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EU environmental legislation adds value to UK businesses

22nd February 2016

Reacting to the Prime Minister’s announcement today on an EU referendum to take place on 23 June, the Aldersgate Group issued the following statement on the importance of EU environmental legislation for UK businesses.

High quality environmental legislation is good for the economy, for business and for citizens. EU environmental legislation has provided to date important benefits for UK businesses and the environment. Many environmental issues such as climate change and air quality are transnational in nature and other environmental issues, whilst not always or necessarily transboundary (e.g. water pollution), are common to many member states.

Whilst some improvements must be made, EU legislation has helped tackle some of these challenges in a more environmentally and economically effective manner by pooling the resources of different member states to address a particular environmental concern and driving environmental and business innovation across the EU. Membership of the EU has also strengthened UK diplomatic efforts in international negotiations such as recently at the climate change summit in Paris.

The UK has at times been a major player in the improvement of EU environmental legislation such as on emissions trading and industrial pollution; however, EU legislation has often resulted in standards that have resulted in a higher degree of environmental protection than would have otherwise applied in the UK. For instance, EU legislation has been the principal driver of rising UK standards on air and water pollution with major health benefits - the Bathing Water Directive has driven real improvements in beach water quality and benefitted tourism. The Environment Agency has stated that the Landfill Directive has changed for the better the way that waste is managed in the UK. The Birds and Habitats Directives have led to substantial improvements in the standards of protection for habitats and species in the UK.

In addition to addressing environmental issues cost-effectively, EU legislation has resulted in the introduction of common environmental and product standards which have been beneficial to UK businesses by providing more of a level playing field across different member states and providing clear market signals on the standards that products and services being developed on the Single Market need to meet. These standards have also often resulted in cost reductions for consumers, for instance DECC predicts that tighter efficiency standards for household energy appliances are expected to deliver an average annual saving of around £158 per household in 2020 (including around £25 per household through more efficient TVs and set-top boxes, £25 through more efficient consumer electronics and around £20 through more efficient lighting).

There are undoubtedly areas of European environmental legislation that could be improved and made more effective, in particular through more consistent implementation across member states and a greater focus on looking at environmental issues as a whole when developing policy to avoid unintended impacts. This could help avoid instances where some areas of EU legislation undermine its environmental objectives such as the European Court of Justice ruling last June that the UK’s reduced 5% VAT rate on energy-saving products was in breach of EU laws. However, the UK is most likely to have some influence in supporting these improvements and ensuring that the interests of its businesses are recognised and promoted if it continues to be part of the EU.

Should the UK leave the EU, the government must ensure that the UK continues to abide by environmental standards of at least a similar threshold to those contained in existing European legislation and applied across the Single Market. This is particularly the case in key areas such as product efficiency, fuel efficiency, industrial pollution and climate change. However, no clarity has been provided to date as to how this would be done and how the future development of these standards and legislation could still be influenced by the UK in the event that it was no longer part of the EU. 

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