As the summer of the countdown clock continues only one thing is certain for the UK's green economy - nothing is certain
It is the summer of the countdown clock. A countdown measured not in weeks and months, but in days, hours, minutes, seconds. A countdown to… Well, no one knows to be honest. Brexit, probably. But then again, perhaps not. An orderly deal-based Brexit that doesn't implode the economy? Maybe. Although don't bet on it. And if not Brexit, then what? An election, a referendum, a soft coup, war with Spain? No idea, mate. Your guess is as good as mine. Still, 84 days to go.
Meanwhile, our new Prime Minister tours the country like a Comic Strip Presents Churchill. Touting his massive clock, gallantly refusing to negotiate with domestic and international allies that might help him avert an economic and constitutional crisis, marking his territory by spraying around spending commitments like a fiscally incontinent, shamblingly ursine repudiation of what it is meant to be to be a conservative.
We are now governed by a politically shameless faux-Keynsian, completely unencumbered by the blatant hypocrisy of all those years lambasting Labour's 'magic money tree', not to mention the countless hours spent crying crocodile tears over the poor children not yet born (and presumably not just to the Prime Minister) who will have to pick up our generation's debts.
The funding for these various pledges may be questionably sourced and replete with so much double counting that if it was an election the Electoral Commission would be called on to adjudicate (yet again), but that is not the point. The point is the hyperactive, vote-grubbing show that must be made of Boris Johnson's performative tramping down of the dirt on the austerity he spent a decade defending - he rushes around the fraying United Kingdom "like a child with cash or a king on cocaine", to quote that end times troubadour Father John Misty.
We shouldn't grumble too much, of course. The country has been crying out for some form of serious infrastructure-focused economic stimulus for the best part of a decade. There will be more joy in heaven over one sinner who repents, and all that. Although, none of the Ministers who now cheerlead for the fiscal largesse they spent nine years insisting would turn the UK into Venezuela look in any way penitent.
But hand-brake turn political inconsistency aside, there are some modest sources for optimism here for the green economy. Johnson's talk of improved rail links in the north of England are hugely welcome, as is the vocal commitment to the net zero transition from the new ministerial teams. It would have been nice if the recent flurry of spending commitments had an over-arching green narrative, but with newly declared climate champion Sajid Javid at the Treasury there are reasons to hope the autumn's Spending Review starts to address the many gaps in the government's net zero strategy.
The problem is these green shoots currently lie right in the path of the Brexit steamroller. As Orsted's chief executive Henrik Poulsen observed yesterday morning as he announced the company's latest sustainability ambitions, the offshore wind giant is "as well prepared as we can possibly be [for Brexit], obviously in a situation which by nature is slightly unpredictable". "Slightly unpredictable"? You've got to love that Danish understatement.
How then to cope with this slight unpredictability? The answer lies in a discipline familiar to anyone tasked with undertaking climate and financial risk management: scenario planning. What are the plausible Brexit scenarios from this point, how likely are they, and how will they impact green business interests? What are the "possible branches of the future", as the new Number 10 overlord Dominic Cummings would have it?
As ever with Brexit, at the brass tacks level there are only three basic scenarios available: leave without a deal, leave with a deal, don't leave. However, these three outcomes could play out in myriad different ways, each resulting in significantly different risks and opportunities for green businesses.
More broadly three specific scenarios look possible on or around October 31st, as the raw power battle to decipher the gap between the mandate granted by the referendum to leave the EU and the mandate removed by the last election for any specific form of Brexit enters its most dramatic phase yet.
Scenario A: Secure a deal - and request a slightly delayed Brexit to finalise it if necessary
What might happen?
It is still just about conceivable that at some point in the next two and a bit months either the UK government or the EU blinks. A 'new' Withdrawal Agreement could be brokered, most likely through some cosmetic changes to the existing deal. It is then just about possible that Johnson could sell if to Parliament.
A rump of Tory Hard Brexiteers will hold out against any deal, but with the threat of a Brexit Party challenge looming over Conservative MPs and Labour rebels sounding increasingly wary of a no deal Brexit it is possible Johnson could succeed where Theresa May failed. MPs would be forcefully reminded that Parliament voted to trigger Article 50. Tory MPs would be equally forcefully reminded that electoral oblivion awaits if they either fail to deliver Brexit or cop the blame for an economic crash. As has always been the case, it is possible to envisage both a workable deal and a parliamentary coalition to pass it.
