UK industry wants to retain energy European standards post-Brexit

British industry overwhelmingly wants to see the retention of European energy standards, after the UK leaves the European Union in 2019, the House of Commons Business Select Committee has concluded.

In its final report issued during the General Election campaign, the all-party committee considered the likely impact of Brexit upon energy and climate change policy.

It began by acknowledging that, prior to the referendum, EU policies were expected to achieve 50 per cent of the UK’s emissions reductions needed from buildings between 2015 and 2030, to remain on track to meet the 2050 targets specified in the Climate Change Act 2008 - the retention of which was now common ground between all political parties apart from UKIP.

Similarly EU energy product standards were expected to be the largest contributor to energy bill reductions over the next decade.

The Committee acknowledged that there is “widespread support” for the retention of EU –derived policies, which “have contributed to significant improvements in the energy efficiency of buildings and products, with benefits in terms of emission reductions, reduced household bills and consumer protection.”

The MPs concluded: “Industry would in particular prefer European energy product standards to be retained. These are likely to be applied in practice, due to the continuing need to trade with EU countries. If our formal standards diverge from those applying in European countries, there is a risk that the UK could become a dumping ground for energy inefficient products.”

The Committee posited that the policy option most amenable to change could be revisions to VAT. During the Vote Leave campaign the present foreign secretary Boris Johnson had argued that, once outside the EU, the UK would be able to scrap VAT on household bills. This had been attacked as distorting the marketplace even further, with consumption charged at 0 per cent VAT, while energy-conserving measures like condensing boilers and low emissivity glass currently incurred 20 per cent VAT.

The Business Secretary, Greg Clark, told the Committee that cutting VAT on household bills “is not something we have been actively looking at.”

While making no commitment regarding the desirability of removing VAT entirely on fuel, there was no equivocation from the MPs regarding the alternative option. “We recommend that the Government reduces VAT on energy efficiency products after the UK leaves the EU”. This was because “a reduction in VAT on energy efficiency products would support consumers in using less energy. This would help to address both fuel poverty and decarbonisation objectives.”

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