Brexit: and now for something completely different – but what?

British Prime Minister Theresa May has triggered Article 50 of the Lisbon Treaty, thereby giving the country 24 months to negotiate terms for leaving the EU. What will this mean for energy policy? Craig Morris has a tentative look with the help of an expert.

scrabble text with the words brexit and EU spelled out on a black background

What’s next for the UK? (Photo by Jeff Djevdet, edited, CC BY 2.0)

It’s enough to make you want to crawl into bed and watch Monty Python… the whole 7 DVD box of Flying Circus: The UK has formally announced its intention to leave the EU. In terms of EU climate and environmental policy, the news is bad, for the UK has had an overall positive impact on both. For instance, the British have been strong supporters of emissions trading and even have their own floor price for carbon because the price in the EU’s Emissions Trading Scheme (ETS) remains ineffectively low.

Perhaps not surprisingly, the country has reduced carbon emissions at home like no other in the EU. By 2016, emissions may have gone down by nearly 36% relative to 1990 (compared to less than 30% in Germany); Carbon Brief even estimates that total greenhouse gas emissions could have dropped by 42%. But if the comment section below that article is any indication, the British themselves are hardly proud of the outcome. Readers complain that the 1.5°C goal requires even more effort – and that the UK has deindustrialized during these years, thereby offshoring emissions. Nonetheless, it’s an outcome to which the rest of Europe can only give a nod of respect, especially at this sad moment.

What comes now is anyone’s guess?

The worst part of Brexit is the long period of uncertainty. The business world hates nothing more than uncertainty. As businesspeople in Texas say, “I can play it round, and I can play it square. Just tell me the rules.” For now, no one knows.

One main item is the ETS. The UK says it wants to remain on the platform, but some experts say that staying in is not a done deal, and Brexit might even been seen as an opportunity to switch to a carbon tax. “Although both sides might want continued UK participation in the EU ETS, I find it difficult to see how you get a deal on that in place in time, de-linked from the rest of the article 50 fiasco,” one expert told Utility Week. The UK’s retreat would remove an ambitious economy from the ETS, which might raise the price of carbon, thereby putting pressure on lazier EU member states – an outcome that might even be good for the climate.

But for quite some time, no one will know exactly, so the ETS as a whole could be weakened, with the business community left guessing when it comes to investment decisions. And that’s definitely bad.

And then there is nuclear

The EU was founded on two pillars: the European Steel and Coal Community and the European Atomic Energy Community (Euratom). In January, the UK announced that Brexit would mean the UK is leaving Euratom, even though London remains committed to building new reactors (on Monday, the British Office for Nuclear Regulation officially approved construction of Hinkley C).

Over the next five years, exiting Euratom means the UK will lose 4.4 million euros related to nuclear safety and waste projects, along with 310 million euros for fusion research at Culham, England. As with other foregone EU finding, London could simply replace the money, especially since the UK is a net payer to the EU – but add this task to the growing list of things to be dealt with ASAP.

In addition, some experts warn that leaving Euratom will make the British nuclear sector even more expensive because the UK will no longer be in line with the international supply chain. Adopting international standards could delay Hinkley C further.

Impact on the EU

“UK climate negotiators are among the best in their profession and were recognized for their skill and leadership,” Andreas Kraemer, founder of German think tank Ecologic, told me for this report. He says the EU will miss this expertise, but otherwise “the EU will not be much affected” by the UK leaving Euratom and/or the ETS. And with the EU no longer having specific member-state targets for renewables after 2020, renewables will hardly be affected either.

There’s obviously a lot more at stake here than energy, such as peace in (Northern) Ireland. Kraemer argues that London should look for a way to give the British what they want: “Scotland, Northern Ireland and Gibraltar in the EU, England and Wales out.” To prevent a precedent being set for Catalonia, Spain is expected to oppose Scottish separatism and re-entry in the EU. Scotland never leaving is one elegant way to get around this dilemma.

But Kraemer does not believe triggering Article 50 is a point of no return: “The British government can withdraw its request to leave the EU any time in the next two years.” Add that to the list of uncertainties. The main group to benefit from Brexit, whatever the outcome, is likely to be comedians.

Craig Morris (@PPchef) is the lead author of Global Energy Transition. He is co-author of Energy Democracy, the first history of Germany’s Energiewende, and is currently Senior Fellow at the IASS.


Craig Morris (@PPchef) is co-author of Energy Democracy, the first history of Germany’s Energiewende.

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