by Jonathan Gaventa, programme leader on European energy infrastructure at E3G.
There is no security in separatism, no innovation in isolationism, and nothing to be gained from walking away from our seat at the European table.
Connection to Europe will protect our energy security. Protecting UK energy security in a carbon-constrained world critically depends on our relationship with Europe.
It is a sad irony that as warnings of blackouts and squeezed capacity margins feature in UK headlines, power companies on the other side of the English Channel are shutting down brand new power stations due to massive over capacity. At one point last summer, wholesale power prices fell to negative €200/MWh in France due to low demand and high renewables output, yet the UK carried on burning imported coal and gas as we had insufficient grid connections to take advantage of the free power. In place of current government plans to force bill payers to subsidise white elephant fossil fuel plants in the UK, it would be far cheaper and more efficient to tap into existing power capacity elsewhere in Europe.
Participation in a European energy market offers massive economic benefits to the UK. Integrating markets across the EU could save European consumers €40 billion a year, with even greater cost savings if we located new electricity generation on an optimal basis. Studies show that UK consumers stand to disproportionately benefit from a better connected power system as they can access cheaper power from neighbouring countries.
The UK will be building out increasing quantities of wind, solar and marine energy in coming years to reduce our dependence on fossil fuel imports and meet climate change commitments. In this context, our ability to trade power within the EU becomes critical to controlling costs and protecting security, as interconnection is among the cheapest options for managing variability. We will need to export power at times of surplus, and will benefit from access to imported power when needed. This can only work in the context of a well-functioning European market and an integrated European grid system.
Low carbon energy security also depends on using energy more efficiently. This requires smarter energy use by lighting, cars, dishwashers and other consumer products. The EU is critical to making this happen. European efficiency standards set a global benchmark, and have forced a step change in the energy use of products, vehicles and industrial processes. Setting such standards, however, can only be done in the context of European co-operation, as it requires an economic weight that no individual country posses on its own.
Co-ordinated innovation is needed on a continental scale
Technology innovation is critical both for the UK’s economic future and for tackling climate change. Innovation doesn’t happen in isolation or by chance. It requires markets, capital, knowledge and choices to be organised on a continental scale. Cost reductions in key energy technologies will not happen in laboratories alone, they rely on co-ordinated deployment on a sufficiently large scale to enable learning-by-doing. This is a core element of European energy and climate strategy.
UK researchers currently benefit directly from EU research funding in areas such as advanced grid technologies, carbon capture, and marine renewables, and this will help give the UK a competitive advantage in such areas in future.
More fundamentally, however, we are benefiting now from the major cost reductions and technology innovations in wind, solar, waste management, industrial processes and electrical efficiency that have only been possible through co-ordinated deployment on a European scale over the course of a number of years. Since 2009, onshore wind costs have reduced by 30 per cent and solar PV costs are down by over 50 per cent. By comparison, UK gas prices have risen by 54 per cent over the same period. Without European collaboration, we would see massive duplication of efforts, with greatly diminished returns.
UK can influence the rules and create the policies within the EU
A British exit from the EU would mean giving up our ability to influence the rules of the market in our own interest, as well as losing our political weight in international negotiations.
Eurosceptic commentators often paint a bleak picture of the UK blindly following rules invented on the whims of distant Brussels bureaucrats.
The reality is that the UK has not been a victim of European energy policies; it has created them. British voices are ubiquitous in Brussels meetings and negotiations. The core basis of European energy law – the three energy liberalisation packages – directly copied the model of UK power sector liberalisation from the 1990s. The EU Emissions Trading Scheme, the central plank of EU climate policy, was based on an approach dreamed up by a UK think tank, was fought for by UK ministers, and directly replicated a similar scheme that operated in the UK. The EU 2020 climate and energy package, which sets renewable, greenhouse gas and efficiency targets for Europe, was initiated in a UK-run European summit at Hampton Court. Its key proponent was not a faceless Eurocrat but Tony Blair.
The uncertainty about the UK’s position in Europe is already diminishing this influence. Through threatening to leave the EU, we are at risk of giving up opportunities to protect our security, benefit our consumers, build our future economy and catalyse global action on climate change. This is in no-one’s interest.