This post is by Andrew Warren, chair of the British Energy Efficiency Federation.
UK electricity consumption is 18 per cent lower than it was 15 years ago. Some two thirds of that drop is due to the implementation of European Union policy on energy using products.
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, which is likely to remain UK manufacturers’ largest single 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.
Standards could become “more flexible”
It is now becoming clear that this is no longer the policy of Boris Johnson’s government. Initial revelations from respected sources like the Financial Times and the Economist 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.
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 was 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, to be able to sell anything into the entire continental European market, such UK made products would inevitably need to comply with all 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 new standards being adopted. Essentially, becoming rule takers, rather than rule makers.
Substantial benefits for consumers and the environment
As it happens, there is already one example of this absurdity around. Last month, BEIS 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. 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. This demonstrates persuasively that, whilst there are some gross costs in introducing such minimum standards, overall the benefits will be substantial. The benefit cost ratio is 2.3. They lower running costs for consumers. And, by reducing energy usage, they have 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 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: to increase investment levels in energy efficiency.
A big EU consultation forum in Brussels is due to start today, under this same Ecodesign Directive. This time it is dealing with water pumps. There are, as ever, considerable UK manufacturing interests likely to be affected. As of now, UK government officials will not be attending. Nobody will officially be able to put the case for British businesses. Options exist which could detrimentally affect such interests. Leaving that empty chair may be portrayed by some as an overt gesture of true Brexit purity. Those operating in the real world might describe it as another pointless gesture that is truly a dereliction of duty by government. And a giant step back from ever achieving net zero carbon.