Minister for Climate Change and Corporate Department for Business, Energy & Chair of the European Union Committee Thank you for your letter, comprehensive recommendations and questions relating to the Explanatory Memorandum (EM) on the Communication from the Commission on t he We acknowledge the unprecedented challenges COVID-19 has created both in the UK and across the globe. We must make it clear – including in our role as incoming COP Presidency - that efforts to rebuild the global economy should focus on supporting a green, fair and resilient recovery , building on the principles of the Paris Agreement and the Sustainable Development Goals. In this context, we recognise the importance of the European Green Deal as part of the European Union’s (EU) recovery package from COVID-19 and welcome the European C ommission’s recent proposal to establish green criteria in the context of a On behalf of BEIS and other departments, please find below responses to the 22 questions covering the European Green Deal, C arbon Border Adjustment Mechanism, Circular Economy Action Plan and Farm to Fork Strategy. We thank you for your continued interest in these matters and hope that you find the answers to your questions useful. 1. How will the Government seek to cooperate with the EU on climate diplomacy in the Delivering success at COP26 next year is the top international priority for the UK. We look forward to working together with all countries to a chieve an ambitious shared outcome in Glasgow. It is vital that the world comes together and takes renewed action to hold global temperature rises to well below 2 degrees and make best efforts to limit warming to 1.5 degrees, in line with the 2015 Paris Agreement. To that end, it is crucial that every country comes forward in 2020 with ambitious new climate commitments that will help us meet the goals of the Paris Agreement. We need countries to submit enhanced Nationally Determined Contributions (NDCs) that set out clearly emissions reductions targets for 2025/2030, and ambitious long -term strategies (LTSs) that mark a course to net zero emissions. Following the UK’s own commitment to reach net zero emissions by 2050, we strongly support the EU’s moves to do the same through the EU climate law published on 4 March. In order to achieve our objectives for COP26, it will be essential to work with our European partners – and we are proud to hold the COP26 Presidency in partnership with Italy, a clear demonstration of our commitment to doing so. The UK-Italy partnership will be unwavering in its commitment to encouraging the highest possible ambition through COP26. While the UK has left the EU, we consider our European partners to be key allies in combating climate change and leading the world in the green transition. We will continue to work constructively across a range of issues, including issues covered by the Green Deal, as well as on the likely sectoral policy areas of focus for energy transitions, zero emission vehicles, nature, finance, and adaptation and resilience. We also intend to work closely with our partners in the EU and its Member States to increase wider global climate ambition. This will involve coordinating engagement through our respective diplomatic networks, including the EU’s Green Diplomacy network, to maximise the impact of our outreach – for example at multilateral events, such as the forthcoming Ministerial on Climate Action with the EU, China and Canada on 7 July. This diplomatic cooperation on COP26 has become even more crucial as countries look to make decisions about their recovery post -COVID-19 which could have a significant impact on their future 2. Has the Government assessed the implications of the EU's increased ambition for the level playing field in the UK -EU future relationship, both in how it might affect the EU’s negotiating position and how the measures proposed would impact on UK A conse quence of the UK leaving the EU is that we will no longer be part of the EU’s framework for tackling climate change. We will continue to have our own high standards with our net zero legislation and set of carbon budgets. The EU will have its own framework. As we will both have high standards, and have (in the UK’s case) or plan (in the EU’s) legislation for net zero emissions by 2050, we do not think that there are level playing field concerns

At the same time , we have proposed in the negotiations with the EU that we continue to cooperate bilaterally on climate change. For example, in tapping the vast resources in the North Sea for offshore wind and greater interconnection to help meet our respective net zero targets, or by being open to linking a UK Emissions Trading Scheme to the EU ETS. As incoming COP26 President, we welcome any increased ambition from the EU, both in terms of legislating for their net zero target and in increasing ambition in their NDC. As you know, we are also c onsidering our own NDC in preparation for COP26, and are urging all countries to submit enhanced NDCs well ahead of COP26. 3. Do you have plans to assess the impact on the UK of the new state aid guidelines The Environmental & Energy Aid Guidelines (EEAG) are now due to expire on 31 December 2021. A public consultation on possible revisions to the guidelines is planned for the first half of 2021, with adoption of revised guidelines in the second half of that year. Once the revised EEAG has been announced in 2021 we will, if appropriate, assess the impacts on the UK. 4. How will the Government ta ke into consideration the European Green Deal when drafting regulations under the Environment and Agriculture Bills?
