Deal or No Deal – Brexit and UK Energy Policy
22nd March 2019 | Commercial Energy
The UK is due to leave the European Union (EU) on 29 March 2019. At this late stage there is still no certainty concerning the handling of the myriad interconnections and partnerships formed with the EU over the past decades. This article examines the most up-to-date evidence available on the likely impact on the UK’s energy sector of leaving with and without an agreement brokered between the UK and the EU.
Disentangling our shared policies and infrastructure has the potential to impact many aspects of the economy and the lives of people in the UK. The EU energy system is highly integrated, and the UK has fully participated in and often led the way in this integration. This suggests that there is little disagreement in what the economically-sensible end-point would be, given the chance and desire to negotiate one.
While a transition period would enable negotiation of a future energy relationship, in a no deal situation the UK would immediately leave the EU’s energy market, the Emissions Trading Scheme, and nuclear regulator Euratom. In the next two sections, we’ll examine what a negotiated energy relationship would look like and review the knock-on effects of severing ties to these institutions without a plan.
The proposed Withdrawal Agreement does not set out arrangement for the UK’s future relationship with the EU regarding energy markets or trading. It does guarantee that current trading arrangements (including those involving energy) with the EU will not cease until at least the end of the transition period at the end of December 2020.
Under a no deal Brexit the price of gas and electricity for consumers would likely increase because the UK would no longer be part of the IEM. The efficiency-increasing and cost-reducing measure that membership of the IEM provides would no longer be available in the UK.
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