Now that British Prime Minister Theresa May and the European Union have reached a deal on initial Brexit issues around the status of European citizens living in Britain and British citizens living in the EU, keeping the border between the Irish Republic and Northern Ireland open, and a transfer of some $50 billion to the EU over several years as part of the divorce settlement, big issues remain. Among them are several difficult energy decisions.
The final round of negotiations is likely to be difficult. It took nine months to reach last Friday’s agreement. It is still not clear whether there will be a hard “full English” Brexit or a soft “continental” Brexit. For now, it looks like it might be a dog’s Brexit.
British right-wing hard liners, including the United Kingdom Independence Party, are furious about the decision to allow European citizens to stay in Britain with the protection of UK courts (and also with EU courts). They want to Euros to go home, immediately. UKIP leader Henry Bolton blasted Friday’s deal as “a total surrender to the European Commission….”
The Labour Party, to Mays’ left, has denounced May, claiming, in the words of Labour leader Jeremy Corbyn, that the Brexit talks have been “a shambles.” May’s Conservative Party is divided about the course of the negotiations.
The hard decisions still on the negotiating table include the knotty issues of trade, and significant issues about Britain’s participation in many European-wide energy institutions and projects.
At the top of the Brexit energy agenda is whether the UK will continue as a member of the EU’s Internal Energy Market. An analysis by Global Risk Insights notes, the UK is now “part of the Internal Energy Market (IEM) which enables harmonized, tariff-free trading of gas and electricity across Europe.” Britain played a major role in creating this market, which has resulted in lower energy prices across the EU, including the UK.
As a practical matter, said the Guardian newspaper, “At least eight cables are being laid under the sea of through the Channel Tunnel to trade power between the UK, Ireland, France, Belgium, Denmark and Norway, tripling the existing number of UK interconnections.” These projects represent billions of pounds of investment and the May government hopes to continue them, and others on the drawing board.
Another important Brexit energy issue is whether the UK will continue to be a member of the EU’s Emissions Trading System, the European approach to reducing greenhouse gas emissions. The Guardian observed that the May government has given no clues as to whether it will remain in the emissions market. The newspaper said, “Some experts think the market’s links to EU institutions may mean an exit is inevitable. Asked if the UK had anything in the policy pipeline to replace the Euro trading system, Nick Hurd, May’s climate minister, said, ‘We’re analyzing it, as you’d expect us to do,’” clearly a dodge.
How would Brexit impact the UK’s renewable energy policy? A Norton Rose Fulbright analysis said that getting out of the EU would release the UK “from its renewable energy targets under the EU Renewable Energy Directive and from EU state restrictions, potentially giving the UK government more freedom both in the design and phasing out of renewable energy support regimes.”
Another wrinkle in the UK market picture under Brexit is the impact on Scotland, which wants to remain in the EU, and hopes to push another referendum to become independent of Britain and stay in the EU. Scotland has put a lot of investment into wind generation, and has doubts about London’s support for these projects. The UK’s Business Insider website quoted former Scottish First Minister Alex Salmon, at a “Renewables after Brexit” conference at the University of Dundee this month, that “Scotland’s renewable potential is unsurpassed in Europe, but Brexit offers fundamental challenge to realising that opportunity. We are leaving the European Union at precisely the time when energy policy is evolving into a more substantial form.”
— Kennedy Maize