Although Member States remain ultimately responsible for the energy supply to their citizens and for deciding on the most appropriate energy mix, the UK and EU energy sectors are integrated through trade, EU legislation, the interconnection of energy supply and nuclear cooperation (under the Treaty establishing the European Atomic Energy Community/Euratom). Since the mid-1990s, the EU has been implementing an internal energy market (IEM) to build a more efficient energy market.460
Given the existing energy integration between the UK and the EU – notably through Euratom and the IEM –the UK energy sector will likely be impacted by Brexit. However, the UK Government is committed to leaving Euratom and is open to leaving the IEM, and has begun preparations for leaving. As such, although the UK Government have expressed preferences for energy integration in future,461 the impact of a no-deal Brexit on energy could be much the same in the long term as a Brexit deal.
Potential impacts of ‘no deal’ could be a less integrated relationship than the UK government intended, and that preparations to leave are not ready in time for a no-deal Brexit. These are in addition to the potential impacts of Brexit in any scenario.
12.1 Internal Energy Market
In 2017 the UK imported 4.2% of its electricity demand through interconnectors to Europe and the island of Ireland, and 36.8% of its gas.462 The UK also imports Liquified Natural Gas, though not through interconnectors and predominantly not from EU countries.
The IEM facilitates harmonised, tariff-free trade across these interconnectors. The draft political declaration states that “the parties should cooperate” on supplies of electricity and gas and that there should be as far as possible “efficient trade over interconnectors”. However the Brexit White Paper said the UK wanted to “explore” options for the UK’s future relationship with the IEM and contains options to either leave or remain in the market.463 Therefore, it is possible that ‘no deal’ could be much the same as a deal, as the UK could stay in or leave the IEM in the event of a deal or leave in the event of no deal.
Leaving the IEM (as a result or a negotiated deal or a no-deal scenario) could have an impact on the trade of energy through interconnectors. However, it is also important to note that several countries outside the EU
460 European Parliament, Factsheets on the European Union, Internal Energy Market
461 HM Government, The Future Relationship between the United Kingdom and the European Union, 12 July 2018, para 139
462 Department for Business, Energy and Industrial Strategy, Digest of UK Energy Statistics 2018. Tables 5.5 and G.5
463 HM Government, The Future Relationship between the United Kingdom and the European Union, 12 July 2018, para 144
currently trade energy through interconnectors with the EU, and the EU does not generally apply tariffs to these imports.
National Grid told the BEIS Committee that ‘no deal’ posed no immediate risk to the UK’s security of electricity supply, which could be supported through greater domestic generation.465
There may be other, longer term costs of leaving the IEM (with or without a deal) without any other sort of agreement to cooperate on energy matters, such as less: efficient trading, which could increase the cost of energy;466 exclusion from EU solidarity principles for gas supply crises;467 more difficultly securing future interconnector projects468 which can help increase flexibility and resilience of grids, especially with increasing intermittent renewables; and less influence on future IEM rules.469 These costs would impact EU Member States that export or import energy to and from the UK, as well as the UK itself.
Ireland’s Single Electricity Market (SEM) allows free trade of power across the island, with all generators and suppliers trading through a central mandatory wholesale market.470 A new Integrated Single Electricity Market (I-SEM), designed closely around the rules of the IEM, was launched in 2018.471 Regulatory divergence between Northern Ireland and ROI as a result of Brexit could be problematic for the continued functioning of this Irish market. Article 11 of the Northern Ireland Protocol in the draft WA states that EU law governing wholesale electricity markets listed in Annex 7 will continue to apply. This legislation relates to generation, transportation, and wholesale cross-border trading of electricity and, in the event of no deal, would not apply unless otherwise legislated for.
