Scot-Govt rallies Welsh and N. Ireland assembly allies over ‘unacceptable risks’ of Brit-Govt energy Brexit from EU emissions trading scheme

The Scottish Government has raised the red warning flag over Brexit because of the ‘unacceptable uncertainty’ over the continuing role – or otherwise – of the UK in the EU emissions trading scheme.

The Scottish Environment Minister has teamed up with the Scot-Govt Minister for Keeping Scotland in the EU in a strongly worded attack on the Brit-Govt’s (silent) policy on remaining in the emissions trading scheme.

And they have demanded ‘immediate talks’ with the UK government – to which they also want counterpart Ministers from the Welsh and N. Ireland assemblies to be invited to.

In a joint letter from Climate Change Secretary Roseanna Cunningham and Mike Russell, Minister for UK Negotiations on Scotland’s Place in Europe, they warned British energy minister Greg Clark and Prime Minister May’s de facto deputy that:

“Given the size and value of the UK carbon market, and given that the ETS covers circa 35% of Scotland’s emissions – ‘we do not think this  <silent) policy> gives sufficient certainty to market participants planning future investments.”

Given that emissions trading is a policy matter devolved to Scotland’s parliament and government – and given the centrality of the ETS to meeting Scotland’s statutory climate change targets, Scottish Ministers first requested formal involvement in negotiations on the UK’s future participation in the EU ETS on 16 May 2017.

This was ignored by the Brit-Govt.

Britain’s Big Six energy providers – which include Scotland’s Big Two (SSE and Scottish Power) – have already announced that they want to remain in the EU emissions trading scheme.

In parallel, significant developments in Brussels have since seen the EU institutions agreeing to amend the ETS Directive to protect its integrity by preventing participants from using allowances issued by ‘a member state whose obligations are lapsing’

In their anti-Brexit broadside yesterday, Russell and Cunninghame thundered: “In the intervening months <since May> the publication of the UK Clean Growth Strategy has given no further certainty on your negotiating intentions.

Roseanna Cunningham, MSP
Roseanna Cunningham, MSP

“Instead, it merely states that ‘involvement in areas like the EU ETS are still to be determined’ but that ‘we will seek to ensure that our future approach is as least as ambitious as the existing scheme’, and ‘provide a smooth transition for the relevant sectors’ while restating your commitment to carbon pricing as an emissions reduction tool – but with no information on what form this would take. 

“Against this background of the UK’s lack of clarity on its intentions on future ETS membership, we have now seen the EU institutions take preventative action to safeguard their interests – with significant risks for market participants in Scotland and the UK.

“We believe that the current situation is unacceptable in climate policy terms, to have no certainty on our policy approach to the traded sector, at a time when the Scottish Government is proposing new legislation to raise our ambition in the light of Paris and when we are 18 months away from leaving the EU. 

“Moreover, the EU amendment presents significant and immediate risks to business in Scotland in terms of additional costs of compliance if UK allowances can no longer be freely-allocated – with real risks to jobs and investment in energy intensive participants at risk of carbon leakage.

“The Scottish Government considers that this situation underlines the importance of the creation of a formal mechanism for discussion between all four UK administrations to agree our approach to future membership of the EU ETS, and on energy and climate policy more widely. 

“Continued participation in the EU ETS represents the most cost-effective means for the traded sector to achieve decarbonisation. 

“Certain sectors are now indicating a preference for alternative UK arrangements if continued ETS participation is impossible, but this underlines again our repeated insistence on Ministerial discussions between our <Scottish and British> governments to consider the case for an alternative UK domestic framework – as is the case at present with our UK joint agreement to the existing domestic greenhouse gas ETS regulations.

The European Union Emissions Trading System (EU ETS) was the first large greenhouse gas emissions trading scheme in the world, and remains the biggest. It was launched in 2005 to fight global warming and is a major pillar of EU climate policy.

Lawrence Slade, Chief Executive of UK Energy – whose members range from the market-dominating Big Six providers to a new generation of small and independent providers – last month announced the association’s wish to remain in the ETS

The EU ETS covers more than 11,000 factories, power stations, and other installations with a net heat excess of 20 MW in 31 countries – ie all 28 EU member states (which presently includes Britain) plus Iceland, Norway, and Liechtenstein.

