Westminster sets out EU energy agreement terms
28 February 2020 | Trading
The UK Government has set out provisions for energy arrangements as part of wider negotiations on its future relationship with the EU.
In a paper titled UK’s Approach to negotiations on Future Relationship with the EU, the UK Government suggests an agreement on energy could cover energy trading over the interconnectors between the UK and the EU, carbon pricing, and climate change.
The UK has undertaken domestic preparations to enable trade in electricity and gas over the interconnectors to continue from 1 January 2021 without an energy agreement.
Existing arrangements, including work carried out with regulators and Transmissions System Operators, will ensure security of energy supply is unaffected. In Northern Ireland, the Ireland/Northern Ireland Protocol to the Withdrawal Agreement provides the basis for the continued operation of the Single Electricity Market.
According to the paper an energy agreement covering electricity and gas trading could improve these baseline arrangements by facilitating efficient cross-border electricity and gas trade, facilitating technical cooperation between electricity and gas network operators and organisations in the planning and use of energy infrastructure connecting their systems and supporting the integration of renewable power and investment in decarbonisation projects in the North Sea.
The UK is committed to carbon pricing as a decarbonisation tool and the UK government will establish a UK system that supports its climate ambition, including net zero greenhouse gas emissions by 2050.
“This will enable UK energy generators, heavy industry and aviation to decarbonise their operations in an efficient and cost-effective manner,” stated the paper.
In the context of the UK’s approach to carbon pricing, it would be open to considering a link between any future UK Emissions Trading System (ETS) and the EU ETS, according to the document, referring to Switzerland’s ETS approach.
“Any such agreement would need to recognise both parties as sovereign equals with our own domestic laws. It could provide for mutual recognition of allowances, enabling use in either system, establish processes through which relevant information will be exchanged and set out essential criteria that will ensure that each trading system is suitably compatible with the other to enable the link to operate,” stated the paper.
On climate change the paper stated the UK is committed to tackling climate change and as COP26 President it will “work with all partners to deliver on the Paris Agreement”.
The document added: “This agreement should reaffirm both sides’ commitments to tackling climate change under the Paris Agreement. It should also recognise both parties’ right to regulate to meet our respective climate goals.”
Responding to the Government’s paper setting out the UK’s Approach to negotiations on Future Relationship with the EU, Energy UK interim chief executive Audrey Gallacher said: “In the year that the UK hosts COP26, Energy UK is pleased to see that energy is part of the negotiations on the future trade agreement between the UK and the EU.
“The Government rightly recognises the importance of the UK energy sector and the need to continue collaboration on energy and climate to tackle climate change and achieve our ambitious decarbonisation targets to reach net zero by 2050.
“Energy UK and its members stand ready to support the Government in achieving a deal that will allow the UK to deploy its low carbon infrastructure at the lowest cost to consumers, enabling further decarbonisation and delivering huge benefits for the UK economy, with new green jobs and a continuing role for the UK as a global leader in technology and innovation.”