The Impact of Brexit on Climate Policy: The EU and the Paris Agreement

On 10 June, the European Commission officially began the legislative process for the ratification of the Paris Agreement by presenting a ratification proposal for the European Union, aiming for the agreement to enter into force as soon as possible. This will happen when at least 55 countries, representing at least 55% of global green house gas (GHG) emissions, will ratify the agreement. The Commission’s proposal will need to be approved by the European Parliament and the Council. After that, the Council will deposit the ratification with the United Nations Secretary General, on behalf of the European Union. Meanwhile, each EU Member States will ratify the Paris agreement, individually.

For the Topic of the Month, this July, we will write about the EU and the Paris agreement. We will review the main aspects of the Paris agreement, describe what the EU has promised to do in Paris, and explore the possibility of having an international carbon price. But before starting talking about the Paris Agreement, we will talk first about the impact on climate policy of the most significant event that happened in Europe in decades: the referendum on the exit of UK from the EU.

The Impact of Brexit on Climate Policy

The UK’s decision to leave the EU may have important implications for the future of both the British and EU climate policy. During the past 15 years, energy and climate policy in the UK has been developed within the EU policy framework, and the UK has been one of the driving forces for the liberalisation of the European energy market and of the climate change policy. As a result, the UK energy market is integrated with that of the rest of Europe. The UK (like all EU member states) has participated in the EU ETS, the single European carbon market. The UK and the EU have now to renegotiate all their relations including those in the areas of energy and climate. The results of this negotiation, which will take at least two years, are still unpredictable, and it is still unclear at what level the UK will take part in the European energy and carbon markets.

The UK, with the 2008 Climate Change Act, has set the goal of achieving 80% GHG emission reduction by 2050 with respect to the 1990 level. The main British parties are committed to this target and the result of the referendum does not imply any change in climate policy. It is probable that Brexit will impose a revision of the EU pledges submitted for the Paris Conference. Before the conference all countries were invited to present the so-called Intended National Determined Contribution (INDC), which are voluntary commitments to reduce GHG emissions that formed the basis of the Paris Agreement (more on this in the next post). The EU presented the INDC on behalf of all the 28 Members States (at that time). With the UK out of Europe, the EU has to recalibrate its INDC and the UK has to present its own contribution. On the one side, this means that if UK wants to pursue stronger climate actions, the British government can potentially submit more ambitious INDC and freely decide to implement stronger climate policy. In the fifth carbon budget, which covers emission reduction for the period 2028 to 2032 and that was presented few days after the referendum, the British government confirmed its commitment in cutting emissions and set a target of 57%, higher than the emission reduction of the EU INDC. On the other side, however, Brexit might pave the way towards a weaker approach to fight climate change. The UK will probably go through a period of economic and political instability that might move climate policy down the priority list. Moreover, with the victory of the Brexit, politicians that supported Brexit, will have a more leverage role in shaping the future national policy. Many of them are for a reduction of the effort to reduce GHG emissions; some are climate skeptics and willing to repeal the Climate Act at all. Once outside the EU, the UK will not be subjected to the EU targets on energy and climate policy, and the national legislation can be changed with a simple majority. For example, the UK now has a target of 15% of energy consumption from renewables energy by 2020, as part of the EU 20-20-20 target. It is still unclear if, without EU pressure, the UK will maintain this commitment. All these uncertainties could also make it more difficult for the private sector to invest in low-carbon technologies in the UK. Lastly, on international climate policy, Brexit will probably reduce the international leverage of UK. In climate negotiations a country’s influence depends significantly on its share of global emissions and wealth. As a member of EU, the UK had access to the table of the major players, while, out if EU, it risks being moved to a secondary position.

From the European side, the EU has to recalibrate its climate policy without the UK. This may imply a delay for the forthcoming climate and energy legislation and probably also for the EU ratification of the Paris Agreement. The EU will lose a country that has been traditionally a supporter of cutting GHG emissions. As a consequence, the opinions of those countries that are more reluctant on strong climate policy, could weight more heavily in the EU. The UK has also been in general a promoter a small role of the central EU government. Indeed, the UK opposed a European Carbon tax in the 90′ and supported the creation of the EU ETS; for the 2030 energy and climate package, it was among the countries not in favor to have renewable binding targets as EU has for 2020. With the UK out on the negotiation for the 2030 EU policy, there might be also a redefinition of the renewable and climate policies. At international level, the UK generally supported the EU in promoting strong actions and helped the EU in the negotiations that lead to the success of Paris COP21. Without the UK, the EU will be smaller and without one of the stronger voices for international actions, this could weaken the EU’s role in the international decision making process, although it will still remain one of the fundamental player.

Written by Claudio Marcantonini