The Government’s landmark Agriculture and Environment Bills will not only ensure we maximise the opportunities created by leaving the EU, but also enable us to set an ambitious and world -leading domestic policy agenda to address the environmental challenges and climate emergency we are facing. Together, these Bills will deliver holistic management of our precious ecosystems to improve bio diversity and better manage our environment. This closely aligns with the objectives of the European Green Deal. The Agriculture and Environment Bills will create a step-change in the way government, civil society and the private sector work in partnership to deliver positive environmental outcomes. For example, the Agriculture Bill will introduce ambitious new financial assistance schemes in England, based on the principle of “public money for public goods”, which will allow us to reward farmers and ot her land managers who protect our environment, improve animal welfare and produce high quality food in a more sustainable way. Our new Environmental Land Management (ELM) scheme will support public goods clean air; clean and plentiful water; thr iving plants and wildlife; reduction in and protection from environmental hazards; mitigation of and adaptation to climate change; and beauty, heritage and engagement with the environment. ELM is intended to provide a powerful vehicle for achieving the goa ls of the 25 Year Environment Plan and our commitment to net zero emissions by 2050. We will also provide grants to farmers, foresters and growers so that they can invest in the equipment, technology, and infrastructure necessary to help their businesses become more sustainable and resource efficient. 5. How will the Government be engaging with the devolved administrations as it monitors the European Green Deal’s detailed proposals and legislation that emerges? We will continue to work closely with DAs on EU business directly, through Government Offices to the Devolved Administrations, and through our respective representations to the European Union (UKMis and the representations of the DAs in Brussels). We are committed to working closely with the devolved administrations (DAs) throughout negotiations with the EU to ensure a future relationship that works in the interests of the whole of the UK. We also recognise the significant interests of the devolved institutions in our negotiations with the EU and that is why we have been clear that the devolved administrations should be fully consulted in preparations for the negotiations. The devolved administrations are free to engage with their respective devolved legislatures as a part of this process. 6a. Is the Government monitoring the development of the policy package as part of the The Government is monitoring closely the development of COVID-19 recovery packages in The EU’s initial response to COVID-19 during the crisis phase focused on providing rescue packages to support liquidity for Member States, businesses and individuals, temporarily suspending state aid rules and waving Maastricht criteria on budget deficits to allow Member States to support their economies. Momentum towards a green recovery within the EU is strong. Climate Min isters from 19 of the EU’s 27 Member States have put their names to a statement calling for the European Green Deal to be at the heart of the EU’s economic response. And 180 Members of the European Parliament launched a Green Recovery Alliance on 14 April, alongside representatives from business, civil society and the finance community. On 27 May, the Commission unveiled proposals for a revamped €1.1trn EU Budget (covering the period 2021-2027) alongside a recovery fund of €750bn (€500 billion for grants through EU programmes and €250 billion of loans to Member States) which the Commission hopes to agree in July. The Commission’s plan which is still being debated by Member States would see the €750bn used in three • €130bn would top-up existing EU programmes – eliminating many of the hard choices in the earlier budget negotiations and addressing some gaps exposed by the COVID-19 crisis, such as new EU-level health spending. • A €560bn Recovery and Resilience Facility (€310bn grants, €25 0bn loans). Member States would submit national reform plans (aligned with Commission priorities, particularly the green and digital transitions) to access the funding. Allocation of the funds is expected to consider the impact of the crisis (and a Commission simulation suggests Italy and Spain could receive approximately 20% each). Grants would have no conditionality attached - a key demand of Member States such as Italy and Spain in debates so far. • The rest (~€60bn) will be used to support firms, split between (a) investing in EU-based companies and supply chains, supporting so-called ‘strategic autonomy’; and (b) a ‘Solvency Support Instrument’ for otherwise healthy firms, attempting to ‘level -the-playing-field’ for Member States with fewer fiscal resources. The latter may be leveraged further (perhaps to • As with the EU budget, at least 25% of the recovery fund must be spent on climate

6b. What measures are the Government considering to ensure that the UK’s economic recovery is similarly compatible with achieving net zero? As we recover from COVID -19, the Government intends to deliver a UK economy which is stronger, cleaner, more sustainable and more resilient. Tackling climate change can be a win- win. Many of the actions we need to take to reach our both our carbon budgets and net zero can also support our economy to recover from COVID-19. BEIS has created five new business-focused groups to unleash Britain’s growth potential and create jobs, as part of the government’s plans to help the economy. They will consider measures to support economic recovery and ensure we have the right skills and opportunities in place for our workforce over the next 18 months. They will also explore key domestic and global challenges to support a green and resilient recovery and ensure the UK is at the forefront of new and emerging industries. We know that we can grow the economy while reducing emissions. We are aiming for 2 million jobs by 2030 in the low carbon economy and its supply chains, up from 460,000 today.
