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UK energy and climate change policy to shift?

The UK, always an awkward member of the European Union, is set to be the first state to leave the bloc (or not; anything seems possible at the moment). However, on the assumption that out means out, we have to consider a future in which British policy in several key areas is not part of an umbrella EU policy. Action on climate change is one important issue in this category.

Already, the House of Commons Energy and Climate Change Committee has launched an inquiry into the implications of Brexit (Leaving the EU: implications for UK climate policy). To quote from the introduction to this inquiry:

“The UK’s climate-change agenda has been driven by a mixture of national and international policies. Nationally, the Climate Change Act 2008 sets the UK decarbonisation agenda up to 2050. On the international stage, the UK currently negotiates as part of the EU bloc. The EU 2030 target—the EU’s proposed contribution at the recent COP21 climate change conference in Paris—was agreed by Member States in October 2014.

The UK’s participation in the EU Emissions Trading Scheme, which requires companies to purchase permits to emit greenhouse gases, will now be subject to negotiation. Withdrawal from the EU raises questions as to the UK’s position with respect to existing EU pledges and policies, and its future interaction with the EU bloc to fight climate change.”

This is an admirably clear summary of the situation. The UK currently has EU commitments to fulfil, but the domestic Climate Change Act has created a framework in which even more demanding targets for emissions cuts are being set. In that sense, Brexit changes very little, because the EU goals will be surpassed if the carbon budgets put forward by the Climate Change Committee are adhered to.

The committee has proposed a 57% reduction in CO2 emissions (against a 1990 baseline) for a fifth carbon budget covering the period 2018 to 2032, and the government has accepted this. In comparison, the EU target is for an emissions reduction of at least 40% by 2030. Like the UK one, this is a nominally binding target, but in this case individual member state targets are not agreed.

On the face of it, then, leaving the EU should make no real difference to UK policy in this area. True, participation in the Emissions Trading Scheme would not necessarily be automatic but this is pretty much immaterial when we see how poorly designed and ineffectual that is (as well as being prone to fraud, but that’s another issue). In fact, Norway does participate in this scheme, so Britain would most likely do the same.

What will change, though, is the country’s trading position and economic circumstances. The final outcome is far from certain, but exporting to existing co-members of the EU will certainly not get any easier. There is also a real possibility that the position of London as the major European centre for international banking could be compromised. Everything points towards a need for exporting industries to become more competitive, something the country has not been good at.

In these circumstances, a key requirement is for a secure supply of affordable energy. This would have been true even before 23 June; the referendum result simply makes it even more important. But current policy flies in the face of that by continuing to favour intermittent renewable energy over reliable gas, nuclear and coal. The government’s adherence to the most demanding emissions reduction targets anywhere in the world inevitably conflict with the need for cheap, reliable energy, at the current stage of technology development.

The decision to leave the EU – a real surprise to most of us – has overturned comfortable certainties and led to an unprecedented political crisis. The governing party will shortly be electing a new leader charged with the responsibility for negotiating a good deal with the rest of the EU (who will not be inclined towards generosity). Meanwhile, the official opposition is engaged in a life-or-death struggle for the soul of the party, with a leader who has lost the confidence of his MPs and is unelectable nationally relying on the dubious legitimacy of support from grassroots members to cling to power. A significant realignment of UK politics would not be beyond the realms of possibility.

Against this background, basic policies may also be looked at in a different light. The door to exploitation of domestic shale gas is finally ajar after permission was given for fracking in North Yorkshire and moves afoot to restart test drilling in Lancashire. Recently we also see that the Climate Change Committee has given its cautious green light for fracking. The big caveat is that this makes no change to emissions targets and greater savings will need to be made elsewhere if more gas is used. However, these modest beginnings for a new domestic supply of gas could be a game-changer in the longer term.

Elsewhere, it is looking increasingly doubtful that EDF’s proposed Hinckley Point C nuclear station will be built, given the likely cost, the financial difficulties faced by the company, its present failure to finish building reactors of this design in Finland and France and the sidelining of George Osborne, a key political supporter. But that doesn’t mean that other projects from Westinghouse and Hitachi will not reach fruition and make nuclear the key to providing a reliable, low-carbon base load.

Whatever happens, the need to secure a prosperous future for the UK, either in or out of the EU, requires some back-to-basics thinking about key policies. There should be no sacred cows, and we certainly should not jeopardise the future by blindly pursuing a costly and ineffective route to reducing carbon dioxide emissions using inadequate technology.