By Antony Froggatt
Access to clean and affordable energy is a vital component of any modern society.
But little attention was given to the implications of Brexit for energy during the EU referendum.
The UK, Scotland and the EU-27 face important choices that could determine the extent of short to medium-term energy disruption from Brexit and the degree to which future co-operation in this field might be possible.
Article 50 specifies that Brexit negotiations must be completed by April 2019, two years after the UK’s formal notification to leave.
In addition, the European Commission has said three issues (the financial or ‘divorce’ settlement; the fate of EU nationals in the UK and visa-versa; and the border between the Republic of Ireland and Northern Ireland) must be settled before formal discussions can begin.
What the agreement, including on energy, will look like is yet unclear.
The UK Government has said Britain will be leaving the European single market, but a February 2017 white paper stated that the UK was “considering all options” on the energy relationship with the EU.
Maintaining reliable and affordable emergy, and in particular electricity supplies, is essential. for society and the economy.
The UK’s decarbonisation will also need changes to the energy system in the EU, which will require significant and harmonised policy intervention across the whole of Europe.
The UK is linked to both the Irish and continental electricity markets through 3 GW of electricity interconnection. The UK’s net electricity imports are expected to rise to 80 TWh in the mid-2020s.
This includes a proposal for an electricity cable between Scotland and Norway. Britain had also planned to further harmonise its operating regimes with those of other member states to enable electricity cables or interconnectors between countries to operate with more flexibility. Increased interconnection will also be necessary. to accommodate the increasing deployment of variable renewables such as solar and wind in an efficient and cost-effective manner, otherwise known as market coupling. It is unclear what will happen post-Brexit . Remaining part of the market coupling system may require adherence to common European rules and operational codes, which the UK will no longer have as much of a say in.
Energy access and trade is of course vital for Scotland’s fossil fuel industry as it receives gas from Norway – both directly and indirectly – via three pipelines. Three of the UK’s four major oil pipeline terminals are also in Scotland where they receive oil both from North Sea fields and Norway. The main point of concern for companies focused on production is the oil price and the impact of Brexit on currency exchanges, particularly since production costs in UK waters are already relatively high.
The midstream and downstream sectors – ie processing, distribution and marketing – could also be affected. At the heart of a pragmatic energy Brexit deal lies the need to maintain the Single Electricity Market (SEM) which operates across the whole of Ireland., is jointly operated by the two jurisdictions and regulated by the Single Electricity Market Committee (SEMC) The Government’s potential pact with the DUP decision by the new minority Conservative government to aim at a voting agreement with Northern Ireland’s Democratic Unionist Party may help ensure that its importance is not overlooked during the negotiations. As in their manifesto, the DUP gave their support for ‘continued progress on the Integrated Single Electricity Market and the North South Interconnector’.
Nuclear energy – plenty of Brexit challenges It may come as a surprise to some that t The UK will be leaving the Euratom Atomic Energy Community. Britain will need to develop or enhance its own nuclear institutions.
Common energy issues between the UK and EU-27 include the import of liquified natural gas to the UK, bound for the continent. But other countries will also have to step up their support for climate-change policy post-Brexit. Consumers and policymakers will have to be told of the mutual benefits of a strong energy relationship as early as possible, as well as think of new ways to co-operate in a post-Brexit world.
Antony Froggatt is Senior Research Fellow in Energy, Environment and Resources at Chatham House.
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