Retained EU Law (Revocation and Reform) Bill

Written evidence submitted by Energy UK. (REULB-39)

to the Retained EU Law (Revocation and Reform) public bill committee   .

Energy UK is the trade association for the UK energy industry with over 100 members from established FTSE 100 companies to growing suppliers, generators and service providers across energy, transport, heat and technology. We represent the majority of the energy sector - excluding networks and upstream oil and gas - and the diverse nature of the UK’s energy sector with our members delivering almost all (90%) of both the UK’s power generation and energy supply for over 27 million UK homes and businesses. The energy industry invests over £13.1bn annually, delivers around £85.6bn in economic activity through its supply chain and interaction with other sectors, and supports over 764,000 jobs in every corner of the country.

Energy UK welcomes the opportunity to respond to the Public Bill Committee’s call for written evidence regarding the Retained EU Law (Revocation and Reform) Bill. Our response is high-level in nature given the short deadline and legal complexity for what will likely be a significant and intricate piece of work.

Key Messages

Energy UK is supportive of the Government’s intention to streamline legislation, further develop a dedicated UK legal framework and recognise that the Bill presents the opportunity to tailor legislation to better suit GB. However, the EU Retained Law Bill potentially unravels large amounts of critical legislation in a short timeframe. We are, therefore, highly concerned about the adverse and destabilising implications which the Bill  could have on the energy sector, as well as on the UK’s wider policy framework and legislation relating to other key areas and sectors, such as health and safety, the environment, as well as consumer and workers’ rights and protections.

The removal of all REUL by the end of next year threatens to cause unprecedented disruption to UK consumers, regulatory authorities, businesses and those at all stages of supply chains. Deregulation, without adequate review, puts legal certainty at risk, which is passed down to UK business and employers not just in the energy sector, but across the whole economy. Potential ‘gaps’ in UK legislation, as a result of the inappropriate sunsetting clause within the Bill, could risk EU sanctions being imposed upon the UK if alternative legislation is not in place prior to the deadline.

To that end, we are equally concerned around the timing and resource implications for Civil Servants at a time when the UK is in the grips of an energy and cost of living crisis, and with a recession looming. This will likely be a highly intricate and time-consuming process. Energy UK is concerned there is simply insufficient resource to dedicate to, and complete, this work to meet the current deadline of the 31st December 2023 (if not extended) especially at a time of crisis. This will inevitably lead to trade-offs between speed and effective regulatory reform. We, therefore, believe the sunset clause should be abandoned immediately.

Amongst our wide-ranging concerns, we believe that clarity is needed with regards to how Government envisages this work will fit in with existing energy legislation and policies. For example, any repeals or changes that may delay Net Zero could undermine the deliverables of key energy polices. Energy UK is, therefore, keen to ensure alignment and a balance of Government’s various policy objectives, such as the delivery of the sector’s 2030 targets. Below, is a list of policies and regulation, specifically relevant and applicable to the energy sector, which we believe could be adversely impacted by the Bill. Given the current uncertainties and complexity of the potential implications of the EU Retained Law Bill we have only provided explanatory notes for a few areas, see Annex 1.

· State Aid Rules

· The Contracts for Difference (CfD) Scheme

­ Specifically, its structure compared with EU auction rules

· Grid Compliance on Voltage and Frequency

· Habitat Regulation and Consenting

­ Including SEA rules and assessments

· Standards on Equipment and Technology

· Harmonisation of Electrical and Trading Systems

· Environmental Regulation

· Network Codes

 

· Licences

· REMIT

· Third Energy Package

· Energy Performance of Buildings Regulations (under DHLUC)

· Energy Efficiency Directive

­ ESOS Requirements under BEIS

Energy UK Recommendations

As it currently stands, we believe the EU Retained Law Bill will likely lead to quick decisions about significant areas of law being taken by Ministers with limited consultation with stakeholders and limited Parliamentary scrutiny.

To support any effective changes to existing regulation, Energy UK strongly encourages Government to engage with stakeholders early, to have a clear assessment framework and adopt a clear, consulted on, programme for any and all proposed changes. There should be careful consideration of each piece of retained EU law to ensure that its removal does not lead to unintended or undesirable consequences for the energy sector and consumers.

We do not also believe that a sunset clause is required. A specific date creates a potential cliff-edge, with insufficient industry and Parliamentary time to mitigate or address the risks that this Bill could create. The scale of legislative change envisaged by a sunset clause is so vast, that it is simply impossible to quantify the risks to market operations, Security of Supply, and the broader effect on the investment needed to reach our energy security and Net Zero targets. Additionally, there could be other pieces of legislation that have been ‘missed’ which may abruptly cease to apply, without notice, at the end of 2023. We, therefore, urge Government to immediately abandon the sunset clause to enable a more thorough review of the retained EU legislation, not constrained by an arbitrary deadline imposed by statute, and, thereby, avoiding unforeseen and potentially disastrous consequences.

Annex 1

Environmental Regulation

The legal framework for environmental regulation in the UK remains substantially dependent on EU legislation. There are a wide range of Directives, Regulations and Decisions that would require significant effort and parliamentary time to replace with domestic legislation. If the time is not taken to transpose these key underpinnings in a thorough and systematic way, there is a significant risk of collapse in the UK’s compliance framework.

There are a few examples where EU regulation has been specifically adjusted for implementation in the UK, for example the EU Emissions Trading Scheme has been replaced by the UK Emissions Trading Scheme, but even where this has occurred key regulations which deal with the details of compliance are still underpinned by EU Decisions for example, the Monitoring and Reporting Regulation (Commission Implementing Regulation (EU) 2018/2066 of 19 December 2018).

The Bill may also result in the repeal of several environmental legislation including Environmental Impact Assessment (EIA) and Habitats Regulations Assessments (HRA) without the necessary replacements being put in place, such as the suggested Environmental Outcomes Report provided by the Levelling Up and Regeneration Bill.

Additionally, the uncertainties which the EU Retained Law Bill creates threatens to undermine the process through which energy projects are considered and planning consent granted. A clear, stable consenting framework for energy infrastructure is required to reach Net Zero. Early engagement and consultation are, therefore, needed to ensure that there is clarity of the consenting requirements in sufficient time so as to avoid duplication, abortive work or delays to the development of energy projects.

Network Codes

Similarly, much of the UK’s gas and electricity markets operate based on rules which stem from EU Regulation. Whilst in some cases, removal of retained law may require minor, administrative changes, there are many where the removal of EU retained law would create a ‘gap’ that would need to be filled. Given the complexity of Network Codes, we are concerned that a huge amount of industry work would be necessary to assess the full impact and develop replacement rules, where these are required.

November 2022.