How is the Brexit vote already affecting energy policy?

11 Jan 2017

The Brexit vote is already having effects on the energy sector, says Joseph Dutton, Associate Research Fellow, University of Exeter and UKERC Researcher, in an interview with the Royal Geographical Society’s Frances Dixon.

UKERC co-hosted a meeting with the Royal Geographical Society (RGS) last November that considered how we 'rescale' the UK's energy system and address the energy trilemma in the light of recent developments such as the policy reset and the Brexit vote. In an interview with the RGS’ Frances Dixon, conducted just before the meeting, Joseph Dutton, Associate Research Fellow, University of Exeter and UKERC Researcher, outlined key arguments around Brexit and energy.

Frances Dixon (FD): What will you be discussing this evening?

Joseph Dutton (JD): The key argument is really that until the government determines its position on what it will negotiate once it has declared Article 50 it is quite difficult to actually say what will happen! Lots of the legislation and regulation that’s already in place in the UK may or may not exist after we leave the EU – but depending on how the negotiations go, we’re not really going to know.

But I think it’s important to highlight the areas of policy that have already been affected and where the energy system is already experiencing the effect of the referendum result even though we haven't left the EU, and also to identify areas where in the future the UK could perhaps use this ‘rebooting’ of regulation and policy that may come to its advantage in developing an energy strategy linked with industrial strategy as well for the future, moving towards decarbonisation.

FD: Can you tell me a bit more about which policy areas have already been affected by the referendum?

JD: So one of the ones we’ve seen already is that because of the wider economic impacts of the referendum result, the exchange rates with the dollar and the Euro are already having an effect on the UK’s energy system. In the last decade or so, we’ve become quite heavily dependent on imports of gas, oil and electricity as our energy system has changed and, of course, as the exchange rate changes these have become more expensive and so already this is starting to effect the wholesale prices in the UK which is feeding into people’s domestic energy tariffs. This is also being seen in the price of petrol and food as well.

FD: What one recommendation would you give to policymakers working in this area?

JD: I think policymakers are in a really difficult position because of the tone of the referendum campaigning; they are in a position where perhaps what is favoured by the public may not be in the best economic interests of the country. This is something which I think is being shown by the government in that they may know that remaining part of the single energy market is really important for energy companies, but leaving the EU is what was promised as part of the referendum and ‘Brexit means Brexit’. This is why we’re seeing this will clash between legally what is going to happen and politically what is palatable for the UK.

But at the same time, I would say there is a silver lining in this in that the government through changing the makeup of the energy department [BEIS] could possibly have a better strategy going forward linking energy and industry together to tackle climate change, and working towards economic growth.

I think, as well, the government needs to remember that decarbonisation and renewable energy, whether or not we’re part of the EU, are still in the interests of the United Kingdom; and this may be an opportunity for us to further explore avenues of renewable technology that perhaps haven’t been visited so far. The UK’s in a really strong position, leading other European countries in terms of its renewable sectors and we have high resources for wave and for wind, and so I think maybe we should use this as a chance to crack on. That may also spur things to do with industrial growth and employment as well which are quite big areas for the government.

FD: How can we use geographical evidence to better inform our decision-making?

JD: I think at a really simplistic level we forget that we are, particularly in energy, physically connected to the EU. We talk about it in an abstract policy and regulation manner but, as I say, in a really simplistic way, we are only a few miles from Europe and we are highly interconnected with electricity and gas infrastructure. This is a really important thing in terms of moving forward; while the government says it will strikeout and develop international relations with other countries economically, certainly in energy terms there are things which are physically embedded because of where the UK finds itself, and the nature of the infrastructure and resources as well; so some things won't really change, just purely because of geography.

Full details of the meeting and interviews with other speakers are also available.