Energy industry growing nervous over ‘Brexit fog’

The body’s 2018 Energy Barometer, which has been published on Tuesday (19 June), says the UK’s withdrawal from the EU was identified by its fellows and associate members as the second most pressing challenge facing the sector, up from fifth last year.

Despite an intervening year of negotiations with Brussels, acute concerns expressed in the 2017 survey have intensified around skilled workforce availability and the future relationship between the UK and the EU single energy market.

At the report’s launch, Joanne Wade, chief executive of the Association for the Conservation of Energy, said: “The Brexit fog is greater than it was last year. We still don’t know whether we have the workforce that we need and what the relationship (with the EU) is going to be and the date is getting ever closer.”

“There is still real anxiety and it would be really good to see the shape of the post-Brexit energy relationship with the EU so that the industry can start to see where the opportunities are.”

Louise Kingham, chief executive officer of the institute, said its members wanted to maintain a similar level of access to the EU.

“The more removed we are the greater the barriers will be.”

One-tenth of respondents to the survey said they saw no opportunities and benefits likely to arise from Brexit for the sector.

Quizzed on the biggest opportunities created by Brexit, respondents identified the UK’s ability to negotiate new trade agreements with non-EU countries, followed by flexibility to finance new electricity generating capacity and renewable heat.

Energy policy remained the most pressing challenge identified in the survey.

Despite the publication last autumn of the government’s clean growth strategy, institute members’ pessimism has increased about the UK’s ability to meet its fifth carbon budget commitment.

The proportion of members who believe the UK will meet the target, under which greenhouse gas emissions are set to fall to 57% of 1990 levels by 2032, has decreased from 19% to 12%.

The share of respondents who anticipate emissions reductions will fall marginally short of the target has grown by 5% to nearly half of the respondents, while the proportion anticipating a significant short fall has remained around one third.

One in ten institute members said the clean growth and industrial strategies both failed to address the most pressing energy issues, with scepticism most marked amongst those working in heat and power generation.

Energy efficiency was identified as the highest priority for the government to meet carbon targets most cost effectively.

In the wake of the government’s decision to phase out the sale of new petrol cars and vans by 2040, developing low carbon transport was viewed as the area where energy policy has had the most positive impact during the last year.

According to reports, this commitment will be watered down in a new road decarbonisation strategy expected to be published by the government later this week.

Across most other energy areas, over half of the respondents think that policy has had no effect or a negative one. The energy policies viewed least positively by EI members are reducing fuel poverty, simplifying energy taxation and securing energy supplies.

David Blackman

This article first appeared on edie’s sister title, Utility Week