There could also be potential impacts on Ireland’s gas supply as a result of Brexit, as Ireland imports much of its gas from the UK.472
The European Atomic Energy Community (Euratom) provides the basis for regulation of civil nuclear activity in its Member States. The Euratom Treaty shares the EU’s institutional framework but is a distinct legal entity from the EU.473 The Government announced in the March 2017 Article 50 letter
464 Gustav Frederiksson, Alexander Roth, Simone Tagliapietra, Georg Zachmann, The Impact of Brexit on the EU Energy System, 23 November 2017, p. 25
465 BEIS Committee, Leaving the EU: negotiation priorities for energy and climate change policy, Fourth Report of Session 2016–17, HC 909, 2 May 2017, p. 12
466 BEIS Committee, Ibid
467 BEIS Committee, ibid, p. 13
468 Andrew Ward, Our friends electric: interconnection and Brexit, Financial Times, 15 January 2018
469 BEIS Committee, ibid, para. 39
470 CER Factsheet on the Single Electricity Market, April 2011
471 Information note, Proposed Amendment to the Electricity Regulation (Amendment) (Single Market) Act 2007
472 Irish Government, Ireland and the negotiations on the UK’s withdrawal from the European Union The Government’s Approach, May 2017, p. 38
473 Euratom Treaty, 1957
170 What if there’s no Brexit deal?
that the UK would leave Euratom as well as the EU.
474 The legal basis for leaving Euratom as part of the UK’s exit from the EU has been a subject of ongoing debate.475
The UK been preparing to leave Euratom by negotiating and signing new nuclear cooperation agreements for trade with the necessary countries, and by passing the Nuclear Safeguards Act 2018 to replace the Euratom safeguard regime with domestic provisions. If there is no deal and no transition period the domestic arrangements will need to be concluded faster than in the case of a transition period.
For other aspects of Euratom such as nuclear research, a no-deal Brexit could have a clearer impact, with funding arrangements affecting the continuation of existing projects (radioisotopes are discussed in section 9.3). For example, Euratom provides 87.5% of the funding for the Culham JET project on fusion energy and the UK Government provides the rest.476 The Government has committed to paying its “fair share” of the funding until 2020.477 However, it is possible that Euratom will not renew its funding as a result of Brexit.
The UK Government have consistently said they want a “close relationship” with Euratom,478 and the draft political declaration stated the UK wanted an agreement to “facilitate trade”, to be “associated with the Euratom research and training programmes”, as well as to cooperate on the exchange of information on the supply of medical radioisotopes.
A no-deal Brexit could mean this relationship with Euratom is not realised. It is also possible that even without a deal, the UK could still secure a separate deal with Euratom. For more general information, see the Library’s briefing paper on Euratom.
12.3 EU Emissions Trading Scheme
The EU Emissions Trading Scheme (ETS) is a mandatory cap-and-trade scheme for greenhouse gases.479 It operates in 31 countries (the 28 EU countries, Iceland, Liechtenstein and Norway) and covers the 45% of the EU’s greenhouse gas emissions that come from energy intensive sectors.480 The EU ETS is currently in its third trading phase (2013-2020).
474 HC Deb 1 February 2017, Vol 620
475 Jonathan Leech and Rupert Cowan, Brexit and Euratom: No Rush to exit?, World Nuclear News, 20 January 2017
476 BEIS, Euratom Exit Factsheet, Research and Development, June 2018
477 Gov.uk, Government commits to continue funding its share of Europe’s flagship UK-based nuclear fusion research facility, 27 June 2017
478 Written Statement [Energy Policy], HCWS399, 11 January 2018
479 The greenhouse gases covered by EU ETS are carbon dioxide (CO2), nitrous oxide (N2O) and perfluorocarbons (PFCs). Greenhouse gas emissions are linked to global warming. See for instance the US Environmental Protection Agency, Overview of Greenhouse Gases,
480 European Commission, Climate Action, EU Emissions Trading System (EU ETS), [accessed 18 July 2018]
If there is no deal the UK would drop out of the EU ETS before the end of Phase 3 and all relevant EU legislation would cease to apply on exit day.481 This scenario – leaving part way through a trading phase – would have practical consequences for the overall EU ETS market and both EU and UK participants.
