By STEVE HOLLIDAY
Red ‘danger’ flags are being raised by engineers and other professionals
who work to provide a reliable supply of energy to our homes, workplaces
and roads, that energy must be a serious priority for Messrs Davis and
Barnier at the Brexit negotiating table in Brussels.
During my decade at the helm of National Grid I was acutely aware of the
interconnected nature of the UK’s energy system. As an island nation we
enjoy enormous indigenous energy resources.
But the efficiencies available through trading energy with our European
neighbours offer huge benefits to consumers, the resilience of our economy
and the environment.
We are physically connected. Vital electricity cables lie on the sea bed
connecting the UK to France, Ireland and the Netherlands. Gas pipelines
link our system to Belgium, Ireland and the Netherlands.
About 5% of the UK’s electricity is imported from the EU, and 38% of its
gas. The UK is no energy island
Interconnection is the most tangible manifestation of collaboration with
our European neighbours in the energy sphere. There are many others –
standards on cars and kitchen appliances; targets on renewables energy
efficiency and carbon reduction – these provide a level playing field for
mutually beneficial gain.
Membership of the EU is not essential to a fruitful relationship with
European neighbours – after all Norway provides up to a fifth of the UK’s
gas – but what will be complicated is disentangling decades of carefully
crafted market integration and finding new mechanisms for achieving similar
benefits.
So I’m not surprised that the Energy Institute’s new 2017 Energy Barometer
ranks Brexit uncertainty among the five most pressing concerns of energy
professionals.
And those surveyed are very clear on the four big signposts for the new
Government as it navigates Brexit.
First: existing EU energy laws that govern how Europe’s energy markets work
should be transferred into UK policy post-Brexit as a top priority and as
seamlessly as possible.
Second: the UK must retain the closest possible cooperation with the EU. It
would be a mistake to assume going it alone is an option – not least in the
case of Ireland and Northern Ireland, who presently share a single
all-Island Energy Market.
Third: the UK Government needs to act to ensure the necessary skilled
workforce is available to the energy industry, prioritising engineers in
particular. Nearly 60% of those responding to the Barometer anticipate a
fall in the number of skilled workers, if free movement of labour is curtailed.
Fourth: energy investors are desperate for a predictable, no-surprises
policy environment. Energy and climate policy has been on ice for the best
part of a year. After a decade of tremendous progress in decarbonisation in
the power sector, investor confidence has also chilled. Investment in clean
energy plunged in the first quarter of 2017 to around $1bn, the lowest
since 2010.
Add to this the potential loss of around £2.5 billion of European
Investment Bank loans in energy each year and the need for government to
defrost its strategy is critical.
That means bringing clarity, soon, through the much heralded Industrial
Strategy, a Clean Growth Plan to meet our carbon reduction targets, and
breaking the logjam of delayed policies.
Energy, due to its complexity, investment lead times and importance to our
economy and society, stands out as a special case among industries which
are heavily integrated at the European level in need of an effective, clear
and far-sighted government strategy.
And it must be one that retains essential links – and future ambition – to
make the most of collaboration with our energy neighbours on the European
mainland.
STEVE HOLLIDAY is a former chief executive of National Grid and is
Vice-President of the Energy Institute.
The Energy Institute is already confirmed as a very welcome sponsor to our
RENEWABLES AFTER BREXIT (environment and energy law) conference.
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