Clarifying the impacts of Brexit on the Paris Agreement and Australia's climate policy Statement

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 Effort Share Decision 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 targets.

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 reductions target.

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. 


Both major 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 framework.


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Brinsley Marlay ● Media Manager ● 02 8239 6299

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