MAKING A SUCCESS OF BREXIT
As a net importer of energy since 2004 and with import dependency expected to grow, the UK's continued trade in electricity and gas across borders, and through interconnectors, particularly between Northern Ireland and the Republic of Ireland, is important for providing secure, reliable and affordable energy for UK customers. Additionally, barrier-free access in cross-border trading and preserving the benefits of joint harmonisation with our European partners will benefit the economy. Trade in goods and services is also critical to the efficient operation of the energy sector, and to future investment. While gas and electricity do not face high tariffs under WTO rules, it will be vital to avoid tariffs across the supply chain.
A stable legal and regulatory environment is key for investment in the energy sector. Continued co-operation and engagement with EU stakeholders and Member States on energy policy issues will be important to safeguard the UK's future interests. This is particularly important in Northern Ireland which shares an electricity market with the Republic of Ireland. While it will be important to retain the benefits of the Internal Energy Market (IEM), continued participation will depend on the UK's ability to influence rules and standards that may still apply to our energy sector. The EU Emissions Trading Scheme (EU ETS) is a key instrument to drive decarbonisation in a lowest cost way. However, if the UK is
to continue to participate in the EU ETS, it will be important to secure a continuing say over its future development.
Clarity will also be needed over the UK's long-term participation in other key pieces of EU energy legislation, which have clear interactions with domestic policies and consequences for industrial competitiveness. A long-term vision will also be required for the UK''s role in international agreements, such as the Paris Agreement, which – while agreed on an international level – are implemented through EU regulation.
The UK energy sector currently faces a skills shortage in some areas, for example offshore wind farm engineers. The total number of jobs in the energy sector is also forecast to grow by 15.5% by 2022  , so it will be vital to ensure all businesses continue to have access to the skills they need.
UK energy projects are currently able to compete for EU funding through programmes such as Horizon2020 and Projects of Common Interest, which can help with important investments. The UK is the biggest recipient of the EIB's dedicated energy funding, securing 24% of total available funds  . The government's announcement that it will guarantee funding for UK research and innovation projects under Horizon2020 is a welcome step, but there is a need to clarify the longer-term funding framework.
Given the range of energy regulations currently enforced by the EU, leaving without a deal would create an unprecedented situation. Domestic regulation could blunt some of these effects. However, the UK could lose the privileges of the IEM and joint legal mechanisms for managing the all-island Ireland electricity market. Avoiding this situation through a new deal, and interim arrangements if necessary, is imperative for current and future investments.
For energy at the CBI, contact Elsa Venturini on +32 (0)2 286 1139 or Elsa.Venturini@cbi.org.uk