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.
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