More generally, a no-deal scenario would not impact the UK’s domestic targets to reduce emissions under the Climate Change Act 2008 (which are more ambitious than EU targets) and the Government has committed to continuing to meet its international climate change commitments.482
Further information on climate change policy and the possible impact of a no-deal scenario, in particular on carbon pricing in the UK, is set out in the Library Briefing Paper on Brexit: Energy and Climate Change.
The European Commission issued a Notice to stakeholders on the withdrawal of the UK from the EU ETS on 19 December 2018. It confirmed that as from 1 January 2019 the UK would not be able to auction EUAs, allocate allowances for free or exchange international credits, for as long as the suspension remains in place. The suspension would be lifted if a withdrawal agreement was ratified.
A European Commission press release issued on the same day as the Notice to stakeholders confirmed the following measures have been adopted in the area of EU climate legislation “in order to ensure that a ‘no-deal’ scenario does not affect the smooth functioning and the environmental integrity of the Emissions Trading System”.
– A Commission Decision to suspend temporarily for the UK the free allocation of emissions allowances, auctioning, and the exchange of international credits with effect from 1 January 2019.
– An Implementing Decision to allow an appropriate annual quota allocation to UK companies for accessing the EU27 market (until 31 December 2020).
– An Implementing Regulation to ensure that the reporting by companies differentiates between the EU market and the UK market to allow a correct allocation of quotas in the future.483
The Government published a technical notice on Meeting climate change requirements if there’s no Brexit deal on 12 October 2018. The notice confirms that a no-deal scenario would not change the “UK’s deep commitment to domestic and international efforts to tackle climate change”.
In relation to the EU ETS, the Government confirmed that the UK will be excluded from participation (including access to the EU ETS Registry) in a no-deal scenario. In response to the Commission’s suspension notice, it
481 Lords EU Committee, Energy and Environment Sub-Committee, Oral evidence: EU Emissions Trading Scheme, 14 March 2018, Q1
482 HM Government, The Future Relationship between the United Kingdom and the European Union, 12 July 2018, Cm 9593, Para 108
483 European Commission press release, Brexit: European Commission implements “no-deal” Contingency Action Plan in specific sectors, 19 December 2018
confirmed that the UK Government would not issue any 2019 allowances (unless and until the suspension was lifted). The notice went on to explain that the Government would remove requirements relating to the surrender of EUAs for the 2019 compliance year onwards, but that it intended to maintain the monitoring, reporting and verification (MRV) arrangements. It also stated that flights between the UK and the EEA “are not expected to be covered” by the EU ETS obligations.
484 In evidence to the House of Lords EU Energy and Environment Sub-Committee, the Energy Minister referred to this outcome as “a mirror system linked to the ETS”.485
The Government laid the Greenhouse Gas Emissions Trading Scheme (Amendment) (EU Exit) Regulations 2019 on 25 January 2019, subject to the negative procedure. The SI aims to maintain the MRV elements of the scheme in the UK, and to amend the other elements of the retained EU law to reflect the fact that the UK will no longer be part of the EU ETS and to ensure that the retained law operates effectively in domestic law in a no-deal scenario. Further information and explanation is available in the accompanying Explanatory Memorandum.
A new UK-wide carbon tax
The Government has also stated that, in a no-deal scenario, the UK would initially meet its existing carbon pricing commitments via the tax system, taking effect from 1 April 2019.486 At Budget 2018, a UK-wide carbon emissions tax rate of £16/tCO2 was announced which would apply to EU ETS sectors for emissions over and above an installation’s allowance (based on the EU ETS free allowance) in the event of a no-deal scenario:
3.51 Carbon pricing following EU exit – The government continues to plan for all scenarios as it prepares for EU exit. In the unlikely event no mutually satisfactory agreement can be reached and the UK departs from the EU ETS in 2019, the government would introduce a Carbon Emissions Tax to help meet the UK’s legally binding carbon reduction commitments under the Climate Change Act. The tax would apply to all stationary installations currently participating in the EU ETS from 1 April 2019. A rate of £16 would apply to each tonne of carbon dioxide emitted over and above an installation’s emissions allowance, which would be based on the installation’s free allowances under the EU ETS. The government is also legislating so it can prepare for a range of long-term carbon pricing options.487
This price was broadly in line with the EU ETS pricing at that time.488 Further information on this proposal is available in the Government policy paper on the Carbon Emissions Tax which was published alongside the Budget.
