Energy MPs at Westminster have raised the alarm over an ‘under-whelming’ lack of information from the UK Govt over the risks that a hard Brexit poses to Britain’s role (or not) in the EU’s internal energy market and its emissions trading system.
In their original MPs on the parliament’s BEIS Committee report covered a range of issues relating to the UK’s future energy and climate change policy as the UK leaves the European Union, including Euratom, the European Internal Energy Market, the EU Emissions Trading System, and energy efficiency and consumer protection.
The BEIS Committee has now published the Government response to the Committee’s report on Leaving the EU: negotiation priorities for energy and climate change policy.
Rachel Reeves MP, Chairman of the Business, Energy and Industrial Strategy Committee, said: “Our Report highlighted a number of areas on energy and climate change policy which the Government should address as we leave the European Union.
“While their response does include some encouraging signs, such as a commitment to working to ensure the continuation of a Single Energy Market for Northern Ireland and Ireland, the Government needs to provide far greater clarity on energy and climate change policy to ensure that industry can plan for the future.
“There is precious little from the Government on two vital areas for our energy and climate change future – the EU Internal Energy Market (IEM) and the EU Emissions Trading System (ETS). The response has scant detail on the UK’s future relationship with the EU IEM or how we may participate in the EU ETS.”
Coincidentally, the UK government opened a short (16-day) consultation on bringing forward the 2018 compliance deadlines for UK operators in the EU ETS to before the date of EU Exit on 29 March 2019.
Otherwise, emissions allowances issued by the UK in 2018 could not be used for compliance.
The consultation closes at 11:45pm on 24 November 2017. Click here to send a reply:
There is increasing talk of the possibility of the UK leaving the EU without a trade agreement. Failure to reach agreement by 19 March 2019 (‘Brexit day’) will impact on how goods and materials (goods) are dealt with at the UK border.
The Institute of Government has analysed the likely consequences of a hard Brexit at the border and identified a number of business-critical issues.
Wind energy is the cheapest form of new power generation and has the potential to provide 30% of Europe’s power by 2030 according to the Brussels-based Wind Europe industry association.
So what are the issues and how might businesses plan for a hard Brexit?
We (don’t) have the technology
For customs, HMRC rely upon a 30-year old IT platform that should have been retired years ago. It can process about 60 million declarations a year but it is estimated that on a hard Brexit, there will be an additional 200 million declarations a year. A new IT platform is due for delivery early 2019 but even then it will need to be reconfigured to deal with a hard Brexit since it was scoped on the assumption that the UK remains in the EU.
What about the Private Sector?
A hard Brexit would require exporting businesses to start filing export declarations.
At the moment all they generally need to do is complete a VAT declaration.
On a hard Brexit it’s estimated that about 180,000 traders, from SMEs to large organisations, will need to make customs declarations for the first time – a fairly detailed process in itself. But businesses are in a bind. In the absence of any clear framework for new trading arrangements, they don’t know what to plan for.
What’s in your supply pipeline?
A hard Brexit will almost certainly increase the need to carry out checks at the border. That will require more physical space at ports for customs offices, borders posts, lorry parks and warehouses.
In reality there is not enough time before Brexit day to make those changes. And it is not only the ports in the UK that will have to adapt; ports in France such as Calais and Dunkirk will have to be adapted, since they will also have to implement a new regime for goods arriving from or being shipped to the UK. This could result in the nightmare scenario of lorries queueing for miles at the borders.
There is talk of creating customs clearance depots away from the ports but these too will require physical space to be identified, permissions obtained and infrastructure developed. It seems hard to believe that this can all be in place by Brexit day.
What does it mean for business?
According to the Institute of Government paper, there is a real fear that if there is a hard Brexit, UK ports will slow down to a snail’s pace.
If your business is one that exports to the EU or relies upon imports from the EU, then there could clearly be very significant disruption.
What should my business do at this stage?
Whatever the political sentiment, contingency planning is a sensible precaution and you should now at least make sure you have visibility where your business sits in any export or import supply chain and consider what your options may be.
Brexit-based questions you may want to ask about your business (and know the answers) include:
- Does your business export goods to the EU?
- Do you know whether any goods you sell are incorporated into goods that are exported (ie. part of an export chain)?
- Are there alternative domestic buyers?
- Does your business rely upon goods imported from the EU?
- Do any of your suppliers rely upon products imported from the EU? Are there alternative UK based suppliers?
