Leaving the EU: the View from Green Business

We are delighted to share this guest post from Juliet Davenport, founder and chief executive of Good Energy.

Like all businesses, green businesses need a stable legal framework within which to operate. There is no question that leaving the EU would introduce a lot of regulatory change and legal instability, at least in the short term. We would also be likely to see changes in exchange rates between sterling and the euro, with a decline in the value of the pound making imports for our production processes more expensive. This could lead to an increase in the perceived risk of lending to sterling-based businesses and hence higher cost of finance.

All of these economic effects, combined with new trade tariffs that we may face as a result of leaving the single market, will increase the costs of business and make life more difficult for businesses in the UK. Resilient and adaptable businesses would of course find a way to flourish, but it is important to note that it will probably be harder to find investment in the post-Brexit scenario. Households will experience the indirect consequences of these economic changes. If the cost of doing business goes up, this will be passed on to customers in the form of higher prices. In the energy sector this is likely to mean higher energy bills for electricity, for example, and since we import 60% of our energy from abroad – including 11% of our electricity from Europe – a price hike would be on the cards for businesses and households.

It is undeniable that the quality of the environment in the UK is protected by EU legislation. The EU has a good record of positive action on environmental issues as diverse as the quality of our beaches, climate change, mandatory targets for renewable energy, and clean air. While most of this legislation would continue to be in place immediately after the vote to leave the EU, the tendency to deny the reality of climate change and view environmental protection law as “red tape” does seem more prevalent in the Brexiteer camp. It is also worth making the point that any national government is less likely to pass strong environmental law than a club of nations.

One of the benefits of EU policy is that it can be made with a longer term perspective and is not driven by the five-year domestic electoral cycle. The indirect nature of EU democracy allows politicians and policy-makers to rise above the narrow interests of a political party and work better for the common good of both citizens and the environment. A decision to leave the EU would lead to a protracted period of negotiation over the exit terms and then a period of rewriting British law. This would be followed by the lengthy period of negotiating new bilateral agreements with a large number of countries to allow us to continue to trade. Not only would this undermine our ability to trade in the short term, and risk the loss of export markets, but it would also require an army of civil servants simply to undertake these negotiations. Government departments which have already been cut to the bone would see resources diverted from existing work, such as enforcing environmental law.

Many of the issues that would confront business if we left that EU are common to all businesses. But from the perspective of a green business we are facing particular threats and it seems clear that green businesses would be better supported by remaining part of the EU.