The Finance (No. 3) Bill 2017-19 contains provisions to implement the carbon emissions tax, which would be brought into force in the event of a
484 Gov.uk, Meeting climate change requirements if there’s no Brexit deal, 12 October 2018
485 House of Lords Select Committee on the EU, Energy and Environment Sub-Committee, Uncorrected oral evidence: No deal preparations: energy and environment, 23 October 2018, Q25
486 Gov.uk, Meeting climate change requirements if there’s no Brexit deal, 12 October 2018
487 HM Treasury, Budget 2018, HC 1629, October 2018
488 EUAs were at EUR 16 on 31 October 2018 according to ICE EUA futures via Sandbag and Quandl.
no-deal scenario only.
489 The relevant provisions are set out in Part 3 of the Bill and are explained as follows by the accompanying Explanatory Notes:
[…] a new Carbon Emissions Tax would be introduced from 1 April 2019, with the first payment due in 2020. All current participants in the EU ETS who are operators of stationary installations in the UK would be set an annual emissions allowance for the purposes of the tax allowing the government to maintain similar arrangements to the EU ETS for industrial installations deemed to be exposed to significant risk of carbon leakage, to support their competitiveness. […]490
The Explanatory Notes confirm that “if the tax were introduced, a consultation on the more detailed arrangements would take place during 2019 to inform a statutory instrument or instruments that would be laid in early 2020”.491
A policy fellow at the Grantham Research Institute on climate change and the environment commented on the proposals, including on the potential impact on the UK’s decarbonisation targets:
By indicating that the Carbon Emissions Tax will be set at £16/tCO2e it effectively raises the Total Carbon Price to £34/tCO2e – £10 higher than the Government’s original target price of £24/tCO2e and, significantly, probably high enough to prevent a resurgence of coal in the early 2020s.492
Further discussion and commentary on the possible impact of a no-deal scenario on climate change policy, in particular on carbon pricing in the UK, is set out in the Library Briefing Paper on Brexit: Energy and Climate Change.
12.4 The environment
The Prime Minister has assured MPs that the UK would not reduce its environmental standards in the event of ‘no deal’493 and the Government has confirmed that UK organisations that secure funding through EU environment programmes, “from now until the end of 2020, will be guaranteed by the UK government, even in a no-deal scenario.”494
The process of converting EU environmental law into domestic law (pursuant to the EU (Withdrawal) Act 2018) requires a large number of Statutory Instruments to be laid by Defra. Whether the Department will
489 The Bill is currently awaiting second reading in the House of Lords.
490 HM Treasury, Finance (No. 3) Bill Explanatory Notes, 7 November 2018, p211
492 LSE, Grantham Research Institute on climate change and the environment, What does the October 2018 Budget mean for UK carbon pricing in a no-deal Brexit? 30 October 2018 [accessed 4 February 2019]
493 For example, see House of Commons Liaison Committee, Oral evidence: the Prime Minister, HC 1393, 18 July 2018, Q116
494 House of Commons Environmental Audit Committee, The Government’s 25 Year Plan for the Environment: Government Response to the Committee’s Eighth Report Twelfth Special Report of Session 2017–19, 6 November 2018, p6
have the time to complete this process before a no deal exit day has been a cause for concern (see Box 6).
A number of select committees are monitoring Defra’s ‘no deal’ preparations, in particular the progress it is making on its EU Exit statutory instrument programme. This relates to Defra’s entire remit, including agriculture, fisheries and environmental policy.
