A changing environment: House of Lords recommendations for Brexit

Posted in Energy Real estate

EU law permeates throughout UK environment and climate change regulation. Following a recent inquiry, the House of Lords European Union Committee (the Committee) has called for caution when proposing any changes to UK environmental and climate change policy in their report assessing issues arising from Brexit negotiations (the Report). The Report explores the main risks and opportunities for the UK, focusing in particular on changes to the legal framework, the institutions which lie behind the environmental acquis and the resources required to achieve policy goals and ensure compliance.

The Committee investigated the impact of compliance with environmental legislation no longer being subject to the supervision and enforcement of the Commission or the Court of Justice of the European Union (CJEU). Here there was a clear divergence between the views of the Government and those of environmental groups. Civil society groups expressed concern that the domestic enforcement regime was not a substitute for the existing EU regime, citing the costs of judicial review and the domestic courts’ inability to levy fines as particular shortfalls of the national framework. By contrast, the Government expressed confidence that existing domestic accountability mechanisms were adequate (whilst recognising that the threat of infraction proceedings had driven environmental policy in the past). Despite Government assurances, the Committee concluded that an independent domestic enforcement mechanism would be necessary to fill the vacuum left by the European Commission. It remains to be seen what policy the Government will introduce.

Witnesses who gave evidence to the inquiry identified a number of opportunities which would in their opinion improve the efficiency and impact of environmental legislation following Brexit. Improvements to waste legislation by removing regulatory barriers to secondary use of materials was one example. Some suggested that the removal of EU state aid rules could facilitate implementation of a more ambitious, simplified climate change policy, although this depends on the regime which the UK implements to replace EU regulation. The Report observed that the additional flexibility gained on leaving the EU carries the risk of a less predictable legal and policy environment. The medium-term stability and predictable review cycles of EU policies has been a source of investor confidence and the Committee stated that policy stability will be important to retain during the process of and following Brexit. In principle, the Report welcomed the proposed Great Repeal Bill as a tool to minimise regulatory and legislative uncertainties following Brexit. However it also outlined the numerous practical difficulties which remain unresolved, and are described in more detail in our earlier update on ‘The Great Repeal Bill’.

EU membership has assisted the UK in the implementation of environment and climate change regulation. Upon leaving the EU, funding from both the EU budget and the European Investment Bank, access to information and collaboration in EU research projects were areas highlighted as being subject to change. The Report welcomed the Prime Minister’s support for continued collaboration with Europe on research projects (presented as one of the ten objectives for the negotiation in the Lancaster House Speech on 17 January 2017) but warned that a “very substantial” increase in resources will be needed for the Government and the Department for Food and Rural Affairs to take on the challenge of repatriating environmental laws.

The future of the EU Emissions Trading Scheme (EU ETS) is likely to be a key negotiating  issue with the EU. The Committee recognised that the UK has a strong, independent legal framework for addressing climate change in the Climate Change Act 2008. Witnesses representing the Government at the inquiry confirmed that no decision has - been made on continued participation in the EU ETS following Brexit. Matthew Bell, Chief Executive, Committee on Climate Change commented that it would be unusual for the UK not to be part of some emissions trading scheme given that, when functioning well, it offers a cost-effective means of reducing carbon emissions. Withdrawal would raise questions as to what happens to existing allowances owned by UK-based companies, and would require changes to be made to the UK’s carbon accounting system. Mr Bell also suggested that if the UK does withdraw from the EU ETS, opportunities to join a different trading scheme, such as future schemes in North America, China or Australia, should be explored. The Committee recommended that every effort is made to retain influence over EU ETS operating rules if the UK remains a member of the scheme. If the Government opts to withdraw from the EU ETS, it will need to evaluate carefully alternative means of driving emissions reductions.

The Government is presently considering the Report’s recommendations which may influence negotiations with the EU and - the formulation of future national environment and climate change policy.

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