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Ten years on from the referendum, the Brexit debate is mostly about what it has or hasn’t already delivered. Rupert Darwall argues that its greatest prize still lies ahead. Net zero and Brexit were always linked. Because the EU is an administrative state built to regulate and unable to deregulate, its member states are locked into net zero by treaty and court. Britain, having left, can repeal its commitment to net zero with a single Act of Parliament. That, Darwall contends, is the biggest Brexit benefit of all – and the example that might yet rescue Europe from itself.
Last month saw two important anniversaries: the tenth anniversary of the Brexit referendum, followed a week later by the fifth anniversary of the signing of the European Climate Law on 30 June 2021, which imposes net zero on EU member states. Net zero and Brexit are linked: initially in a highly damaging way, but now constituting the biggest prospective Brexit benefit of all.
A target waved through
After the House of Commons rejected her Brexit plans for the third time, Theresa May accepted defeat and announced her resignation. Three weeks earlier, the Climate Change Committee, the government’s statutory adviser on emissions targets, had published a report urging the government to write net zero into UK law. “UK leadership is a strong theme of our advice,” its chair, Lord Deben, wrote in the report’s foreword, then adding a dash of climate guilt. “It is right that the UK takes a lead on this issue … The UK is one of the largest historical contributors to climate change.”
A mere 41 days after publication of the report, the government announced it would be tabling a Statutory Instrument to increase the Climate Change Act’s 2050 decarbonisation target from an 80 per cent reduction in greenhouse gas emissions, against 1990 levels, to a 100 per cent reduction – i.e. net zero. Twelve days later, on 24 June 2019, the Commons nodded net zero through after a debate of less than 90 minutes – without so much as a division.
Responding to Labour’s Graham Stringer, who asked why there had been no regulatory impact assessment on net zero, Chris Skidmore, the minister for energy and clean growth moving the draft order, said none was needed – just as, he said, there had been none when the target was raised to 80 per cent.
In fact, there was an impact assessment signed by the then – and current – energy secretary, Ed Miliband on 9 March 2009. It’s easy to see why Skidmore didn’t want to produce a new one for net zero. The Act’s purpose, according to the 2009 assessment, is “Demonstrating the UK’s leadership in tackling climate change”. However, the assessment also warned of the cost of failed leadership if the rest of the world didn’t follow: “Though there would be a net benefit for the world as a whole the UK would bear all the cost of the action and would not experience any benefit from reciprocal reductions elsewhere. The economic case for the UK continuing to act alone where global action cannot be achieved would be weak.”
“Weak” is too kind. The economic case would be non-existent. In the 11 years from passage of the Climate Change Act in 2008 to the adoption of net zero in 2019, Britain cut its carbon dioxide emissions by 180 million tonnes – a reduction of almost a third. Over the same period, the rest of the world increased its carbon dioxide emissions by 5,177 million tonnes. Eleven years of Britain’s costly emissions cuts were wiped out on average every 140 days by increased emissions from the rest of the world. Furthermore, British climate jingoism ignored the reality of Britain’s EU membership. Participation in the EU’s Emissions Trading Scheme (ETS) meant that Britain cutting emissions by more than its allocation of ETS Emissions Allowances enabled higher emissions elsewhere in the bloc. The net effect on global emissions was zero.
A paper empire
But the deeper significance of net zero lies not only in its futility, but in what it reveals about the two very different kinds of state on either side of the Channel – and in the fact that Britain, unlike its former partners, was not permanently bound to the bloc. Divergence from the rest of the EU had been under way for decades.
The first sign came in 1985. In the second volume of his biography of Margaret Thatcher, Charles Moore relates how Helmut Kohl and François Mitterrand had stitched up Mrs Thatcher over her proposal to complete Europe’s single market, pitched to Kohl at Chequers. Thatcher wanted a deal between member states and not a treaty, which would risk transferring more power to Brussels. Kohl met Mitterrand. “Le problème c’est le GB,” Mitterrand told him. They took the Chequers text and reworked it into the intergovernmental treaty that became the Single European Act – the very transfer of power to Brussels she had sought to avoid.
Divergence became unbridgeable with the fall of the Berlin Wall. Mitterrand’s solution to German reunification was monetary union. Solving the German problem with the single currency created an insuperable British one. Sterling’s ejection from the Exchange Rate Mechanism in September 1992 ensured that no future Conservative government would take Britain into the euro. New Labour was split. Tony Blair wanted in; Gordon Brown wanted to stay out. Its 1997 manifesto embraced the contradiction of wanting to play a leading role in Europe while being opposed to a “European federal superstate”, ignoring where the EU needed to go to sustain the euro.
