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#celive #seuk @CleanEnergyLive cleanenergylive.co.uk
4-6 October 2016 The NEC, Birmingham, UK
#celive #seuk @CleanEnergyLive cleanenergylive.co.uk
GROWING THE RENEWABLE ENERGY ECONOMY
Dr Nina Skorupska CBE
Chief Executive, Renewable Energy Association
5th October 2016
What’s the possible impact of
Brexit on the UK energy market?
Who we are Sector groups
Our various sector groups enable us to focus on
sector-specific issues. Members can join our various
groups concentrating on individual renewable
technologies, energy market sectors, or cross-cutting
issue forums.
Renewable Energy Assurance Ltd carries
out a range of certification and consumer
protection activities all of which promote
sustainable energy.
WHA is the UK trade association for the
modern biomass heating industry
Subsidiaries
4
X
Key Government Policy & Sector “Cross-Cutting” Priorities
REA Sector Group
Organics Recycling
Renewable Transport Inc. EVs
Biogas Biomass Heat/ WHA
Waste to
Energy inc. ACT
Geo –thermal
Biomass Power
Ocean Energy
UK Solar
UK Energy Storage
Policy
UK Renewable Power: Markets & Grids (FiT/EMR)
Renewable Heat (Renewable Heat Incentive)
Renewable transport (RTFO)
EU
Post Brexit: The new relationship with Europe
FORUMS/ Cross-Cutting
Groups
Finance Forum
Decentralised Energy Forum
Innovation – technologies & markets
Circular Economy
Sustainability / Land use
REA Priority Cross-Cutting Forums for 2016 (Extracted from REA’s Business Plan)
5
New Government – Key Positions
Prime Minister
Theresa May MP
• Very few public
statements on
Renewables/
Climate Change
Chancellor of the
Exchequer
Phillip Hammond MP
• Strong on Paris COP
• Redefined Conservative
Argument on Climate
Secretary of State for
Exiting the European
Union
David Davis MP
• Seen as a climate
sceptic
• Voting history of
voting against or
missing key votes
6
New Government Department
– Business, Energy & Industrial Strategy (BEIS, “Bays”)
Greg Clark MP
BEIS Secretary of State
• Historic support
• Former DECC Shadow
Secretary
• Authored reports on Climate
Change, Sustainability and
Environment
• Recent history in CLG of
concern
Nick Hurd MP
Minister of State for Climate Change and
Industry
Conservative Environmental Group
• PMB on Sustainable Communities
• Key in DfID on Solar in Africa projects
as Development Minister
• Former Chair of the APPG on
Environment
Baroness Neville-Rolfe
Minister of State for Energy and
Intellectual Property
• Former MAFF Civil Servant
• Director of Tesco
• IP Junior Minister
Jesse Norman MP
Minister for Industry and Energy
• Deputy to Baroness Neville-Rolfe
• Former Director of Barclays
• Also former Senior Fellow of Policy
Exchange where he wrote on green cities
7
The Department for the Environment and Rural
Affairs - DEFRA
Andrea Leadsom MP
Secretary of State for Defra
•Previously MoS for Energy at DECC
•Banking and finance background
•Advocate to leave EU
•Supported GIB establishment
Dr Thérèse Coffey MP
Parliamentary Under Secretary of State
for the Environment and Rural Life
Opportunities
• Previously Parliamentary Secretary and
Deputy Leader of the HoC
•Portfolio includes Waste Management
•2014 appointed Assistant Government
Whip
George Eustice MP
Minister of State for Agriculture,
Fisheries and Food
Part of the Pro-Brexit Fresh Start
movement
Lord Gardiner of Kimble
Parliamentary Under Secretary of
State for Rural Affairs and Biosecurity
Previously served as a whip and
spokesman for: Cabinet office, BIS,
Energy and Climate Change
• Portfolio includes Climate Change
Adaptation
8
The Department for Transport - DfT
Chris Grayling MP
Secretary of State for DfT
•Former SOS Justice
•Seen to the right of the party
•Anti-wind
John Hayes MP
Minister of State
• Previous Energy Minister
• Anti-wind/Reluctant on renewables
• Independent minister
• Responsible for environment and
technology
Andrew Jones MP
Parliamentary Under Secretary of
State
Continues at DfT, albeit with different
brief
Lord Ahmad of Wimbledon
Parliamentary Under Secretary of
State
• Former Home Office and DfT
• Responsible for Aviation
Paul Maynard MP Parliamentary Under
Secretary of State
• Strong advocate for
fuel duty freeze
9
Brexit - Article 50
10
Two-year timetable once the article is triggered:
“The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification”
Decides the terms of separation
• Ends the obligations and responsibilities of being an EU member
• Not a trade deal
• Needs approval from at least 20 member states with 65% of the
population
Brexit – Energy Policy Risks & Impact on Renewables
Ability to build Hinkley Point C
Capacity Mechanism - State Aid
- Diesel-gate
2025 Coal Pledge
2020/2030 Targets - Transport & Heat
Future CfD pots? - Shape/Rules
- Budget
Flexible/ decentralised energy system falls in priority
Government focus on
Interconnectors & Gas
Could also be tempered by the political atmosphere during negotiations and need for compromise.
11
Brexit – Other Policy Risks?
• EU procurement/ competition law
• Financial market changes
• Breakup of National Grid/ creation of
an Independent System Operator?
