IEEP’s London office Director Martin Nesbit reflects on three areas of focus for environmental stakeholders

The long-expected formal notification, by the UK Government, of its intention to withdraw from the European Union marks the beginning of the end of over 40 years of this partnership. It also marks the beginning of what is set to be a complex, politically-charged, period of negotiation of a future relationship. IEEP’s London office has a lot of UK staff, and UK-based nationals of other EU countries, for whom the first of these two facts is deeply sad and concerning. But we will be focused on the impacts on the environment and environmental policy, both in the EU27, and in the UK. There are three main areas on which we think environmental stakeholders should focus.

Environmental policy in the UK

The first area is the impact on environmental policy in the UK. In our work in the run-up to the referendum in June last year, we looked at the influence of EU environmental policy on the UK, and concluded that it had been broadly beneficial. As a member of the EU, the UK was able to move further and faster towards implementation of ambitious environmental policies than it was likely to have done outside the EU. And it is important to remember that this isn’t because of a democratic deficit, with ambitious EU environmental policies foisted onto an unwilling UK public; the UK was an active and influential participant in the design of new policies. Cooperation within the EU process enabled Member States collectively to deliver the environmental progress that their populations were calling for, by removing much of the threat of short-term economic disadvantage from the introduction of new legislation.

Outside the EU, the UK may, depending on the nature of the deals eventually struck with the EU-27, have significant flexibility to change or adapt environmental legislation. The UK government has, for the time being, committed to writing the current EU acquis into UK law, to provide continuity – not least because of the unmanageable complexity of making immediate choices about which rules to keep and which to change. However, the legislation likely to be put before the UK parliament this week will also contain powers to roll back legislation selectively in the future. And many in the governing Conservative party have already begun to target specific areas, with Brexit campaigner Michael Gove identifying the Habitats Directive as a constraint on housebuilding (with a regrettable disregard for accuracy in his strange assertion that the Directive requires any development within 5 miles of heathland to provide compensating green space), and similar points made recently by former Conservative leader Iain Duncan Smith.

While UK environmental NGOs have rightly emphasised the opportunity for an ambitious approach – see the Greener UK manifesto for more information –and while both the Scottish and the Welsh Governments have emphasised the importance of EU environmental legislation in their demands in relation to the UK negotiating position, there are clearly predominantly downside risks. There has not been a rush of UK Ministers endorsing the Greener UK pledge; and even if in the short term standards do not change, we have the prospect of the Conservative and UKIP manifestos for the next UK election competing in their pledges for deregulation. It will therefore be important for green groups in the UK both to argue for current environmental standards to be rolled forward effectively, with credible governance and enforcement mechanisms, and the principles (like the precautionary principle) which underpin the EU approach to environmental problems; and to press for convincing, bankable guarantees about not reducing the level or effectiveness of standards in future. Legislation is not enough on its own; it has to be backed by a clear will to implement in practice, and mechanisms to enforce that will. The EU’s institutions have provided a powerful motivation for governments to deliver on their commitments, and this gap in the UK’s post-Brexit governance needs to be filled.

Environmental policy in the EU 27

And UK environmental stakeholders will be looking to EU negotiators for help in reinforcing the UK’s environmental commitments; not out of a sense that the EU27 has a responsibility to save the UK’s environmental policy, but from a recognition that a more level playing field in terms of environmental standards has long been an important underpinning of the single market. What happens here is important for the future of environmental policy in the EU 27. The Single European Act not only introduced greater flexibility in the adoption of single market laws – some of which, like legislation in the chemicals and products sectors, have been important instruments of environmental policy; it also introduced Qualified Majority Voting for environmental legislation, as part of a deal which recognised that access to a wider market brought with it an obligation not to undercut competitors through weaker standards. Recent comments from Michel Barnier (the Commission’s chief negotiator on Brexit) about the importance of environmental issues in the negotiations– a future trade deal with the UK cannot allow it to retreat on environmental protection and so become a free rider compared to EU Member States – have been encouraging. It is also an area where the European Parliament has expressed concern; but these points now need to find a real echo in the negotiating position eventually adopted by the EU27. There has been speculation about the impact on EU policymaking dynamics of removing the UK from Council and Parliament – less headline ambition on climate, but also less pressure for deregulation, and possibly some new avenues opening up for cooperation. However, it is clear that the nature of the deal the EU27 is prepared to sign up to with the UK will be an important signal of how the EU sees its future – either as a confident and united bloc making progress on implementation of the Sustainable Development Goals and with a determination to avoid deregulatory competition; or as an increasingly fragmented group with new tensions breaking out over the costs of environmental ambition, and the economic and environmental damage caused by subsidies to polluting industries.

