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The implications of Brexit on the British energy system: a disadvantageous consequence

di - 2 Settembre 2019
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Moreover, the EU is currently not charging import duties on electricity and, although, a tariff on imported gas exists and is of 0.7%[11] , it has chosen not to apply it in practice. In case the UK would manage a deal and stay within the IEM no drastic changes would occur, but this is probably not the case as the UK does not want to be subjected to the European Court of Justice (ECJ). As a matter of fact, the full continued membership to the IEM would be the best option for the UK, but this is very unlikely since the British government showed its strong interest in leaving the Single Market and taking the distances from the European Court of Justice. However, the IEM is subject to the ECJ, and access to the IEM implies adopting the rules that govern it and accepting the jurisdiction of the ECJ. Whithout a deal the UK would probably see the reintroduction of explicit import and export transmission tariffs. Although tariffs on energy itself are very unlikely to be introduced, the energy industry could be affected by tariffs on products used to construct and maintain the energy system.[12]
Within this picture, a fundamental aspect to be addressed in the best way, is on the consequences between the UK and Ireland, especially, on what will happen with the ISEM. The ISEM has been a clear demonstration of British-Irish energy cooperation and is now at risk. If a deal could still guarantee some certainty, the no deal appears to be on the table between the UK and the EU and creates higher tensions. However, the ISEM is the result of independent agreements between Ireland and the UK and in theory should be unaffected by the UK’s withdrawal from the EU, therefore, the real complication stays in Ireland’s EU membership, that makes it subjected to EU regulations concerning energy generation and supply.[13]
It is possible to say that the island of Ireland will be the part suffering the most from this situation due to its ‘newborn balance’, a balance that took a very long time before it could be found. Undermining any of the agreements that now exist between Northern Ireland and Ireland is very risky.
The second point addressed regards the interconnectors: the system of interconnectors around Great Britain and Ireland is a strong one and it is expanding. Other projects of interconnectors are in the making. These projects are joint ventures between multiple companies, and all require the cooperation of different governments, regulators and grid companies. Unless the market and commercial arrangements are made clear, it is not sure whether these projects will be realized. The UK needs more interconnection to ensure it takes the lowest cost pathway to decarbonization and should prioritize interconnectors in the future relationship negotiations with the EU. The IEM contributes strongly throughout Europe in achieving green targets by smoothening the flow of electricity through interconnectors and increasing the production of renewable sources. More precisely, interconnectors can contribute to the UK having a low carbon, low cost, and secure electricity system.[14]
The third point addressed is about the policy influence and agenda setting role that it has historically had via the EU. The UK is set to lose its position in the key decision making body ACER. Nevertheless, it can still have a role in technical matters in nework of Transission System Operators. Ofgem will not be able to remain a full member of ACER, although it may be able to have observer status, subject to negotiations, and could therefore potentially participate in working groups. They would not, however, be represented on the board or have voting rights.
The last and fourth point is the nuclear energy aspect, as the UK is also leaving Euratom. The nuclear sector is an increasing one in the UK, an example is the construction of Hinkley Point C in Somerset. It is the first new nuclear power station in the UK under construction since last December. It will provide low-carbon electricity for around 6 million homes. The Nuclear resource could become of primary importance for the UK and could guarantee a high level of electricity production for Britain, enhancing also exporting opportunities. What should be considered at this point is that leaving Euratom, means that some dynamics are going to change for the UK. The production of nuclear energy is under UK regulations and not EU ones, so it won’t be problematic, while a problem would be the trading of nuclear material which relies on the Euratom regulations. The real issue, in this case, is about the immigration law for low-skilled labor force, as it would not allow the entrance of enough workers from the EU which are needed.[15] It is estimated that a the peak of its contruction it is going to need 1,400[16] steel fixers. At the moment the number of certified steel fixers in the UK is 2,7000[17] , meaning that more than the half of them would be needed to meet the requirement.[18]
There is still no idea if the Brexit will ever be delivered or if there are any chances to stop it. If it ever will, it would be best to exit at least with a deal to safeguard the population, guaranteeing energy security and a stable situation on the border between Ireland and Northern Ireland.

Note

11.  HOUSE OF LORDS, “Brexit: energy security”, 2018

12.  HOUSE OF LORDS, “Brexit: energy security”, 2018

13.  HOUSE OF LORDS, “Brexit: energy security”, 2018

14. Joseph Dutton, “UK-EU electricity interconnection: the UK’s low-carbon future and regional cooperation after Brexit”. January 7, 2019. https://www.e3g.org/library/uk-eu-electricity-interconnection-low-carbon-future-and-brexit

15. HOUSE OF LORDS, “Brexit: energy security”, 2018

16. HOUSE OF LORDS, “Brexit: energy security”, 2018

17. HOUSE OF LORDS, “Brexit: energy security”, 2018

18. HOUSE OF LORDS, “Brexit: energy security”, 2018

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