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'No Deal' Brexit: Is the UK facing two years of chemicals 'chaos'?

September 26, 2018
Energy & Chemical Value Chain

The latest batch of technical notices outlining how the UK will cope in the event of a ‘no deal’ Brexit have sparked major concerns over the future of the UK’s green energy, chemicals, and agriculture sectors.

Published by the Department of Environment, Food and Rural Affairs (Defra) last night, the notices include what one commentator described as some of “the most honest” Brexit analysis so far, revealing the “chaos” that could engulf key sectors of the green economy if the UK crashes out of the EU with out a deal.

The latest tranche in the series of government updates deal with a wide range of green issues, including chemicals regulation, low-carbon power generation, food importing and exporting rules, food labelling rules, and the movement of plants across borders.

Each of the notices stress that a no deal scenario remains unlikely and that the government and the EU are making good progress towards delivering a comprehensive withdrawal and trade agreement, despite the recent blow to the government’s ‘Chequers Plan’ at the latest EU summit in Salzburg.

However, they also argue it is the duty of the government to “prepare for all eventualities, including ‘no deal’, until we can be certain of the outcome of those negotiations”.

The plan for chemicals regulation post-Brexit has sparked some of the most vocal concerns from industry.

Under current plans the government said it would preserve “as far as possible” the existing REACH legislation governing the chemicals market under new UK legislation, making only the technical changes necessary to reflect the UK’s new status outside the EU.

Meanwhile, regulatory and enforcement duties would be picked up by the UK Health and Safety Executive (HSE), alongside the Environment Agency, while plans are also being drawn up for a new UK IT system for the registration of new chemicals.

But Defra spelled out that the UK will not be committed to following decisions made under the REACH regime in the event of a ‘no deal’ Brexit.

The Chem Trust, a UK charity working in chemicals safety, said it was “very concerned” the government’s current plans could mean future hazardous chemicals will not be banned in tandem with the EU’s legislative framework.

“As far as we are aware, the government’s proposed legislation will not have any provision to ensure that the UK’s controls on chemicals will remain the same as the EU’s post-Brexit,” the Chem Trust said, noting that decisions were instead set to be made by a new UK chemicals agency. “Without any automatic provision for copy-across of EU restrictions and future improvements in EU chemicals laws, it is clear that UK controls on chemical use could rapidly diverge from those in the EU. If the UK controls fell behind those of the EU then the protection of human health and the environment would be reduced,” it warned.

The government also said companies importing and exporting chemicals with existing EU REACH registrations will have their registrations automatically grandfathered into the UK scheme, giving them two years from the day the UK leaves the EU to provide the HSE with the “full data package” that supported their EU approval.

But the Chem Trust said it is “unconvinced that such an approach will give a high level of protection for human health and the environment, and whether it is really feasible for the UK to build a chemical safety database from this information”.

Dustin Benton, policy director at the Green Alliance, echoed the Chem Trust’s concerns. Writing on Twitter, he described the no deal notice for the chemical sector as “the most honest notice I’ve read” and said if enacted it could deliver two years of “chaos” for the UK chemicals sector while the HSE takes over regulatory duties.

Further concerns were raised by the food and agriculture industry, which said a ‘no deal’ exit from the EU would prove “catastrophic” for the sector. Defra admits in its technical notice on farming that from the day of departure, all exports of animals and animal products will be halted until the EU lists the UK as a third country. It says it “cannot be certain” of the EU response or timings, but said it is “confident” the UK would meet ‘third country’ listing requirements.

The assurances provided little comfort for National Farmers Union president Minette Batters. “These technical notices confirm in black and white what we already knew: a no-deal scenario would be catastrophic for British agriculture,” she said in a statement. “A scenario where farmers face an immediate trade embargo for many of their products would have devastating effects, and would severely threaten livelihoods and businesses.”