Moreover, if Parliamentary resistance did continue Johnson is arguably shameless enough to perform the ultimate reverse ferret and secure opposition support for a new deal by tacking towards a softer Brexit - he used to be a fan of free movement and advocated for a much closer relationship with the EU than May's deal, after all - or even conceding to a second referendum, confident in his abilities to win a second poll. The ERG would cry blue murder, but a cross-party deal could give Johnson the votes he currently lacks.
Under almost all shades of this scenario the clock will probably reach zero before a deal is finalised, and as such it may necessitate a further request to the EU for more time to finalise the agreement that averts a major economic crunch.
What are the implications for the green economy?
With the chances of a softer Brexit or a second referendum vanishingly slim, getting some form of deal over the line could prove to be the best available outcome for the green economy. It would still come with considerable long term risks, but it would get the UK into the transition period, ensuring a period of welcome, if still relative, stability that could unlock a wave of fresh investment from all those companies currently sitting on their hands.
As part of any deal the EU would insist on a high degree of alignment on environmental standards and goals and the UK would seek continued access to shared institutions and policies, such as the Emissions Trading Scheme and European Chemicals Agency. Disruption would be minimised. And at the same time the UK would be free to pursue its exciting green farming subsidy reforms.
Yes, the risk of future environmental deregulation would increase, and yes, new trade frictions could well consign the UK to a period of lengthy economic decline. But neither of those outcomes are inevitable and the pressure would be on Johnson and co to deliver on their vision of a more agile, competitive, sovereign, and ultimately greener, net zero emission state.
How likely is it?
It could happen, but it's a long shot, isn't it? It may be the most economically rational way to execute an economically irrational decision, but just in case you hadn't noticed Brexit is about a lot more than economics. The idea of Johnson pivoting towards a deal looks more like wishful thinking with every passing day - hence the plummeting pound. Given his 'do or die' rhetoric it is virtually inconceivable he would request a Brexit extension, even if a deal was within reach.
To use the grisly metaphor, much of the Conservative faithful appears to have drunk the Hard Brexit Kool-Aid. They have bought the Faragist line that anything other than a no deal Brexit is Brexit In Name Only (BRINO). Johnson looks set to become the latest in a long line of Conservative Leaders to learn that no matter how much you give the Eurosceptic right it will never be satisfied. He seems highly unlikely to take a course of action that would allow the Brexit Party to cry betrayal and enter the next election as a competitive force.
That said, right up until the clock strikes zero hopes will remain that common sense could cut through the fog of phoney 'war cabinets'. Neither Westminster nor Brussels really wants to commit economic mutually assured damage. It may be easier to sell a deal to MPs and the public amidst the 11th hour drama of disaster averted. The Brexit Party would cry betrayal, but as a campaigner Johnson would prove much more adept than May in presenting the compelling counter-argument: "We're out aren't we? What does your name even mean anymore? You don't represent the post-Brexit sunlit green uplands that we are now motoring towards in our electric car, Nigel." These are the straws at which most business leaders currently clutch.
Scenario B: Engineer a crash out Brexit
What might happen?
The conventional wisdom is that Parliament can and will stop a 'no deal' Brexit. But can it and, perhaps more importantly, will it?
The 'can it' question is mired in constitutional disagreement. The consensus seems to be MPs could block a 'no deal' exit, but it would require the executive to actually submit a request for an Article 50 extension, something Number 10 insists will not happen. As such all the talk this week is of governments of national unity, prorogued parliaments, and the Queen being called upon to sack the Prime Minister. The only thing that does seem certain is that Brexit now cannot be stopped without a major constitutional crisis - potentially the largest the UK has seen in centuries.
But would it come to that? The votes to avert a no deal Brexit this Spring were bum-clenchingly close. The rebel alliance may have been strengthened by Johnson's unceremonious defenestration of Soft Brexit-minded Ministers, but at the same time the whipping operation this time around will be even more vicious in its bullying intensity and focus, all the while aided by ever more intense public and media pressure. Cummings is reported to have mused that MPs will ultimately do their duty and deliver the Brexit the public voted for three years ago. It is still possible to envisage a no deal Brexit being engineered by fair means or foul - again, hence the plummeting pound.
What are the implications for the green economy?
In a word: bad. There are too many variables to determine whether a crash out Brexit would be disruptive or disastrous to the prospects of green businesses, but there are very few commentators who think it would be beneficial in the short to medium term and plenty who fear it could prove catastrophic.
There are two broad scenarios, neither of which is particularly encouraging. The first is that the government's confidence is partially vindicated. There are some teething problems, but traffic chaos is averted, temporary agreements keep planes in the air, corporate contingency planning means the shelves and medicine cabinets stay full, the promised 'no deal' Brexit funding helps farmers and other exporters survive. As a result the economic hit is not as bad than the worst case scenarios predicted and the remorseless Johnsonian media operation declares victory against "the doubters and the doomsters". The government would then set about delivering on its promised net zero strategy, green governance reforms, and wider vision for a post-Brexit revival.