During COVID-19, we have published the first stage of our Transport Decarbonisation plan and have announced a £2 billion package for cycling and walking. These announcements reflect our commitment to reach our net zero ambition, through a sustainable, diverse and resilient transport system and are part of a range of responses to our net zero target. The Carbon Border Adjustment Mechanism The shared risk of carbon leakage in pursuit of net zero 7. In light of the evidence highlighted above [on carbon leakage], is the Government considering new policies to mitigate the risk of carbon leakage in a net zero context? The UK’s membership of the EU Emissions Trading System (ETS) will end following the Transition Period. The Government is legislating to implement a future carbon pricing policy from 2021 that will replace this; all options for carbon pricing will support the UK’s 2050 net zero commitment and legally binding carbon reduction targets. 8. Have your officials engaged with the European Commission on the proposed carbon border adjustment mechanism and if not, when will they do so? As published in our recent response to the Future of UK Carbon Pricing consultation, we intend to establish a UK Emissions Trading System which could operate as either a linked or standalone system. As announced at Budget 2020, the UK Government will also publish a consultation later this year on the design of a Carbon Emissions Tax, as an alternative to a standalone UK ETS, to ensure a carbon price remains in place in all scenarios. All these future carbon pricing options have been designed to maintain t he current support provided to energy-intensive industries through free allocation of emissions allowances. This will ensure we continue to achieve effective emissions reductions, yet protect important industries and jobs across the UK, mitigating the risk of carbon leakage, on our journey to net

Possible impacts of the EU’s proposed carbon border adjustment mechanism on the UK 9. Have your officials begun assessing the possible impacts of a carbon border adjustment mechanism on the UK, including engaging with industry and specialists to gather the necessary evidence? The UK has set out a clear position on what we are seeking in the negotiations with the EU through the UK Approach to Negotiations publication. We want a relationship based on friendly cooperation with both parties respecting one another’s legal autonomy. We also want this relationship to be a long lasting one. Therefore, where relevant, we are considering any implications of future EU policy proposals on the future relationship agreement. As part of the EU Green Deal, the carbon border adjustment mechanism proposal is expected by June 2021 with public consultation opening later in 2020 . Discussions are therefore still in their early stages with little detail given on what the mechanism would look like in practice. The UK is closely following the progress of these discussions and will assess potential measures, including through engagement with industry and specialists, as they become The UK’s relationship with the mechanism 10. Given the relevance of this proposal to future domestic carbon pricing policy and the ongoing negotiations with the EU, have the Government begun assessing the costs and benefits of different ways of interacting with the EU’s mechanism and of As a global leader on decarbonisation, the UK recognises the issues that the EU’s carbon border adjustment proposal could look to address, and we are monitoring the debate on The EU’s Plan compared to the Government’s Resources and Waste Strategy 11. Are there any aspects of the EU’s Circular Economy Action Plan that the Government is monitoring particularly closely with a view to adopting similar policies The Government is monitoring the implementation of proposals in the EU’s Circular Economy Action Plan (CEAP). Much of the CEAP mirrors the work the Government is doing under the Resources and Waste Strategy to advance the transition to a circular economy. The powers being sought in the Environment Bill will enable the government to make regulations aligned with the goals of the CEAP, but which enable us to achieve these objectives in the best way for the UK (or for England, since much of waste policy is devolved). These include eco-design product requirements, resource efficiency product information and labelling requirements and Extended Producer Responsibility schemes. 12. When do you expect the consultation to develop the revised Waste Prevention Defra has carried out a review of the existing Waste Prevention Programme which it plans to publish shortly. Over the past 12 months Defra has engaged with a range of stakeholders to develop initial proposals for a revised programme and will communicate next st eps in due

