BREXIT: A Climate of Political Uncertainties

The referendum in Britain to exit from the European Union revealed how an extended caveat of global warming – Syrian refugee crisis has indebted to the death knell for European 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 (agricultural sector accounted 19% of Syrian Gross Domestic Product). By a quirk of fate, the resultant refugee crisis in Europe became the propaganda machine for Brexit, and the Tories camp of climate skeptics who led the Leave campaign seems to have downgraded climate change from its new agendas. This warrants a look at how Brexit stands to affect the consensus arrived at recent Paris climate agreement.


BREXIT & Climate Change Negotiations


Constituting 7.3 % of global demographics (third largest as a combined bloc after China & India) and with a GDP valued at $ 18.495 trillion (as of 2014), European Union – the 28 member bloc of Europe is that one supranational body whose global influence catapulted it to a superpower. However the same European dream is struggling to stay afloat with the recent developments and a divided Europe, puts the Paris treaty is 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. In ongoing melee on Brexit and its implications, the Paris deal was found itself amiss. 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 GHG emissions accounts 55% of total global emissions have to ratify the agreement.


Being the world’s largest single market with a share of 13.10% of total emissions, EU‘s ratification of the treaty is critical for the deal to enter into force. EU represented itself as a union when giving its climate pledges, and with Brexit, the status of its climate pledges – Intended Nationally Determined Contributions (INDC s) are at stake. The exit in the 5th largest economy of the world (4.6% GDP value globally) and the 2nd largest in the Union (GDP worth $2849.35 billion as of 2015) from its ambit may entail the existing 27 member E.U and the U.K to present their revised pledges to the UNFCC (United Nations Framework on Climate Change.


The leadership role of E.U in global climate negotiations was characteristic in the ratification of the Kyoto Protocol(at a time of U.S 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% of GHG emissions by 2030. In pursuit of energy security and fuel savings EU aims for a cut of 19 % in its energy imports, compared to 2010, besides saving up to 14 billion euros on an average annual basis between 2010-2030 respectively.Notwithstanding these, E.U was also pitted to be a forerunner towards setting appliance and regulatory standards that can shape policies in all major economies within the union.


Climate of Political Uncertainties


Brexit will cast a gloom on a prime climate instrument of EU – the European Emission Trading System (ETS), set up 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% 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. U.K has 1,000 installations which operate under this system and accounts for 10% 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 imply U.K to devise new arrangements in its cap and trade scheme.


UK’s emissions (GHG) constitute 2% of global emissions and its role in pushing EU 2030 carbon target from 40% to 50% 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% by 2050 compared with 1990 levels; and the Finance Act 2011 – aimed for the development of a carbon price floor, were crucial interventions in this regard. But if recent reports of U.K National Grid are to be believed, U.K 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- offshore wind, may take a backseat. Nevertheless, it aims to reduce its GHG emissions 57% by 2032 compared with 1990, with adoption of its fifth carbon budget.


Brexit being a protracted process with uncertainties, is likely to affect the carbon price mechanisms in E.U, 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 spill over-effect over 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 skeptic as the new Environment Secretary, the new government has seems to have snubbed efforts to tackle climate change from its policy agenda. Nonetheless, both the Conservatives and Labor camps agree on diversification to energy sources like renewables, domestic shale, and nuclear technologies to achieve the proposed decarbonization plans (to cut emissions by 80% by 2050).


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


Source: Vinny Davis of the Centre for Public Policy Research. Image via Occupy.


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*Any views expressed are unintentional, personal, and might not be representative of the IndoAmerican Center.