What happens if there is no deal? 

The third and final area for attention is one that is easily overlooked at the beginning of a negotiation. What happens if there is no deal? Political debate in the UK over whether an abrupt departure from the EU, relying on “WTO terms” (although there is a lack of clarity over exactly what terms would in fact apply) would be acceptable, or would cause such economic disruption it should not be contemplated. The UK Government’s intermittent signalling that “no deal is better than a bad deal” is probably a combination of internal party management on the one hand, and negotiating tactics on the other. While EU27 negotiators are clearly right to emphasise that the UK would suffer much more than the remaining Member States in such a scenario, they will be trying to work out whether the UK means what it says. The truth is, the UK Government probably doesn’t know itself, yet; it will depend on how the politics of the negotiations play out domestically. Acting crazy can be a powerful negotiating tactic, but it tends to work best in one-off negotiations. The EU27 will need to weigh up whether accommodating UK demands in order to avoid the damage a hard Brexit would do both (hugely) to the UK economy and (significantly) to the EU 27 risks establishing a pattern of behaviour which will continue through the inevitable further detail of the negotiations to be ironed out, and the future trading and political relationship with their neighbour.

In any case, the sheer complexity of the negotiations, the range of views and demands that will need to be accommodated, and the “red lines” being laid down by the UK and across the institutions, create a clear risk that even in a benign scenario for the atmosphere of the negotiations, a deal could well not be concluded within 2 years. It seems unlikely either that the UK will ask for the negotiations to be extended indefinitely, or that unanimity would be achieved among the EU27 to allow that to happen. Both the UK and the Commission therefore need to turn their minds to the arrangements that would apply in the event of the Treaties simply “ceasing to apply” to the UK. This matters for environmental policy as much as for any other areas of economic life: businesses will need to know what rules will apply to them, and to trade across the Channel, in order to have confidence investing in new, greener technologies; Member States will need to know what happens to climate targets in order for them to be able to make the early decisions that are increasingly vital for cost-effective decarbonisation; and the risk of damage to environmental ambition from an economic downturn has already been demonstrated by the impact on the EU’s priorities of the economic pressures following the 2008 financial crisis.

There could be scope for the EU on the one hand, and the UK on the other, to manage the impacts through unilateral application of transitional rules; with the EU almost certainly using the progressive imposition of tariffs as a means to encourage the UK back to the negotiating table. At a minimum, however, firms will need to know what rules apply to transactions with the UK. There is a perception that neither side wants to be seen to be preparing for failure; but, paradoxically, demonstrating that the authorities on either side of the channel have contingency planning in place, and that the transition will be managed as predictably as possible, could help to calm nerves and allow the long-term planning that environmental investment needs.

Predictability, a clear trajectory for climate and other environmental objectives, and an understanding that ambition will be progressively increased, can be vital drivers for unlocking the potential economic benefits of a greener economy – estimated at €1.8 trillion for the EU in a recent Ellen Macarthur Foundation report on the circular economy. However, policy risk is the enemy of both environmental ambition and economic growth. The damage caused not just to the US’s environmental credentials, but to the prospects for jobs and growth in its renewables sectors, by President Trump’s short-sighted executive order earlier this week overturning US rules on climate mitigation is a clear warning sign. Both the UK and the EU need to work hard to ensure that, despite the potential turmoil of the Brexit negotiations, they provide green investors with a policy framework that enables them, and Europe’s citizens and environment, to thrive.

Press contact: Harvey Jones / hjones@ieep.eu / +44 207 340 0933 / +44 747 281 5818