Summary
This Report is intended to inform the public and to influence the Government’s negotiations on leaving the European Union in respect of energy and climate change policy.
Neither the referendum campaign, nor the evidence we have received, revealed widespread concerns that EU membership is damaging UK energy competitiveness or adversely affecting consumers. Whilst there are undoubtedly weaknesses in the operation of some EU policies on energy and climate change, notably the EU Emissions Trading System (ETS), the Secretary of State, the Rt Hon Greg Clark MP, acknowledged that co-operation with EU partners was generally mutually beneficial. The UK has consistently been a driver of high standards and ambitious climate change targets.
In the short term, we recommend that the Government, as part of its negotiations, seeks to avoid disruption to the energy sector and the domestic climate change agenda. Arrangements mirroring the status quo should be sought and implemented as far as possible. The Government should seek to provide as much clarity and stability as possible on domestic policy to support investment. In particular, we recommend that the Government should seek to maintain ongoing access to the Internal Energy Market, and resolve the particular difficulties faced by Northern Ireland, as it shares a single electricity market with the Republic of Ireland. We also recommend that the Government seeks to retain membership of the EU ETS until at least 2020. Longer term membership of the EU ETS should be conditional on progress of its future reform.
In the longer term, we are concerned that the UK will become a “rule taker” outside the EU, complying with, but unable to influence, rules and standards. If our formal standards diverge too far from those applying in European countries, there is a risk that the UK could become a dumping ground for energy inefficient products. We recommend that the Government retains or mirrors European energy product standards for the immediate future at least and should also, as far as possible, maintain routes to influence their development, for example through active UK participation in European standards bodies.
The Government has said that the UK will be leaving Euratom as a consequence of the referendum result. We share the concern of the nuclear industry that new arrangements for regulating nuclear trade and activity will take longer than two years to set up. We therefore recommend that the Government seeks to delay exit from Euratom, if necessary, to be certain that new arrangements can be in place on our departure from the EU.
Many of the biggest decisions in relation to energy and climate change policy are long term and not dependent on the outcome of negotiations. Brexit must not be allowed to distract the Government from the delivery of essential and long-term domestic policy decisions, such as the Clean Growth Plan, nor to undermine the Government’s commitment to meeting emissions reduction targets, which are enshrined in domestic legislation. We recommend that the Government provides a clear and long-term vision for the UK energy sector to support investor confidence and that this should underpin its negotiating objectives.
4 May 2017