course. The Resources and Waste Strategy, published in December 2018, sets out how we will preserve our stock of material resources by minimising waste, promoting resource efficiency and moving towards a more circular economy. 13. Please clarify the nature and scope of the Government’s commitment to matching or exceeding the ambition of the EU’s Ecodesign standards, made in the Resources and Waste Strategy in 2018. For example, will it cover the expanded range of sustainability char acteristics (beyond energy efficiency) and product groups in the EU’s new sustainable products policy? Please explain in which product groups and standards the Government is planning to exceed the EU’s standards. The existing EU Ecodesign legislation will be retained in UK law at the end of the Transition Period and provides the framework for regulating across a wide range of energy-related products. These extend beyond energy efficiency and cover all phases of a product’s lifecycle, including material consumption, emissions, pollution, waste generation and possibilities for reuse, recycling and recovery of materials and/or ener gy. The Government plans to consult later this year on new ecodesign requirements for energy-related products in the UK, which reflects what the UK had previously agreed at EU level as a Member State, with a view to introducing legislation from 2021.
BEIS has also recently published a call for evidence on how to improve the efficacy of ecodesign and energy labelling policy. Through the Environment Bill, the Government is also seeking powers to enable regulations to be made that expand the application of ecodesign principles to non-energy related products (such as textiles and furniture), as well as resource efficiency product information , labelling schemes and Extended Producer Responsibility. Priority product groups will be selected on the basis of the evidence and the Government will consult before regulations are made. 14. Will the Government consider introducing an additional target that includes the economic viability of processing as a factor? The Government has committed to introducing a number of measures aimed at increasing the supply and quality of materials for reprocessing which will contribute to increasing the economic viability of reprocessing. These include Extended Producer Responsibility for packaging as well as higher packag ing waste recycling targets, consistent recycling collections for households and businesses and a Deposit Return Scheme for drinks containers. In addition, the tax on plastic packaging with a recycled content of less than 30% will help drive demand for recycled plastics. Mandatory recycled content and boosting markets for secondary raw materials 15. Given the success of the Government’s plastics tax and the EU’s policy in this area, have you considered introducing targets for recycled content, beyond th ose already We will explore all options to increase the resource efficiency of the products we make. Where it makes sense to do so we would consider requiring minimum recycled content. 16. Does the Government recognise the risks of not moving quickly to promote markets for secondary raw materials, in light of the EU’s proposals? What steps are you taking to secure the UK’s role in those markets? There are a number of measures in the Resources and Waste Strategy which will promote markets for the use of secondary materials. The Office for National Statistics are leading work on the National Materials Datahub project which will seek to improve the quality of data we have of materials in the system/UK and create visibility of these materials, subject to We are seeking powers through the Environment Bill which will enable the Government to mandate the provision of information on the material content of a product which would enable reprocessing businesses to source relevant products, including those with cri tical raw materials. The Government has announced that from April 2022 it will introduce a world - leading new tax on the production and import of plastic packaging with less than 30% recycled content. This will stimulate the demand for recycled plastic and the market for secondary Digital product passports and a European Circular Dataspace 17. Has the Government considered the implications of the EU’s digital product passports and the European Circular Dataspace for the UK’s policy and businesses? Please provide an update on the funding and development of the National Materials We are seeking powers through the Environment Bill that would enable us to mandate the provision of information on the material content of a product. Should government decide to do so, this will enable the introduction of ‘product passports’. The Office for National Statistics are leading on the National Materials Datahub project. As far as we are aware the project is awaiting confirmation of funding to take it to the next development stage which is a two year ‘research’ phase. 