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  • How Brexit will affect energy and natural resources sector

How Brexit will affect energy and natural resources sector

01 July 2016

Noel Clehane , Global Head of Regulatory & Public Policy Affairs |

Although it is too early to know what the future EU-UK relationship will look like, some things are already clear.
The UK will continue to determine its own energy mix, as is the case today. However the UK Government will need to determine whether a new balance is required and deal with the consequent impact, primarily on renewables and nuclear. Oil and gas prices will continue to be set on international markets; and the UK will continue to need to trade energy with its European partners, not least to make up for its own power shortfall.

The EU’s focus is on creating an Energy Union by developing regional infrastructure and an open market for energy across the European Union. The UK’s exit from the EU will have little or no effect on the continuation of these plans.

Indeed, sources amongst senior policymakers have suggested that only two EU countries will be affected by a Brexit, the UK itself, which would potentially be excluded from these developments, and Ireland which would
effectively become an energy island unless it is able to develop energy interconnections with another EU country.

In addition, as the UK loses its ability to influence European energy, climate and environment policy, the EU will lose a market-led, pro-business heavyweight, which may lead to a more interventionist approach in policymaking by the EU.

The departure of the UK also means the loss of a strong voice for a market-based transition to a low-carbon energy system. Consecutive UK Governments have been strong proponents of ambitious climate policies.

For companies working in the UK energy and natural resources sectors, it will be important to take every
opportunity to influence the future direction of policy in this area both at EU and UK level.

Those with an interest in maintaining the current trajectory of policy – or something resembling it – need to work to ensure that these areas are not amongst the victims of areas of policy being reviewed in the UK as a result of the referendum result and any UK Government changes.