A year on from Brexit - what is the impact on UK energy policy and politics? This paper explores three key areas: markets & interconnectors; UK in a global context; and policy capacity and Brexit opportunity costs.
Introduction and key insights
The UK-EU Trade & Cooperation agreement was finally agreed in December 2020 and we are now also a year on from the end of the transition period. This is an opportune time to re-visit Brexit and its implications, in particular for the UK’s ability to put itself on a clear pathway to meeting legally binding emissions reduction targets at a vital time for sustainable energy policymaking.
This paper outlines what we see as being the main implications of Brexit for UK energy and climate policy and politics, which we separate out into three main sections: markets and interconnectors; UK in a global context; and policy capacity and Brexit opportunity costs. It is based on analysis of key government and think tank documents, a survey of 85 UK and EU based stakeholders, and is further supported by supplementary semi-structured interviews.
Key Insights:
- The UK has managed to operationalise its emissions trading system in record time, whilst, although volatile, the UK carbon price per ton has remained similar to the EU’s.
- The impact of Brexit on new electricity interconnector capacity has not been as significant as some commentators feared, albeit existing links are being used less efficiently due to default trade rules.
- Net zero remains a binding target, but concerns persist about net zero policy delivery in the UK and EU. The development of joint projects and infrastructure for offshore wind is a clear opportunity and a necessary win-win for the EU and UK.
- Brexit is still, in practical terms, far from ‘over’ – (re-)negotiations are ongoing and details of new agreements and regimes are, as yet, unresolved but may still be masked by the Covid pandemic.
- Energy and climate renegotiations continue to be caught in the cross-fire of Brexit friction between the UK and EU, largely on Northern Ireland and fishing issues. At the same time, the UK has lost abilities to influence the considerable amount of new climate and energy policy emerging from the EU.
- ‘Doing’ Brexit has taken up civil service and political capacity, at a time when new climate policies are urgently required to enable the UK to get back on track to meeting ambitious legally binding emissions reduction targets. This has been exacerbated by Covid-19.