18. Will the Government be assessing how these proposals [specified in the letter] may impact on UK farmers who are exporters, and their relevance to the UK -EU future We will continue to monitor major policy developments, such as the EU’s Farm to Fork strategy, in all our major trading partners. Each such development may have an impact on exporters, including farmers, and form part of the substantial change to our econ omy as we leave the EU. No single model or single number attached to a single scenario can ever capture the full complexity of that change. However, we will continue to keep Parliament informed with appropriate analysis at appropriate times in a way that does not impede our ability to strike the best deal for the UK. Reducing the use and risk of pesticides 19. The Commission’s Green Deal Communication refers to a need to reduce significantly the use and risk of chemical pesticides, and the Farm t o Fork Strategy includes a target relating to pesticides. Will the Government be assessing the impact of the EU’s pesticides measures on UK farmers exporting to the EU, including if they result in different requirements to those in UK regulations? The Government supports measures to reduce the risks from the use of pesticides and is developing its own approach. We will certainly want to assess the impacts on trade and on UK farmers of any major changes to EU pesticides legislation and policy. 20. In February 2019, the Government said that it would undertake a broader review of pesticides policy. What is the status of this review? Will the Government be considering if measures to reduce the use or risk of pesticides are necessary, in light of the EU’s policy announcement? The Government is continuing to develop its approach to pesticides within the broad objectives set out in the 25 Year Environment Plan. These objectives include the further reduction of risks and we would also expect to see an overall reduction in use. The National Action Plan for the Sustainable use of Pesticides will be published for consultation later this year and will detail our plans, including work towards greater uptake of Integrated Pest Management (IPM) at a whole farm level. Innovation – new genomic techniques, innovative food and feeds 21. We recommend that the Government closely monitor the EU’s policy discussions on these two areas [new genomic techniques, innovative food and feeds] and considers carefully the implications of different policy options. Please update us on your initial view of the EU’s proposals and on the UK’s policy intentions in these areas.
Defra are responsible for defining what are GM products. If new genomic techniques are to be regulated outside of the GM regulatory framework any foods produced by such technology will still require authorisation prior to being permitted on the market and this will entail a thorough food safety risk assessment. Similarly, for novel foods the FSA will maintain a robust food safety assessment system and developments in innovative foods would remain subject to pre-market food safety authorisation for consumer protection and reassurance. On a different area of innovation, the Commission’s Green Deal Communication proposes to “launch a process to identify new innovative food and feed products, such as seafood based on algae” and the Strategy provides further detail on measures in this area. The AICC told the Committee that “we should be open to all types of innovation in UK food production and in our diets, but not at the cost of damaging or restricting the domestic production of our basic food supplies, to overall UK food security or to public health”. Achieving the net zero target is a priority for Government, and we are scoping policy options through the Agriculture Bill, our future farming policy, the National Food Strategy and the 25 Year Environment Plan, all with the aim of enabling farmers and land owners to optimise sustainable food production and reduce emissions from agriculture. We will continue to monitor and support new developments in sustainable animal feeds including such alternatives as seaweed, algae, insect protein and the repurposing of surplus food for the

Farm to Fork and the UK-EU future relationship negotiations 22. The Committee shares the view that tariff -free trade in agricultural products with the EU is vital for the UK farming sector. We urge the Government to keep in mind the consequences of failing to sec ure this through an agreement as it conducts the negotiations with the EU. In your view, is the EU’s Farm to Fork strategy compatible with tariff-free agricultural trade between the UK and EU? Our position remains that we want a free trade deal, based on friendly cooperation. The UK is a significant importer of food and other goods, and avoiding tariffs should be beneficial to both sides, given our shared commitment to high regulatory standards. The EU’s Farm to Fork strategy does not alter that assessment.