Leaving the EU: negotiation priorities for energy and climate change policy Contents

1Introduction

UK–EU integration on energy and climate change policy

1.The energy and climate change policies of the UK are closely aligned with those of the EU, and our energy sectors are integrated through trade, directives and interconnection of energy supply. Successive UK governments have championed a harmonised EU energy market characterised by competition, reduced consumer prices and increased security of supply, for the benefit of the country.1 On climate change, the UK acts both domestically and internationally, in accordance with the Climate Change Act 2008 and EU climate-related directives.2 This dual approach was reflected when the UK signed the 2015 UN Climate Change agreement (the ‘Paris Agreement’) as both a national signatory and as part of the EU ‘bloc’.

2.The UK has also led the development of the EU’s coordinated approach to emissions reductions. The Committee on Climate Change has recommended that the UK should continue to adhere to those EU policies and schemes that are working effectively. It has stated that if the UK is to remain on track to meet its target to reduce emissions by at least 80% of 1990 levels by 2050, some 55% of the emissions reductions required by 2030 would be achieved by retaining or replicating EU policies and initiatives, such as product and efficiency standards, the EU Emissions Trading System and sectoral targets.3

Our inquiry

3.Immediately after the referendum the Energy and Climate Change (ECC) Select Committee launched two parallel inquiries into the implications of leaving the EU on energy and climate change policy. This work was cut short by the Committee’s abolition in October 2016, and the creation of the Business, Energy and Industrial Strategy Committee, to reflect the changed departmental structure introduced by the new Prime Minister. Initial findings from the written evidence received were published in the ECC Committee’s final Report.4 The Committee highlighted several policy areas that could be significantly affected by the UK’s departure but did not have the opportunity to investigate these in detail and assess negotiating priorities accordingly.

4.On 18 November 2016 we launched our inquiry, Leaving the EU: negotiation priorities for energy and climate change policy, to build on the ECC Committee’s initial findings. We sought to focus on identifying the Government’s priorities on energy and climate change when negotiating the UK’s exit from the EU.5 In response to our call for evidence, we received 38 written submissions and held five oral evidence sessions between January and April 2017. These were in addition to the 129 submissions received by the ECC Committee, which we have also reconsidered. We are grateful to all those who took the time to contribute to the inquiries.

5.During this inquiry the Government has made steps in progressing the UK’s departure from the EU. The Prime Minister set out twelve guiding principles for the negotiations on 17 January 2017, in her Lancaster House speech.6 These were built upon on 2 February by a White Paper, The United Kingdom’s exit from and new partnership with the European Union.7 On 29 March, the Prime Minister wrote to the European Council President, Donald Tusk, to give formal notification of the UK’s intention to leave.8 According to Article 50 of the Treaty on the European Union, this means that the UK will depart the EU no later than 29 March 2019.9 Immediately after the UK’s notification, the European Council and European Parliament published their own draft principles for the negotiations.10

6.Following the decision of the House to support the Prime Minister’s intention to hold a General Election on 8 June, we brought our inquiry to a conclusion before the Dissolution of Parliament. This Report provides recommendations on energy and climate change negotiation priorities for the new Government, and for all parties to consider in shaping their positions on our departure from the EU.

7.Chapter 2 of this Report summarises the negotiation parameters relevant to energy and climate change policy that have been set out by the UK Government, the European Council and the European Parliament. Chapter 3 explores the role of the Internal Energy Market in the UK energy system, with Chapter 4 examining the specific relevance of this to Northern Ireland. Chapter 5 discusses the role of the EU Emissions Trading System in our decarbonisation strategy. In Chapter 6, we investigate the implications of the Government’s decision to leave Euratom alongside our departure from the EU. Chapter 7 assesses the potential effects of Brexit on investment and the realisation of the Government’s ambitions for the energy sector, while its effects on wider European energy efficiency legislation and consumer protection is considered in Chapter 8. In Chapter 9 we provide an overview of cross-cutting issues that affect energy and climate change policy as a whole.

Climate change policy

8.Due to the constraints of time and in recognition of the work of the ECC Committee, we have not in this inquiry pursued certain non-controversial aspects of climate change policy. These include the EU Effort Sharing Decision, the UK’s joint pledge with the EU under the Paris Agreement, and options to retain UK influence in international climate change negotiations. We share the view of many witnesses to our inquiry that the one of the best approaches for the UK to maximise its future influence in international climate negotiations is through leadership by example on domestic policy.11 We have also not covered renewable energy in depth but clearly it is an important policy area, both as a means of meeting our emission reduction targets and for the success of the future green economy.


1 See for example: House of Lords EU Sub-Committee D, No country is an energy island: Securing investment for the EU’s future, (HL Paper 161; May 2013). This concluded that there are “clear benefits to be derived from working within the EU on the energy challenge.”

2 The Climate Change Act 2008 includes a commitment for the UK to achieve an 80% reduction in emissions by 2050 relative to 1990 levels. It established a regime of 5 year ‘carbon budgets’ - milestones to achieving the 2050 target.

3 Committee on Climate Change, Meeting Carbon Budgets – Implications of Brexit for UK climate policy, (October 2013)

4 Energy and Climate Change Committee, Third Report of Session 2016–17, The energy revolution and future challenges for UK energy and climate change policy, HC 705

5 Full Terms of Reference can be found on the Committee’s website.

6The government’s negotiating objectives for exiting the EU”, Prime Minister’s speech, 17 January 2017

7 Department for Exiting the European Union, The United Kingdom’s exit from, and new partnership with the European Union, Cm 9417, 2 February 2017

10 Brexit: red lines and starting principles, Briefing paper 7938, House of Commons Library, 31 March 2017

11 Chatham House-UKERC (LEU0006); Renewable Energy Association (LEU0009); Institution of Engineering and Technology (LEU0010); The Prince of Wales’s Corporate Leaders Group (LEU0012); Polar Research and Policy Initiative (LEU0016); DONG Energy UK (LEU0021); Dairy UK (LEU0027); Oil & Gas UK (LEU0032); New Nuclear Watch Europe (LEU0033); Energy Saving Trust (LEU0035)




4 May 2017