Lords warn of Brexit threat to UK’s energy trade

Brexit puts the UK’s trade in energy with the EU at risk, a House of Lords’ EU Energy and Environment Sub-Committee’s report entitled Brexit: energy security reveals today.

The EU is a key energy trading partner for the UK, supplying approximately 12% of the UK’s gas and 5% of electricity. The UK will need to continue to trade energy with the EU in order to meet demand, but if such trade takes place outside the Internal Energy Market it is likely to be less efficient. This creates the potential for higher energy bills, and leaving the EU could risk supply shortages in the event of extreme weather or unplanned generation outages.

The Committee urges the government to set out how it will work with the EU to anticipate and manage supply shortages, and to assess what impact leaving the Internal Energy Market would have on the price paid by consumers for their energy.

Lord Teverson, Chairman of the EU Energy and Environment Sub-Committee, said: “Individuals and businesses across the UK depend on a reliable and affordable supply of energy. In recent years, the UK has achieved such a supply in partnership with the EU, working with other Member States to make cross-border trade in energy easier and cheaper.

“Over the course of the inquiry the Committee heard about the benefits of the UK’s current energy relationship with the EU, and the Minister acknowledged these benefits when he stated his hope that Brexit would result in as little change as possible. It remains unclear, however, how this can be achieved, without remaining in the single market, IEM and the other bodies that develop and implement the EU’s energy policy.”

The Committee has also stressed that the Euratom treaty is fundamental to the current functioning of nuclear energy generation in the UK. Failure to replace its provisions by the point of withdrawal could result in the UK being unable to import nuclear materials, bringing the UK’s civil nuclear industry to a halt.

The government is taking measures to avoid this worst case scenario but, given the risk to the UK’s energy security if replacement provision is not in place in time, the Committee call on the Government to ensure contingency arrangements are in place and to review the possibility of a Euratom-specific transition period separate from the wider Brexit process.

Other potential challenges to the UK’s energy security highlighted by the Committee include:

  • Without access to specialist EU workers, there are serious concerns over whether the construction of new nuclear generation sites (including the Government’s flagship Hinkley C project) is feasible.
  • EU investment has made an important contribution to constructing and maintaining a secure energy system in the UK. Replacement of this funding is critical to ensuring sufficient infrastructure is in place to enable future energy trading.
  • The UK’s influence of future energy policy is likely to be severely constrained post-Brexit. The government should conduct a frank assessment of its potential degree of influence, taking particular note of the difficulties faced by other non-EU countries such as Switzerland and Norway.

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