It is in the EU and Britain’s best interests to work together on energy policy once Britain has left the EU, Chatham House said in a new report, Staying Connected: Key Elements for UK–EU27 Energy Cooperation After Brexit.

Strong energy cooperation would allow existing and future interconnectors to be used as efficiently as possible, helping all countries to decarbonise, Chatham House said. The think tank recommended that the best way to achieve this would be to establish an enlarged European Energy Union, so that EU policies could align with non-member European countries, including the UK, Norway and Switzerland, while also allowing non-member countries to access the EU’s Internal Energy Market (IEM). 

The research paper also made the following recommendations:

• Any future agreement needs to maintain the Single Electricity Market (SEM) across the island of Ireland, as failure to do so could result in an expensive duplication of infrastructure and governance
• EU funds and European Investment Bank (EIB) loans account for around £2.5 billion of the UK’s energy-related infrastructure, climate change mitigation, and research and development (R&D) funding per year. The UK will need to replace these funding sources to ensure that its energy sector remains competitive and innovative.
• To remain fully integrated with the IEM, the UK government, British companies and other relevant stakeholders will need to maintain an active presence in Brussels and European energy forums, so that constructive and informed engagement can be sustained.
• The UK may be required to leave the EU Emissions Trading System (ETS). To maintain carbon pricing in some form outside of the ETS, the UK would need to either establish its own emissions trading scheme; or build on the carbon floor price and introduce a carbon tax. Either of these potential solutions would need political longevity to be effective.

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