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UK House of Lords publishes report on Brexit and energy security

The UK House of Lords’ EU Energy and Environment Sub-Committee recently published its report on Brexit and the implications for the nation’s energy security.

The Energy Institute had (EI) submitted a response to the Sub-Committee’s Brexit: energy security inquiry in September last year, and the resulting report cites the EI several times – on the importance of interconnectors (paragraph 71); the concerns raised around tariffs being levied on goods and services critical to the energy sector (paragraph 84); and on the need to ensure ongoing collaboration with EU members on research and development projects (paragraph 104).

Individuals and businesses across the UK depend on a reliable and affordable supply of gas and electricity. In recent years, the UK has achieved such a supply in partnership with the EU, working with other Member States to make crossborder trade in energy easier and cheaper. However, having played a leading role in developing the EU’s Internal Energy Market (IEM), the UK is now on course to leave it. The House of Lords’ inquiry revealed strong support across the energy sector to continue to participate in the IEM, but this is unlikely to be possible if the government pursues its policy of leaving the Single Market and the jurisdiction of the Court of Justice of the European Union.

The UK will need to continue to trade energy with the EU in order to meet demand, but if such trade takes place outside the IEM it is likely to be less efficient, potentially raising costs for consumers. In addition to changing the UK-EU trading relationship, Brexit raises a number of other potential challenges to the UK’s energy security. For example, the UK’s use of nuclear material is currently enabled by its membership of Euratom. However, the UK will be leaving Euratom as well as the EU and, if the government does not replicate its provisions by the date of departure, the UK could be temporarily unable to trade in nuclear goods and services, including importing nuclear material, as a result.

The government is taking measures to avoid this worst-case scenario. However, concerns have also been raised over whether the Office for Nuclear Regulation will be able to recruit and train sufficient inspectors in time, and whether it will be possible to build new nuclear generation sites, such as Hinkley C, if access to specialist EU workers is restricted.

Meanwhile, EU investment has made a significant contribution to constructing and maintaining a secure energy system in the UK, but the UK’s ability to draw on these investment sources post-Brexit is uncertain. It will be particularly important to replace the EU’s funding of interconnectors, in order to ensure there is sufficient infrastructure to enable future energy trading. The experience of other countries suggests that the UK is likely to have little influence on EU energy policy post-Brexit. This will be particularly concerning in the event the UK continues to participate in the IEM, given the corresponding requirement to comply with current and future relevant EU legislation. Contributors to the inquiry highlighted many benefits of the UK’s current energy relationship with the EU, and the Minister acknowledged these benefits when he stated his hope that Brexit would result in as little change as possible. It remains unclear, however, how this can be achieved, without remaining in the Single Market, IEM and the other bodies that develop and implement the EU’s energy policy. The report calls on the UK government to clarify its post-Brexit energy policy in the event the UK no longer participates in the IEM.

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