New environmental recommendations by the government’s net zero tsar could have a “significant impact on trade”, analysts predict.
Chris Skidmore’s Net Zero Review suggested the government should introduce environmental and climate protections in future free trade agreements to remove trade barriers to environmental goods and services.
“There is a missed opportunity to further trade in environmental goods which could expand UK exports,” he wrote.
“By eliminating tariffs and non-tariff barriers on, for instance, certain clean energy technologies and energy efficiency products could increase their trade volume by 14% and 60% respectively.”
These recommendations could permanently change supply chains and “significantly impact trade” if adopted, said Hunter Matson, trade policy and research specialist the Institute of Export & International Trade.
“We will be observing closely which of the recommendations the government will implement and how this will affect the trade community.”
Skidmore also said government should have a clear programme by 2024 to accelerate decarbonisation of the freight and logistics sector.
Several retailers and logistics businesses have begun to switch to more eco-friendly freight options in order to tackle their carbon emissions – from Tesco swapping trucks for rail freight to Aldi introducing renewable biomethane-powered HGVs.
However, some of the changes in regulation proposed by the Tory MP regarding the ramp up of renewables investment and green trade still rely heavily on the UK nailing its trade deals with key partners, particularly the European Union.
“The review is right in saying that the move to net zero has economic advantages for the UK,” said Vicky Payne, interim director of the IOE&IT Academy. “But it’s vital that the right business environment is created through policies, regulations and taxation regimes that incentivise investment in decarbonisation”.
Payne added the development and implementation of the UK’s Emission Trading Scheme – a cap and trade scheme to reduce greenhouse gas emissions in energy-intensive sectors like packaging manufacturing – “will also be important for traders”.
This should help avoid businesses setting up show elsewhere – take Coca-Cola-owned smoothie maker Innocent Drinks, which has recently built a new CO2-neutral factory in Rotterdam to bottle products for European markets.
The move allows it to bypass Brexit border checks while taking advantage of the Netherlands’ green business-friendly environment.
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