The financial crisis of 2008 did more than expose the euro’s near-fatal flaws. It revealed what kind of entity the EU had become – an administrative state without a proper executive, unable to act decisively when it mattered. The authors of the European Central Bank’s statutes were so obsessed with fighting inflation that they had completely forgotten about central banks’ lender-of-last-resort function to stem bank runs. European leaders wanted to believe that the financial crisis was all the fault of Wall Street and lax American regulation. But as Tamim Bayoumi, deputy director of the IMF’s strategy, shows, the crises on both sides of the Atlantic were “parasitically intertwined”. On the eve of the financial crisis, the three largest banks in the world by assets and therefore liabilities were European – Royal Bank of Scotland, Deutsche Bank and BNP Paribas.
The reason why the financial crisis lasted less than two years in the US and the UK but around five years in the eurozone is institutional. The US and the UK are nation states possessing strong executives capable of acting quickly and decisively. By contrast, the EU is an administrative state without a proper executive. Crucial elements of eurozone member states’ sovereignty were uploaded to the EU and dispersed around EU institutions and committees that preferred to “kick the can down the road”.
“No modern state is considered a going concern unless it is equipped with a strong executive, and every state without one is held to be courting disaster, and regarded with pity and contempt by those more fortunate,” observes the American political philosopher Harvey Mansfield. The EU falls squarely in the second category. The EU is a creature of the treaties that created it; in a literal sense, it is a paper empire because its power derives from pieces of paper. On its own terrain, it is, as Sir Ivan Rogers, our man in Brussels during the Brexit referendum, noted in 2018, “formidably good at process against negotiating opponents”. And the EU is not the benign hegemon of the imaginings of today’s chronic Rejoiners. The EU wants Brexit to fail. Any deal where Britain comes as supplicant will be a bad deal for Britain.
Yet mastery of bureaucratic process sits atop two intrinsic, irremediable weaknesses stemming from the absence of strong executive capacity. First, the EU is a soft power colossus with no hard power. Geopolitics is the domain of the executive. Acting with dispatch, as during the financial crisis, requires having a tight, cohesive executive, one that in a democracy must possess democratic legitimacy.
Second, administrative states exist to regulate. They do not willingly deregulate and thereby reduce their power. At Bruges in 1988, in the most important sentence of the most important speech delivered by any British prime minister during the 47 years of Britain’s membership, Mrs Thatcher declared: “We have not successfully rolled back the frontiers of the state in Britain, only to see them re-imposed at a European level with a European super-state exercising a new dominance from Brussels.” Adopting net zero after Britain had decided to leave the EU violates the economic logic of Brexit, because it necessitates having far more damaging regulation than any imposed from Brussels.
The biggest Brexit benefit
Net zero also damaged the politics of Brexit. Brexit’s political success depended on a strong economy. Net zero legislates lower living standards. The fundamental economic fact of the energy transition is having more inputs to produce fewer outputs, which is the definition of negative productivity growth. Theresa May’s decision to write net zero into law could have been reversed by her successor. Instead, Boris Johnson’s 2019 election manifesto indulged in more climate jingoism with a pledge for Britain to “lead the global fight against climate change by delivering on our world-leading target of net zero greenhouse gas emissions by 2050”. If May and Johnson had intentionally set about sabotaging Brexit, they could scarcely have done a better job.
Had the Brexit referendum gone the other way in 2016, the EU would have forced Britain to adopt net zero five years later. Outside the EU, a single election and a single Act of Parliament can repeal the Climate Change Act and clean out all its supporting regulations. That no British government has yet chosen to do so is a failure of political will, not of capacity – and will is answerable to a single election. Within the EU, repeal is virtually a practical impossibility even if the European Commission were so disposed. Under qualified majority voting, a blocking minority of Germany, France, Spain and Luxembourg would be sufficient. Repeal would also have to gain the assent of the European Parliament. Then there are the other EU laws supporting net zero – the Renewable Energy Directive, the EU Emissions Trading Scheme, the Energy Efficiency Directive, the Effort Sharing Regulation and so on.
Moreover, four policy tenets of environmentalism – the precautionary principle, the principles of preventative action, rectification of environmental damage at source and the polluter pays – form part of Article 191 of the Treaty on the Functioning of the European Union. Even if the Commission, a super-majority of member states and the European Parliament were all lined up for repeal, the effort could still be stymied by the European Court of Justice. In practical terms, EU member states are institutionally locked into net zero. The only way out is to follow Britain and leave the EU.
Thus, the biggest Brexit benefit is Britain’s ability to free itself from net zero. It is also the biggest benefit to individual EU member states. A Britain that dumped GDP-destroying climate policies, put prosperity first, slashed its energy costs and started to put on a point or two of extra GDP growth would be an example to be emulated. Only once the EU recognises that its climate policies represent an existential threat will it see sense. By saving itself from its net zero climate folly, Britain can help rescue Europe from the EU’s net zero trap.
Rupert Darwall is the author of The Age of Error and the West’s Undoing, which will be published by Encounter Books this autumn.
