What the EU Referendum could mean for UK energy and carbon regulation

The date of the EU referendum has been announced. Politicians, business leaders and anyone with access to social media have voiced opinions and hammered their flag to the ‘Remain’ or ‘Leave’ mast. With the prominent issues up for debate being the economy, trade and immigration, it’s clear that the vote will not be decided by ...

Rachel Hunter

3 Mar 2016 3 mins read time
What the EU Referendum could mean for UK energy and carbon regulation

The date of the EU referendum has been announced. Politicians, business leaders and anyone with access to social media have voiced opinions and hammered their flag to the ‘Remain’ or ‘Leave’ mast.

With the prominent issues up for debate being the economy, trade and immigration, it’s clear that the vote will not be decided by carbon and energy issues alone.

This being true, it will not stop the environmental agenda being hugely impacted by what may happen in June. So what exactly are the issues we need to think about during the run up to the EU Referendum with regards to energy and carbon?

Much of the UK’s environmental policy that impacts businesses is inspired by regulation conceived at EU level which is then transposed into national legislation.

 

For example, just some of the regulations that already exist, and impact our clients, are:

  • Energy Efficiency Directive (ESOS) requiring energy audits to identify energy efficiency measures

     

  • The EU Emissions Trading Scheme requiring energy intensive companies to enter into the EU wide cap and trade scheme to mitigate greenhouse gas emissions output or face financial penalties

     

  • Non-Financial Reporting Directive (NFR) requiring companies to disclose information about their GHG emissions and environmental practices in financial reports

 

Further to these compliance schemes, other legislation around carbon targets, renewables targets, biodiversity, waste and water use also impact our clients in the UK and in other EU member states.

What would happen to existing EU-inspired legislation if Britain exited? Given the current agenda to re-draw energy policy and review existing environmental laws, it is possible the Government would seek to streamline the policy framework once free of the EU requirements. Removing or re-writing existing UK legislation that came from EU Directives could result in uncertainty and, potentially, widespread disruption that would likely lead to a slower corporate response to climate change and energy challenges.

 

Infrastructure-related investments are likely to be most impacted by any uncertainty due to their long-term nature. We can expect to see this most in the area of investment to meet low carbon and renewable targets. These targets, originating at EU level, have enabled billions of pounds worth of investment and innovation. What may the revising of targets mean to our journey towards a low carbon future?

Finally, the Paris Agreement that resulted from COP 21 was committed to as part of an EU-wide negotiating body. If Britain exits the EU, what will this mean for our place in climate change geo-politics?

 It’s safe to say that there are many unanswered questions in the EU referendum debate. There does not seem to be a clear view about what may be in store for energy and carbon legislation in or out of the European Union. Those of us who value the advancements to the environmental agenda enabled by the EU owe it to ourselves to clarify the likely impacts of a Leave vote.