Aldersgate Group Lobbying To Include Climate Change In Trade Talks

Summary

• The group is pushing for inclusion of a climate change clause in Britain’s in-progress bilateral trade deals
• Trading partners might not agree, as they are heavily dependent on fossil fuel sources
• British government might also see reviving its ailing companies as the first priority

The Aldersgate Group, a leading climate change advocacy organization in the United Kingdom, is trying to persuade the British government to make climate change a central theme in every trade negotiation it enters into. The executive director of the group Nick Molho believes that attaching such climate change clauses to trade negotiations will not only strengthen Britain’s competitive advantage in the low carbon global market, but will also improve its international standing as a proactive country that supports sustainable development. This demand would appear genuine to many on the grounds that many countries would still be using high carbon manufacturing processes which might make their products cheaper, and British goods uncompetitive. From the timing point of view, however, it will be a difficult proposition for the British trade negotiators, as the country is currently faced with an impending recessionary situation like never seen before. Exports from Britain are drying up fast, and urgent action is required to garner foreign exchange, and support export-led businesses from going bust.

On the climate change front, a number of important trading partners of the United Kingdom have much lower rankings. For instance, many nations like Australia, United States, China, and many Mideast countries are largely dependent on coal and crude oil. The market dynamics of their economies are such that they might not be able to reduce their dependence of these commodities immediately. Any insistence by the UK Government to incorporate a climate change clause into trade negotiations could very well impact the trading partner country’s investment that is already under progress.

The Post-Brexit United Kingdom has set out on an ambitious mission to sign in as many free trade agreements with major economies in the world as possible. The country would like to see more and more goods and services produced by domestic companies finding their way into these markets at competitive prices. That puts the country in a very difficult situation, as many of these countries have different climate change policy and may not be having the same tariff structures as the United Kingdom, hence may not agree to imposing the proposed climate tariff. In case Britain still insists on the same, then either the negotiations could fail, or these countries will impose counter-tariffs which will make British products less competitive in these markets, resulting in the failure of the very purpose these trade deals being negotiated.

The European Union, on the other hand, has been much more proactive on the matter of climate change as compared to many other geographies. It has enacted relevant laws and set-out several targets for member EU countries to reduce their carbon footprint over a period of time.

A contrary view is also doing the rounds

While being a member of the EU, Britain adhered to these regulations well and over the past decade or so, has made significant progress in reducing the country’s carbon footprint. However, after the country's exit from the European Union and after being deeply battered by the coronavirus pandemic, the situation has dramatically changed. So on the contrary, many experts do argue that it is quite likely that many of the British companies might actually request for a deferment of the climate change timeline to deal with the current economic situation. Moreover, even for the government, it could be a good opportunity to postpone its targets for some time so that the economy could be brought on track first and then pursue its climate change objectives.

Right now, there is no clarity on the UK government's standpoint in this regard. The Aldersgate Group, on the other hand is making its demands very vocal, and has been lobbying intensely. It sees this as an opportunity to forward its global climate change agenda and bring more countries under a legalized framework to reduce their carbon emissions in a timebound manner.

Therefore, Britain is currently at the crossroads. When it exited the European Union, it set out a target for itself to rebuild the county to be modern and to be able to deal with any challenges that the future might throw at it. Climate change is a major challenge that the world is currently facing. If an early action is not taken several species of animals and birds will be lost forever, and even the human race will be plagued with numerous health ailments which will put our survival at risk. Thus it is but imperative that any future economic strategy must incorporate climate change considerations. Now the important question is that of its timing; the coronavirus pandemic particularly worsened the state of the British economy. The government currently does not have much leverage to tinker with such slightly far-fetched ideas, in a scenario of rising job-losses and company insolvencies. It would thus be very tempting to postpone such a cause to a better time.

Let us take a closer look at BP Plc, a British company which is very proactive regarding climate change initiatives.

BP Plc – (LON: BP) BP Plc is one of the flagbearers of climate change in the United Kingdom. Being the second largest oil and gas company in the country, it has set out to adopt five companies by the year 2025 in the renewable energy and the efficiency-maximization space. BP Plc will hand hold and nurture these five companies till they have a turnover of at least £1 billion. The initiative is named by the company as the Launchpad initiative and will run parallel to the company’s venture capital unit, which also funds start-ups with disruptive technologies that work on its renewable energy and power-efficiency platforms. While the  venture capital unit only provides seed capital and takes up a minority stake in the new companies, BP will own majority stake in these five companies under the Launchpad platform.

The company stock (LON: BP) traded at GBX 313.10, up by 1.46 percent on June 26 at 1:04 pm. Its 52 week low/high range was recorded as 233.70 / 557.90 and it displayed a negative YTD (year to date) return of (35.82) on the stock.

So finally, it is a good initiative by the Aldersgate Groups to try and push for including a climate change clause in the ongoing bilateral trade negotiations. However, the pertinent question remains whether this pandemic could lead to a loss of all the hard work done by Britain on this front during the past decade, while being a member of the EU, at least for the time being. Well, there are no easy answers. Though the suggestion is well taken, but UK government might have to wait before it gets a green signal from its trading partners on the same.