Brexit Blog Series: Part 1 – Energy Legislation and Government Schemes

Local and international laws and agreements have created a solid foundation for continuing the existing energy and carbon reduction agenda, post-Brexit. What remains to be seen, however, is which specific policies the Government will use to realize their commitments to carbon reduction. This is especially the case now that Theresa May’s Government has dismantled the Department for Energy and Climate Change (DECC).

United Nations Framework Convention on Climate Change (UNFCCC) agreements like the recent Paris Agreement mandate action on climate change in various ways. As they are already mostly on the UK’s statute books, international agreements like this would not be affected by the decision to leave the EU. Climate action in the UK has also been cemented into UK law via the Climate Change Act of 2008. As this is also an act of parliament stemming from UK elected officials, Brexit is not likely to unravel these high-level commitments to carbon reduction.

The recent acceptance of the recommendations from the Committee on Climate Change (CCC) – the so called ‘fifth carbon budget’ – further indicates political commitment to carbon reduction. These recent targets are tougher than those agreed at the EU level anyway, as they require a carbon cut of 57% by 2032 rather than a 40% cut by 2030 on 1990 levels.

While the result of the EU referendum may not negatively influence overarching carbon targets, Brexit may have a larger impact on specific policies aimed at realising the overarching targets. Generally, policies which are more likely to change may be those directly linked with the EU, even if some of these are cemented with an act of parliament. Policies and schemes which may change include:

  • Policies associated with the Energy Efficiency Directive (EED)

The EED is behind various energy management and efficiency policies including the mandatory energy auditing scheme – Energy Savings Opportunity Scheme (ESOS) and recent Heat Network Regulations. It also requires member states to demonstrate a plan to improve efficiency to an aggregate of 20% by 2020.

  • ESOS

Some changes to ESOS were already expected before Brexit, as the scheme has been under recent review. As the next compliance date is not until 2019, this scheme may change considerably by then.

  • Heat Networks

This scheme is currently under an existing delay as the EU is reviewing the feasibility calculator. This is expected to be finished at the end of 2016, but could be further delayed, or it may become unenforceable.

  • Policies associated with the Energy Performance of Buildings Directive (EPBD).

This can include Energy Performance Certificates (EPCs), Display Energy Certificates (DECs), and building regulations during construction or refurbishment stages. The current Government has not shown much affinity for building efficiency in their approach to carbon reduction, and there is general discontent with many of the existing policies, making this area worth watching for notable changes.

  • EU Emissions Trading System (ETS)

This carbon emissions trading may eventually be replaced with a UK-based system. This change would not be seen for a number of years.

Because many of these are enshrined in UK law, the change will not be immediate, and those who need to comply should continue to until further notice.

Policies that may remain for the time being are ones that are UK-driven:

  • Carbon Reduction Commitment (CRC). The CRC was announced to be ending in 2019 in the 2016 Budget statement. Qualifying organisations will need to continue to comply until then.
  • Climate Change Levy (CCL) will continue to be charged.
  • Climate Change Agreements (CCA) are expected to continue until at least 2023.
  • Energy Intensive Industry RO + FiTs compensation. This will migrate to an exemption scheme in 2017, though qualifying organisations may continue to apply for relief from RO + FiTs.
  • Renewable Heat Incentive (RHI) and selective funding for renewables will likely continue as the Government has prioritised decarbonisation in the energy supply over efficiency.

One certainty is that Brexit opens up a lot of opportunity for change with regards to the energy policy landscape. Given the notable gap between the Government’s commitment to lofty carbon targets and the policy toolkit we currently have to reach them, it will be interesting to see to what extent the existing EU driven policies will be eliminated from UK law.

Whether Brexit increases or decreases overall energy legislation remains to be seen, but should be on all of our minds post-Brexit.


Robin Hamaker is a qualified low carbon energy consultant. She provides advice and services on energy efficiency and audits, energy behaviour change, and on UK energy legislation such as CRC, CCA, and now ESOS. She can be reached at RHamaker@pulsebusinessenergy.co.uk