Saturday, May 6, 2017
ELECTION IRONIES. WHERE WILL EU ISSUES PLAY INTO UK CLIMATE POLICY?
As the UK moves towards the June general election, there is a widespread assumption of an overwhelming victory for Mrs May’s Conservatives. So it is perhaps time to put a positive spin on this most probable outcome and consider the issues that may arise for UK climate policy.
A very strong personal position for Mrs May, and the crushing of UKIP, will make it much easier for her to agree the inevitable compromises that will be required to secure exit terms that avoid the economic disaster of a no deal exit. Inter alia this is likely to include substantial “divorce payment” even if it is well short of the £ 100 bn plus that is a negotiating position currently hinted at in Brussels. But almost any viable agreement will include other equally substantial disappointments for the diehard Brexiteers.
Energy issues will not be top of the list of problem areas, but Brussels may seek to retain the UK within the EU ETS, ostensibly on the grounds of ensuring “fair” competition in trade. The UK should not resist this too strongly, first because the EU ETS has in any case proved to be a rather ineffective instrument, but more importantly because there are potential longer term advantages to membership of a regional block for trading carbon emissions, should these arrangements ever escape from the cycles of weak adjustment to rapidly changing conditions within an inflexible political framework.
In broader terms the UK would be ill advised to seek to separate itself from continental European systems. Interconnection is a major part of future UK energy plans, and a common basis for trading and interconnection protocols and coordination of interconnection investments has some clear positive benefits to both parties. There are also strong contractual and other relationships in the nuclear industry (including disposal of nuclear waste) which will need to be maintained in some form.
There are signs that Mrs May is moving sharply away from the market fundamentalism that has characterised much of the Right of the Tory party, and especially its members most closely associated with campaigning for Brexit. The evidence for this has been most clear in terms of her ambitions for a government that “works for all of the people”. But its most concrete manifestation to date has been in the threat of a “price cap” for the energy utilities. This would be the death knell for the liberalised market as we have known it.
A further irony has been the revelation that price caps currently apply in about half of other EU countries, indicating (whatever general view one takes on their wisdom) that much or most of the EU has not followed the UK market liberalised market model very far down the road. The UK is retreating further towards a more typical EU paradigm of mixed market and interventionist approaches. All the while the Commission itself has been pushing to move faster to liberalised and UK-inspired “single market” solutions. The irony is that at the point of its departure the UK will actually be moving into closer alignment with its neighbours, at least in terms of its general philosophy.
There have been suggestions that consumer bills will be prioritised over renewables investment. On the other hand a government that works for “all the people” may also be predisposed to projects that can show a substantial wider benefit to the economy. Industrial strategy may be back in fashion, and is unlikely to be directed to new fossil technologies except (just possibly) in renewed interest in carbon capture (CCS). It is more likely that nuclear programmes will be maintained, and projects such as the West Coast tidal lagoons, which can show major external benefits (as well as carbon saving) will get some serious attention.
The negotiations have clearly got off to a bad start, with a trio of apparent incompetents in key roles. This does not augur well for either any sort of agreement, or even less for a “good deal” for the UK. But we have to hope that sense will prevail. If it does, and even though Brexit is not the preferred scenario for most Greens and others engaged with climate policy, then there is no reason to despair of at least some continued progress in UK climate policy.