The EU Referendum and Climate Change

To tackle the impacts of climate change the EU has committed to three targets for 2020. The first is to reduce emissions by 20% on 1990 levels. The second is to provide 20% of its total energy from renewables. The third is to increase energy efficiency by 20% from 2007 levels. Being part of the EU the UK is also currently committed to these targets but what happens if the UK exits the EU in June?

Posted on 25 February 2016.

One of the main mechanisms to reduce emissions within the EU to achieve the first target is the EU emissions trading scheme (EUETS) which has been in operation since 2003.  The UK government also operates climate change agreements (CCA) and the Carbon Reduction Commitment (CRC) Energy Efficiency scheme which have been active since 2001 and 2010 respectively. 

The second target is addressed by the EU with the Renewable Energy Directive.  Within this directive the UK has been allocated a reduction of 15%. 

More recently the UK government introduced the Energy Savings Opportunity Scheme (ESOS) to address the EU Energy Efficiency Directive (2012) which provides the framework to promote improved energy efficiency across the EU to address the third EU target on climate change. 

If the UK leaves the EU in June what does that mean for all the current climate change legislation? The UK government already announced in the July 2015 Budget that they would be reviewing business energy efficiency taxes (CCA and CRC) with the possibility of abolishing them and introducing a new single tax based on the Climate Change Levy (CCL). 

The UK Government also intimated that they would like to have a single reporting framework based on ESOS but taking elements from CRC and CCA.  The 2016 Budget was expected to bring some clarity on these proposals but with the uncertain EU future is now the right time to make changes or announcements?

If the UK does exit the EU is it better to wait and simplify the reporting framework further? Without the mandatory EUETS and ESOS reporting, the UK Government has the opportunity to establish something new which could encompass all the ambitions of the actions to tackle climate change in a simple system reducing reporting burden on companies!