Article from: OGEL 2 (2017), in Editorial
While Brexit impact is unfolding before our eyes, it is clear that it will take years for researchers and policy makers to realize the full impact of Brexit on various sectors of the economies of the UK and the EU. Complete untangling of the web of connections that took decades to build between the UK and other EU members seems an impossible task, even if the focus is only on energy issues as shown in the papers of this special OGEL issue on Brexit. While studying the impact of Brexit is interesting, it is clear from the research in this volume that studying the continued interdependence between the UK and the EU is even more interesting.
Worth noting an issue that one of the authors touched on: the decline in the value of the British pound has a direct impact on investment in the oil and gas sector in the North Sea. Even without change in government policy and without any new incentives, lower sterling reduces the cost of exploration and production in North Sea since 50%-60% percent of the cost is denominated in local currency. However, Brexit will make financing more complicated, and probably more expensive. Still, the net effect could be positive for UK companies operating in the North Sea.
Three common threads among all papers, despite the fact that they differ in focus: cost of energy supply, security of energy supply, and new agreements take time. These issues will continue to dominate any future agreements and will continue to appear in future research.
The first two articles in this issue focus on the impact of Brexit on infrastructure and interconnections. The first paper by Silke Goldberg on interconnectors concludes that "A reliable alternative regime would need to be negotiated which will likely have an impact on both costs and the security of supply for the UK " while remaining in the IEM could be among the best solutions and "is likely to provide more security not only for their relevant projects, but also for the energy sector as a whole.
In the second paper, Andreas Gunst discusses the implications of a hard Brexit on UK-EU interconnectors. He concludes any new arrangements will take a long time to negotiate and he proposes the use of interconnector-specific intergovernmental agreements.
The remaining four papers focus on the impact of Brexit natural gas supply, nuclear energy, and the emission trading systems.
Malin Andréasson focuses on post Brexit gas supplies in the UK. She provides the theoretical and the legal aspects of the options available to the UK to insure energy security is post Brexit era. Thuo Njoroge Daniel also focuses on the gas sector and provides an overview of the UK natural gas sector. He expects the post-Brexit UK to create "a more attractive investment climate for oil and gas investors".
Authors Silke Goldberg and Shekhor Sumit examine the impact of the UK exit from the European Atomic Energy Community "Euratom". They conclude that a UK exist might lead to "serious consequences for the civil nuclear generation sector" that might result in "UK nuclear power stations being forced to close"
Andreas Gunst writes about the impact of Brexit on the EU Emissions Trading System ("EU ETS"). Tremendous work needs to be done to create the UK ETS and then linking them to the EU ETS. He examines the various choices including the Guarantees of Origin ("GoO") system.
There are still several energy issues that need the attention of researchers and probably more that will emerge as the UK negotiate its exit. However, the hope is that the Brexit will take the easiest way out for all parties.