The latest batch of notices coincided with the release of fresh proposals from leading Brexit campaigners pushing proposals for a ‘Canada-style’ trade deal, which supporters claim would allow Britain to cut loose from the EU completely on key issues such as the environmental regulation and food standards.

The proposals, released yesterday by the Institute of Economic Affairs (IEA) think tank, was backed by former Foreign Secretary Boris Johnson and former Brexit Secretary David Davis. It suggests the government should drop the so-called ‘Chequers Plan’ and instead agree a new trade deal with the EU modelled on one agreed by the UK and Canada last year.

The “alternative framework” for Brexit argues the UK should “reset” the EU-UK negotiations by striking a free trade deal that allows free market access for goods with zero tariffs, but leaves the UK free to ignore EU rules on areas such as the environment and then make up any resulting lost trade with the EU through trade deals with other nations. Such a deal would mean abandoning EU principles that enshrine environmental and social protections, such as the ‘precautionary principle’ which mandates new products and processes must be proved safe before they can be commercially launched.

Environment Secretary Michael Gove has previously said the government plans to enshrine such principles into UK law after Brexit. Meanwhile, the EU has repeatedly stressed that it will only sign up to a new trade deal if the UK commits to maintaining a high level of environmental protection and robust labour laws.

However, the IEA paper argues the government should reject the EU’s ‘red lines’ on environmental and social standards. “There is no reason why the UK should accept the position that market access to the EU market should be constrained by differences across the broad horizontal areas like labour and environment,” the paper argues. “This is not how modern trade arrangements work.”

Amy Mount, head of the Greener UK coalition of 13 NGOs pushing for a ‘Green Brexit’, condemned the IEA plan as a threat to the UK’s environment and food standards that runs against public opinion. “The idea that environmental protections are a barrier to #trade is an outdated & discredited assumption,” she wrote on Twitter.

As the battle between the two competing visions of Brexit rages on in the Conservative party, experts fear the threat of a no deal draws ever closer.

Such a scenario would have implications for renewable energy generators in the UK, Defra also confirmed yesterday. The technical notices confirmed the UK would continue to recognise Renewable Energy Guarantees of Origin issued in the EU post-Brexit, but acknowledged the government does not expect the EU to reciprocate under a ‘no deal’ scenario. As such UK generators of renewable energy may not have the low-carbon status of their product recognised in the EU market, which could “compromise” existing contracts with EU countries’ electricity suppliers or traders.

Where renewable generators are selling to EU energy suppliers, the government advises firms “may wish to consider how they market their exports”.

James Court, policy and external affairs director of the Renewable Energy Association, said industry operators are concerned the loss of the low-carbon certificate could harm the market value of their power, although this mainly would impact larger energy suppliers.

But he said it is nevertheless indicative of the continuing uncertainty all energy industry operators are facing. “The latest papers show the huge complexities and uncertainties our members are facing,” he said. “Deal or no deal, companies need sight of what will be in place over core issues such as EU ETS trading and the relationship with the Internal Energy Market going forward, both have a huge impact on our day to day business.”

Meanwhile, installers of ‘microgeneration’ technologies, such as heat pumps and biomass units, would find their installation certificates no longer recognised by some European Economic Area (EEA) counties under a ‘no deal’ scenario. Installers would have to reapply for EEA certification after Brexit to work overseas, Defra said.

The latest tranche of documents go some way to addressing several of the most pressing green business concerns related to a ‘no deal’ Brexit, but further clarification is still keenly awaited on topics such as waste and recycling rules and emissions targets.

Nevertheless, the updates will further fuel concerns that a ‘no deal’ Brexit would result in huge disruption for much of the green economy. As talks between the UK and EU hover on a knife edge following last week’s disastrous Salzburg Summit and leading Brexit campaigners continue to agitate for a more hardline approach to the negotiations, for many green businesses the prospect of a ‘no deal’ Brexit is becoming a little too close for comfort.

By Madeleine Cuff

Source: Business Green

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