3rd July 2017 | Posted by: Daniel Birkett | Industry News

Eurelectric has provided its analysis on the various consequences which could be caused by ‘Brexit’.

Eurelectric, the trade association for the European electricity industry has produced an initial view on the potential impact of Brexit. The organisation warns that energy trading negotiations might not be finalised within the two-year period dictated in article 50.

Eurelectric said it would welcome ‘transitional arrangements’ and ‘harmonised rules’ to avoid any potential distortions that have adverse effects on wholesale electricity prices, as well as ensuring supply security in the EU’s internal energy market. In its analysis, Eurelectric concluded that the UK will need to look at a broader governance framework and a non-domestic dispute resolution, should it want to remain in the Internal Energy Market without automatically applying for EU legislation and adhering to the European Court of Justice.

As a potential solution. The analysis suggests that the European Free Trade Association (EFTA) Court and the EFTA Surveillance Authority could overlook any jurisdictional matters.

Eurelectric also added that on-going engagement and commitment from the UK in regards to legislation would be welcomed and doing so will strengthen their relationship with the EU going forward.

The report focused on one potential issue, namely the UK leaving the EU carbon emissions trading scheme (ETS) which would directly affect prices.

The scheme is vital to the EU’s attempts to prevent climate change and has reduced emissions at over 11,000 energy intensive sites. Certain emissions produced at these sites are capped by the mechanism, this cap then decreases over time to reduce the amount of greenhouse gas produced. Companies can then receive or buy a limited amount of emission allowances as needed, as well as international credits to make use of low-carbon generation projects around the world.

If the UK were to leave the scheme, then around 8-9% of demand would leave with them, thus leading to an adjustment of supply allowances. This could have a significant impact on the EU’s 2030 climate and energy targets and the UK would need to create a linked scheme to achieve free and fair trading.

In summary the report revealed a breakdown in the relationship between the EU and the UK and the effects would mainly be felt by the UK itself, as well as connecting countries.