Brexit And The Climate Of Political Uncertainty In European Union

The result of the referendum in Britain leading to its exit from the European Union (EU) revealed how an extended caveat of global warming and Syrian refugee crisis led to the death knell for the union’s stability as a united bloc. The refugee crisis in Syria was aggravated by the prolonged droughts in the region, devastating the core sector of its economy (agriculture accounted for 19 percent of Syrian gross domestic product (GDP). The resultant refugee crisis in Europe became the propaganda machine for Brexit, and the climate sceptics in the Tories camp, who led the Leave campaign seem to have downgraded climate change from its new agendas. This warrants a look at how Brexit stands to affect the consensus arrived at in the recent Paris climate agreement.

Brexit and climate change negotiations

Constituting 7.3 percent of global demographics (the third largest as a combined bloc after China and India) and with a GDP valued at $18.495 trillion (as of 2014), the EU is that one supranational body, whose global influence catapulted it to a superpower. However, the same European dream is struggling to stay afloat and a divided Europe is putting the Paris treaty on the verge of disarray.

The Paris climate agreement was instrumental in achieving a global consensus to limit global warming to below 2C and is presently awaiting ratification from its parties. For the Paris climate deal to be legally binding, a minimum of 55 members who were party to the convention (from 195 countries) and whose greenhouse gas (GHG) emissions account for 55 percent of total global emissions have to ratify the agreement.

Being the world’s largest single market with a share of 13.10 percent of total emissions, EU’s ratification of the treaty is critical for the deal. EU represented itself as a union when giving its climate pledges, and with Brexit, the status of its climate pledges, intended nationally-determined contributions (INDCs) are at stake. The exit of the fifth largest economy of the world (4.6 per cent GDP value globally) and the second largest in the union (GDP worth $2849.35 billion as of 2015) from EU may mean that the existing 27-member EU and the UK will have to present their revised pledges to the United Nations Framework on Climate Change (UNFCC).

The leadership role that EU played in global climate negotiations was evident in the ratification of the Kyoto Protocol (at a time of US veto) and the referendum, therefore, augurs for a need to look at the energy and climate policies in all the key economies within the union to which Britain is still a party. In the INDCs, EU pledged towards reducing 40 percent of GHG emissions by 2030.  In pursuit of energy security and fuel savings, EU aims for a cut of 19 percent in its energy imports, compared to 2010, besides saving up to 14 billion euros on an average annual basis between 2010 and 2030 respectively. EU was also pitted to be a forerunner towards setting appliance and regulatory standards that can shape policies in all major economies within the bloc.

Climate of political uncertainties

Brexit will cast a gloom on EU’s prime climate instrument — the European Emission Trading System (ETS), set up in 2005. The EU ETS, the largest and the only international carbon market aims to reduce emissions in a cost-effective manner. It operates within the union, and in Norway, Liechtenstein and Iceland. It aims to reduce emissions by 21 percent by 2020 based on 2005 levels, besides limiting emissions from over 11,000 installations (power and heavy industry) and commercial airlines sector in the region. UK has 1,000 installations which operate under this system and account for 10 per cent of verified emissions. If Britain chooses to be party to the emissions trading system aka the Swiss or Norwegian model, it would end up as a silent spectator without a say in the decision-making processes, and a complete exit would mean UK will have to devise new arrangements in its cap and trade scheme.

UK’s emissions (GHG) constitute two percent of global emissions and its role in pushing EU 2030 carbon target from 40 percent to 50 percent cuts on 1990 levels is notable. Domestically too, Britain has engaged itself in committing to a low-carbon future. The Climate Change Act (2008) set up with the objective of reducing the UK’s GHG emissions by at least 80 percent by 2050 compared with 1990 levels; and the Finance Act 2011 aimed at the development of a carbon price floor, were crucial interventions in this regard. But if recent reports of UK National Grid are to be believed, the country will miss its 2020 renewable energy targets owing to the failure to employ renewables in the heat and transport domain. Capital intensive energy projects funded by EU like offshore wind, may take a backseat. Nevertheless, it aims to reduce its GHG emissions by 57 percent by 2032 compared with 1990, with adoption of its fifth carbon budget.

Brexit being a protracted process with many uncertainties, is likely to affect the carbon price mechanisms in EU, giving incentives for the heavy industries (fossil-powered plants) to disregard the pollution standards or the energy businesses to flout pollution norms when such processes are in limbo. The spillover effect on the renewable energy sector with 28.9 billion Euros investments is precarious.

Hopes to refurbish the chaotic political situation were evident in the cabinet reshuffle by the new Prime Minister Theresa May. Ironically, one of the first major change was to merge the Energy and Climate Change Department with the Department for Business, Energy and Industrial Strategy. Tories are known for their extreme stand on negating climate science, and with Andrea Leadsom, a staunch climate sceptic as the new Environment Secretary, the new government seems to have snubbed efforts to tackle climate change from its policy agenda. Nonetheless, both the Conservatives and Labour camps agree on diversification of energy sources like renewables, domestic shale and nuclear technologies to achieve the proposed decarbonisation plans (cut emissions by 80 percent by 2050).

A divided Europe may scuttle any concerted effort on climate change. In the ongoing clamour for invoking Article 50 of the Lisbon Treaty to leave the bloc, it will be hard for UK to remain in the union and negotiate its terms. The call for recalibration of the Paris treaty by the outgoing UNFCC Executive Secretary Christina Figures in the wake of Brexit is a stark reminder of the varied unintended consequences of public opinion given leeway over such decisive matters with long-term implications.

Vinny Davis is a research associate at CPPR Centre for Strategic Studies

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