Current Status of Political Negotiations
Following the result of the referendum on membership of the EU, the UK triggered Article 50 of the Treaty of the European Union on 29 March 2017. As set out under the treaty and the domestic EU Withdrawal Act 2018, the UK will cease to be a member of the EU as of 30th March 2019.
The Government has negotiated a draft Withdrawal Agreement (WA) with the EU which would be a legally binding international treaty and a political declaration on the future relationship which would form the basis for negotiations once the UK ceases to be a member of the EU. A ‘no deal’ outcome does not provide the certainty required by industry and would pose risks to the functioning of the UK energy market, by interrupting the continuity of energy and trade policy
The transition period and other provisions within the proposed Withdrawal Agreement give industry certainty in key areas in the short term and the Political Declaration provides a basis for agreeing a framework to deliver enduring cooperation and trade in energy. This deal was rejected by Parliament on 15th January.
Key Issues for the Energy Sector
In 2019 alone, RenewableUK members will commence construction of over 4GW of new renewable energy capacity, in addition to the 3.3GW currently under construction and 20GW of operational wind and marine capacity. Development of the renewables industry, made up of RenewableUK’s 400-plus members and the wider sector, is guided by policy covering energy markets, infrastructure, trade, manufacturing and labour and employment issues. Critical issues are:
Interconnection with European markets is an increasingly important part of the electricity market. Net imports of electricity accounted for 4% of the UK’s power supply in 2017. Increased interconnection with neighbouring markets can help to enhance the security of our power supply and support investment in low carbon and renewable generation sources.
Northern Ireland is particularly dependent on cross-border electricity trading as it forms part of a Single Electricity Market (SEM/I-SEM) with the Republic of Ireland. The I-SEM has successfully delivered a secure, low cost energy supply for consumers which must be preserved as the UK leaves the EU.
Integrated supply chains across the EU are vital to energy companies and investors in new infrastructure. In offshore wind, for example, there are significant manufacturing facilities in the UK which serve the UK and European markets and utilise components from a domestic and European supply chain. New tariffs, customs procedures or other barriers could disrupt supply chains for manufacturers and risk driving up costs, which would ultimately be borne by consumers.
A robust carbon price signal is required to support continued investment in low carbon technologies needed to meet our domestic carbon budgets and commitments under the Paris Agreement. The UK’s current carbon price is made up of the EU Emissions Trading Scheme price of carbon with an additional GB and power-only element set by the UK Government.
Maintaining access for skilled labour as the UK exits the European Union will ensure we have the skills we need for short-term construction projects and enable continued export of our talent across the EU.
Coordination of environmental standards between the UK and EU allows for knowledge and products to be traded whilst maintaining high standards and consistency.
What Your Business Can Do to Prepare for Brexit
Ratification of a withdrawal agreement requires majority support in Parliament and the implementation of new legislation ahead of 29th March 2019. Should a deal and subsequent legislation not be implemented, the UK will leave the EU on a no deal basis on March 29th.
In addition to its general EU Exit web portal, the Government has set up an online tool to help businesses identify what they might need to do to prepare for the UK leaving the EU, as well as providing information on changes expected, in particular industries and regulatory information.
The UK and EU have, in recent months, increased preparations for a ‘no deal’ outcome and the UK Government has issued a number of guidance notes on cross-cutting and industry specific issues. Below are some Government ‘no deal’ guidance notes which you might find useful:
ACER's REMIT-related open letter provides information to market participants, Registered Reporting Mechanisms and Organised Market Places on REMIT in the event of a no-deal Brexit. This is particularly of significance to market participants who are – or who, after a no-deal Brexit, will be - from a third country and whose predominant trading activity is in wholesale energy markets in Ireland. It clarifies that UK-based market participants will need to re-register with another National Regulatory Authority in order to trade in the European Union after a no deal Brexit. Please direct any queries to REMIT@cru.ie
EU Preparations for Brexit
Similarly, information on preparations being made by the European Union can be accessed on the Brexit Preparedness section of the EU Commission website.
EU member states are also developing ‘no deal’ and Brexit contingency plans on an individual basis. If your business works internationally in, or with, EU and third countries, and you would like to find out more about any planning and support offered by particular EU members states, you might like to contact their embassy in the UK; details can be found here.
Support in Key Markets
Globally, the renewable energy market is worth over $300bn a year and the UK’s world-leading wind and marine energy sectors are exporting to every continent. As the UK leaves the EU, we must ensure that we continue to grow trade in this global growth sector. The Department for International Trade has a network of specialists in British embassies and other diplomatic offices around the world which provide support for UK companies. DIT contacts in key EU markets for RenewableUK members can be accessed below:
What RenewableUK is Doing
At RenewableUK, we have been working with our members to develop our Brexit position paper (members only – see below) and represent their views to stakeholders in Government and to Parliamentarians. We regularly update our members with news and analysis of the latest developments on Brexit, such as our assessment of the proposed Withdrawal Agreement (members only – see below). As these issues cut across the energy sector and particularly affect companies active in Northern Ireland, RenewableUK is working collaboratively with other UK and Ireland energy organisations, as well as our colleagues at WindEurope, to ensure that Brexit arrangements support continued trade and investment in the UK’s renewable energy industries.
For more information about Brexit and RenewableUK’s activities, please contact our Head of External Affairs Luke Clark.