Industry experts call for streamlined environmental standards post-Brexit
UK trade would benefit from efficient environmental standards post-Brexit, such as the removal of staid aid requirements and an overlap of energy efficiency standards, according to experts from the chemical and manufacturing sectors.
Appearing before the EU Energy and Environment Sub-Committee on Wednesday (9 November) to provide evidence on environment and climate change policy post-Brexit from a business perspective, high-level panellists discussed the approach of UK businesses to EU environmental standards and regulation.
Chemical Industries Association’s (CIA) chief executive Steve Elliot represented the chemical and pharmaceutical industry, collectively the UK’s largest export earner, with an estimated £4-5bn surplus each year.
Representing the trade-intensive chemical sector, which annually exports 60% of all products to the European (EU), Elliot called on the UK Government to “stay engaged” until Britain’s departure from the EU had been finalised. However, an opportunity exists to create more “business-sensitive” domestic legislation, according to Elliot, who believes certain elements of EU environmental standards are bureaucratic and costly.
“The removal of state aid requirements could allow us to simplify the UK policy mix in the climate change area,” Elliot said. “We’ve got the current situation for our energy-intensive members, they get partial relief from renewables, the European Trading System (ETS), the carbon price floor mechanism, and the Climate Change Levy. That’s very nice but it’s incredibly bureaucratic. Does the sum-of-the-parts equal the whole, where we could perhaps achieve a UK energy mix which is extremely simplified?
“If there’s another one in the climate change area, it’s a very practical one - the energy efficiency directive and its audit requirement. That’s implemented in the UK through ESOS. That requires businesses already covered by EU ETS to conduct energy efficiency audits, creating an overlap which we see as unnecessary. Practically, you end up diverting manpower from energy efficiency project work because the audit requires past evaluations to be repeated using external auditors whilst not requiring the improvements identified to be implemented.”
The ETS system helps the chemical and pharmaceutical community track performances in regards to emissions reduction and environmental responsibility. According to Elliot, the current system could be delivered in a more “cost-effective” manner to stimulate investor confidence.
The chemical industry is also subjected to the EU’s REACH regulation, adopted to improve the protection of human health and the environment from the risks that can be posed by chemicals, while enhancing the competitiveness of the EU chemicals industry. While UK companies will continue to comply with the regulation after its 2018 deadline, Elliot confirmed that chemical SMEs trading mostly outside the EU believe a scope exists for a “REACH-lite” regulation which is more “risk-based, pragmatic and proportionate.”
Elliot’s views were echoed by the manufacturers’ organisation EEF’s climate and environment policy advisor Finella Elliot. More than half of the manufacturing sector’s exports go to the EU, demonstrating the importance of maintaining strong short-term continental ties, specifically unvetted access to the single market. A recent survey, however, found that 70% of EEF members wanted to see the stock of environmental regulation “rationalised and reduced”.
“From speaking with our members, there is a general feeling that EU regulation definitely isn’t perfect and there definitely is scope to reduce administrative burdens. We’ve campaigned for a long time for the streamlining of environmental regulation,” she said.
“But as Steve said, there are regulatory stability benefits of grandfathering the environmental legislation in the short-term. It’s something that our members are calling for.
“Our members will absolutely continue to comply to access the single market. They prefer one set of rules and regulations with the EU. Our manufacturers are telling us they don’t want to have multiple products for multiple markets, they want one product that they can export to a number of markets at the same time of maintaining the same level of environmental standards.”
Also speaking at the event was Dan Lewis, infrastructure policy advisor at the Institute of Directors (IoD). Lewis stated that the pros and cons of EU regulation are balanced, noting the UK smart meter roll-out as an example. In September, the IoD attacked the UK smart meter roll-out for being too complex and costly, insisting that the UK had “gold-plated” the requirements of EU legislation.
“The smart meters which came through a EU directive were only meant to rollout to 80% of the country,” Lewis said. "We effectively gold-plated and said we wanted to rollout to 100%.
“On top of that we have come out an extremely complex and expensive way of doing this, which is equivalent to £400 per household, when we know there are SMEs which can upgrade smart meter at the cost of £50-£60, so I think it would be a mistake to say all EU legislation is good or bad. There are good and bad sides to the argument.”