- Does your business rely on moving goods through the EU to a destination outside the EU? Do you have contractual exposure if there’s a hard Brexit?
- What about new contracts that you are entering into – how can you protect yourself legally?
Reneweables After Brexit: Keynote conference overview
By Prof. PETER CAMERON
In a relatively short time, renewable energy has become an integral and growing part of Scotland’s energy mix.
In a country with just 8% of the UK’s population, Scotland accounts for around a quarter of UK capacity and over two-thirds of renewable power in the devolved administrations.
This underlines how far Scotland has come from dependence on oil and gas production, and how much it has contributed to meeting the UK’s carbon reduction targets.
It is rightly recognised as a success story, and is a global leader among the countries determined to make the transition to a low carbon economy. Yet, looking closer, the fragility of this trend is apparent.
Scotland’s renewable energy sector is intimately linked to the rest of Europe in its corporate ownership links, the sale of its power and the purchase of its equipment and infrastructure.
Changes in the UK relationship to Europe will inevitably impact on Scotland whatever the form of Brexit and/or Scotland’s political future.
Scotland has already dealt with considerable policy uncertainty due to the current structure of devolution; as a part of the UK, the Scottish Government has only some devolved powers over renewable energy with the rest reserved to the UK Government.
This has led to increasing divergence between Scottish and UK policy, with Scotland arguably more aligned with the EU as a result.
With Brexit, all the policy-makers – at Holyrood, Westminster and Brussels – will have to review their commitments to renewable energy but, just as importantly, to subsidies, infrastructure and tariffs.
Investors – from the USA to China – will be weighing their options very carefully in light of the withdrawal arrangements. Contracting, supply chains, subsidies, financing and trading will all be affected. Uncertainty about costs will soon become a fact of life for the sector.
Yet policy support cannot simply dissolve into the mist. As the Paris Agreement on climate change takes effect, the commitments to the sector will continue from the EU, from Westminster and crucially from the Scottish Government in Holyrood.
To date, their policies have helped to change the economics and acceptability of renewable energy in ways no-one could have expected 10 years ago.
- So, what should they be doing now to mitigate this uncertainty?
- What form should further support for the sector take when EU support mechanisms cease?
- What is the likely trend of EU policy on renewable energy as it plans to introduce a series of new measures across the member countries?
- Will the EU be negative or retaliatory or will it be cooperative?
One key issue will be the degree of continuity or change evidenced by the UK renewables sector going forward.
Renewables AFTER Brexit is not a meeting to discuss the form of Brexit or the pros and cons of it.
Rather, it is a sharing of knowledge to inform our conversation about Scotland’s energy future at a time of energy and political transition; a time when the next round of policy choices may well determine what the future will look like and indeed whether it has a future.
We invite you to join us in shaping the future conversation about Renewables After Brexit in Scotland.
Professor Peter Cameron, PhD FRSE FCIArb
Director, Centre for Energy, Petroleum and Mineral Law & Policy
School of Social Sciences, University of Dundee
Dundee University and its energy centre – the Centre for Energy, Petroleum and Mineral Law and Policy or CEPMLP – is part of this transition story. Set up at the start of the North Sea oil and gas boom, the Centre celebrates its 40th birthday in 2017. It has been reorganising its course curriculum to reflect the new energy mix, and prepare its students to lead in a more diverse and complex multi-polar energy world.
This event is likely to be the key renewable energy conference of the year. The following UK and EU energy and industry experts are also due to speak at Renewables AFTER Brexit
- Jorge Vasconcelos, Council of Europe Energy Regulators and EU Energy Roadmap 2050 Advisory Group
- Munir Hassan, Head of Clean Energy, CMS Cameron McKenna; (“Practical steps and considerations for renewables projects and investors in preparing for Brexit”)
- John Campbell, QC
- Dave Pearson, Director, Star Renewable Energy
- Mark Sommerfeld, Policy Analyst, Renewable Energy Association
- Graham Provest, Managing Director, Absolute Solar and Wind Energy
- Ian Dunsmore, Scottish Water Horizons
- Alex Salmond, the former First Minister of Scotland
- Anne McCall, Director, RSPB Scotland
- Dr. Leonie Reins, Tilburg Institute for Law, Technology & Society in The Netherlands: (Brexit and the implications for (European) energy and environmental law & the EU Emissions Trading Scheme)
The link below gives an outline of the conference programme. Please note that this is subject to change.