12 April 2018

| CBI Updates Team

Update

Secure, affordable and sustainable energy supplies are critical to households and businesses across the country. The CBI’s latest report, Smooth operations, highlights the importance of getting EU rules right on energy after Brexit.

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This week, the CBI launched its newest Brexit report, Smooth operations, which provides and A to Z of the rules that will matter to businesses after the transition period. It is based on thousands of conversations with UK businesses, as well as dozens of leading trade associations, and outlines the regulatory needs of 23 industry and service sectors.

In considering the future regulatory regime for the energy sector, the report highlights that UK and EU rules have become highly integrated over the years, ensuring that the market functions efficiently and delivers secure, clean and affordable energy to businesses and households. Given the critical nature of the energy system, it is vital that a pragmatic approach to negotiations is taken in this area. Within this context, the report argues that:

  • Barrier-free access and appropriate regulatory convergence with the Internal Energy Market (IEM) will be important. Appropriate convergence to the current EU rules on the IEM be essential to ensure that the EU and the UK can continue to trade energy in a harmonised way. Negotiations on the future of the UK’s involvement in the IEM should include the agreement of a practical and cost-effective approach to accessing and facilitating interconnectors based on a level playing field between domestic and overseas generation.
  • Preserving the Integrated-Single Electricity Market is of utmost importance. Businesses want to see the benefits of the I-SEM maintained to protect consumers in the Republic of Ireland, Northern Ireland and Great Britain. The integrated nature of the Irish and Northern Irish electricity systems, plus the dependency of Ireland and Northern Ireland on gas and electricity network connection to the EU via Great Britain, mean that bespoke regulatory provisions will be required to ensure that the I-SEM is preserved.
  • The UK should retain ongoing influence in key EU energy agencies and bodies. Business believes that it will be important to ensure the UK’s ongoing influence in the development of the energy system, rules and regulations – which it has already made significant contributions to – in order to manage regulatory alignment.
  • The benefits of the UK’s membership of Euratom should be maintained. Business has identified that failure to preserve continuity in arrangements on nuclear would result in significant damage to the UK civil nuclear industry. It is therefore important that the benefits of this community are maintained, whether through continued membership of Euratom or replacement arrangements.
  • The UK should ensure full participation with the EU Emissions Trading System (EU ETS) until the end of 2020, with at least equivalence thereafter. In line with transition arrangements, it is in the interest of all participants for the UK to participate in the EU ETS until the end of 2020. Thereafter, the UK should either continue its participation in the EU ETS, provided it maintains its influence on any future reforms, or establish an appropriate domestic approach, aligned with the EU system.

The UK has played a key role in liberalising energy markets and has been a leader in tackling climate change, supporting the EU’s energy transition to a low-carbon economy. Ongoing collaboration and mutual support as we transition to a low carbon economy while maintaining secure and affordable energy supplies therefore offers potential benefits to both the UK and EU.

For more information, please contact Elsa Venturini