–Brexit trade talks run to the wire — here’s how Britain will probably push, with or without an EU trade deal
By Mathew Carr
Dec. 22, 2020 — LONDON: The environment and the levels of industrial assistance are apparently two of the issues holding up the trade negotiations between the U.K. and the EU.
British PM Boris Johnson said talks remain in trouble about a week from the end of the year and the end of the Brexit transition period, according to the BBC.
If there’s no deal, Britain might exit under World Trade Organization rules (or the fraught talks might simply be elaborate statecraft designed to deter others from leaving the EU).
“There are problems. It’s vital that everyone understands that the U.K. has got to be able to control its own laws completely, and also that we have got to be able to control our own fisheries.” He predicted the U.K. would “prosper mightily”, whatever the outcome of the UK-EU talks, in Brussels. (BBC)
Britain is under pressure on climate change because it has huge historical responsibility for the climate crisis, compared with its tiny population.
Leadership’s possible in the areas of energy and the climate transition, according to a report by Vivid Economics/University College London (see link below).
U.K. can evolve the Powering Past Coal Alliance to stimulate coal phase-out by large coal users. The Vivid/UCL scenario requires a rapid global shift from coal (94% reduction by 2030).
Thus, expanding and broadening the membership of the Alliance with large coal users (e.g. USA, China, Russia, and India) will be necessary. As a co-founder, the UK could further lead on this expansion given its domestic coal record.
One way forward could be for the UK to propose a tiered approach: first with new members agreeing to no new coal; then eliminating old and inefficient plants; and finally guaranteeing a finite lifetime for the remaining coal-powered units. Similarly, further use of public and private sector financing could be dependent on countries’ coal phase-out commitments.
2. OFFSHORE WIND
As a global leader in offshore wind (36% of installed global capacity), the UK can expand the global role of this power source.
With 17% of global technical potential in European waters, the UK can help in accelerating large-scale domestic deployment of offshore wind as well as further reducing the technology costs. Internationally, it can provide a targeted concessional finance and grant scheme for feasibility and Front-end engineering design (FEED) studies for offshore wind developers in low- and middle-income countries with large technical potential (e.g. Brazil, India, and Morocco).
It can also explore cross-country financing programmes that have a potential in scaling up the size of projects and reducing finance costs, which could be effective in the case of capital-intensive offshore wind.
3. CCS AND HYDROGEN
The UK could further accelerate the introduction of industrial clusters, carbon capture and storage, and hydrogen infrastructure.
The UK has a distinct advantage in CCS potential compared to other countries due to the high availability of usable CO2 storage sites for CCS infrastructure (70 billion tons of CO2, equivalent to the EU’s combined storage capacity) as well as having existing oil and gas expertise.
With more than 60% of modelled hydrogen use outside the leadership regions by 2050, the UK has clear opportunities in developing early domestic markets, as in the offshore wind case, first through blue hydrogen infrastructure while facilitating long-term cost reductions of green hydrogen and deployment elsewhere in the world.
Blue hydrogen is produced from natural gas after reforming to remove carbon content. Green hydrogen is produced by using power to electrolyse water.
As one of the five largest CO2 emitters from passenger flights, the UK is in a position to develop a leadership position in the aviation sector by establishing detailed binding commitments and targets, in line with the Committee on Climate Change (CCC)’s net-zero pathway, that include international aviation emissions.
This means that the UK could also lead on coordinating how Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) targets can successfully interact with domestic targets and result in genuine emissions reductions that avoid double counting.
Further, it can leverage the UK aviation sector’s commitment to 2050 net-zero carbon emissions to increase the International Air Transport Association (IATA)’s ambition to aim for net-zero emissions by 2050.
Finally, it can lead on establishing international standards for sustainable aviation fuels to ensure their genuine sustainability and then creating cross-country coalitions developing large-scale supply of cost-competitive sustainable aviation fuels (SAFs).
5. GHG REMOVALS
The UK has strong institutional capacity, CCS storage potential, and an established innovation ecosystem (e.g. £31.5m Greenhouse Gas Removal Demonstrators Fund and up to £100m of forthcoming research and development (R&D) funding for Direct Air Capture (DAC) technology).
This makes it well placed to increase the number of demonstration projects of Bioenergy with Carbon Capture and Storage (BECCS), DAC, and other GHGs removals.
Further, with eight million tonnes of imported biomass in 2018 and a likely future role in BECCS, the UK could lead in the development of high sustainability standards that ensure low-carbon agricultural and sustainable land use practices elsewhere in the world.
The UK is also in a strong position in leveraging the private sector’s role, through its net-zero commitments, in the development of GHGs removals markets. Internationally, it has an excellent opportunity to lead cooperation on sustainability standards, introduction of effective financing mechanisms (e.g. Environmental Land Management payments), or inclusion of GHGs removals in carbon markets.
6. GREEN PANDEMIC RECOVERY AND GREEN FINANCE
The UK could consider an introduction of innovation and commercialisation funds in areas like buildings, industry, and transport.
Through its presidencies of both the Group of Seven (G7) and the United Nations Climate Change Conference (COP 26) in 2021, it could play a prominent role in forming alliances together with other key players (e.g. the EU or China) and encouraging others to commit to green recovery measures.
Through international organisations, the UK could push for green conditions to be attached to any finance packages to developing countries. In the financial sector, the UK can further increase its efforts to green its domestic financial sector through accelerated transition to binding Task Force on ClimateRelated Financial Disclosures (TCFD) requirements.
As a world leader on cross-border lending (18% of global market share), the UK could also scale up its efforts in green cross-border capital flows by expanding the Green Finance Institute’s partnerships to other markets.
The UK International Climate Fund (ICF) programme could further leverage private finance commitments in critical areas (power, transport, and agriculture and land use) and regions with most cost-effective potential, leading to stronger private sector capital flows in the medium term.
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