• European Investment Bank lending
to UK energy projects
• Limits on movement of labour
• REMIT: ACER transaction reporting
European Communities Act (1972)
13
Disagreement over whether it is necessary to repeal this Act in its entirety to officially leave the EU. The ECA gives precedence to the Treaty for the European Union. Article 192 – energy efficiency of buildings and products, market competition measures, and other environmental legislation. Article 194 - covers the majority of energy related legislation, including renewables. EU Secondary legislation (eg directives, decisions) – are implemented in UK law via Primary or Secondary regulations, usually via the ECA Section 2(2) SI
Renewable Energy Directive Energy Efficiency Directive
EU ETS EU 2030 Climate and Energy
Framework
Circular Economy Package
Renewable Targets
Renewable Energy Directive – EU (Subject to Brexit Negotiation)
•15% of all energy to come from renewables by 2020
•Will require 30% power, 12% heat and 10% Transport demand to come
from renewables
Climate Change Act (2008) - UK
- 80% reduction in carbon emissions from 1990 levels by 2050
- 5th Carbon budget will require 57% reduction by 2032, abatement of 1725
MtCO2e . Passed through parliament in July 2015
Cop 21 Paris 2015 – UN
•Agreed to aim for no more than 1.5oC warming and renewed
commitment to EU targets.
There are number of legally binding targets which remain in place driving forward decarbonisation.
Theresa May Speech at Conservative Party Conference
– 2nd October 2016
- “We will invoke Article 50 no later than the end of March next year.”
- Confirmed there will be no parliamentary vote on issuing Article 50
- Announced the “Great Repeal Bill” to repeal the European communities Act. To be given royal assent in The Queens Speech – May 2017.
- EU law to be copied into British Law at point of departure.
(EEA) / European Free Trade Association (EFTA)
Member of Energy Community
Member of EFTA, not EEA
Bilateral free trade agreement
No agreement - WTO laws apply
Subject to all
laws and regulations on Energy and Environment. But with no say.
Access to Internal Energy Market
Have to be part of EFTA as well
Group agree to
common EU regulations in assumption of transition into the Union.
Possible limited access to Internal Energy Market
May not be appropriate for UK
some regulations
apply, but not the full EEA conditions. Carbon trading market linked.
free trade agreements already in place with +20 countries, inc. Canada, Mexico &South Africa
Access agreed on
a range of goods and services. Purely trade related, and no say on the development of regulations or policy in the EU.
Canada secured favorable deal (99% of tariffs removed), but took 7 years
General
Agreement on Trade and Tariffs (GATT) for goods and GATS for Services. No input into regulations and policy.
Unclear what tariffs immediately following Brexit.
Energy/trade options going forward ?
16
Can any of the “alternative models” work?
Stabilise UK economy
Acceptable to EU leave
voters
Acceptable to EU 27
17
Ignore referendum result
WTO option
Access to Single Market
What the UK Government are saying they
will head for…
“We will seek the best deal possible as we negotiate a new agreement
with the European Union. I want that deal to reflect the kind of
mature, cooperative relationship that close friends and allies
enjoy. I want it to include cooperation on law enforcement and counter-
terrorism work. I want it to involve free trade, in goods and
services. I want it to give British companies the maximum
freedom to trade with and operate in the Single Market – and let
European businesses do the same here.
But let me be clear. We are not leaving the European Union only to
give up control of immigration again. And we are not leaving only
to return to the jurisdiction of the European Court of Justice.”
Theresa May, UK Prime Minister, Conservative Party Conference 2nd October 2016
Next for the Industry….
• Brexit Unit discussions
• Article 50 triggered?
• Expansion of Civil Service
• New Ministers -
- “Business as Usual” • Consultation RTFO
• RHI Changes
• Business Rates
• CfD auctions
• ECAs
• “Flexibility” call for evidence key for Storage
• Party Conferences
• General Election?
19
Brexit – Next steps
Lobbying government – BEIS / DCLG /DEFRA /DfT /Exit EU Department
Developing industry wide working group within the REA
REA Priority… Creating a unified voice for the renewable and clean technology economy
• Business clarity - Transpose existing rules
• Policy certainty - No rowing back from existing government
commitments and secure business as usual.
• Low-Carbon Infrastructure Strategy - Need to drive investment,
jobs and trade
• Internal Energy Market – A clear statement on in or out
Access to a secure market providing stability or rules to be avoided?
20
REA Priority… Creating a unified voice for the renewable and clean technology economy Post Brexit: The new relationship with Europe
1. UK political leadership & financial markets impact
2. Future energy market structure and environmental legislation
and regulation for the UK
3. “Business as usual”
- assuring a future for renewable energy and clean technology
21
Brexit EU Conference – 8th December 2016
REA to hold a half-day Brexit
Conference in December
-Review what we know six months since the
referendum
-Hear from Energy Minister about the UK’s
positioning in regards to energy and Brexit.
-Bring European voices and UK renewable
industry together to positively support future
direction of negotiations in 2017 and beyond
that influence the low carbon energy
economy.
GROWING THE RENEWABLE ENERGY ECONOMY
Renewable Energy Association
25 Eccleston Place
Victoria
London SW1 9NF
Tel: 020 7925 3570
Web: www.r-e-a.net
Key contacts for Post Brexit: the new relationship with Europe
James Court - Head of Policy & External Affairs, REA
Mark Sommerfeld – Policy Analyst, REA
http://www.r-e-a.net/http://www.r-e-a.net/http://www.r-e-a.net/http://www.r-e-a.net/http://www.r-e-a.net/mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]