Brexit impact on energy markets could be ‘limited’, study says

The study suggests that existing interconnectors and those under construction mean the UK's energy market will suffer too greatly after Brexit. [Shutterstock]

Brexit could have a limited effect on energy markets in both the United Kingdom and the European Union, according to a new study that is optimistic about the future of energy policy. But the Court of Auditors has warned that experimental energy research could suffer.

A new study published on Wednesday (22 November) by the University of Cambridge and the Centre on Regulation in Europe has assessed what impact the UK’s exit from the EU will have on energy policy on both sides of the Channel.

By focusing on the UK’s energy interconnections with Ireland, France, the Netherlands and Belgium, the study authors were able to predict what the state-of-play could be in 2025. Although future plans for integration could be limited by Brexit, the interconnector capacity already under construction “dwarfs” this potential, they claim.

Furthermore, proposed projects by both parties that would bypass each other, including further energy connectors between Norway and the UK, as well as an electricity link between France and Ireland, are “expensive and mutually undesirable alternatives to the current arrangements”.

Commission funds France-Ireland power link that bypasses UK

The European Commission has allocated €4 million to a project that will link the French and Irish electricity grids via an undersea cable. Irish lawmakers have now touted the plan as an “obvious solution” to Ireland’s energy reliance on a post-Brexit United Kingdom.

British participation in the EU’s Emissions Trading System (ETS) is also valuable according to the report, which points out that the UK is “a substantial net purchaser of [carbon] permits and hence is buying cheap abatement from overseas via its membership”.

In general, the study suggests that the UK and the EU “benefit substantially” from their current participation in common electricity, gas and carbon market arrangements. It also concluded that energy is actually a peripheral issue compared to other sectors under scrutiny in the withdrawal process.

Britain should stay in EU energy market in Brexit transition deal, think tank says

Britain should seek to remain in the European Union’s energy market and carbon trading scheme in a transition period if a Brexit deal is not reached in two years, a report by think tank Chatham House said on Wednesday (10 May).

Continental shift?

The study acknowledged that it is difficult to predict the effect of Brexit on the EU-27’s energy policy but speculated that the loss of the UK could change its future direction.

Without the weight of the UK’s vote – or even veto – on some issues, the authors suggest that the popularity of nuclear power could suffer even further, the ETS could lose a valuable ally and the willingness to use market mechanisms, in general, might decrease.

Using its modelling technique, the study also calls for new arrangements to be drafted and considered, citing the island of Ireland as an example of where energy trading may take place in a whole new way once the UK leaves.

Report maps UK’s ‘uncertain’ energy landscape post-Brexit

As Britain looks set to leave the EU’s Single Market, business consultants have attempted to map out the numerous challenges facing the energy sector after Brexit, making the case for a transition phase to smooth the exit path.

Fusion faux pas

However, the European Court of Auditors concluded on 13 November in its annual report on the EU’s participation in a landmark international energy project that Brexit could “have a significant effect” on attempts to crack nuclear fusion technology.

In its assessment of Fusion for Energy (F4E), the EU’s joint undertaking in the ITER project (the International Thermonuclear Experimental Reactor), the Court noted that the UK’s Article 50 notification included withdrawal from both the European Union and the Euratom nuclear treaty.

The report concluded that an agreement setting out the arrangements for the withdrawal will have to be negotiated. At this stage, the Brexit talks are still stalled in their first phase, as negotiators have failed to make “sufficient progress” on a number of other key issues.

But F4E’s Shakeib Ali Arshad, a nuclear engineer, told reporters at the UN climate summit in Bonn last week that “the point of no return” has already been reached in the project. He added that orders for expensive sophisticated machinery have already been placed and finalised.

The ITER, is being constructed in southern France, supported by funding from across the world. The EU is footing about 45% of the total bill.

It aims to show that fusion, the process of colliding hydrogen atoms to produce sustainable energy, is practically possible and not just a theory. If the project is successful, the reactor will produce more power than it consumes, using a fuel source that could last millions of years.

UK willing to keep funding EU nuclear fusion project after Brexit

The British government said on Tuesday (27 June) it would continue to fund a collaborative nuclear fusion project with the European Union to 2020 if the bloc extends Britain’s contract to host the facility beyond 2018.