How will a No-Deal Brexit affect business climate change obligations?

More and more, mainstream media appear to be edging on the side of No-Deal when it comes to predicting the outcome of Brexit.

Under Boris Johnson’s leadership, the UK is set to leave the EU on 31 October, and No-Deal planning has been stepped up, with extra funds earmarked for such an event.

We can’t yet predict the outcome, and it’s fair to say the majority of MPs and businesses are hoping for a last minute agreement. But if No-Deal does come to pass, what do businesses need to do about their climate change and carbon reporting obligations?

Basic government guidance regarding carbon and climate change for businesses

The government has published some basic No-Deal guidance here. It explains: ‘Delivering the deal negotiated with the EU remains the government’s top priority. This has not changed.

‘However, the government must prepare for every eventuality, including a No-Deal scenario. For two years, the government has been implementing a significant programme of work to ensure that the UK is prepared to leave the EU.’

Operators and traders with EU Emissions Trading System

The government advises operators and traders with EU ETS allowances in their account in the UK section of the registry should plan for a loss of registry access as of the withdrawal date in a No-Deal scenario, and consider taking action to manage the risks this may create.

Energy intensive industry relief schemes participants

The government advises businesses that currently benefit from energy intensive industry relief schemes for the indirect policy costs of carbon pricing should continue to comply with the requirements set out in the government guidance for these schemes.

And there is another, additional, vital paragraph of guidance for businesses…

If there’s No-Deal

‘There is no change to the UK’s deep commitment to domestic and international efforts to tackle climate change. The UK’s Climate Change Act is domestic legislation and will be unaffected by exiting the EU. The UK will remain a Party to international climate change agreements.

‘Its commitment to them will remain as strong as ever and will be unaffected by Brexit. The UK will therefore continue to take ambitious steps to reduce greenhouse gas emissions, and the UK’s Clean Growth Strategy highlights our policies and proposals for doing so. Clean Growth will remain at the centre of our modern Industrial Strategy.’

ESOS, SECR and carbon reporting continue as before

So, the essential takeaway is that carbon reporting regulations; ESOS and Streamlined Energy and Carbon Reporting (SECR), won’t change in the event of No-Deal because they are enshrined in UK law. Therefore they are unaffected by No-Deal.

Indeed, a great many additional laws affecting UK businesses regarding climate change, reporting, emissions and environment won’t change either, as they too are enshrined within the Climate Change Act and the Clean Growth Strategy.

What should businesses affected by ESOS and SECR do regarding Deal or No-Deal?

For the moment, all firms captured by UK carbon reporting law including ESOS and SECR should assume a business as normal scenario, and prepare their reports and data in precisely the same way as before the Brexit vote took place.

There is speculation, and it’s nothing more than that for now, that Brexit overall may hurt decarbonisation, and potentially business. ‘Many green business leaders and investors remain fearful that the economic fallout from a No-Deal Brexit will act as a significant drag on decarbonisation efforts, while also leading for huge levels of disruption for clean tech businesses and exporters.’ writes Business Green.

But carbon reporting on ESOS and SECR remains unchanged. We’ll report back with any critical further information as Brexit unfolds.

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