However, any sense of relief under such a scenario is likely to prove short-lived. The long haul of securing new trade deals with the EU, US, and others would still loom, and all with the UK's negotiating leverage at its lowest ebb. Meanwhile, the steady erosion of the UK's economic health and competitiveness caused by eye-watering trade barriers and the inevitable diversion of investment would continue its unyielding work. At the same time, certain victorious Hard Brexiters would launch a major new front in their campaign to deregulate the UK, ditch its climate ambitions, and swamp the country with their beloved chlorinated chicken.
And that's the best case scenario. The alternative is 'Project Fear' comes home to roost. The hard reality of border checks, tariff schedules, and severed relations result in chaos, shortages, and perhaps even violence. The economy tanks, investor confidence is shredded, and businesses are inundated by the administrative burden of duplicated paperwork and regulatory confusion. None of this can be ruled out. Amidst a febrile political atmosphere, the Brexit Party would still cry betrayal over Brexit "not being done right" and the government's emboldened libertarian contingent would attempt to force through their longed for agenda of tax cuts and regulatory roll-back. Again, none of this can be ruled out. As Caroline Lucas has observed, the government is not planning to have police and troops on stand-by so they can put out the Brexit bunting - they are worried about riots.
The implications for the green economy in terms of short term administrative, commercial, and operational impacts, as well as the long term risks of a new pollutocratic political order, are as obvious as they are sobering.
How likely is it?
Not as unlikely as you'd want. The government is insisting it is prepared to embrace the risks of no deal and if it is bluffing it is doing a pretty good job of it. It cannot be guaranteed Parliament will avert the economic self-harm that would result.
If it were to happen it is possible to envisage a course forward that is damaging rather than disastrous. The fundamentals for the green economy would remain broadly positive in the long term and for all the noise generated by climate sceptic, polluter friendly, ultra-free marketeers they remain a tiny minority in parliament and the country. But there is no doubt both the economic headwinds and political attacks faced by a sector of the economy that is critical to the UK's long term competitiveness would intensify.
Under the worst case scenario the prospects for the green economy - and all that entails for the global effort to avert climatic disaster - become little more than a footnote, because we could end up flirting with something not far short of failed state territory.
As former May advisor Giles Wilkes observed in a brilliantly stark piece last week, "no deal is failure".
"The Big Thing is overshadowing all," he warned. "Tiny steps forward, obliterated by one giant leap back. Whatever happens with No Deal swamps every policy I ever worked across. What is the point of sharpening the competition regime, when you've severed and cauterised ties with European competition? How can we cant on about the Future of Mobility when the automotive supply chains are being shattered? Good luck attracting billions into new energy investment with the pound pogoing off $1.05. It would not matter if we nailed those zillions of tiny actions, No Deal would wipe it away. There is no Industrial Strategy available to Britain that makes up for an eight per cent GDP loss."
The fear is that the shadow cast by "The Big Thing" could stretch on for decades. Which brings us to...
Scenario C: The government collapses or calls an election amidst a constitutional hell-scape
What might happen?
Who knows? Were Parliament to successfully block a no deal Brexit, either through a no confidence vote or another mechanism, then the long-simmering constitutional crisis would finally boil over. Faced with Parliamentary opposition to its signature policy the most logical path forward would be for the government to declare an election and submit a request for another three to six month Brexit extension to allow the UK to stage an election that might finally thrash out the specific Brexit mandate it never fully secured through the referendum (thanks Mr Cameron, thanks a lot). But again, Brexit is about a lot more than logic.
It is conceivable the UK's unwritten constitution and the reckless and premature triggering of Article 50 could allow the country to crash out of the EU in the midst of an election campaign or in the interregnum created by a no confidence vote. Johnson's notable refusal to categorically rule out proroguing parliament opens up all sorts of democratically outrageous possibilities. Talk of a soft coup is not too strong. The three leading protagonists in this drama have been variously described as "world king" (Johnson on Johnson), a "career psychopath" (Cameron on Cummings), and "a bit of a Maoist [who] believes that the world makes progress through the process of creative destruction" (Cameron on Gove). Even if they ultimately baulk at the historic precedent they would set by ignoring parliament, the recent kite-flying by this trio is still hugely dangerous, utterly reckless, and evidence of a body politic in the poorest of health. There is a route forward for a British Trumpism and all the division and instability that entails, even if the idea continues to horrify and alienate a majority of voters.
