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Brexit Barks, The Climate Caravan Moves On

Feb 28, 2017 2 MIN. READ

Rather than an international treaty or an EU directive, the cornerstone of UK action on climate change is a UK Act of Parliament: the Climate Change Act of 20081.

The Act sets a long-term decarbonization target.

Greenhouse gas emissions bar graph

The Act requires the Government to produce “carbon budgets2, advised by the Climate Change Committee. These budgets cap greenhouse gas emissions from economic sectors including the energy sector over successive five-year periods.

The Act stands “irrespective of UK membership of the EU3. So do the carbon budgets, which BEIS sees as “very important for the enforcement of targets that we are internationally committed to.”4

Moreover, the recent Green Paper “Building our Industrial Strategy” reiterated the Government’s commitment to meeting the targets under the Act and to reducing the costs of achieving the UK’s energy-sector decarbonization goals.5

UK participation in EU funding programs and collaborative partnerships after Brexit, including in those for clean energy, will require agreement with EU partners to be reached during Article 50 negotiations.

UK Funding Distribution breakdown graph

The attractions of such an agreement are considerable for both sides. On the one hand, the UK has world-class resources, skills and capabilities in numerous technologies (such as offshore wind, ocean energy, smart grids, and energy storage). On the other, the UK is a substantial net beneficiary of EU funding for RD&D6, meaning that the UK’s national programs, such as the ongoing Energy Innovation Programme7 and the new Industrial Challenge Strategy Fund8,9, would need to pick up the slack if EU sources of support for clean-energy RD&D were lost. Support from international programs, such as Mission Innovation10, would also become more crucial.

ICF experts are currently helping the UK Government to identify areas where UK firms could be strong in non-EU low-carbon markets. Our offices in key emerging markets, such as China and India, make us well placed to provide insights to public and private-sector clients on low carbon market developments there – and how to contribute to those developments, which will be all the more important after Brexit.

We also provide ongoing support to the European Commission in evaluating and developing policy and funding instruments for low-carbon innovation.

The EU currently funds clean-energy projects through grants (from a variety of EU sources, mainly for R&D) and through loans (from the European Investment Bank, mainly for deployment)11. However, commercial-scale demonstration projects are in practice too large for grants and too risky for loans, alone or in combination. They need equity investment as well.

Following a recent recommendation in an ICF clean-energy study12, the Commission is considering options for creating an equity investment mechanism which would help leverage private-sector co-investors.


1. Climate Change Act, 2008. [online] Available at http://www.legislation.gov.uk/ukpga/2008/27/introduction [Accessed 28 February 2017]
2. Climate Change Committee. Carbon Budgets and targets. [online] Available at: https://www.theccc.org.uk/tackling-climate-change/reducing-carbon-emissions/carbon-budgets-and-targets/ [Accessed 28 February 2017]
3. Climate Change Committee, 2016. Briefing note: “Meeting Carbon Budgets – Implications of Brexit for UK climate policy”. [online] Available at: https://www.theccc.org.uk/wp-content/uploads/2016/10/Meeting-Carbon-Budgets-Implications-of-Brexit-for-UK-climate-policy-Committee-on-Climate-Change-October-2016.pdf [Accessed 28 February 2017]
4. House of Lords European Union Committee, 2017: 12th Report of Session 2016-17: “Brexit: Environment and Climate Change”. [online] Available at: https://www.publications.parliament.uk/pa/ld201617/ldselect/ldeucom/109/109.pdf [Accessed 28 February 2017]
5. HM Government, January 2017: Green Paper “Building our Industrial Strategy”. [online] Available at https://beisgovuk.citizenspace.com/strategy/industrial-strategy/supporting_documents/buildingourindustrialstrategygreenpaper.pdf [Accessed 28 February 2017]
6. House of Lords European Union Committee, February 2017. 12th Report of Session 2016-17: “Brexit: Environment and Climate Change” [online]
7. HM Government, 2017. Guidance: Energy Innovation. [online] Available at: https://www.gov.uk/guidance/energy-innovation [Accessed 28 February 2017]
8. HM Government, 2017. Press release: First Industrial Strategy Challenge Find engagement begins. [online] Available at: https://www.gov.uk/government/news/first-industrial-strategy-challenge-fund-engagement-begins [Accessed 28 February 2017]
9. HM Government, 2017. Press release: £229 million of industrial strategy investment in science, research and innovation. [online] Available at: https://www.gov.uk/government/news/229-million-of-industrial-strategy-investment-in-science-research-and-innovation [Accessed 28 February 2017]
10. Mission Innovation, 2016. [online] Available at: http://mission-innovation.net/ [Accessed 28 February 2017]
11. Climate Change Committee, 2016. Briefing note: “Meeting Carbon Budgets – Implications of Brexit for UK climate policy” [online]
12. European Commission, Directorate-General for Research & Innovation, 2016. Innovative Financial Instruments for First-of-a-Kind, commercial-scale demonstration projects in the field of Energy. [online] Available at: http://ec.europa.eu/research/energy/pdf/innovative_financial_instruments_for_FOAK_in_the_field_of_Energy.pdf [Accessed 28 February 2017]

By James Gardiner and Jonathan Lonsdale
Managing Consultant
Consulting Director

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