Brexit and its impact on climate & energy policy

by Michalis Prodromou*

The outcome of the British referendum on the country’s membership in the EU will certainly have an impact on British, European and international low carbon policies; the question is how severe this will be.

Will the Brexit affect the ratification process of the Paris climate agreement, achieved only a few months ago? The agreement “would require recalibration” in case of an EU-exit outcome of the referendum said Christiana Figueres, only a few hours before the results were announced. However, she appeared far more reassuring in front of a London business summit audience this week that “the UK will maintain its leadership on climate change”, adding that cooperation in this area can add to the stability and continuity of EU-UK relationships. It remains to be seen whether the Tory party leader will stand for climate change skepticism or ambitious GHG emissions’ curbing efforts.

Cooling towers letting out steam and smoke at a coal-fired power station near Pontefract in Yorkshire, UK.

 © Edward Parker / WWF

As far as EU policies are concerned, the ETS seems to be on the losers’ side of the referendum: Thomson Reuters analysts predict a 1€ drop from the current cost of CO2 allowances – early signs show that the drop is already on its way. Besides, the ongoing ETS reform process will be hurt by Ian Duncan’s resignation, as the Scottish MEP seemed to be a successful post-2020 ETS reform rapporteur. The integrated energy market plan also seems to be at risk; Brexit means additional difficulty in building common interconnecting infrastructure, and loss of EU-UK gas systems and renewable technologies complementarity.

Within the UK, an investment slowdown should be expected, as investors wait for the markets to prove stable again and climate policy commitments be reaffirmed- especially as the Fresh Start platform (supporting UK’s departure from the EU) has strongly questioned EU’s 2020 targets and favored, instead, a shale gas expansion. There are already concerns about the Hinkley Point C nuclear power plant moving on as planned, while Siemens has put wind power projects expansion on hold “due to uncertainty”. In any case, the UK is now free to decide upon its own VAT and import duties policies.

The UK has benefited from the European Union's environmental legislation, whether it’s the adoption of strict emissions limits or British people’s right to use the EU’s appeal mechanisms against environmental law infringement. British diplomacy has also had an impact on shaping EU’s policies - see for example the Paris agreement - or the opening of the energy market. No matter what happens next, it will be in the interest of everyone to safeguard the longstanding relationships between the EU and UK, especially when it comes to dealing with transboundary issues.


* Michalis Prodromou is Senior Energy Advisor at WWF Greece

Last modified onFriday, 26 August 2016 21:40
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