On 22-23 March 2018, the University of Edinburgh and ClimateXChange co-hosted two events exploring the potential impact of Brexit on the Scottish energy system. Over the two days, a distinguished set of experts from across industry, government, academia and law debated the risks and uncertainties of Brexit in the context of the Scottish Government’s ambitious decarbonisation strategy, and the UK’s wider climate and energy policy agenda.
The first event – a panel discussion – discussed the question ‘How disruptive will Brexit be to Scotland’s Energy Strategy?’. The aim of the event was to provide a Scottish perspective on the impact of Brexit on our energy system. Indeed, this is a highly topic issue; the Scottish Government has been at the forefront for building the case against the UK’s departure from the European Union, and has recently published an assessment highlighting significant costs of a ‘hard’ Brexit to the Scottish economy
The following day an invitation-only workshop gathered 15 experts from across government, industry, and academia to consider the future of the UK’s electricity system in the context of Brexit. Participants engaged with the following questions:
- What are the risks and uncertainties facing the UK electricity system after Brexit? To what extent does the functioning of this system – now and in the future – depend on EU membership?
- How can the probability and impact of the identified risks be measured and assessed?
- What can be done to mitigate risk and reduce uncertainty for the UK electricity system following Brexit?
On 22 and 23 March 2018 a panel discussion and a workshop have marked the end of a fellowship funded by the Scottish Government, on the topic of ‘Scotland and the European Energy Union’, carried out by Dr Ronan Bolton, Dr Peter Zeniewski and Dr Mark Winskel, University of Edinburgh.
This blog is Peter Zeniewski’s reflections on the project.
Our project started in 2015, before the spectre of Brexit began to haunt Europe. The initial focus was on the technocratic and bureaucratic elements of integration that were working behind the scenes, in European committees and forums, to build a common energy system. A lot of this was dry, procedural and uneventful – thinks like network codes, market coupling, the conditions for accessing European loans for infrastructure investments, and so on. Even the word we used to describe some of what was going on – ‘technocratic internationalism’ – was hardly an explosive academic concept.
But the day after the referendum in June 2016, our project was quickly swept up in the politics of Brexit. From that point onward we were chasing our tails trying to make sense of it all. What would Brexit mean for the energy markets in both the UK and Europe? Will cross-border flows of oil, gas and electricity continue as usual? How will it affect investments in low-carbon technologies? Will Scotland get more or less power to determine its energy future? Suddenly we were victims of the daily vagaries of politics, under a thick cloud of uncertainty, trying to stay on top of energy-related developments emanating from statements made by Holyrood, Westminster, and Brussels.
The complexity remains fairly daunting: Brexit is like placing a bunch of moving parts atop an energy system with a bunch of moving parts. In Scotland and the rest of the UK, the challenges around decarbonisation will require huge investments, stable regulation, resilient infrastructure, and a deep and skilled pool of labour, and dare we say a hint of luck and good fortune. This is particularly relevant for Scotland, which happens to have introduced arguably the world’s most ambitious climate change targets at a time when the UK as a whole is leaving the European Union, and with it much of the institutional, commercial and political arrangements that have underpinned the drive to decarbonise Europe as a whole.
As consumers we might not feel much change to our energy services in the immediate aftermath of Brexit. As Keith Anderson, the CEO of Scottish Power, repeatedly assured us, “the lights will stay on.” But there are differing views about just how disruptive Brexit will turn out to be for the energy sector. Certainly, there may be fewer challenges than in other sectors such as chemicals, automotive or financial services. Energy – whether fossil or low carbon – may not command as much attention in Brexit negotiations as wider political and trade-related issues, but a stable, well-functioning energy system remains one of the crucial basic building blocks to an affluent, modern society. It is in this context that we will continue to monitor Brexit developments to ensure that Scotland in particular is well-placed to effectively deal with the many uncertainties it has engendered.
The implications of Brexit for investment in the UK’s renewable energy supply chain are uncertain, as much will depend on the broader terms of departure and the future relationship with the EU, which remain unclear.
This research report considers the extent to which Brexit poses a risk to renewable electricity investment in the UK – and Scotland in particular.
In the medium terms Brexit may affect Scotland’s substantial number of on- and off-shore wind projects in the pipeline. The terms may translate into reduced access to low-cost financing for these projects, the imposition of tariff and non-tariff barriers on low-carbon goods and services, reduced access to a skilled pool of labour, as well as more limited entitlements to European public funding for Research & Development.
At the same time, however, there are positive signs that European utilities remain committed to developing the UK’s domestic supply chain; we consider recent inward investment flows and record low auction prices for delivering offshore wind energy as encouraging signs of industry resilience.