Brexit Burnishes U.K.s Climate Image, But Exacts Real Costs – Forbes

British prime Minister Boris Johnson hosts a virtual meeting of G7 leaders in the Cabinet Room at ... [+] Number Ten, Downing Street on February 19, 2021 in London, England. The 2021 G Summit will be held in Carbis Bay, Cornwall from 11-13th June.

This November, U.K. prime minister Boris Johnson will crow about the benefits of Brexit once again.

That is when the U.K.s Glasgow, in Scotland, will host this years UN climate conference, effectively handing a megaphone to Johnson to boast about his countrys climate ambitions. And thanks to Brexit, he will have something considerable to brag about: a formal pledge by the U.K., under UN guidelines, to cut greenhouse gas emissions 68% by 2030, well above the EUs pledged 55% cut.

The U.K.s role as host to this years COP conference, as the annual gatherings are known, is an example of how the U.K.s break from the EU affords it new opportunities to burnish its climate reputation on the world stage. While the true climate impact of Brexit may be somewhat negative what the U.K. gains in bragging rights, after all, the EU loses Brexit is at minimum a major public relations gift to Britains ambitions to sell itself as an environmental leader.

The COP26 is not the only international summit this year where the U.K. will have a chance to shine a spotlight on itself. In another stroke of luck, the U.K. is also set to host a meeting of seven of the worlds largest economies, the G7, this June in Cornwall. Climate is set to be one of the summit's main priorities.

The U.K. sees decarbonization as one of the global challenges where it can show potential leadership, said Alastair Hamilton, a partner at consulting firm McKinsey. The confluence of Brexit happening in the same year as the COP26 and when it is chair of the G7, the U.K. will be seeing that as...a big diplomatic opportunity.

Philippa Spence, an executive director at Denmark-based environmental engineering consultancy Ramboll, agreed: The Johnson government is seeing the green agenda as an opportunity to rebrand after a damaging year in 2020, with COP26 as a chance to present the U.K. as a global leader in this space.

The U.K.s biggest climate coup may have been in freeing itself of the nettlesome West-East tug-of-war that has plagued the EUs ability to set binding climate targets. Central and Eastern European countries, which still rely heavily on coal-fired power, have fought bitterly to keep the EU Commission from adopting tougher headline targets. Only in December did EU heads of state manage to persuade Poland and other holdouts, such as Hungary and the Czech Republic, to raise the blocs official target to a 55% cut of greenhouse gas emissions by 2030 against 1990 levels, up from the previous target of 40%. (The EU needs agreement from all 27 of its member nations to change targets.)

Flexing its newfound freedom from the EU, the U.K. pledged its own emissions reduction target, as required under the 2016 Paris Agreement, the very next day, December 12, as part of its submission to the COP26 conference in Glasgow: an attention-grabbing 68%.

The U.K.s exit from the bloc also renews attention to the fact that the U.K. is actually running ahead of the EU on some other big environmental goals. For example, it has pledged to ban sales of petrol and diesel cars and vans by 2030, whereas the EU has opted instead only to steadily increase its fuel economy standards.

Despite the leadership-enhancing effects of Brexit, the U.K.s exit from the bloc has already exacted real costs.

The EU has lost a valuable member nation committed to aggressive climate overhaul. And both the EU and the U.K. have squandered valuable political capital, time and focus on Brexit negotiations when they could have been working to decarbonize their economies. Brexit hijacked the EU agenda, as one December 2019 academic paper put it.

Even the Johnson governments expected eagerness to promote its new 68% cut in greenhouse gas emissions by 2030 leaves unacknowledged a key fact: the U.K. would probably have committed itself to a similar target even if it were still in the EU.

Even before it left the bloc, the U.K.s climate commitments were largely spelled out in national laws, not under any agreement with the EU, pointed out Shane Tomlinson, deputy CEO of E3G, a European climate think tank.

There are a lot of pro-Brexit people who want to sell a vision that somehow the U.K. is now unchained from the EU and free to innovate, said Tomlinson. However, in general these arguments dont pass any scrutiny.

For example, the U.K. still would have had the freedom to increase its 2030 greenhouse gas cut to 68% even if it had remained in the EU, Tomlinson said. (Even back when the EU was still targeting a cut of 40% by 2030, the U.K. was already committed to a 57% reduction, he said.) Additionally, by remaining inside the bloc the U.K. might have been able to use its negotiating power to leverage bigger commitments from member nations such as Germany or France, he said.

Of course, if the U.K. really is serious about striking new trade deals with other countries, it may be able to leverage its influence on climate around the world in ways that the EU, with its existing bevy of trade relationships, perhaps cannot. But this is far from certain.

Brexit also could make the U.K. less attractive as a haven for cutting-edge energy and climate firms looking for new homes in Europe. While it is still too early to tell, some anecdotal evidence suggests that at least a few cleantech firms are opting for the EU over the U.K., seeking the blocs greater bigger talent visa-free talent pool, the reduced dependence on customs checks at the border or its greater policy certainty.

This month the Intercontinental Exchange (ICE) said it would move its carbon emissions trading operations out of London to Amsterdam, as the U.K. now has its own, separate scheme.

And David Hunt, the CEO and founder of Hyperion Executive Search, which finds talent for cleantech firms, said that one of his clients, a listed U.S. company involved in electric vehicle charging, has switched its attention from the U.K. to Germany as it eyes locations to set up a European base of operations. Among the reasons, Hunt said, was concern about potential issues with imports of components from the EU into the U.K.

For electric vehicle producers, rules of origin requirements in the new trade deals mean U.K. firms will have to prove that at least 40% of the value of parts in a finished car originated in the U.K., commodities news specialist Argus Media reported this month. That may mean the U.K. would need to produce its own batteries, anodes and cathodes, a big change that could drive some manufacturers across the Channel.

Still, the number of departures of green tech firms so far has been minimal, and there have even been some surprises: Jaguar Land Rover unexpectedly decided this month that it would retool its U.K. carmaking site in the Midlands as a new electric vehicle hub.

It is one thing to declare more ambitious climate goals. Can the U.K. actually achieve them?

Experts say that much depends on whether the U.K. chooses to lower its environmental standards as it pursues trade deals with non-EU nations. The post-Brexit trade deal contains non-regression clauses and other mechanisms to limit the extent of possible backsliding on standards, but the energy section of the deal is temporary and will expire in June 2026 unless a more comprehensive agreement is reached or the deadline is extended.

While there is an obvious incentive to pursue such a strategy lucrative free trading relationships there are good reasons to think the U.K. wont bite. If the U.K. ever fell far behind the EU on products standards, for example, it would probably get smacked with a heavy carbon border tax which the EU Commission is even now working to erect along its borders. How would the U.K. then export to its nearest very large trading bloc? Now that becomes a massive challenge, said James MacGregor, an environmental economist with Ramboll, the engineering consultancy.

Nor have Brexiteers shown special eagerness to back out of EU environmental commitments. Notably, in January 2018 Cabinet Office minister and devout Brexiteer Michael Gove argued in an opinion piece for Politico that the U.K. called for the whole body of existing European environmental law to have effect in U.K. law.

While it is still too early to tell, the U.K., having staked its global image on an ambitious post-Brexit climate agenda, would likely be loath to fall short. Its reputation, if not the climate itself, depends on it.

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Brexit Burnishes U.K.s Climate Image, But Exacts Real Costs - Forbes