Brexit: What about climate change?

In the wake of Brexit, “uncertainty” has become somewhat of a buzzword. The variables and unknown quantities resulting from the displacement of various political figures in the wake of the vote to leave (or not in the case of Jeremy Corbyn) has meant the number of outcomes for the future political landscape of Britain is huge. This upheaval may cause concern for those worried about the implications for the climate, as the EU is often seen as a driver for much of UK environmental policy. With this is mind, how will the Brexit vote and subsequent political turmoil impact upon the UK’s ambitions for a reduction in greenhouse gas emissions?

It is important to remember that the UK has been fairly progressive when tackling climate change, is the first country to set legally binding Carbon Budgets and the Climate Change Act was passed by a majority of 463 votes to 3. Secretary of State for Energy and Climate Change, Amber Rudd, has been clear that she doesn’t intend to let the exit negatively effect targets set for 2050. In a recent speech she said, “Climate change has not been downgraded as a threat” and despite the vote to leave, there is still a commitment to the promises made at the Paris Climate Change Conference last year and the 2008 Climate Change Act. The Fifth Carbon Budget announced on the 30th of June will aim to cut carbon emissions by 57% from the 1990 level by 2032. It has been welcomed by politicians and activists on all sides of the political spectrum.

Well intentioned as these targets may be, decisions made under this government are seemingly at odds with the successful meeting of them - for example, cutting subsidies for renewables and removing tax breaks for hybrid cars. Before Andrea Leadsom threw her hat into the ring for the Tory party leadership, her role as junior energy and climate change minister saw her release statements calling climate change “an essential responsibility that we hold towards our children and grandchildren”. Despite this powerful statement, she was part of the team which has overseen cuts to incentives for renewable energy projects, preferring to let the market decide on the UK’s future energy supply. Whilst no longer in the running for overall leadership of the Party, there is an unresolved conflict within the Conservatives about how best to deal with these issues whilst appealing to the climate change deniers that still exist on the fringes of the party. Despite Mrs Leadsom’s assurances that climate change is a priority, it must be noted that she attracted support from likes of Lord Lawson, a climate change sceptic, and Boris Johnson, an outspoken critic of the aesthetic of wind turbines. In 2014 she wrote in her blog “I completely welcome the announcement from the European Commission made recently regarding the possibility of ending all subsidies for wind farms” and euro-scepticism and climate change scepticism have often gone hand in hand. Now Mrs Leadsom has withdrawn from the leadership race there is a genuine risk that we might see Theresa May placate this element of the party through reducing the emphasis placed on climate change.

Mrs May, now set to succeed David Cameron on Wednesday 13th July, has so far remained tight lipped on the subject of climate change. Back in 2006 she welcomed proposals for the promotion of renewable energy and said, “The Government could do far more to promote green energy, rather than giving unfair subsidies to new nuclear power stations”. If she stands by this statement against nuclear power it could impact upon the construction of Hinkley Point, the long awaited and controversial proposed plans for a nuclear power plant in Somerset. However this would fly in the face of current government policy that has committed to new nuclear power in the UK and the statement was made whilst the Conservatives were in opposition and so may have just been a jibe at the ruling Labour party. This uncertainty over the importance our future Prime Minister will place on environmental issues has seen calls for Mr Cameron to ratify the Paris agreement prior to the hand over. However, since the handover was previously scheduled for October but is now due to take place on 13 July, this will not be possible. The deal was struck at the Paris Climate Change Conference in an attempt to limit the rise in global temperatures to less than 2C, but each country that signed the agreement has to formally ratify the deal through a communication to the UN and as of yet there has been no timeline put in place for this to go ahead.

Since the vote to leave, market volatility has been well documented but this uncertainty has weighed particularly heavily on the shoulders of the European renewable energy sector with the fear that opponents to clean energy projects will seize the opportunity to reduce subsidies further. The largest EU green energy companies have been keen to smooth over concerns and continued commitment to the development of new technologies and industries has been expressed by the Department of Energy and Climate Change; this will hopefully provide investment opportunities to those who wish to support cleaner energy projects. However, as Amber Rudd said in reference to Brexit, “I think the UK’s role in dealing with a warming planet may have been made harder by the decision last Thursday”. Let us hope that this doesn’t turn out to be the case.


Compliance Reference: MEBBCCKH/120716




Read our 2020 Voting Guidelines

As investors, we vote at company AGMs. It’s a responsibility we take seriously. Read the updated Voting Guidelines.

Read more

Get in touch with our team

We’re available by phone and email, but most of all in person to provide expert advice and assistance.

Read more

Climate Change in a Covid-19 World

How climate change risks sliding down the political agenda due to COVID-19 and what investors can do about it.

Read more