Under the EU ETS, the governments of the EU Member States agree on national emission caps which have to be approved by the EU commission. Those countries then allocate allowances to their industrial operators, and track and validate the actual emissions in accordance with the relevant assigned amount.

Slade said: “I am writing to set out Energy UK’s position on what we believe should be the <British> Government position on the future of carbon pricing including the carbon price floor and EU Emission Trading Scheme (EU ETS).

“Following the UK’s decision to exit the European Union whilst recognising that post Brexit there is a strong requirement for a different mind-set for ‘Team GB’, investors require a clear path for the future of carbon pricing.

“However, our preference is for the UK to retain membership of the EU ETS to deliver decarbonisation at lowest cost for the whole economy. Long-term visibility is needed to help enhance investor confidence and lower cost of investment.”

Meanwhile, Scottish Environment Minister Roseanna Cunningham and Nicola Sturgeon, Scottish First Minister, will attend the UN Climate Conference in Bonn in later this month.

Renewables AFTER Brexit keynote conference:

The stakes have never been higher

Be careful what EU wish for..
Be careful what EU wish for..

Since the decision of the UK voters in the referendum in June 2016 to leave the European Union, a great deal has been written, said and speculated about Brexit.

For many businesses, lack of certainty over the outcome is having a very real effect right now on decision making, investment and jobs. Already direct inward investment into the UK has vanished since the Brexit referendum result.

The Brexit negotiations between the UK and EU matter enormously. Until they are resolved, there can be no clarity on commerce, law, or policy.

And if the Brexit negotiations are not resolved at all – the UK leaves the EU on 1 April 2019 when more than 40 years of EU law will be jettisoned overnight if the current British government does not its Brexit Bill passed by the Westminster parliament.

So the renewables sector – which now generates over half of Scotland’s electricity – urgently requires clarity on:

  • People – being able to attract and retain the right staff
  • Profit – being able to minimise extra cost burdens and to maximise income
  • Practicalities – being able to do business with certainty and a minimum of obstacles
  • Possibilities – being able to avoid missing out as the single market grows

For example, Energy UK – which represents SSE, Scottish Power and other Big Six utilities – wants to remain within the European Emissions Trading System.

Major German, Dutch and Spanish manufacturers may find it harder to sell their turbines into the UK after Brexit.

Atlantis Resources – a global developer of renewable energy projects with headquarters in Edinburgh – is also concerned about the state of the industry after Brexit.

Atlantis’s flagship tidal power project – MeyGen – is situated in the Inner Sound of Scotland’s Pentland Firth and is the world’s largest tidal stream array.

Nova Innovation, another Edinburgh-based tidal energy company has said that access to EU markets, supply chain and free movement of people, will have an impact on future success.

The European Union is an important source of financing for renewable projects, particularly tidal stream. Atlantis has been awarded both Horizon 2020 and NER300 funding from the European Commission as well as received offers of support from the European Investment Bank for future phases of their flagship MeyGen project.

They believe that should the UK remain in the EU single market they will be extremely well positioned to continue this success and benefit from future rounds of EU funding.

Ease of movement and access to markets are as critical as access to EU funding.

Atlantis has strategic partners in Belgium and France as well as suppliers across Europe, and employs a number of EU nationals who are technical experts in marine technology and whose skills and experience would be difficult to replace.

There are different views as to what is best for Scottish and and UK companies. But what must be clear to everyone is that because of Brexit, many choices have to be made, such as:

  • How best to prepare my company
  • Whether to cut back, invest or relocate; and, crucially,
  • What the renewables industry should negotiate for, both on the transition and beyond, with the Scottish and UK governments

The aim of this crucial Renewables AFTER Brexit conference is to look at the key issues from the point of view of businesses in tackling the ‘Brexit trilemma’ of law, policy and the environment.

This event is likely to be the key renewable energy conference of the year. The following industry experts are also due to speak

  • 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, UK 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)

Being held on 1 December 2017 at the University of Dundee, the conference is a joint venture between the University’s Centre for Energy, Petroleum and Mineral Law & Policy and Scottish Energy News.

For more details, sponsorship opportunities and conference booking details: www.renewablesafterbrexit.co.uk

“To repeat what Poland’s former foreign minister said this week: the UK has a lot more to lose than the EU in these negotiations given that Britain is 15% of the EU’s trade,  and the EU is 47% of Britain’s trade.”

 

 

 

 

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