The Repeal Bill: The challenges we face

19th July 2017


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Author

Michael Lynch

Richard Clarke writes on the challenges facing environmental regulation within the Repeal Bill

With the publication of the Queen’s Speech, the “Great” Repeal Bill is scheduled to come before parliament during the next term. Its purpose is to transpose existing EU legislation into UK law and provide for the repeal of the European Communities Act 1972, which gives EU law legal power.

However, as former environment secretary Andrea Leadsom made clear, up to one-third of environmental legislation “won’t be easy to transpose”. It is thought these will be laws where regulatory, monitoring or enforcement currently resides in EU bodies, such as REACH. The Repeal Bill is unlikely to provide clarity on how such regulation will operate in a post-Brexit world. Instead we would expect such issues to be addressed during negotiations on future trade and customs arrangements.

Cause for concern

Outside the transposition of existing EU laws, some significant areas of future environmental regulation will potentially require further clarification or additional legislation. One key area relates to the absence of overarching principles in UK environmental law. Because most UK legislation came to the statute books during the UK’s membership of the EU, it has been based on requirements set out in the Treaty on the Functioning of the European Union. This enshrines key environmental protections, specifically the polluter pays principle and the precautionary principle, contained in Article 191.

On exiting the EU, these key principles which underpin UK environmental law will cease to apply. The House of Commons Environmental Audit Committee has raised concerns over just this issue, calling for a new Environmental Protection Act to ensure that these principles are fully enshrined within UK law.

Whilst the UK’s commitments under the Paris Agreement were ratified by the UK government and will be unchanged by Brexit, many elements of UK carbon reporting and control measures are based on or linked to EU requirements or bodies. In particular, organisations obligated under the EU Emissions Trading Scheme (EU ETS) will need clarification of how allowance trading will operate post-Brexit. Phase three of the scheme is scheduled to be complete in 2020 after Brexit is likely to occur. Whether the UK will negotiate continued access to the EU ETS or create a parallel UK scheme will determine how this important carbon control mechanism will operate, as well as clarifying how the value of EU ETS allowances will function during and after withdrawal from the EU.

Opportunities

Within the UK, the government had already indicated a desire to scrap the Carbon Reduction Commitment Scheme in 2019 and at the same time review carbon reporting requirements. At the time of the 2016 budget, it was thought that under continued EU membership, Energy Savings Opportunity Scheme (ESOS) requirements would apply and that any future reporting scheme would be based on extended ESOS requirements.

With Brexit, the UK may choose to discontinue ESOS at the end of the current phase in 2019. As many environmental professionals have questioned whether the scheme adds value, there is an opportunity to take a detailed look at carbon reporting within the UK to ensure it remains fit for purpose.

Funding shortfall

The UK faces a number of major infrastructure challenges as it moves to a low-carbon economy. Much of the heavy funding of such infrastructure projects is currently met by the European Investment Bank (EIB) and the European Investment Fund. In 2016, the UK accessed £8.1bn of EIB funding for projects dominated by environmental infrastructure. Between 2012 and 2016, this has included 30% for energy, 28% for water, sewerage, waste and urban development, and 23% for transport.

The EIB represents the lowest-cost funding source for local government and other infrastructure bodies. Without a commitment post-Brexit to ongoing access to such low-cost financial support, it will be harder for vital projects to find funding that assists existing or new projects.

Plans but no actions

Environmental policy in the UK has long deferred to the EU agenda and, as such, the UK does not have a UK-specific environmental vision or plan. The government has commissioned DEFRA to produce a 25-year action plan but, two years on, this is not yet available, and recent indications from environment secretary Michael Gove are that it is unlikely to be completed this year.

For business this means that there is lack of clarity on the future direction of environmental policy. Perhaps most significantly, this relates to the proposed EU Circular Economy Package. While the draft directives are likely to be brought before the EU parliament in coming years, transposition deadlines are likely to be beyond the UK’s departure. As such, there will be no requirement for the UK to implement the directives.

Touching on a wide range of waste and packaging law, these proposals would otherwise be of significance to most UK businesses. With current raw material costs around 20% higher, owing to exchange rate fluctuations, materials efficiency and reuse may well be a major issue for business in the post-Brexit world.

Within the broader aim of the Repeal Bill to transpose EU law into UK law, there are many areas of environmental legislation and policy that remain unclear. Brexit represents an opportunity for the UK to review environmental regulation and ensure it remains up to standard in the years to come. As professionals, we must engage in the process of debate and consultation to ensure a best-fit regulatory outcome.

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