Gambling on a Green Brexit

James Murray
Gambling on a Green Brexit

The Brexit negotiations are reaching their first major crunch point, and for the green economy there are no good, safe options available

As that great turn of the century philosopher, Sir Alex Ferguson, once observed, 'it's squeaky bum time'.

Key Cabinet Ministers are said to be meeting long into the night ahead of the crunchiest of the long run of crunch meetings tomorrow, where Prime Minister Theresa May will try and exert what little remaining authority she has in order to secure her government's support for the Withdrawal Agreement that has been brokered with Brussels.

What happens next is anyone's guess. As's Ian Dunt (who is having a very good war) observed recently things are about to go "all wibbly-wobbly" as the long-standing divisions between Leavers and Remainers fragment along new lines. Both tribes are now splitting into 'the gamblers', who would reject the government's deal in the hope the fallout results in their desired outcome (be it a People's Vote and crushing Remain victory or a deregulatory, WTO rules, 'no deal' spree in the disaster capitalism casino), and the risk averse 'play-it-safers', who understandably fear the economic cataclysm of 'no deal' and will hold their noses and support an imperfect Withdrawal Agreement to avoid it.

For the green economy this new dividing line is complicated by the fact a path towards a Green Brexit remains just about visible.

It is no secret the vast majority of people working in the green economy backed Remain and many would like to see the whole Brexit project abandoned as swiftly as possible. And yet the environmental sector is one of the few areas where there is a clear upside to quitting the EU (alongside all the considerable economic downsides, obviously). The potential to be free of the Common Agricultural Policy and reform farming subsidies along the overtly environmental lines being mapped out by Michael Gove could prove revolutionary for the very look and feel of Britain. It is a green gift horse that the more astute environmentalists are loath to ignore.

Then there's the government's repeated insistence it has neither a desire nor a mandate to water down environmental standards, as well as the EU's long-standing determination - reasserted today - to make UK adherence to all of its climate and environmental goals a red line in both any future trade deal and the controversial backstop for guarding against a hard border between Ireland and Northern Ireland.

Taken as a whole it is possible to see how from a green economy perspective a deal that paves the way for the softest of soft Brexits could retain much of the status quo, but with significant additional green policy gains in the form of farming reform, a new Environment Act, and the strengthening of the Climate Change Act to set a net zero emission target.  

However, this optimistic outlook rests on a sizeable amount of trust being invested in a government that is both deeply divided and more than a little economical with the actualite. 

Over recent months every attempt by ministers to downplay the risk of a post-Brexit assault on green policies - however well intentioned - has amounted to an exercise in gas-lighting. These fears are not unfounded. From within Cabinet Sajid Javid and Liz Truss have talked openly of their desire to cut environmental 'red tape'. Liam Fox salivates at the thought of a chlorinated chicken trade deal. Outside of Cabinet Boris Johnson and Iain Duncan Smith hint bluntly about the green policies they would like to see axed. And the influential European Research Group continues to frequently marry euro and climate scepticism.

Perhaps most worryingly of all, the Treasury is said to be engaged in a running battle with Defra to neuter the proposed new Green Watchdog and strip binding targets out of the new Environment Act. Philip Hammond's desire to keep the option of a deregulatory blitz alive is as transparently guileless as his 'end of austerity' spin. 

Faced with the very real risk that a deal would simply be a precursor to steady chipping away of the government's green ambitions, why not roll the dice? Why not reject May's deal - which is only going to get torn apart by the EU in the upcoming trade talks anyway - and seek a People's Vote that might just draw a line under this whole sorry saga? Why not campaign more fiercely to highlight the many benefits membership of the EU brings? The clean tech R&D funding, the green infrastructure investment, the critical importance of a multi-lateral and unified response to the existential climate threat. 

The possibility of a solid Remain victory and a reinvigorated relationship with the EU that could see the UK side with the other climate hawks in the bloc to accelerate green reforms and investment is too tempting for many hard core Remainers to resist. But there is an obvious answer to all those 'why nots'. You might lose again (or win narrowly in a way that only further deepens the divisions that are currently scarring British society). 

