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Brexit and Energy

Lord Howell

In the all-consuming Brexit debate energy has been the neglected child.

The subject hardly appeared in the British Prime Minister’s struggle with his European partners to get a re-negotiation ‘deal’, now largely forgotten, and except in occasional references to climate change has scarcely featured in the stormy and bitter arguments surrounding the issue.

This is strange because amongst the areas of central importance demanding major reform the energy policies of the EU would certainly be a top candidate. The basic aims and targets of European energy policy, it will be recalled, have all along been to achieve affordability, security of supply and reduced CO2 emissions. All three have delivered spectacular failure.

Affordable energy has become a memory. In several EU states energy has become some of the most expensive in the developed world, with direct and shattering impact on energy-intensive users, such as steel in the UK, and on poorer households. In Germany the damage to industrial competitiveness has been described (by the former Energy Commissioner Antonio Tajani) as ‘a massacre’. In the UK angry voices are being raised that, contrary to earlier Government promises that green surcharges would not be out of step with European neighbours, energy costs have in practice soared above the levels of competitors.

On the security side, stable and reliable power supplies have been replaced in at least two major member states (UK and Germany) by talk of black-outs and interruptions. In the British case the situation has become acute, with the spare capacity in the electricity generating system dropping to danger levels and the National Grid being driven to increasingly expensive emergency arrangements.

As for carbon emissions the latest figures from Eurostat tell a miserable story. Emissions in the EU from fossil fuel combustion actually increased in 2015 compared with the previous year (by an estimated 0.7%). This figure conceals large variations with Denmark, Finland and Britain recording reductions but many other states outweighing them with substantial rises. And of course even the fall in emissions arising from production and power generation in a big economy like the UK is masked by consumption-related emissions, notably from record levels of imported goods. When these are taken into account the total emissions figures continue to climb way above 1990 levels, and above both EU targets and the UK’s self-imposed still higher aims for 2030 and beyond.

UK and European Union Flags
Picture Credit: Flickr/Elliott Brown

In Germany it needs no further statistics to confirm the environmental damage as rising quantities of lignite coal are poured into power stations.

How is it that this whole area of mishap has been more or less ignored as the Brexit charges fly back and forth between the ‘leavers’ and ‘remainers’, and as the whole outside world looks on with growing unease? After all, the very foundations of the 20th century move for European integration were rooted in energy as the vital ingredient for a recovering Continent, with the original Coal and Steel Community and Euratom leading the way.

One answer is that the Brexit debate has not really addressed major issues of EU reform. Initial intentions were undoubtedly that the focus should be on the reform and future of all aspects of the EU as it stumbled into an unending crises.

But then somehow the debate lost its way. Advisers crowded in to insist that it should all be reduced to a shopping list of British demands, and that the fundamentals, the pillar principles, of EU architecture should on no account be touched. What should have been from the outset a deep European question became a British question – and a narrow one at that.

A second answer is that the complex issues surrounding the energy and climate debacle in Europe do not fit into the polarised simplicities of the British ‘Stay or Leave’ squabble.

The priorities for energy policy reform in Europe demand both more integration and less, at one and the same time. More physical integration, through gas pipeline and electricity connectors, both east-west and north-south, is urgently required, with the central drive and coordination clearly needing to come from Brussels, although with funds from the private sector. This is to some extent recognised in the most recent manifestation of policy, Proposals for an EU Energy Union.

In contrast, far less EU central direction and much more dispersed flexibility, are the imperatives in the conduct of energy investment and transformation towards a new energy mix in the digital age. With power supply itself likely to be increasingly localised, both at community and even at individual home unit levels, the whole world of giant energy systems linked by elaborate transmission networks, begins to fall away. The case for centralisation of energy policy or provision in the EU, which dominated 20th century thinking about scale and size, is rapidly being outdated.

A third answer could be that the energy issue in Europe has become politically entangled with Russia and the question of over-dependence in some states on Gazprom pipeline supplies. A policy attitude which until about 2010 or 2011 was set to downgrade all fossil fuels, not only coal-burning and oil but gas as well, was tumbled into reverse by Ukraine and Crimea events, and by the sudden conviction that non-Russian gas supplies must be increased almost regardless of cost or carbon considerations.

A fourth consideration has been that EU Commission thinking was based from the outset on both continued high oil and gas prices and peak oil. In both areas they were proved wrong, thus flawing their strategic arguments.

In sum, for those interested in a stronger and modernised EU, resting on a 21st century model which takes full account  of the age of information and big data and its massive transforming effects, and for those interested in reliable  and affordable energy supplies throughout the European region, the polarised Brexit debate offers little or nothing. It coincides with the widespread view lying beneath the radar of shrill media headlines, that this is the wrong debate about the wrong issues.

European energy policy, with its attempts to impose uniform patterns of decarbonisation on all member states, has proved a demonstrable and immensely expensive strategy. The concentration of resources on subsidising renewable and penalising fossil fuels has been misplaced and ineffective. Progress lies far more in the direction of new technologies, greatly improved energy efficiency and innovation in every aspect of energy supply and consumption.

The ill-focused Brexit debate offers nothing on any of these fronts. A pity – and there will be a heavy price to pay, both by the environment, by the poorest people and by the European economy.

The article was first published on 17 May 2016

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