14 March 2016

Brexit In Brief: Energy


Transcript

There is an argument that if Brexit were to happen, it is likely that the UK would remain part of Europe’s integrated gas and electricity markets, in the same way as Norway or Switzerland, using one mechanism or another.

However, it is important to note that both Norway and Switzerland contribute substantial amounts to the EU budget.

One risk of Brexit would be a potential reduced emphasis on renewables by the UK. This is because whilst the UK does have legally binding targets for cutting down emissions in its climate change act, without Europe’s renewables targets in place, the UK could argue that it wants to cut down those emissions using gas fired technology for example. Certain coal fire power stations are due to shut down in various member states due to new regulation. Upon Brexit, the UK Government could argue that because coal is very cheap at the moment it no longer wants to shut down those coal fire power stations and also remove the need for clean coal technology from the new power stations to be built.

Another consequence of Brexit might be the loss of vital sources of funding for the UK, which is available for European projects of importance, for example the European Investment Bank’s Climate Awareness Bond Programme, of which the UK has been the largest beneficiary to date. It is now unclear whether the UK would be eligible for that programme going forwards. There are various other grants available as well for European projects and it is unclear whether the UK would continue to qualify for those.

Clearly this could add up to billions of pounds worth of funding and the loss would be very adverse to the UK, both in terms of the investment out of the UK by UK companies but also within the UK as well.

In particular, the UK is very dependent on energy imports; a common European policy helps us negotiate better deals with the rest of the world and to pool our combined resources efficiently.

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