What Does the Brexit Mean for the UK’s Energy Future?

What Does the Brexit Mean for the UK’s Energy Future?

The U.K. voters’ decision to exit the European Union on the 23rd of June this year sent shock waves through world markets after its announcement, and the energy markets were no exception. Now that the news have settled somewhat, experts try to determine which implications the departure of the EU’s second-largest economy could have for the Paris climate accord and the UK’s energy sector in general.

The consensus from British renewable energy advocates and analysts is that while the Brexit will not completely derail the EU’s efforts to reduce carbon emissions, the future of the UK’s renewable energy sector is now very far from clear.

Under Prime Minister David Cameron as well as his predecessors, Britain positioned itself a leader relating to energy policy matters and was a great supporter of renewable energy. Several features of EU-wide energy policy in the last decade were – at least partly – modeled after U.K. legislation.
But now the direction the UK’s energy sector will take is uncertain. The successful leave campaign was led by several political figures openly not in favor of tackling climate change. The Brexit’s figurehead Boris Johnson once questioned global warming and likened wind farms to a “hideous Venusian invasion”. And the examples of important figures of the campaign not in favor of supporting renewables goes on, the campaign’s strategy committee included Lord Lawson, founder of the Global Warming Policy Foundation think-tank which says the science of climate change is “not yet settled”.

It seems, none of the contenders to replace David Cameron could be considered advocates of renewable energy. Now that the UK will be freed from its obligations under EU treaties, with an enormous amount of disarray in its political landscape, the Leave victory raises questions about whether years of cross-party consensus on the need to combat global warming may unravel.

Despite of where one stands in the referendum debate, the fact is that the UK’s energy policy was always made in London, not in Brussels.
Nevertheless, the country’s renewable-energy targets for 2020 were in doubt by many even before the vote and leaving the EU could make them almost unreachable, even if backed up by support from UK politicians.
In an effort to decrease the markets rising uncertainties, some ministers have argued that the UK is still legally bound to help meet EU-wide climate and energy targets, requiring 20 per cent of the economic zone’s energy to come from renewables by 2020.
But once the UK has left the EU it may no longer be bound to such goals, let alone newer targets decided on in 2030 that affirm the politico-economic union’s commitments to the Paris climate accord.

According to the Financial Times, Amber Rudd, the energy secretary and a prominent Remain campaigner, told a climate change conference that the existing government was still committed to all pre Brexit policies, even if the vote made it harder for the UK to tackle global warming. She pointed to the cross-party consensus vote in favor of the UK’s 2008 Climate Change Act, which commits the UK to an 80 per cent cut in greenhouse gas emissions by 2050.

Energy markets throughout the rest of Europe and remaining EU member states are currently moving in a very different direction compared to the UK. EU countries are working towards an internationalized energy market, resulting in the fear that the UK’s post-Brexit energy sector will be left in the continent’s corner.

For nearly two decades the EU has been moving slowly but steadily toward market unification, building international transmission lines and liberalizing rules on foreign energy suppliers working in other EU countries. A continent-wide grid is critical to integrate large amounts of renewable energy into the system.

Major high-voltage subsea interconnections between Scandinavia, Northern Europe, and the U.K. were large components of the unification, but without Europe’s second-largest economy and third-largest energy market in terms of electricity generation, that progress is now atilt.
The EU’s green energy companies have been careful to downplay concerns about the sector in the UK until now, which last year had a market value of £16bn and employed close to 117,000 people, according to the Renewable Energy Association.

The UK could follow the path of Norway, which is not an EU member state but has agreed to be bound by the politico-economic union’s climate targets. But the fate of these rules, like all others based on EU policies, is now very far from clear.

Judith Gruendler, 07. July 2016, 16:51

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