Proposals for a UK post-Brexit energy landscape and relationship with Europe seem somewhat thin on the ground, apparently comprising little more than a letter from company CEOs including some of the ‘Big Six’ energy suppliers simply calling for the development of a “comprehensive Climate and Energy Chapter” in the negotiations, a report from the British House of Lords mainly calling on the government on how it will address various issues, and from the industry itself a short report from the trade association Energy UK presenting priorities for a future framework agreement.
Now Eurelectric has made a second foray into the debate from the European perspective, setting out its position on a number of fronts alongside its intended main message of calling policy makers to minimise “any possible disruption on the energy and climate agenda.”
Previously the association, which represents Europe’s electricity industry, had said that the UK should remain aligned with the wider European energy market, with its continued membership of the internal market crucial to the development of the region’s renewable integration.
“Eurelectric urges policymakers to pursue the close collaboration between the EU and UK on the energy and climate agendas.” says Eurelectric Secretary General Kristian Ruby in a statement.
“Whatever form the future agreement between the EU and the UK will take, it must focus on the following areas: the Internal Electricity Market; including the trading and transmission framework created via the network codes and guidelines, the Single Electricity Market, the EU energy and climate frameworks, the Industrial Emission Directive, the EU Emissions Trading Scheme (ETS), the nuclear energy sector and the financial regulations that also frame energy commodity trading.”
The fact that the UK is inexorably tied to Europe through over 8GW of interconnections, both existing and under development, with both the opportunities but also obligations these present, should serve as an obvious starting point to any proposals.
Eurelectric apparently also take this view, stating in its first message point that in view of the mutual benefits and the importance of energy for the EU and the UK in powering their economies and societies, collaboration should continue as closely as possible by supporting continued wholesale energy market integration, cross-border interconnection and efficient energy trading arrangements between the parties post-Brexit.
Eurelectric is of the view that UK actors should continue to be full members in EU industry bodies such as the energy regulators’ ACER, the transmission operator organisations ENTSO-E and ENTSOG, the new distributor entity and the financial and nuclear authorities ESMA and ENSREG at least for the duration of the transition period and to the largest extent possible thereafter. This is to prevent any regulatory divergence or oversight that could create unnecessary barriers to cross-border trade.
Eurelectric supports the UK’s continued participation in infrastructure schemes including the Trans-European Networks for Energy, Projects of Common Interest and the Connecting Europe Facility, assuming that financial contributions continue to be made to the relevant programmes.
Eurelectric says it also supports the continuation of the island of Ireland energy market and calls for all parties to find a political solution that preserves the current market integration and cooperation.
Carbon emission reduction
Given the role of the energy sector in decarbonising the economy and reducing carbon emissions, Eurelectric says it would welcome the UK continuing to collaborate towards the EU’s energy and climate goals. Eurelectric also would support the UK’s continued participation in the ETS.
Eurelectric also highlights the importance of appropriate political arrangements being put in place across various fronts. One of these is the Euratom Community in order to preserve the current benefits and avoid disruption across the nuclear fuel cycle. Another, based on the UK’s significance as a gas hub, is to maintain the gas market arrangement as close as possible to the current one.
A further one is a future framework to ensure a consistent interface between financial and physical commodity markets. A common regulatory approach in the UK and EU is recommended to avoid regulatory arbitrage and to ensure fair competition between market participants. This is particularly relevant as in wholesale energy there is already a pan-European market comprising both UK and the continent, Eurelectric points out.
Finally, an arbitration mechanism will be needed to ensure that both the EU and the UK abide by any new agreement. Eurelectric says it supports clear, business oriented arrangements. The dispute resolution mechanism needs to be timely, independent and enforceable.
An energy roadmap
While the proposals are largely focussed on Europe’s interests, they are nevertheless very much in line with those from Energy UK, which was also a signatory to the CEOs’ letter.
Given this high level of agreement between the respective sectors on the two sides of the Channel, the prospect of achieving an energy agreement is good. The UK energy sector should now take the lead and set out a detailed roadmap, which the government can adopt in its negotiations. Moreover, it would give a degree of certainty on policy in areas such as energy efficiency, which currently are based on EU directives.