Post referendum, the UK must continue to lead on environmental issues

Posted by Nick Molho on 23rd June 2016
First published in: Economist Insights


From an environmental perspective, the outcome of the UK’s referendum to leave the European Union could potentially have important consequences. Whilst far from perfect, EU environmental legislation has helped deliver better environmental standards in the UK in areas such as industrial pollution, water and air quality. By putting in place environmental rules that applied across the single market, it has also helped provide UK businesses with a level playing field with their EU competitors. The rules have helped to drive innovation in areas such as energy efficiency and create export opportunities for low carbon goods.

Why it must remain a leader

However, there is no reason why going forward the UK cannot continue to take a leading position on this agenda. Indeed, it should. One must remember two important things here. First, the UK has a good history of leading on environmental issues internationally, beyond just the EU – the excellent work of the Foreign and Commonwealth Office supporting climate polices globally is a good example. This is backed up by ambitious climate change legislation at home through the UK’s Climate Change Act that requires the UK to cut its emissions of greenhouse gases by at least 80% by 2050.

Second, despite some policy uncertainty, the UK has built a strong low carbon and renewable energy economy at home, which according to the Office for National Statistics, was worth over £46bn in 2014 and employed over 238,000 people directly. Many UK businesses are at the cutting edge of environmental innovation, whether it be in developing smart ICT solutions or manufacturing ultra-low emission vehicles (53% of which are exported to Europe).

When one looks at the global context, it makes sense for the UK to build on this work. The world economy faces major environmental challenges such as climate change, which do not respect national borders. But at the same time, it is also witnessing a rapid increase in global investments in low-carbon technologies in countries as varied as the United States, China, India and South Africa, with China also committed to reducing its production of coal.

The road ahead

In 2015, the international market for low carbon goods and services was already worth US$5.5tn and this has continued to grow after the successful outcome of the Paris climate change summit in December that saw world leaders committing to prevent an increase in temperatures to “well below 2C”.

Looking ahead, it therefore makes both environmental and economic sense for the UK to continue leading on environmental issues and grow its low carbon economy. Globally, the UK should continue to play a pro-active role in international negotiations such as through the “COP” climate change summits. Domestically, it should send a clear signal to businesses that it is committed to growing the UK’s low carbon economy and improving the state of its natural environment, which ultimately supports its economy.

Adopting the fifth carbon budget, which sets out the emission cuts the UK needs to make between 2028 and 2032 to meet its long-term targets affordably, will be critical to attract the reasonably priced private sector investment needed in a wide range of technologies from energy efficiency and low carbon heat to low carbon transport and clean energy. This will need to be backed up by a detailed emission reduction plan to deliver this budget, which the government must publish by the end of 2016.

Challenges remain

Putting in place a 25 year plan to help better value the UK’s natural assets and improve the state of its natural environment, which the government has committed to do, must be a priority too.

The outcome of the UK’s referendum has generated uncertainties across the board. But the environmental challenges we face are still the same and the global shift to a low carbon economy is still happening. It will be in the new government’s interest to continue leading on environmental issues and build the competitive, low carbon economy the UK needs to thrive on the global stage.