Energy and climate policy will not be affected by Brexit, Decc insists

30th June 2016


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Tian Sun

UK action on energy and climate change will not be affected by the vote to leave the EU, both the secretary of state and minister for the energy and climate change department (Decc) have insisted.

Speaking at the Business and Climate summit in London, energy and climate secretary Amber Rudd, who campaigned to stay in the EU, said that the government’s commitment to tackling climate change would continue.

‘However we choose to leave the EU, let me be clear: we remain committed to dealing with climate change. The act was not imposed on us by the EU. It was delivered with cross-party support by the UK parliament. Leading Leave campaigners have made clear they remain committed to it, she said.

‘These factors – a clear energy policy framework and a strong, investment-friendly economy – combine to make the UK an ideal place to attract energy investment.

‘Whatever settlement we decide on in the comings months, these fundamentals will remain,’ Rudd added.

Although the Decc secretary acknowledged that the UK faces a period of uncertainty and the referendum result raises many questions for the energy sector, she maintained that the economic benefits that had made the UK a good location for energy investments had not changed, and that the country would retain its openness to trade.

Meanwhile, energy minister Andrea Leadsom told MPs on the parliamentary energy and climate change committee that the UK’s departure from the EU would not change anything in terms of energy or climate policy. The UK works globally on climate change, not just with the EU, she said.

Leadsom, who today announced she would run to lead the Conservative Party, insisted that Brexit would have little impact on investor confidence, despite the fact that Siemens yesterday announced it had put plans to export offshore wind turbines from its new manufacturing hub in Hull on hold until the terms of the deal to leave the EU were clear.

Leadsom, who campaigned to leave the EU, said that some of the savings the UK makes from not paying into the EU budget should be spent on reducing VAT on fuel bills.

Climate experts at E3G said that the referendum result would not change the fundamentals of energy and climate policy as the underlying economics point to a mutual interest in continued UK participation in the integrated European energy market. They warned, however, that investors in the UK’s energy sector face uncertainty over the future terms of access to the internal energy market; financial risk such as potentially higher borrowing costs and currency fluctuations; and political risk, including changes in the UK’s political leadership and policy direction.

The prime minister, and potential Conservative leadership candidates, should limit the uncertainty by reiterate a commitment for the UK’s clean energy and climate policies and targets to be at least as strong, or stronger than, the rest of the EU, E3G suggested. Leaders in other member states should also make a statement of intent for the UK to continue to fully participate in the internal energy market, it added.

Greenpeace director John Sauven praised both Rudd and Leadsom for seeking to reassure the sector that the government was still committed to the Climate Change Act and leadership on climate change.

But he warned that ‘soothing words’ were not good enough. ‘Green investor confidence in the UK was shaking before Brexit because of the government’s ever-changing and incoherent policies, which neither minister seem willing to get to grips with even now,’ he said.

In the aftermath of the Brexit vote, environment bodies, including IEMA, called on the government to swiftly endorse the fifth carbon budget in line with the Committee on Climate Change’s advice to limit emissions to 1,765 MtCO2e for the period 2028–2032, representing a 57% cut compared to 1990 levels. Rudd is set to announce that approval today.

Lord Stern of Brentford, chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science, said: ‘The fifth carbon budget will provide some confidence for investors that the UK will, outside the EU, continue the transition to a low-carbon economy, which offers enormous potential for sustainable growth and prosperity for decades to come.

‘The UK’s commitment on climate change is longstanding and based on a understanding that it is a global issue and should not be altered by its future departure from the EU.’

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