Briefing Paper

Brexit and the EU Energy Union: Keeping Europe’s Energy and Climate Transition on Track

By

Tower bridge shard at night coloured lighting

The UK’s referendum on leaving the EU in June 2016 was a surprise to many on both sides of the channel. The decision has kicked off a broad conversation on reform. Two specific processes have been initiated: a set of exit negotiations with the UK now that the UK has triggered Article 50, and a wider debate on the ‘Future of Europe’.

So far, there has been relatively little political focus on energy and climate change in either reform process. This is an unfortunate oversight: European citizens rank climate change as a key security risk, and investment in clean energy and low carbon technologies is central for the economic development of Europe as a whole.

A positive approach is needed that both protects the EU’s Energy Union and climate ambition, and recognizes Europe’s climate transition as core to Europe’s future energy relationships and the future of Europe itself.

This briefing note maps out the key risks for the EU-27 on climate and energy from the Brexit process, and a way forward for building Europe’s Energy Union after Brexit.

Summary

The European Union has committed to develop “a resilient Energy Union with a forward-looking climate policy”, and has embarked on reforms to integrate energy markets across borders and accelerate the shift to an efficient, low-carbon and high-renewables energy system.

The decision of the UK to leave the EU does not change the underlying case for Europe’s energy and climate transition, but it does complicate efforts to take the Energy Union forward. The UK is deeply connected into EU energy policies, markets and physical systems. In both political and practical terms, dealing with the UK’s exit will be complex.

Five specific threats for the EU-27 need to be managed to keep the Energy Union on track as the Brexit process unfolds:

  • Distraction: Maintaining political focus and diplomatic capacity.
  • Deregulation: Avoiding a ‘race to the bottom’ on environmental standards.
  • Disentanglement: Ensuring the integrity of climate and energy policy instruments.
  • Disruption to markets: Securing pathways for trade in clean energy and low carbon goods and services.
  • Deferral of investment: Averting a hiatus in clean energy investment, particularly in the context of changes to European Investment Bank and EU budget.

Beyond managing risks, the reform processes unleashed by the Brexit vote are an important moment to recast not only UK-EU energy relationships, but also EU energy relations with third countries in general, and the role of the energy and climate transition in the ‘Future of Europe’ debate itself.

Conclusion

Managing the risks of Brexit will be important for keeping the Energy Union on track, but it is not sufficient.  The decisions taken through the Brexit negotiations and related reform processes have the potential shape the future not only of the future UK-EU relationship on energy, but also the position of third countries in the Energy Union more generally and the role of energy and climate in the Future of Europe itself.

With this in mind, there are several emerging areas that are worthy of further development and attention:

> Bottom-up cooperation and ‘facts on the ground’

The future of the UK-EU relationship on energy and climate change will result not only from formal negotiations but also from the ‘facts on the ground’ created through practical, bottom-up cooperation that will continue even during and after the formal negotiations.

The international climate change agenda will be an important venue for this. Despite the Brexit vote in June 2016, deep alignment and cooperation continued into the 2016 UNFCCC conference in Marrakech. This practical focus on shared interests will help to maintain trust and establish conditions for future relationships.

Bottom-up cooperation is also happening at sub-national and regional levels as well as via the EU. The Mayors of London and Paris have launched a cooperation initiative on air quality and emissions monitoring. UK cities play an active role in European networks on climate and clean energy, including the Covenant of Mayors.

Similarly, even after the EU referendum the UK joined a regional political initiative on North Seas Grid collaboration, in recognition of the shared value in coordinated development of offshore renewables and interconnection resources.

> A ‘collaborative track’ to the exit negotiations

Explicit venues for cooperation on climate and clean energy may also be needed in the exit negotiations themselves.

Much of the attention on the negotiations so far has focused either on the conditions of exit (e.g. resolving outstanding financial liabilities) or on a future trade agreement. Such a narrow economic framing overlooks the mutual public value of cooperation in areas beyond budget and trade, including on climate change and environment. Other sectors such as digital, security, innovation, health, science and criminal justice are also important venues for continued and dynamic cooperation between the EU27 and the UK.

The structure of the negotiations will need to allow for sufficient time and negotiating space for a ‘collaborative track’ on long-term shared interests to succeed.

> Energy Union beyond EU borders

The Brexit negotiations mark an opportunity for rethinking EU relationships with third countries on energy more generally, as negotiations with the UK may form a precedent for other external energy partnerships in future.

European Commission Vice President Maros Sefcovic has backed the idea of an ‘Energy Union beyond EU borders’. There are a very wide range of initiatives for enabling this, including regional initiatives including non-EU countries (such as the North Seas Grid initiative which includes Norway, and the CESEC initiative in South East Europe) and more formal structures such as the European Community.

There are strong drivers for the EU to widen its energy relationships with its neighbours, including access to renewable energy and flexibility resources, and cooperating on energy security.

A set of common principles should be developed to underpin different models for participation in the ‘Energy Union Beyond EU Borders’. The Brexit context offers an important trigger for a dialogue to be initiated between the EU and its neighbours on how to take this cooperation forward.

> Integrating Energy Union into Future of Europe

Finally, the UK’s vote to leave the EU triggered a broader process of reflection on the “Future of Europe” itself. A European Commission White Paper was published in March, and European Council conclusions are likely to be agreed in December.

This ‘Future of Europe’ process is an opportunity to deliberate the core values of the EU, what it chooses to focus on and ultimately how the EU operates. The EU Energy Union should be positioned at the heart of this process. Rather than being treated as a technical process or subsidiary concern, the EU’s energy and climate transition will be central to the prosperity and security of every European citizen. The issues at stake range from the directly personal (the air that we breathe) to the most geopolitical (ending energy import dependency and restoring vitality to the global economy).

Read the full E3G Briefing Paper: Brexit and the EU Energy Union: Keeping Europe's Energy and Climate Transition on Track.

Newsletter Signup