Carbon Critical

December 14, 2020

A Desirable Race to the Bottom

In the Brexit negotiations presently on knife’s edge, climate issues play a minor role. However, concerns around them mirror the obstacles. Both sides should realize they are essentially on the same team.

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Two graphs showing the paths of UK and EU27 CO2 emissions since 1990
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On December 3 the United Kingdom announced its new, tougher greenhouse gas emissions reduction target for 2030, a 68-percent reduction on 1990 levels. This target is lower than the EU’s goal of a 55 percent emissions cut over the same 40-year period, which the European Council finalized a week later.

This variance in ambition makes a difference: According to Climate Action Tracker, hitting the new target would make the UK “one of the first countries globally to bring its domestic emissions into line with what would be necessary globally for the Paris Agreement’s 1.5 degrees Celsius limit.” The EU is not in that select group, as British Prime Minister Boris Johnson may well have known when he said in a climate speech that the UK would reduce emissions “faster than any other major economy.” The Downing Street press release even reminded readers that “the target is the first set by the UK following its departure from the EU.” The EU, too, is proud of its “ambitious” climate target and thinks of itself as a climate leader.

Brussels and London may be working to put out the same fire, but they aren’t shy about playing to the crowd in the process. So, will it be climate cooperation or competition after Brexit?

Very Friendly Competition

It will be a bit of both, for the debate about EU-UK climate relations is the Brexit debate writ small: In general, each side has similar goals and an interest in the other’s success. Disagreements are the result of concerns about unfair advantages and joint projects being undermined. And implementation will be a headache.

Some areas of climate policy are naturally more cooperative. Cutting emissions is very much a positive-sum game. The “carbon budget” is a global one because the climate is stabilized whether emissions are cut in Normandy or Norfolk. That’s why the Brexit negotiators have found climate policy easier to deal with than issues like fishing rights allocations, where one more fish for the British might mean one fewer fish for the French. In and of themselves, diverging national emissions targets create none of the “level playing field” issues that bedevil topics such as trade tariffs or labor standards; the UK gains no competitive advantage from manufacturing a product under its national emissions regime and selling it to the EU.

Many of the arguments supporting close UK-EU cooperation on security also apply to climate. As they say, the UK is not leaving Europe. Just as Brexit will not fundamentally change either side’s interest in sharing information on criminals or coordinating security and defense policies, it will not change the reality of energy flows in North-Eastern Europe. Electricity interconnectors already allow power to be traded between the UK and its neighbors, and more are being built. Like Norway, another non-EU state, the UK will also be an important part of a future European hydrogen economy in which hydrogen and captured carbon dioxide are traded across the North Sea.

Public Relations Battles

Two other aspects of the climate relationship are causing friction, however.

First, there is the aforementioned diplomatic and public relations battle. When the Number 10 Downing Street Press Office puts out that the UK is “leading the way in tackling climate change globally,” it is playing to several audiences. To climate-concerned British progressives likely to oppose both Brexit and Boris Johnson, it demonstrates that the Conservative government takes seriously an issue they care about. To the UK’s non-European allies and trading partners, notably the incoming administration of US President-elect Joe Biden, this messaging is meant to prove that Johnson is not a Trump-like populist wary of international structures but rather a climate leader and the future host of a hopefully successful COP26 in Glasgow. To Brexiteers, this language is a signal that the UK has broken the shackles of the EU regime and “taken back” its sovereign freedom.

For its part, the EU does not want anyone getting the idea that the EU had been holding back British climate policy. There has been no EU regulation preventing the UK from setting lower national emissions targets or spending more money to promote offshore wind power, a key element of Johnson’s climate plan. Nor are emissions reductions from 1990-2030 the only measure of climate ambition—the UK’s green recovery package, for instance, is smaller than France’s or Germany’s.

In agricultural policy, though, the government in London has actually gained more freedom of action to cut emissions by leaving the EU: the UK’s post-Brexit agricultural regime will phase out direct farm subsidies in favor of subsidies linked to green reforms, whereas the EU will plod along with a largely unchanged Common Agricultural Policy (CAP). Politico quoted Bas Eickhout, the Green vice chair of the European Parliament’s environment committee, as saying that Brussels’ failure to substantially reform the CAP had “given the Brits an easy storyline” in the Brexit public relations battle. Still, this is an exception to the general rule: the story here is not that the UK will finally be free to take climate action after Brexit.

An Uneven Playing Field

Second, and more important, is the issue of an uneven playing field. Even if divergent emissions targets are no obstacle to trade, other regulations affected by Brexit could complicate things for businesspeople working across the EU-UK border. Take environmental standards, which sometime have climate implications as well. In its negotiating approach, the UK asserts that it will “maintain [EU] standards” on “the level of protection offered by environmental laws” but also pledges to retain “full control of its own laws.” This is a basic Brexit dilemma: how can two sides agree to keep something equivalent if they reserve the right to change it unilaterally? If the UK wants full access to the EU market, Brussels argues, it cannot have more lax standards for the production of chemicals or plastics.

Carbon pricing is a key sticking point, too. So far, the UK has been part of the EU Emissions Trading Scheme (ETS), the bloc’s most important carbon-pricing mechanism. It will need to replace this somehow after Brexit. Draft UK legislation published in November outlines the UK’s plans for its own ETS. Although the bill leaves open the possibility that the UK scheme will be linked to the EU ETS, as Switzerland’s is (another country outside of the EU), there will be no link by January 1, 2021—the EU-Switzerland link took seven years to finalize. What’s more, Switzerland will regularly adapt its ETS to keep it aligned with the EU scheme, which brings us back to the same problem of how to have a cake and eat it too.

And there is another carbon pricing mechanism on the horizon: the EU’s carbon border adjustment, which is meant to ensure that the carbon dioxide embedded in products like steel or cement is reflected in the price. Although several variants of the scheme are still being evaluated, this will almost certainly exempt countries with compatible carbon-pricing mechanisms. The negotiations over Brexit and the ETS will determine how compatible Britain’s carbon pricing scheme is, and how easy it will be for British companies to export carbon-intensive products to the EU. 

On the Same Team

In the grand scheme of things, these climate issues are minor irritants in the future UK-EU relationship. If either Brussels or London has to watch their divorced partner flourish and dominate a key market of the future, they would want it to be with a technology that helps to maintain a stable climate for all nations. In other words, figuring out how to tax imports of carbon-free British steel would be a nice problem for the EU to have.

When it comes to emissions, a race to the bottom is exactly what we want.

Noah J. Gordon is INTERNATIONALE POLITIK QUARTERLY’s climate columnist.

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