EU Energy Policy Contents

Introduction: EU Energy Policy

Security of energy supply, competitively priced energy and reducing the environmental impact of energy generation are key public policy goals for any country. Electricity imported into the United Kingdom from the EU makes a valuable contribution to the UK’s security of supply.1 There are already existing connections to France, the Netherlands and Ireland and a further seven interconnectors—to France, Belgium, Norway, Denmark and Ireland—are planned by 2022. By that stage, interconnected electricity could potentially supply around 20% of the UK’s peak energy demand.

While the EU and its Member States recognise the value of interconnection, each Member State remains ultimately responsible for security of energy supply to its citizens, and for deciding on the most appropriate energy mix.

As EU Member States develop the internal energy market, so the global approach to energy is fundamentally changing, with an increasing reliance on renewable energy.

The Commission has accordingly proposed a “Clean Energy” Package. It aims “to keep the European Union competitive as the clean energy transition is changing the global energy markets.” The proposals have three main goals:

The package consists of eight legislative proposals relating to energy efficiency, renewable energy, electricity market design and governance, as well as a number of non-legislative documents. In this Report, we assess the UK Government approach to the legislative proposals and summarise some of the supporting documentation.

At the heart of the proposals is a new approach to electricity market design, designed to ensure a more effective internal energy market that promotes the secure supply of efficient, clean and affordable energy. The Commission also proposes a new overarching energy governance structure with a view to ensuring that the EU delivers on its energy and climate change commitments.

Brexit

Given the interconnection between the United Kingdom and the wider EU energy market, we are concerned to explore the extent to which this legislation will apply to, or impact upon, the United Kingdom once it has withdrawn from the European Union.

Each of the Explanatory Memoranda on these proposals contains the following passage:

“On 23 June, the people of the United Kingdom voted in the EU referendum to leave the EU. Until exit negotiations are concluded, the UK remains a full member of the EU and all the rights and obligations of EU membership remain in force. During this period the Government will continue to negotiate, implement and apply EU legislation.”

Negotiations on two of the proposals (on energy performance of buildings and energy efficiency) are likely to progress swiftly. Even taking into account a twelve month implementation period, it is conceivable that the UK will be required to implement those proposals before it leaves the European Union.

The other proposals are likely to proceed at a slower pace and therefore the degree of application to the UK will very much depend on the type of future relationship negotiated between the UK and the EU, notably in terms of the trade of energy and the conditions that might be placed on that trade.

On Brexit, the package raises important factual questions about the arrangements for energy trading between the EU and third countries. There is little reference throughout the proposals to third countries—the UK’s status once it leaves the EU—with the exception of the revisions to the rules governing the EU’s Agency for the Cooperation of Energy Regulators (ACER), which facilitates the smooth functioning of the internal energy market by providing a forum for cooperation between national regulators. The Commission proposes that third countries should be able to participate in the activities of that Agency, as long as they have concluded an agreement with the EU and apply EU energy, environment and competition law.

We understand the Government’s concerns not to prejudice Brexit negotiations, but in this, and in other cases, the Government’s position can only be understood and evaluated with more information on the Brexit related aspects of the proposals. Much of that information is factual, and will be no secret to the EU negotiators. We make no judgements about the future energy relationship between the EU and the UK, but we wish to be as fully informed as possible.

Conclusion

We recognise that this is an early stage in the proceedings. The Government is clear in its various Explanatory Memoranda that it is still formulating its position and will submit a clear assessment of the costs and benefits of each proposal to the UK in due course. When it does so, we expect a full response to the questions we pose, or a clear explanation of why it would not be in the national interest to provide such a response.

Given the outstanding questions on Brexit and on the impact of the proposals, we retain all of the legislative proposals under scrutiny. We consider them to be of interest to the House as a whole. We draw all the proposals to the attention of the Committee on Business, Energy and Industrial Strategy Committee and we draw this Report to the attention of the Committee on Exiting the European Union.


1 Ofgem’s most optimistic assessment of electricity capacity over the current winter assumed, among other assumptions, that the interconnectors with mainland Europe would import at maximum capacity, as they did in winter 2014–15.




27 January 2017