20 October 2020

Environment analysis: Burges Salmon Environment team consider the current UK-EU negotiating position on key environmental issues, the alignment of UK laws with EU laws and non-regression, the potential impact of the Internal market Bill on these issues and what to expect moving forward.

This analysis was first published on Lexis®PSL on 15 October 2020 and can be found here (subscription required)

What are the current UK and EU negotiating positions on key environmental issues such as emissions trading, chemicals and REACH?

We should start by remembering that the environmental sector was largely pro-EU in the 2016 referendum campaign, no doubt informed by the fact that so much of the legal framework for the protection of the environment comes from the EU, and the knowledge that many of the big environmental issues facing us today need to be tackled on a global scale. This thinking has continued to endure within some rather optimistic views on what a free trade agreement might achieve in ‘locking in’ environmental protection by coupling us to an increasingly ambitious European Commission green agenda.

The political reality is rather different. Take the EU REACH Regulation on chemicals. Over the past decade, the European Chemicals Agency has received vast quantities of scientific data from industry on the chemicals placed on the EU single market in quantities over one tonne p.a. That data is used by the European Chemicals Agency and all of the chemicals agencies within member states to evaluate the potential hazards of those chemicals. Both the chemicals industry and environmental campaigners have been arguing that it is absurd to replicate this in the UK, rather than to align UK chemicals regulation with EU REACH and share that data. The cost to industry of replicating the database in the UK has been estimated at one billion pounds even before the question arises of how the UK agency (the HSE) will evaluate it all.

On 1 October this year, the Chancellor of the Duchy of Lancaster, Michael Gove, was asked on the floor of the House of Commons why the chemicals industry was being asked to pay this price in the midst of an economic crisis, and whether closer alignment might be sought as part of a trade deal. Gove’s response was unequivocal: ‘It’s an inevitable consequence of leaving the European Union Single Market and Customs Union and freeing ourselves from the jurisdiction of the Court of Justice of the European Union that we do have to have our own regulatory systems in place’. Gove added that one of the ‘great prizes’ of leaving the EU was to ‘be free from the often anti-science and anti-innovation approach that the EU has had hitherto’.

This approach to the negotiation is replicated for other environmental regimes. On the EU emissions trading system (EU ETS), the UK has expressed an openness to considering a link between and independent UK ETS and the existing EU ETS in the future, but on the basis of two (separate, autonomous) regimes. On that basis, the UK will be free to pursue its own carbon reduction incentives and mechanisms, including scrapping ETS altogether and opting for a more straight-forward carbon tax (a live issue).

What do the negotiating positions say with regard to alignment of UK laws with EU-laws and non-regression?

There is broad agreement that both parties want the other to commit not to weaken or reduce the level of protection for the environment. However, the devil is in the detail. The real issue is how such a commitment is monitored and enforced. The UK government is committed to revisiting environmental law and changing the laws to better suit the UK’s policy ambitions. As Secretary of State for Environment, Food and Rural Affairs, George Eustice, put in in his big speech on the environment on 20 July 2020, ‘there is no point leaving the EU to keep everything the same’. The EU is concerned that significant divergence in the UK’s approach to environmental law and policy provides the UK with an opportunity to row back on environmental protection without the EU understanding what is going on. There is also a question of how this is enforced within the free trade agreement: the UK is adamant that environment protection should not be subject to the Free Trade Agreement’s dispute resolution mechanism. In practice, therefore, there are some very big issues still to be tackled.

Are there any other key areas of negotiation that could affect environmental law?

Environmental law does not sit in isolation: it permeates into so many other areas of law, such as corporate governance and transparency, finance, energy, transport, manufacturing, land use and agriculture. Free trade agreements are about opening access to markets, whereas environmental protection and safeguards are often considered to be non-tariff barriers to trade. There is an inherent tension, therefore, between international trade deals and domestic environmental protection legislation. How these are reconciled in the EU-UK free trade agreement remains to be seen, but of equal importance is the question of whether environmental standards and regulation will be maintained when negotiating free trade agreements with other parts of the world.

How might the Internal Market Bill affect environmental laws?

While the UK press (and indeed the EU) have been predominantly, and unsurprisingly, concerned with the fact that the government has openly accepted that the Internal Market Bill would provide Ministers with powers to violate international law, it is perhaps the less-controversial elements of the Bill that may have the most significant impact on environmental law in the UK.

The Bill will (re)introduce the principles of mutual recognition and non-discrimination for the UK internal market to prevent the emergence of new barriers to intra-UK trade. The question that many people are asking is ‘what will be the effect of these principles on the devolution agenda?’ which is particularly important for environmental law as a devolved competence. Nicola Sturgeon certainly has a view on this: she described the Bill as ‘a full frontal assault on devolution’.

By way of an example, Scotland has mooted imposing stricter controls on the use of single-use plastics than elsewhere in the UK. If it chose to do so, any such provisions would not prevent the placing on the Scottish market of goods which met the required standards in England (by virtue of the principle of mutual recognition). It might even be argued that mutual recognition could act as a disincentive for Scotland to exercise its devolved right to apply its own rules on plastic packaging, since those rules would in effect only bite on domestic operators, but not on imports from elsewhere in the UK. This may of course put Scottish producers at a commercial disadvantage.

When might we know the direction of travel in key environmental areas and what are the next steps?

I think the direction of travel is reasonably clear: the policy of this current government is to have independence from the EU, in the field of environmental protection as well as elsewhere. The EU-UK free trade agreement will be important, of course, but we do not anticipate any significant departures in terms of the UK’s insistence on independence in the field of environmental law and environmental policy. Indeed, the UK has already embarked upon its own path for environmental law, and the Environment Bill currently before parliament will herald a new era of UK environmental law. We are watching the passage of the Environment Bill, and the powers it gives to ministers to make new environmental law, very closely. As Eustice put it in his 20 July speech ‘As a country we have opted for the freedom to act and to decide our own environment policies in future. But with that freedom comes new responsibilities.’ We now wait to see how the freedom is exercised and those responsibilities are addressed.

Interviewed by Emma Richardson for Lexis®PSL

Key contact

Michael Barlow

Michael Barlow Partner

  • Head of Environment
  • Head of Water
  • Head of ESG

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