Brexit: Chatham House spells out complexities of UK’s energy relationship with EU


Of all the dire warnings of doom bellowed in the unflinching faces of ‘Brexiteers’ over the past 12 months, the very fact that tangibly extricating the U.K. from the ties that bind it to the EU will prove a difficult logistical undertaking for which Britain lacks the know-how and manpower has generally been lost on those determined for Brexit.

But a new report by independent policy institute Chatham House has spelled out in clear terms the effort required to unpick the U.K. from its energy obligations, collaborations and partnerships currently in place with the EU.

The key aim for both parties – a post-Brexit U.K. and the newly trimmed EU27 – is to ensure a common ground remains feasible, said the Chatham House researchers, who outlined a summary of issues that require immediate attention in the U.K.

Maintaining the U.K.’s integration into the European Internal Energy Market (IEM) post-Brexit is a key objective if Europe is to continue to enhance its geopolitical security, energy independence and maintain a competitive pan-European energy market. To stay inside the IEM, the U.K. will have to comply with all current and future EU energy market rules as well as some EU environmental legislation. At the current time, it is unclear what the appetite is within Downing Street for this to happen, but an active presence in Brussels and at European energy forums would be a must in order for a “constructive and informed engagement” with the EU, said Chatham House.

If the U.K. is unwilling to abide by the jurisdiction of the European Court of Justice (ECJ), and if there is no new EU-U.K. energy compliance mechanism, it is likely that the U.K. will be forced to leave the EU Emissions Trading System (ETS), which has been instrumental in both Britain’s and the EU’s fight against climate change. In the absence of ETS membership, Chatham House recommends that the U.K. implements its own emissions trading scheme – an undertaking that would be “complicated and time-consuming” – or build on the carbon floor price and introduce a carbon tax.

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Existing energy cooperation that extends to physical interconnectors – physical pipes and cables that transfer energy across borders –should also be maintained as smoothly as possible if the U.K. and EU is to further decarbonize its energy system and minimize the costs of operating low-carbon electricity systems, Chatham House added.

Outside of the EU, there is a risk that the U.K. will no longer be eligible for the ~$2.9 billion in loans and EU funds from the European Investment Bank (EIB) that it currently benefits from for energy-related infrastructure, R&D and climate change mitigation each year. “Replacing these sources of finance will be necessary to ensure that the U.K.’s energy sector remains competitive and innovative,” said Chatham House.

In conclusion, the researchers stated: “It is in both the U.K.’s and the EU27’s interests for the U.K. to continue to collaborate on energy policy with EU and non-EU member states. The best way to achieve this would be to establish a robust new pan-European energy partnership: an enlarged European Energy Union. In particular, such a partnership could offer a useful platform for aligning EU policies with those of third countries, including the U.K., Norway and Switzerland, while allowing them to fully access the IEM and push forward common initiatives.”

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