The European Union has had a common climate policy since 2000, energy topics have been discussed jointly by all member states since 1996. Retrospectively the foundation of the European Community of Coal and Steel 1951 reached agreements on these questions.
EU directives were already implemented into British law so great legislative changes won’t be necessary after exiting the EU. The former Secretary of State for Energy and Climate Change Amber Rudd is taking over as Home Secretary in the May ministry. But also the many climate change sceptics among the Brexit supporters aren’t going to bring about a fundamental turn of the decarbonisation goals of Great Britain (80% CO2 reduction until 2050) under Rudd’s successor Greg Clark.
Nuclear power plants will profit from Brexit
This will be different to the future energy mix of the island. The former Minister of State for Energy Andrea Leadsom sees the expansion of renewables at its end. The renewables industry had become ‘a victim of its own success’. To avoid increasing energy prices the new government will implement its ambitious nuclear goals. Up to six new nuclear power plants could arise within the next years.
Furthermore, the UK has to increase its imports of natural gas to compensate the backup volatile renewables will need. But this requires a stronger cooperation with other EU member states. At the moment 51% of natural gas imports come through pipelines from the Netherlands, Belgium and Norway as well as a major part of the own production through the Frigg UK System from Scotland which could separate from England and join the EU later.
Same fate as Norway and Switzerland
As a consequence of that the UK, like Norway, has to abide by EU law if it wants to stay connected to the European natural gas market. But in contrast it won’t have any influence on how to design that market.
Of course this applies for all regulations made by the EU in its climate and energy policy which affect the UK directly or indirectly – especially when it comes to the electricity market. For some time past the EU further the European Energy Single Market to balance overproduction and regional booming demand in whole Europe. From this major project they hope for an increased competition and a better integration of renewable energies.
First the UK would be excluded from this single market as well. The Britishenvironmental think tank E3G has called for a fast binding agreement between the UK and the EU to preserve access to the Energy Union for Great Britain. The realisation of such an agreement could be difficult as the example of Switzerland shows. The EU refused to open the energy internal market for Switzerland as long as a more general agreement on all relations between Switzerland and EU is not signed. Something similar could happen to the UK.
Only large corporations would profit from decreased investment security
The missing investment security would have the biggest impact on the climate and energy policy of Great Britain. The markets are nervous already. It will take years to finish the negotiations for the Brexit. This will have negative effects on the financing of the supply infrastructure.
Although large corporations declared they will continue to invest and realise their projects. EDF Energy for example will build its planned nuclear power plants. Also big German energy suppliers E.ON and RWE reacted calmly on the Brexit. But especially for smaller, innovative companies, start-ups and energy cooperatives it will be much more difficult to find investors and political support for their projects.
Even the already planned power and gas lines from the mainland Europe are questionable because they are financed by EU subsidies – like many research projects as well. The natural gas imports could increase in price due to the negative development of the pound Sterling.
Impacts on the European Climate and Energy Policy
Brexit will also impact on the European Climate and Energy Policy. The EU would lose a market-liberal member who pushed vehemently for an opening of the whole European energy market. Great Britain as well was an important advocate for ambitious climate goals.
This could mean that less aspiring goals by the Central and Eastern European member states could gain in importance. Poland’s role especially could become more weighty in the EU, due to its current coal-friendly policy. Then again the UK was an opponent of a monitoring of the achievement of the climate and energy goals and in favour of a flexible system regarding the energy mix and energy efficiency which it had in common with Poland and other Central and Eastern European countries. Here there may be stricter control mechanisms enforced as proposed by Germany, Denmark and Sweden.
Should the UK also leave the EU emissions trading system British companies would rapidly sell their certificates. The price for these would decrease as the incentives for climate-friendly investments. The system being almost irrelevant already would finally collapse.
It will be at least two years until the final Brexit. Short-term changes will be the exception. But the UK should be well-positioned not to be isolated from the EU in climate and energy policy. But also the EU should be prepared for the upcoming challenges and should decide if non-members can be part of the Energy Union.