Refusing to follow EU rules on energy efficiency standards will put UK manufacturers on the back foot

In recent months, Andrew Warren, a former special advisor to the House of Commons environment select committee and a regular contributor to EiD, has written on the impact of Brexit on aspects of British energy efficiency policy.  Actually, these have implications for important industries in Britain. In this article, recently published on the Business Green website, Andrew warns that not following EU standards will really put UK manufacturers on the back foot. With the UK election on December 12th, we should soon get a clearer view on what is happening. Nothing is obvious at the moment.

 

Brexit set to cause another manufacturing disadvantage for UK industry

UK electricity consumption is 18 per cent lower than 15 years ago. Some two-thirds of that drop can be ascribed to implementation of European Union energy-using product policy.

Effectively, this policy is implemented via two distinct, but related, streams of activity. The first sets minimum standards of efficiency for energy-using products, outlawing the worst fuel-wasters from sale. The second ascribes labels to each those products, ranging from A to G, revealing likely running costs.

Such requirements are currently in place for 28 energy-using product groups. Including domestic products like washing machines and TVs, and business products like power transformers and commercial refrigeration.

For the first three years following the Brexit referendum, every single indication from Theresa May’s government was that both of these successful policies would be continued seamlessly even when the UK was no longer formally part of the EU. So UK product policy on energy usage would remain aligned with that in operation right across Europe – likely to remain UK manufacturers’ largest single market.

Different products for the European market

This continuity would have ensured that the energy savings already achieved would remain for future years. And as new products continue to be added to the substantial list of those covered, the expectation had been that UK manufacturers operating in each sector would continue to make products that, at minimum, always complied with European standards.

It is now becoming clear that this is no longer the policy of any Johnson-led Government. Initial revelations from respected sources like the Financial Times and the Economist magazine have hinted that the international trade department is informing those in non-European countries that such “environmental” standards could become “more flexible”. The EU’s chief Brexit negotiator, Michel Barnier, tweeted that this was his understanding too.

Then the BBC’s veteran environmental analyst Roger Harrabin revealed that he had been sent a formal statement that effectively confirmed that post-Brexit, the UK could adopt very different, if any, minimum standards for energy usage by relevant products. He also revealed that Downing Street zealots were restricting UK officials even from attending formal EU meetings that were considering future initiatives regarding product policy. This diktat is applying even though the UK is still formally a member of the EU.

All this has considerable potential ramifications for UK manufacturers of any such products.

Even if the UK were in future to opt to run its own esoteric energy standards, that would still leave UK manufacturers seriously disadvantaged. It would mean that – in order to be able to sell anything into the entire continental European market – such UK-made products would inevitably need to comply with the EU’s requirements. The other big difference is that UK-based firms would no longer have any formal say in deciding the detail of all new standards being adopted. Essentially, becoming rule-takers, rather than rule-makers.

Option to not implement European standards for products

As it happens, there is already one example of this absurdity around. In September the Business Department launched a public consultation concerning another set of proposed product changes. This covers product areas like chargers for mobile phones, monitors and computers – of which 80 million are sold in the UK annually. Details can be found at Ecodesign requirements for external power supplies: draft regulation.

This consultation follows precisely the same procedure as has occurred for every single product category covered under this directive. As usual, it includes a very comprehensive economic impact assessment of the proposal, which demonstrates persuasively that, whilst there are some gross costs in introducing such minimum standards, taken overall the benefits that will accrue will be substantial. The benefit-cost ratio is 2.3. These gains are financial, providing lower running costs for consumers. And by reducing energy usage, it has very beneficial ecological consequences.

The impact assessment includes two other options. The first follows common practice, to establish whether the same market improvements could be achieved by a voluntary agreement with relevant companies. Earlier consultation with relevant companies across Europe has revealed this to be a non-starter.

But the second alternative option is a distinct Brexit novelty. It explores the pros and cons of not proceeding with this proposal in the UK at all. It states that “the main reason why this option has not been pursued further is that, without regulation, manufacturing decisions and consumer behaviour is likely to be dictated by upfront costs more than energy efficiency”.

Effectively this a succinct restatement of the entire justification for introducing regulation into the marketplace, so as to increase investment levels in energy efficiency.

Special permission needed for UK bureaucrats to attend

At the end of October, a big EU consultation forum was held in Brussels, under this same Eco Design Directive. This time dealing with water pumps. There are considerable UK manufacturing interests likely to be affected. Up until the last minute, it was feared that UK government officials would not be attending. Nobody officially would be able to put the case for British businesses. Options exist which could detrimentally affect such interests.

After much strenuous lobbying from (unsurprisingly) the British Pump Manufacturers Association, a few days beforehand 10 Downing Street staff grudgingly approved the attendance of two civil servants from the Business Department. By that stage the zealots had conceded that any chance of achieving the declared departure date from the European Union before 2020 had evaporated. So at the eleventh hour these two civil servants were indeed given special permission to board the Brussels Eurostar, to help put across the arguments of British businesses to their opposite numbers from other governments.

Leaving an empty chair may be portrayed by some as an overt gesture of true Brexit purity. Those operating in the real world might describe actually doing so as another pointless gesture that is truly a dereliction of duty by government. And a giant step back from ever achieving net zero carbon.

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