Brexit threats to energy policy

17th October 2016


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  • Mitigation ,
  • Generation ,
  • Conventional

Author

Christopher Lavelle

The House of Commons energy and climate change committee, which is to be disbanded today, has released its final report, highlighting future threats and opportunities to UK energy policy post-Brexit.

The report concludes the work of several inquiries by the from the energy and climate change committee (ECCC), including on changes in energy generation, supply and demand, as well as more recent studies into the implications for climate and energy policy when the UK leaves the EU.

According to the report, the energy sector is changing in response to economic and social concerns as well as national and international climate change ambitions. Renewable technologies are unpredictable and their rapid uptake in recent years has created new pressures on the network. The committee recommends an overhaul of network operations, and new tools to manage variable generation. “We urged the government to address the network system as a whole and develop its change-readiness capability so as to meet the ambition of a low-carbon future,” the report says.

It suggests that energy storage could revolutionise the energy sector but says evidence from the National Grid submitted to the committee indicates that the technology is being held back by a lack of clarity on legal and commercial status and insufficient incentives for investors. Double charging for storage, is also a major problem, according to Dr Jill Cainey, director of the Electricity Storage Network, who explained to the ECCC that storage facilities are charged once for consuming the electricity they store, and then for supplying it back to the grid. The end-user of the electricity released is then also charged for consuming it. ‘Everyone pays double and that has a material cost to projects,’ Cainey told the committee.

The ECCC report says there is no single innovation to solve the ‘energy trilemma’ and that a combination of new technologies, business models and consumer engagement are needed.

The committee says it has had little time to assess what the impacts on energy policy might be when the UK leaves the EU. Comments in the report about Brexit are largely speculative, but highlight several energy and climate change policies that could be affected, depending on the final agreement. A key consideration is whether the UK should join an EU-wide single market in energy, which the committee argues would create ‘a larger, harmonised energy market with fewer trade barriers’. It would also promote competition, reduce consumer prices, and increase security of supply, says the report.

The committee’s inquiry in to the EU emissions trading system generated considerable debate from stakeholders and is described in the report as the single most important policy instrument for the potential reduction of greenhouse gases in Europe, accounting for 50% of the emissions reduction required by 2020 under the Climate Change Act. The committee argues that there may be value for the UK in pursuing the joint fulfilment of climate change goals and retaining its positive influence over EU nations.

On energy security, the committee concludes that the UK is heavily dependent on Europe for its electricity and gas imports and that the government should seek to build investor confidence to avoid exacerbating difficulties in bringing forward investment in new electricity capacity and new indigenous resources. The government should also examine the role of the ‘solidarity principle’ in managing potential gas crises, specifically how the UK can continue to participate.

EU-derived legislation retained in UK law will need to be reviewed and amended in the light of the UK’s relationship with the bloc once it had formally left. ‘It is essential that parliament has adequate time to fully scrutinise any proposed legislative changes,’ the report argues. There are also questions about how relevant and enforceable energy laws will remain once the UK is no longer in the EU.

In the transition to the new BEIS committee, the ECCC urges its successor to press the government on the timeline for developing its emissions reduction plan to meet the fourth and fifth carbon budgets, arguing that any delay risks further uncertainty on the direction of UK energy and climate policy that could damage investor confidence and call into question the country’s ability to meet its long-term decarbonisation targets.

Labour MP for Hartlepool and former shadow business minister Iain Wright will chair the new BEIS committee. In a recent tweet he said he was delighted to be chairing the committee and pledged that energy and climate change would be front and centre of its work.

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