Failure to collaborate with the EU post-Brexit on energy and climate policy could raise energy costs for the UK, hitting consumers and unnecessarily complicating UK carbon emissions reductions. That’s according to the Green Alliance, which is calling on the UK government to continue to co-operate with the EU on energy and climate post-Brexit, claiming that it is “strongly in the national interest, particularly in relation to the growing low carbon economy.”
The independent think tank says that this sector already represents two to three percent of the UK’s GDP, and over 55 percent of trade in low carbon technology is with the EU.
Negotiating Brexit, from think tank Green Alliance, highlights Brexit risks and proposes establishing a “Paris co-operation track,” using the Paris Agreement on climate change, an international mechanism ratified independently by both the EU and the UK, as the basis for future collaboration with the EU on climate and energy.
According to the Green Alliance, the five main areas at risk are:
• Electricity interconnection with the EU which meets seven per cent of UK’s electricity needs and keeps consumer energy bills down. National Grid’s “two degrees” scenario for UK electricity sees interconnectors providing 17 percent of UK peak demand by 2023. A doubling of existing interconnection could save up to £1 billion a year in reduced wholesale prices by 2020, but leaving the EU’s internal energy market would put this at risk.
• Northern Ireland’s energy integration with the Republic of Ireland. If the UK leaves the internal energy market, it will disrupt the £6 billion (US$7.87 billion) Irish energy market.
• Favorable finance terms from the European Investment Bank. Current loans from the EIB are worth £8 billion (US$10.5 billion), more than double the finance previously available from the Green Investment Bank for UK energy infrastructure over the past five years. This favorable finance has underpinned the success of the UK offshore wind and electric vehicle sectors.
• Maintaining product standards and, in particular, vehicle standards which UK car manufacturers must comply with, as they export 80 percent of their vehicles, half of EU consumers. Divergence in a vehicle and other product standards would undermine UK exporters and risks turning the UK into a dumping ground for inefficient and shoddy products that aren’t fit to be sold in the EU.
• Delivering the carbon budgets where 55 percent of required emissions reductions to 2030 are expected to be delivered through EU-derived legislation with risks to effective transposition and future compliance and governance.
The study identifies several actions for the UK including to reconsider the hard line on the role of the European Court of Justice (ECJ), which governs the shared energy and climate rules across the EU and countries in the wider Energy Community.
“The UK’s concerns about the ECJ should not lead us to forego the benefits of high levels of cooperation: greater energy security and faster and cheaper decarbonization. Several options are available to address potential concerns over the role of the ECJ,” says the Green Alliance.
It suggests that an “association agreement” with the EU is a potential alternative, which would minimize the ECJ’s role and could achieve the necessary outcomes.
It also wants to retain access to the internal energy market for electricity and gas to maintain barrier-free trade. The internal energy market and its rules and principles have served British interests well, according to the think tank, and Britain should negotiate continued participation in the market and the technical bodies proposing the rules.
The Green Alliance also urges the UK to stay aligned with EU product standards and environmental principles as a significant divergence from these could undermine UK competitiveness and the ability to trade in low carbon goods and services, as well as weakening health and environmental safeguards.
“Sustained cooperation will mean that the UK can continue to stand with the EU at the forefront of international leadership on climate. It will also maximize the benefits of low carbon trade with Europe and support the shared vision of long term energy security. Not least, it will secure clean and cheap energy for UK consumers,” says Chaitanya Kumar, Green Alliance’s senior policy adviser on low carbon energy, and author of the analysis.