Brexit: A death knell for the circular economy?

Written by: Caroline Hand | Published:

At this point after the referendum, the only thing that is certain is uncertainty. Caroline Hand at Wolters Kluwer looks at the options and makes some tentative predictions as to how the circular economy will fare in the UK

When it comes to the environment, most commentators agree that EU legislation has had a positive impact, and the vast majority of environmental professionals who were polled voted to remain in the EU. Strong expressions of dismay at the result of the referendum have emanated from a variety of public figures, such as Lord Deben, who described Brexit as the “biggest example of self-harm done by a nation for probably 200 years”.

One of the specific concerns relates to the EU Circular Economy Package: although the details remain to be fleshed out, this would raise the EU recycling target to at least 65% by 2030, update the main waste directives and provide support to various circular initiatives.

Environmental lawyer Simon Colvin said: “[The package is] so all-encompassing in terms of the products we use and the waste we generate, it was going to catalyse so many things in so many areas. And that’s just gone now really, in one fell swoop.” But is such handwringing truly justified?

The two basic options

The government is faced with the task of building a new relationship with the EU. We must decide whether to remain a member of the European Economic Area (EEA), or trade with the EU as an independent member of the World Trade Organization (WTO).

If the UK remains within the EEA, most of the EU’s environmental legislation will still apply. The only environmental laws that would no longer apply are the Birds Directive, Habitats Directive and Bathing Water Directive. Non-mandatory aspects of the Circular Economy Package would not apply, but it would be in the interests of the UK to keep its resources policies in line with those of the rest of the EU, in anticipation of future legislation. The UK would, however, lose EU funding for initiatives that emanate from the package, and would not have a say in the development of future EU waste legislation.

While this option would be the easiest in terms of trading relationships, as things stand, it is unlikely to be pursued as it would require the UK to carry on allowing the free movement of people.

The other basic option is to leave the EEA and operate as an independent member of the WTO. In this scenario, most environmental legislation would no longer apply, but the UK would still have to meet EU product standards when trading with member states. This would mean continued compliance with aspects of the WEEE Directive, such as heavy metal content and labelling. If the Circular Economy Package introduces standards for recycled content of products, the UK would also have to comply with those.

Benefits of the package

The concept of the circular economy did not emanate from the EU Commission.

Rather, the pioneering work has been done by think-tanks such as the Ellen MacArthur Foundation, innovators such as Sophie Thomas at the RSA, and “disruptive” businesses which exploit the potential of the internet and new technology.

Global corporations had already initiated circular programmes before Brussels finally got on board. So what unique contribution does the EU package make?

Funding

First, the EU provides funding. The UK has already benefited from the LIFE scheme, which helped to finance the electronic duty of care (EDOC). EU funding will also help SMEs in Wales develop circular business models.

The Circular Economy for SMEs project is supported by €1.73 million (£1.45 million) of Interreg Europe funding, and is being delivered by 10 partners from six European countries.

Research

The Horizon 2020 work programme 2016-2017 includes a major initiative, Industry 2020 in the Circular Economy, which will grant over €650 million for innovative demonstration projects.

Trade and standards

The Commission promises to simplify the procedures for trade in secondary materials, and take further steps to police the transfrontier shipment of waste. And the EU has significant competence in the related issue of product standards: the Circular Economy Package contains pledges to develop new standards for waste-based fertilisers to encourage the circulation of organics.

The Commission will also propose mandatory product design and marking requirements to make it easier and safer to dismantle, reuse and recycle flat computer and TV screens.

Fears surrounding Brexit

A number of specific concerns have been raised by the UK resources sector regarding the possible negative consequences of Brexit. One very practical issue is the trade in refuse derived fuel (RDF). At present, the UK does not have the infrastructure to burn all this RDF, so a large quantity is exported to mainland Europe. Some fear that RDF could end up in landfill if the UK leaves the EEA.

The Circular Economy Package would introduce a new municipal waste recycling target of 65% and a packaging recycling target of 75% by 2030. Outside of the EEA, we would be under no obligation to strive for these and could linger on the current plateau of around 44%. However, for the waste and resources industry, the issue of greatest concern is the market for secondary materials. Higher targets for collection of recyclables from the public will be to no avail if there is no market for the reprocessed materials.

Bottom of the in-tray?

Jacob Hayler of the Environmental Services Association (ESA) has commented that Brexit risks placing the waste and recycling sector “at the bottom of the government’s in-tray”.

Thanks to the highly prescriptive nature of EU waste legislation, Defra has not felt the need to draw up an English waste policy for the years beyond 2020. Once out of the EU, this will leave a policy void.

Going it alone

Does Britain – or more specifically England – really need the EU to kickstart the circular economy? The devolved governments are already committed to the circular economy. Their ambitious policies extend well beyond 2020 and are already producing results, such as the diversion of food waste from landfill in Scotland (see pages 18-20). There are strong economic incentives to increase the circulation of resources.

According to a recent report undertaken by Imperial College London, a closed-loop society could add £29 billion to national GDP by 2025. And the Green Alliance found that 200,000 jobs could be created by 2030 if the UK continues on its current circular economy development rate.

Choosing how to spend…

Once Britain is no longer paying contributions to the EU, the government will be free to decide how to spend the money it has saved.

The withdrawal of public funding from the successful National Industrial Symbiosis Project shows that policymakers are not all necessarily aware that a circular economy is conducive to economic growth. Now is the time for supporters of the circular economy to make a strong case to ministers.

…and how to regulate

Brexit will create the opportunity to develop legislation that is better tailored to UK conditions. Local authorities may be relieved at the chance to keep their commingled recycling systems while the Commission moves towards stricter segregation.

Food waste collection is an area where Brexit could allow for the introduction of higher standards – perhaps even a ban on the landfilling of food waste – which would support the anaerobic digestion sector.

Return of the ‘dirty man of Europe’?

Some of the more doom-laden prophecies predict a return to the bad old days when the UK was seen as the ‘dirty man of Europe’. But in actual fact, Britain had a significant input into the development of innovative policies such as integrated pollution control. Is the government likely to abandon all the environmental gains that have been made during its decades of EU membership?

This is certainly not the case for climate change policy, where the UK’s pioneering Climate Change Act 2008 leads the way in Europe. Recent success stories demonstrate that, independently of any pressure from the EU, the UK is making strides towards a more circular economy. Eurostat’s latest statistics reveal that Britain and the Netherlands are the most resource-efficient countries in Europe. And ironically, the EU has just awarded a prize to the Environment Agency’s electronic duty of care system.

The conclusion seems to be that the circular economy is a lot bigger than the EU package, and although EU legislation is likely to give it a boost in Europe, the UK has every incentive to pursue this agenda independently.

Caroline Hand is lead commentator for Wolters Kluwer’s Croner-i Environment and Sustainability


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