And then there's the risk you simply drive us towards a 'no deal'. As the government's recent technical notices make clear, no deal would be disastrous to the green economy, disrupting everything from emissions trading and power transmission to chemicals licensing and waste exports. But these technical challenges are simply a paint-stripper aperitif to the indigestible toxins that would flow through the UK's economy and body politic in the event of a full blown 'no deal'. The logistical chaos and the slow bleed of companies deferring investment and relocating overseas would turn the 2008 financial crash and ensuing austerity into the good old days we are all forced to look back on as a happier, simpler, and wealthier time.

Anyone thinking the green economy would find it easy to secure political backing and financial funding in a country in the grip of a constitutional crisis while diving into its third recession in less than a decade needs to share what they are smoking. Climate change may remain an existential crisis, but so is being able to secure reliable food and medicine supplies.

What is clear is that from this point there are no unalloyed good options available. Every Brexit path is littered with risks and costs and unwelcome trade-offs - there may be sunlit uplands at the end of the journey, but no one can be sure where they are or how long it will take to reach them.

The harsh unyielding reality is that once Theresa May triggered Article 50 with such criminally low levels of preparedness and foresight there were only four options available, none of them good.

The first is a humiliating reversal and scrapping of the process, with all the immense political risks that entails. The second is joining the EEA with Norway and taking the loss of influence over EU rules (vassalage, if you will) and the continuation of freedom of movement (albeit with more controls than we have currently) in return for economic stability, good access to our largest market, freedom from further political union, and control over farming and fisheries policy. The third is seeking a Canada-style trade deal, while accepting such a deal would still require a significant loss of sovereignty and control to a larger trading partner, a sizeable economic hit, and would have to be brokered with a partner that will always resist a hard border on the island of Ireland.

And the fourth option is burning it all to the ground. Crashing out without a deal, reverting to WTO rules, effectively tearing up the Good Friday Agreement, taking all the economic and political consequences that would flow from such a decision, and hoping some sovereign green shoots grow from the ashes. That's it. There's nothing else. Anyone who says different is lying - again.

In the long run, the green economy will continue to prosper because both cost-benefit trajectories and global mega-trends all work in its favour. But in the interim Brexit confusion reigns supreme. The temptation to try and reverse the Brexit decision remains compelling for many, but the prospect of a genuinely Green Brexit may make any sort of deal - almost no matter how flawed - the lowest risk path available. Assuming, that is, those within government who remain hostile to the low carbon agenda can be kept at bay indefinitely.

That said, at the time of writing it seems unlikely May has the votes to get her deal through Parliament. The democratic deficit inherent in any form of soft Brexit, the UK's inevitably position as junior partner and rule-taker is too much for too many parliamentarians to swallow. They look to Norway and see not a successful economy and mature democracy, but an exercise in sovereignty-shredding 'vassalage'. They ignore the fact that 'chaos or vassalage', as Jo Johnson eloquently put it, were always the only options once David Cameron took his Brexit gamble and lost. For all May's many flaws this messy end game was the inevitable consequence as soon as MPs voted overwhelmingly to trigger Article 50 with nothing more than the back of an envelope plan scrawled down by Nick Timothy one lunchtime to reassure them all would be well.

As such the economic, and likely environmental, disaster of a no deal Brexit remains a looming possibility. The country and the green economy would no doubt recover from 'no deal' contortions eventually, but the opportunity cost of another lost decade would be simply staggering, and all at a time when the years allotted to build a sustainable net zero economy are drifting by far too fast.

All results remain possible, injury time is fast approaching, and no amount of bullying the referee will help. Anyone who tells you confidently they know what will happen next is lying. As that great philosopher almost said 'Brexit, bloody hell'.  

A version of this article first appeared as part of the BusinessGreen Overnight Briefing newsletter, which is available to all BusinessGreen subscribers.

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