#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?

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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

jcourt@r-e-a.net

Mark Sommerfeld – Policy Analyst, REA

msommerfeld@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/http://www.r-e-a.net/mailto:jcourt@r-e-a.netmailto:jcourt@r-e-a.netmailto:jcourt@r-e-a.netmailto:jcourt@r-e-a.netmailto:jcourt@r-e-a.netmailto:msommerfeld@r-e-a.netmailto:msommerfeld@r-e-a.netmailto:msommerfeld@r-e-a.netmailto:msommerfeld@r-e-a.netmailto:msommerfeld@r-e-a.net