Compliance with the Paris agreement, offshore wind energy, nuclear energy... While the United Kingdom is no longer part of the European Union’s joint action against climate change and has not been a member of the internal energy market since 1 January, the agreement on the post-Brexit relationship reached on 24 December includes various provisions aimed at maintaining a certain level of ambition and cooperation on climate and energy.
Perhaps the most striking provision is the right to terminate or suspend the agreement in whole or in part in the event that one of the parties should fail to comply with the Paris Agreement.
The European Commission welcomes the fact that for the first time, a trade and cooperation agreement puts the fight against climate change on an equal footing with other key areas.
Non-regression clause
In addition to this clause, the agreement provides for the fact that currently applicable environmental and climate standards may not be lowered in such a way that affects trade or investment between the parties.
This desire to prevent any risk of ‘environmental and climate dumping’ is particularly reflected by the inclusion of a binding and enforceable non-regression clause under which both parties undertake to maintain as a minimum, the level of climate protection in force on 31 December 2020.
In addition, the text reaffirms the EU’s energy and climate objectives for 2030, as well as British objectives (as included in their national energy and climate plan).
ETS
It also includes provisions on the Emissions Trading Scheme (ETS).
As promised in the agreement, London introduced its own carbon pricing system on 1 January 2021. This has to cover greenhouse gas emissions from electricity generation, heat production, industry and aviation (with an exemption for aviation stating that it can be included within a maximum of two years), states the document.
In addition, both parties will examine the possibility of “linking their respective carbon pricing systems in a way that preserves the integrity of these systems and provides for the possibility to increase their effectiveness”, for example by extending their scope to other sectors such as buildings, through a linked agreement in the future.
Energy
In terms of energy, the agreement stresses the importance of cooperating in the development of offshore renewable energies. It therefore provides for the creation of a specific forum to hold technical discussions between the two parties on the development of the offshore grid and the potential of the North Sea region in terms of renewable energy.
With regard to energy exchanges, the document notes the possibility of developing separate mechanisms for exchanges via interconnections in light of the fact that Great Britain is no longer in the Union’s internal energy market (Northern Ireland maintains a Single Electricity Market with Southern Ireland).
Based on the concept of ‘free volume multi-regional coupling’, these mechanisms would be implemented within 15 months of the agreement entering into force.
However, this model will be less effective than the single system used within the EU, according to the European Commission.
According to Máximo Miccinilli, Director of Energy and Climate at the Centre on Regulation in Europe (CERRE), even though it is not yet possible to predict what increase in energy prices there will be, there will be an impact on consumers’ energy bills, at least during the period in which these mechanisms are in the process of being set up.
The agreement also includes: - provisions to ensure non-discriminatory access to energy transmission infrastructure and predictable and efficient use of electricity and gas interconnections; - a new cooperation framework between EU and UK transmission system operators (TSOs) and energy regulators; - provisions to ensure security of supply; - provisions regulating subsidies for the energy sector.
However, will all of these provisions be enough?
Little risk of climate dumping in the short term
Noting that the UK has been “a leading country in terms of climate ambition” in recent years and that it has recently announced an ambitious target for 2030 (see EUROPE 12616/23), Thomas Pellerin-Carlin, Director of the ‘Energy’ Centre of the Jacques Delors Institute, believes that there is “little risk of climate dumping by the UK against the EU in the short term”, especially since the country will preside over COP26 in Glasgow in November.
Joining Mr Pellerin-Carlin, Máximo Miccinilli is of the opinion that the British Prime Minister, Boris Johnson, will be keen “to differentiate from the EU in terms of showing UK leadership on a global topic like climate”.
“I do not think that the clause about the Paris Agreement compliance will make any difference”, he specifically told EUROPE, judging that this “safety net” has very little chance of being used.
Rather than climate dumping, Mr Miccinilli fears that “the pathways to 2050 designed and implemented by London will not necessarily converge with the EU’s own pathway and that somewhat, the decarbonation plans will not reinforce each other but rather compete or distort themselves” , taking as an example the different perception of the role of carbon capture and storage (CCS) and nuclear technologies.
Indeed, as M. Pellerin-Carlin noted, “Great Britain has been the leading pro-nuclear country in terms of its positioning within the EU over the last 10-20 years”.
According to Mr. Miccinilli, the climate and energy chapter of the agreement actually includes “gaps”, which will have to be the subject of “specific arrangements to be made in the next years to come”, in order to put in place “broader institutional cooperation” to establish a convergent path towards 2050.
Finally, it should be noted that the Trade and Cooperation Agreement is accompanied by a separate cooperation agreement between Euratom and the United Kingdom on the safe and peaceful uses of nuclear energy.
See the trade and cooperation agreement between the EU and the United Kingdom: https://bit.ly/3s3wH1R and the agreement on nuclear energy: http://bit.ly/3bk9oe8 (Original version in French by Damien Genicot)