And then there is the question of what would happen in an eventual election. Whether it happens before or after Brexit it promises to supercharge the current divisiveness that scars British politics and public life. It would be a Culture War election. An election pitting a celebrity fronted Vote Leave administration against parliament, Brussels, and the opposition parties. It would not be pretty and with the only constant in the polls being the near 50-50 split between remain and leave leaning parties there is no way of confidently predicting the outcome.
What are the implications for the green economy?
This is where the scenario planning gets really complicated, because it could result in either the best or worst possible outcomes for the green economy.
An election might provide the moment of catharsis the UK so desperately needs. Judging by the tenor of the recent Conservative Party leadership campaign and Labour and the Lib Dems' vocal backing for a "climate emergency" it would be a Brexit election, but it would have climate change prominent on the undercard. It is possible a mandate could finally be secured for a specific form of Brexit, alongside clear public backing for a genuinely ambitious net zero emission strategy. That form of Brexit may be a New Year's Day no deal Brexit, but it could also be the softer Brexit and/or second referendum offered by a Remain-leaning alliance. It is possible the intense drama of constitutional crisis and an election campaign that inevitably plumbs new depths of unpleasantness may finally give way to the green light at the end of the tunnel.
However, other outcomes are available. Who would bet against all the pieces being thrown up in the air and coming down much where they are now, with no one party commanding a workable majority for enacting manifestos that themselves continued to fudge the key Brexit challenges? The uncertainty could stretch on for years to come.
Worse still for the green economy, it remains possible that a 'Boris v Parliament' election could see the Tory leadership strike a formal or informal pact with the Brexit Party, handing yet more influence to the most unashamedly climate sceptic political tribe in British politics, regardless of what its non-existent manifesto tries to suggest to the contrary. A bunch of Trumpist fan-boys could take the support of around 35 per cent of voters and interpret it as a mandate for a libertarian remaking of the UK economy.
How likely is it?
Again God knows. Things could change very quickly, but at the moment an election either just before or just after the October deadline seems pretty likely. How it would then play out is anyone's guess. Businesses striving to tackle what all the main political parties agree is the biggest long term threat facing the planet would be forgiven for feeling frustrated and not a little distressed.
What to take from this little off the cuff exercise in scenario planning? The truth is that confusion reigns, and that confusion could quickly morph into chaos. Faced with such inherent uncertainty businesses would be wise to revert to the clichés of first principles: control the controllables, trust in the fundamentals.
That means reading the government's no deal technical notices (sorry, I don't make the rules), checking supply chain risks, developing contingency plans, working out new administrative requirements. It means acknowledging the economic risks, but recognising that the net zero transition remains a top priority, a global necessity, and a potential source of competitive advantage. As such the investment case for plenty of clean technologies and emissions reduction initiatives should remain compelling, despite all the uncertainty.
At the same time, the political turmoil means it is more important than ever that those businesses that want to see an accelerated net zero transition weigh in alongside the majority of the public who want the same thing. Business leaders must make the case for deep decarbonisation as vocally and consistently as possible. Politicians will be easily distracted and face immense competing pressures in the coming months and years. Green business leaders must do all they can to remind policymakers of the compelling, vote-winning, optimistic narrative climate action can offer. It is a narrative that has to be presented alongside Brexit, not beyond Brexit, of course, because there is no beyond Brexit.
For that is the most depressing aspect of the countdown clock. Not the gimmicky electioneering, nor the sledgehammer subtle threat to MPs that it seeks to amplify. But the simple fact it is a con.
Even if the UK leaves the EU in 84 days, Brexit will not end. Departure will simply mark the start of another round of politically charged and diplomatically tortuous negotiations, all with countless environmental implications in play. It is that decade spanning process that could prove to be a slow motion trainwreck for the UK, eating up political and corporate bandwidth for years to come. It threatens to become an anchor tied round the ankle of the industries and leaders desperate to build a 21st century, net zero emission, sustainable, and healthy economy. The Big Thing is overshadowing all.
The net zero transition will continue, of course - not even Brexit can halt global trends, especially when they are being driven by competitive technologies, evolving markets, and raw geopolitics. But a mismanaged Brexit would result in a slower and less economically advantageous transition than could have been engineered. The climate and the Brexit clocks may be ticking, but they are not necessarily counting down towards some arbitrary date. The fear is they are counting down towards a harder define, but still unnervingly recognisable new era of rolling and interlocking political and environmental crises. And it feels like time is running out.
A version of this article originally appeared in the BusinessGreen Overnight Briefing email, which is available to all BusinessGreen subscribers.
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