Anglo-Scottish legal consequences for UK energy sector of British Independence from EU-bloc – Scottish Energy News

Following the historic vote to leave the EU, there are now a wide range of
possible outcomes for the UK’s energy sector in respect of its regulatory
and market options, and its relationship with the EU, writes Chris Gotts.

These will all have differing implications for investment and trade, and
will depend on the fundamental decisions that the UK makes, including
whether to seek to remain part of a Single Electricity Market (a scenario
that is not dissimilar to the current position).

Other European nations, such as Norway and Switzerland are outside the EU
and have voluntarily adopted much of the EU legislation, yet it will be a
fundamental decision as to whether the UK will follow this route.

If it chooses not to, then the single electricity market and climate change
& emissions directives could entirely cease to apply in the UK, and there
will be significantly greater freedom for the UK to choose its energy path,
policy and structure.

The debate that will follow the vote during the next two years of
negotiation will be intense, and there will be some fundamental decisions
to make.

Decisions will need to be made not only on the energy market and trading
arrangements, but also in respect of the participation in the EU ETS and in
respect of EU targets for emissions and renewable energy.

The UK’s commitment to tackling climate change will come into focus and the
UK will likely have to renegotiate its own climate change agreement under
COP21.

Given the challenges and uncertainties faced by the energy industry in the
last 12 months, it seems likely that the immediate outcome of the vote will
be a hiatus where developers, generators, lenders and investment funds take
stock.

Until more is known on the UK’s intentions for its future development of
energy policy, both in the UK and within the EU, it is extremely difficult
to predict the precise impact that the vote will have on energy policy.

However, there will be no immediate changes in the laws in the UK –
including Scotland’s already separate legal system – as a direct
consequence of the result of the EU Referendum and any changes which might
take place will only become clear once the UK’s future relationship with
the EU has been agreed.

Chris Gotts is Energy partner at Burness Paul, a Scottish legal services firm.