Defra Secretary of State Michael Gove confirmed to the Commons European Scrutiny Committee in July 2018 that “although no one wants it”, Defra was stepping up its preparation for the possibility that the UK would have to trade on WTO terms from March 2019.495 A subsequent NAO Report examined Defra’s preparedness for Brexit, including ‘No Deal’, and found that there was a “high risk that Defra will be unable to deliver all the Statutory Instruments it needs in time”.496
A letter from Michael Gove to the Lords EU Energy and Environment Sub-Committee on 15 January 2019 stated that “Since the National Audit Office report was published in September 2018 we have made good progress on our EU exit SI programme and are confidence we can deliver a fully functioning statute book for the day we leave the EU”.497 He went on to confirm that (as of 11 January 2019) 83 of the 120 Defra EU exit SIs had been laid before Parliament or the sifting committees.
The Government published a Technical Notice on Upholding environmental standards if there’s no Brexit deal (updated on 19 December 2018). It confirms that such standards include waste, air quality, water and protection of habitats and species, and reaffirmed the Government’s commitment to maintain environmental standards after the UK leaves the EU. Other no-deal guidance related to environmental policy was also published on:
- Industrial emissions standards (updated 19 December 2018)
- Reporting CO2 emissions for new cars and vans (13 September 2018)
- Maintaining the continuity of waste shipments if there’s no Brexit deal (updated 19 December 2018)
The Technical Notice on environmental standards references the forthcoming Environment Bill, part of which—the draft Environment (Principles and Governance) Bill—was published on 19 December 2018. The wider Environment Bill is expected later in 2019. A number of commentators have expressed concerns that the new domestic approach to environmental principles and governance will not be in place in time in the case of a no-deal scenario, thus creating a potential governance gap as there will be insufficient time to put in place new arrangements for enforcement of environmental law against public authorities.498 The Government has not announced interim measures to fill the gap but the Technical Notice states:
495 House of Commons European Scrutiny Committee, Oral evidence: EU Withdrawal, HC 763, Q718
496 NAO, Defra Progress in Implementing EU Exit, 12 September 2018. HC 1498
497 EU Energy and Environment Sub-Committee, Letter from Michael Gove, 15 January 2019. See also EFRA Committee correspondence from Defra Permanent Secretary (Clare Moriarty), 18 January 2019.
498 For example: RSPB, Martin Harper’s blog, Why a ‘no deal’ Brexit increases risks to the environment, 16 January 2019
We are considering what interim measures may be necessary in a no deal scenario after 29 March 2019 (postponed to 31 January 2020, with a transitional period to effective withdrawal on 31 December 2020) and before the Environment Act is passed and comes into effect.
The UK’s legal framework for enforcing domestic environmental legislation by UK regulatory bodies or court systems is unaffected by leaving the EU and continues to apply. Environmental targets currently covered by EU legislation are already covered in domestic legislation. Permits and licences issued by UK regulatory bodies will continue to apply as now.499
In direct response to the ‘No Deal’ notice, ClientEarth law and policy advisor (Tom West) raised concerns about the “holes in the Government’s contingencies” for the environment:
Despite continued assurances that Brexit won’t damage our environment, today’s document release highlights the holes in the government’s contingencies for maintaining current environmental standards in a no-deal situation.
The government claims that the EU Withdrawal Act and ‘interim measures’ will uphold standards after Britain withdraws, however it is unclear what exactly these essential safeguards would be.500
Further discussion of the draft Bill and a no-deal scenario is available in the Library Briefing Paper on Environmental Principles and Governance: the draft Bill. The House of Lords EU Energy and Environment Sub-Committee has an open inquiry on No deal preparations for energy and environment, examining the UK’s preparations for a no-deal Brexit.
The European Commission has issued a number of Preparedness notices to stakeholders, including on environmental issues such as waste law.
‘No deal’ commentary
A March 2018 risk analysis report commissioned by Friends of the Earth, UK environmental policy post-Brexit by UK academics501 examined a number of scenarios, including a “chaotic” ‘no deal’ (‘cliff-edge’ Brexit) and a “planned” ‘no deal’ (the WTO option) and the impact each could have on specific environmental policy areas. Waste, chemicals, habitats and birds and climate change were all identified as policy areas at moderate to very high risk under a no-deal scenario.
