several uncertainties within the British companies. According to India Redrup, policy manager at trade association Energy UK: “If you are a power operator in the UK, you are looking at a Black Hole looking at the lack of carbon price signal”.
Post-Brexit, Britain will have a monumental challenge of establishing the UK ETS which is more robust and cost-efficient for the companies. As a way forward, the two regimes should aim to either co-benefit or complement their respective efforts, rather than hampering the present mitigation policies.
Akshay Honmane is a climate change and foreign policy researcher, currently studying for an International Relations masters at the London School of Economics.