Jun 27, 2016 - 10:08am
Some Australian media today are reporting erroneous implications
of the Brexit vote on the Paris Agreement.
The Paris Agreement will not be renegotiated with the UK leaving
the EU: The UK has signed the Paris Agreement and it will not be
reopened. The main impacts will be on the UK and EU targets. Before Paris,
the UK submitted a joint 2030 target (INDC) together with other EU member
states. Once it leaves the EU, the UK will need to submit its own target, and the EU will need to resubmit its new target.
There will be procedural details to agree regarding how best to
manage negotiations over the EU’s
in light of this change. This process divides the EU’s overall
targets among member states. This will have implications for the UK’s and the
EU's timetable for ratification of the Paris Agreement.
Impacts on ratification of the Paris Agreement: The EU was
never expected to ratify the Paris Agreement quickly, because of the need to
work through the Effort Sharing Decision. Given this, expectations of when the
Paris Agreement may become binding international law have not changed. Given
that 50 countries have already
committed to ratifying this year or early next, the agreement may still
enter into force in that time frame.
The UK has been taking unilateral action for some time: The UK already
has domestic targets as set out by their own climate change legislation. The
UK’s current target is a 50 per cent reduction on 1990 levels by 2025 (roughly
40 per cent below 2005 levels). These are stronger than the EU's overall
The heart of the UK’s climate ambition is delivered by the UK’s own policy and
legislation. The UK
Climate Change Act sets out the framework that limits
emissions, including five-yearly carbon budgets, the fifth of which is due to
be agreed very shortly. This will start to define the UK’s 2030 emissions
In the short term, the UK risks losing clean energy investment: Further political
volatility will likely distract decision-making capability on climate and
energy in the UK and possibly the EU. It is likely there will be a protracted
exit negotiation process. In the interim, existing rules and arrangements on
climate will continue to apply, most likely for at least the next two years.
However, this political uncertainty and the broader economic impacts of the
decision will likely make investors wary of renewable and other clean energy
investments in the UK. Capital is global and investors are increasing factoring
in carbon and climate change risks into their decisions. In the short term,
this increases the likelihood that that will continue to shift investments to
countries with stable clean energy policy settings.
Over the medium to long-term the UK should be able to create sufficient demand
internally for zero carbon goods and services so as to not significantly impact
investment in the zero carbon sector.
Implications for Australian climate policy: Overall, the UK’s decision
does not really affect long-term global trends towards a net zero emissions
economy or Australia’s commitments under the Paris Agreement. Global
investments in renewable electricity are now double those in new coal and gas
fired generation. These trends are likely to go on, and continue to impact
Australian energy markets.
The Paris Agreement is also a long-term and
durable framework. Australia has signed the agreement and remains committed to ratify it this
year. Our participation is not conditional on what others do.
parties have committed to substantial policy
reviews post-election. Uncertainty about climate change and energy policies is
currently deferring the inevitable transition to clean energy, and risks
massive disruption to energy jobs, prices and supply as technological, economic
and climate realities drive us into this transition.
The Paris outcomes also set out the benchmarks by which policies will be judged
– for example, the objectives of the agreement to limit warming to 1.5- 2°C. How the
long-term policy is consistent with limiting warming to 1.5 -2°C is the core test of any
Brinsley Marlay ● Media Manager ● 02 8239 6299