Greener UK (a coalition of environmental bodies) published a report What would a no deal Brexit mean for the environment? (July 2018) highlighting a number of ‘no deal’ concerns, including losing mechanisms for co-operating with the EU on transboundary environmental issues (of particular importance for Ireland), and a potential gap in governance between exit day and the date that any new UK environmental watchdog is established.502
499 Gov.uk, Upholding environmental standards if there’s no Brexit deal, 19 December 2018
500 ClientEarth, Brexit documents highlight the holes for the environment in a No deal scenario, 14 September 2018 [accessed 1 February 2019]
501 Burns, C., Gravey, V., and Jordan, A., 2018. UK Environmental Policy Post-Brexit: A Risk Analysis, a report for Friends of the Earth, Brexit and Environment, March 2018.
502 Greener UK, What would a no deal Brexit mean for the environment? July 2018 [accessed 20 July 2018]
Further discussion of environmental issues in the context of Brexit is provided in the Library Briefing Paper on Brexit and the environment, 8 August 2018.
The main EU legislation for the regulation of chemicals is called REACH (formally the Registration, Evaluation, Authorisation and Restriction of Chemicals Regulation (No 1907/2006)). There is also other specific EU legislation for certain types of chemicals, for example pesticides; this section only covers REACH. REACH facilitates free trade in chemicals across the single market while also providing a framework by which the use of hazardous substances in the EEA can be controlled or restricted, which is important for health and the environment. Further information is provided in the Library briefing paper on Brexit and Chemicals Regulation (REACH) (CBP 8403, 6 November 2018).
REACH requires substances that are manufactured or imported into the EEA (in quantities of more than one tonne) to be registered by relevant companies with the European Chemicals Agency (ECHA) along with data about the properties and safe use of that substance. Only companies based in the EEA can register substances with the ECHA. In principle, each substance only requires one registration, so companies work together to develop joint registrations.503 Registrations are complex and can take months to produce due to the amount and type of data that needs to be submitted.504
The Department for Environment, Food and Rural Affairs (Defra) is the lead Government department with overall policy responsibility across the UK. The Health and Safety Executive (HSE) is the competent authority for REACH in the UK and plays a role in enforcement and in assessing substances that have been prioritised for potential regulatory action because of concerns about their hazardous properties.505
REACH is an example of a (non-tariff) regulatory trade barrier that impacts the chemical industry and other industries that use chemicals, such as manufacturing sectors. The UK and EU chemical industries both want a trade deal that ensures frictionless trade and regulatory consistency between the UK and EU, pointing to the complex supply chains that exist in manufacturing sectors.506
In a no-deal situation the UK would become a third party to REACH on exit day. There are two broad issues that arise: (1) how UK companies can access the EEA market and (2) how chemicals will be regulated in the UK.
503 ECHA, Registration; Health and Safety Executive, The Registration Process [accessed 5 February 2019]
504 House of Lords, Select Committee on the European Union, Energy and Environment Sub-Committee, Oral evidence: The future of REACH regulations post-Brexitv, 27 June 2018, Q11 [Anita Lloyd].
505 Health and Safety Executive, UK REACH Competent Authority and Other REACH Processes, [accessed 5 February 2019].
506 Cefic and CIA, European Chemical Industry Joint Statement of Brexit and the Future, November 2017; Squire Patton Boggs, Making Brexit work for the chemicals industry, February 2018.
