What will be the impact of Brexit on clean energy in the UK? Answer: nobody knows, because nothing is remotely clear in British politics now. Who will be prime minister? Will there be an early general election? What will be the relationship between the UK and the remaining EU member-states? Will there even be a UK?
However, some broad predictions can be made – and they are not optimistic.
In the short term, there will probably not be significant change in the policy framework. But there will be further slowdown in investment in energy infrastructure: potential investors do not like instability. Investment in renewables will be reduced because the UK will no longer be obliged to meet the 2020 legally-binding renewables target. Investment in new nuclear will also be reduced: progress on Hinkley looks even less likely this week than it did last. Investment in new interconnectors will probably suffer less. Other countries’ governments may be very cross with Britain, but that will not stop them wanting to sell us more electricity.
In the medium- to long-term, some laws governing the energy sector will probably be revoked or weakened. The free market right of the Conservative party has been strengthened, and attacks on ‘Brussels red tape’ were frequent in the successful Leave campaign. There were criticisms of the EU’s 2010 Industrial Emissions Directive, which limits air pollution emissions from power stations and protects public health (http://www.thelancet.com/commissions/climate-change-2015). However, air pollution is quite high on the UK political and media agendas. So the Industrial Emissions Directive will probably remain in force post-Brexit.
Weaker climate policies
Climate policies look more vulnerable, because there is a significant overlap between Euroscepticism and climate scepticism. The UK’s Climate Change Act, which commits the UK to reduce greenhouse gas emissions by at least 80 per cent (from1990 levels) by 2050, was passed with all party support in 2008 – only five MPs voted against. There are more climate sceptic Conservative MPs now than there were in 2008, and likely to be even more following a general election called by the new prime minister. But the new government is not likely to repeal the Act. Instead, it will probably weaken it by adopting less ambitious ‘carbon budgets’. The Act requires governments to set such budgets for four year periods, on advice from a Committee on Climate Change. The Cameron government has yet to accept the Committee’s latest recommendation.
The 2010-15 Conservative-Liberal Democrat coalition government implemented an Emissions Performance Standard banning the construction of new coal power stations unless they have carbon capture and storage. The opposition Labour party tried to get this applied to existing coal as well (as Obama is doing with his Clean Power Plan). There is now little likelihood of this happening. And the promise made by energy and climate secretary Amber Rudd (a leading Remain campaigner) to close unabated coal by 2025 looks unlikely to be met. Rudd said in her speech announcing this target that it would only be implemented if consistent with energy security. The slow down in energy infrastructure considered above makes the target much more challenging.
The coalition also introduced a ‘carbon floor price’: emissions allowances under the EU Emissions Trading System are not sold in the UK if the auction bid is lower than £18 per tonne of carbon dioxide. This raises around £2 billion a year, (https://sandbag.org.uk/site_media/pdfs/reports/Sandbag_Carbon_Floor_Price_190312.pdf ), so a Chancellor of the Exchequer will not want to abolish it. But making UK operators pay around three times the cost of allowances elsewhere in Europe does not help UK competitiveness, so the next Chancellor will come under considerable pressure to scrap it.
Advanced nuclear power
Post-Brexit, there will be less Europe-wide collaboration on energy R&D. This will hamper research. In the words of Universities for Europe:
“Working together, UK and European researchers can pool their resources, expertise, data and infrastructure to achieve more together than they could do alone. Many of today’s challenges are global, not national. In the EU, researchers can collaborate more easily to come up with solutions on an international scale, making the most of Europe’s diversity to achieve bigger and better results. EU frameworks, programmes and funding support collaboration are reducing the barriers to working across borders.” (http://www.universitiesforeurope.com/news/Pages/home.aspx)
This additional barrier does not make energy R&D impossible. The UK must continue to invest in energy innovation. Chancellor George Osborne promised in his 2015 Autumn Statement £250 million over five years for nuclear innovation. In his March 2016 Budget he allocated £30 million to a Small Modular Reactor (SMR) competition. The Department of Energy and Climate Change is currently talking to potential SMR developers. This is in line with our recommendations (see http://www.the-weinberg-foundation.org/wp-content/uploads/2016/04/Next-Steps-For-Nuclear-Innovation.pdf). However, the referendum result means that the UK government has less money than expected. And a competition does not guarantee that money will be provided. The UK ran a competition on Carbon Capture and Storage but then cancelled it without giving any awards. The top priority for Weinberg Next Nuclear in the coming months will be to try to ensure that the SMR competition continues and leads to financial support to developers.