2020 was set to be a pivotal year for global climate action, with the UK firmly at the heart of it as host of the UN Climate Change Conference (COP26). The Covid-19 pandemic has created a new and unexpected context for these efforts, throwing the future of environmental policy into question.
As focus turns to recovery, this note looks at the outlook for climate change policy in the UK and the implications for business.
Policies emerging around the green recovery
Earlier this month, the PM set out his much-hyped plan for rebuilding the economy following the pandemic. With a slogan of “build, build, build”, he signaled investments in infrastructure and skills, including accelerating “shovel-ready” projects.
Chancellor Rishi Sunak subsequently presented his summer economic update, focusing on protecting, supporting, and creating jobs. In contrast to the PM’s “New Deal”, the Chancellor’s “Plan for Jobs” had more clear and tangible implications for environmental policy.
Taken together, the Government’s plan reaffirmed that, while climate change is certainly on the political agenda, it is principally there on economic rather than environmental merit. Retraining and offsetting job losses (a key Treasury focus for recovery) means building up ‘green’ industries – which is where the environment has the most political resonance.
So, what does the Government’s recovery plan say about the future of the green economy:
The pandemic has also resulted in delays to key strategies and reviews being worked on within government, many of which are central to the UK’s ability to meet its net zero commitment. But while the timings have changed, there is no indication of the direction of travel being abandoned altogether:
Green groups have criticised the Government’s recovery plan as unambitious and inadequate compared to the measures announced in Europe. On the specifics, the energy efficiency package has been cautiously welcomed by some as a sign that the Government is willing to put forward capital investment that helps the UK on its path to net zero – provided it is also supportive of wider priorities on economic growth and jobs. But the jury is still out and looking ahead, green campaigners will be watching closely to see if the Government translates its warm words into action during the remainder of the year, including at the Autumn Budget, and within key publications such as the National Infrastructure Strategy and Net Zero Review.
The effects of UK-EU trade negotiations
The issue of environmental commitments has emerged as one of several sticking points in ongoing UK-EU trade talks, with both sides at odds over including the Paris Agreement target in a future deal. The EU wants to see the target included, while the UK argues it shouldn’t have to make such legal commitments in exchange for preferential access to the European market. The disagreement reflects fundamental differences in the negotiating positions of the two sides, with the UK focused on protecting its regulatory independence and the EU on maintaining the integrity of the single market. And with no legal obligation on the UK to maintain current standards if no trade deal is agreed, environmental campaigners have continued to voice concerns that the UK could renege on other EU directives – for example, on industrial and transport emissions – in order to pursue trade deals with other countries, such as the US.
It is also worth noting the role of the devolved administrations. The UK Government has recently set out plans to create a single UK internal market, with “mutual recognition” across all four nations. While many policy areas will be repatriated from the EU to the devolved administrations, the proposed rules would in effect require them to accept English products – even if they are produced to lower standards. This therefore leaves open the possibility of regulatory discrepancies in environmental policy within the UK internal market, which businesses operating across borders will have to navigate.
More broadly, the UK has played a central role in the EU’s efforts to date on climate change, decarbonising faster than any other member state and setting an example through its world-leading net zero legislation. Brexit will end the UK’s influence over future EU climate policy, potentially handing greater prominence and power to less ambitious members of the bloc. While this is a key concern raised by climate experts, the ambitious nature of the recently announced EU Green Deal suggests these concerns may well be overblown.
So, while the Government has repeatedly pledged not to “dilute” environmental standards after the UK has left the EU, it remains to be seen what material impact Brexit will have on national and global efforts to combat climate change. Next year’s COP26 will be a key test for how prepared the UK is to lead on this issue – or whether it will fall back in line and allow the EU to lead on the international stage.