Exporting chemicals to the EU market
In a no deal scenario, UK companies’ REACH registrations would no longer be valid (in the absence of an agreement otherwise).507
If REACH registrations are invalid, UK companies would not be able to sell to the EEA market without taking action to re-register with the ECHA via an EEA-based organisation.508 This may be an affiliate/subsidiary company or an “only representative” (OR) agent. Alternatively, the obligation for compliance would fall to the importer of the substance to the EEA. The European Chemicals Agency’s guidance for UK based registrants states that it is not sufficient to set up a company “on paper”:
A registrant is responsible for the substances covered by their registrations. This means that the responsible staff and relevant documentation must be present at the address of the registrant – setting up a company on paper only in the EU-27 or EEA is not sufficient.509
Industry stakeholders warn of significant disruptions to complex supply chains in manufacturing sectors in the absence of a deal to ensure frictionless trade, saying that even minimal regulatory checks at borders would likely lead to companies re-evaluating their manufacturing strategies.510
The House of Commons Public Accounts Committee (PAC) in November 2018 stated that Defra was “too complacent about the risk of disruption that UK chemical exporters could face in a no deal scenario”.511 The Committee raised concerns that the Department was “relying on the EU’s goodwill to minimise any interruptions to trade” which it stated “may not be forthcoming if there is no deal, particularly if no deal results in a dispute over the financial settlement”.512 The Committee also raised concerns that Defra had underplayed what re-registration with the ECHA involves and recommended that the HSE provide “realistic honest advice to chemical manufacturers”.513 The Government’s response to the Committee’s report had not been published as of 31 January 2019. In December 2018, the HSE published additional guidance for businesses to prepare for a no-deal Brexit; this mainly provided information about registering with the UK system (see below) and pointed to the ECHA’s guidance for how to maintain access to the EEA market.514
507 European Chemicals Agency, UKs withdrawal from the EU, [accessed 22 August 2018]; Defra, Regulating chemicals (REACH) if there’s no Brexit deal, 24 September 2018.
508 European Chemicals Agency, UKs withdrawal from the EU, [accessed 4 February 2019]; Defra, Regulating chemicals (REACH) if there’s no Brexit deal, 24 September 2018.
509 European Chemicals Agency, UKs withdrawal from the EU: UK based registrant [accessed 4 February 2019].
510 Squire Patton Boggs, Making Brexit work for the chemicals industry, February 2018.
511 Public Accounts Committee, Defra’s progress towards Brexit, 68th report of session, HC1514, 14 November 2019, paras 3-4.
512 Public Accounts Committee, Defra’s progress towards Brexit, 68th report of session, HC1514, 14 November 2019, para 3.
513 Public Accounts Committee, Defra’s progress towards Brexit, 68th report of session, HC1514, 14 November 2019, paras 3-4.
514 HSE, REACH: What you’ll need to do in a no deal scenario [accessed 1 February 2018].
Regulating chemicals in the UK (“UK REACH”)
Leaving the EU REACH framework means that a separate system for regulating chemicals must be established in the UK. In a no-deal scenario, this would need to be in place for 30 March 2019.
The Government intends to establish a UK system for regulating chemicals that mirrors the EU REACH system as far as possible – a “UK REACH”. Challenges include establishing a regulator to take over the functions of the ECHA and setting up a UK database of registered substances.
The Government published a no-deal technical notice on REACH in September 2018 that set out its policy for regulating chemicals in a no deal Brexit scenario.515 It confirmed that the HSE would be the lead regulatory authority carrying out the functions previously carried out by the ECHA. Existing REACH registrations and authorisations (approvals for certain substances to be used) would be automatically transferred (“grandfathered”) from the EU to UK system. This means that the chemicals that were registered and approved for use in the EU system would be allowed in the UK immediately after exit day. This is intended to minimise immediate disruption to supply chains. However, the UK would not have access to the information and data, for example about chemical safety, that supports those registrations. The Government would therefore implement a transitional period during which companies provide basic data about their registrations, with a requirement for companies to submit a full data package within two years. The HSE published guidance in December 2018 about steps that businesses would need to take to comply with the new UK regime.516 Further discussion and commentary on the Government’s proposals is provided in the Library briefing paper on Brexit and Chemicals Regulation (REACH) (CBP 8403, 6 November 2018).
Secondary legislation that would implement the above policy was laid in Parliament by Defra on 9 January 2019 (the draft REACH etc (Amendment etc) (EU Exit) Regulations 2019). They are subject to the affirmative procedure and if passed would come into force on exit day. The Explanatory Memorandum provides further details about the legislation, including about how the HSE would receive scientific/expert advice and about the role of the devolved Administrations. The Scottish and Welsh Governments have indicated they are content for devolved matters to go in the UK-wide SI.517 518
In January 2019 the House of Lords EU Energy and Environment Sub-Committee raised concerns about the Government’s no deal preparations, including whether the registration database would be ready in time:
515 Defra, Regulating chemicals (REACH) if there’s no Brexit deal, 24 September 2018.
516 HSE, REACH: What you’ll need to do in a no deal scenario, accessed 31 January 2019.
517 Letter from Cabinet Secretary for Environment, Climate Change and Land Reform to the Scottish Parliament Environment, Climate Change & Land Reform Committee, 27 November 2018. Available on the Scottish Parliament webpage: Statutory Instruments – European Union (Withdrawal) Act 2018 [accessed 31 January 2019]
518 Welsh Government, Written Statement, 11 January 2019. Available on Welsh Assembly webpage WS-30C-076 – The REACH etc. (Amendment etc.) (EU Exit) Regulations 2019 (“2019 Regulations”) [accessed 31 January 2019].
Last year we were hugely concerned about the scale of work that needed to be done to maintain adequate chemical regulation in light of Brexit, and frankly the Minister’s response to our report has done little to alleviate our concerns. It seems Brexit could leave us without a functioning and populated UK chemicals database, without an independent and transparent process for risk assessments, and without access to the thousands of chemicals produced by EU-led companies. I hope the Minister can provide further assurances on the measures that are being put in place, otherwise we risk a severe impact on the UK chemical and manufacturing industries, and potentially on human and environmental health.519
On 28 January 2019, Defra told PAC that usability testing for the chemicals registration IT system would begin in late February.520 In November 2018 the Committee had raised concerns about the “enormous task” that Defra faced to get key IT systems in place. Regarding the chemicals system, Defra told the Committee that it would be an “unsophisticated” system “designed to address the basic needs of industry with a contingency solution to enable it to function at greater scale and with better functionality in the longer term”.521 In September 2018, the National Audit Office raised concerns that there was a risk that the basic design may need significant reworking in the future.522
There have been some press reports about potential shortages of chemicals needed in critical industry sectors in the UK, such as water and gas in the event of a no deal Brexit.523 524 These concerns largely relate to potential disruptions to trade, for example through additional checks at the border or disruptions to supply chains, when some chemicals are required for just-in-time delivery. In response to questions about such shortages from the House of Commons Environmental Audit Committee (EAC) in December 2018, Defra Secretary of State Michael Gove said that the chemicals industry in the UK would continue to function but acknowledged that there would be additional costs and challenges in the event of a no deal situation:
[…] the inference from your point is that the chemicals would somehow evaporate and disappear, that there would be no chemicals industry in this country and no access to chemicals. That is emphatically not the case. But it is the case, I am very happy to acknowledge it and have already done so, that there would be
519 House of Lords EU Energy and Environment Sub-Committee, Government rebuked for lack of preparation on Brexit and chemicals, 16 January 2019. See also the Lords Committee Report, Brexit: chemical regulation, 23rd report of session, HL 215, 7 November 2018.
520 Letter from Claire Moriarty (Defra Permanent Secretary) to Meg Hillier (Chair of PAC), 28 January 2019.
521 Public Accounts Committee, Defra’s progress towards Brexit, 68th report of session, HC1514, 14 November 2019, para 27
522 National Audit Office, Department for Environment, Food and Rural Affairs, Progress in Implementing EU Exitv, HC1498, 12 September 2018, para 14; see also paras 2.10- 2.15
523 No-deal Brexit could lead to vital chemicals shortage, experts warn, ENDS Report, Simon Pickstone, 6 December 2018, [subs only, accessed 1 February 2018].
524 Environmental Audit Committee, Oral evidence: Chemical Regulation after the UK has left the EU, HC 1769, 4 December 2018, Q47-54.
additional costs, pressures and challenges for the chemical industry in the event of no deal, which is why we are so anxious to avoid it.525
525 House of Commons Environmental Audit Committee, Oral evidence: Session with the Secretary of State for Defra on Resources and Waste Strategy, HC 1835, 19 December 2018, Q141.
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