News | Published June 30 2019

EU could reduce winter energy exports to Britain after Brexit, industry leader says

Brexit may put the UK at risk of gas supply shortages and rising prices in winter according to European energy mogul Marco Alvera.

Alvera currently heads European industry group GasNaturally and is the chief executive of Italian gas company Snam.

Almost half of the gas supply consumed in the UK comes from Europe and government figures say that 39 per cent of the country’s overall electricity supply was generated by natural gas in 2018.

Yet, Alvera told the BBC that gas exports to Britain may be restricted during cold spells.

He said: “We’ve spoken to several ministers and civil servants over the last two years. Energy has not been discussed enough.

“I would make [energy] a high priority in the discussions, and I haven’t seen it be like that”.

Alvera also warned that despite UK reliance on imported natural gas resources over the winter, it may not prevent EU nations introducing tariffs on their gas and electricity exports after Brexit.

He added: “In the week [last year] when we had the ‘Beast from the East’ cold spell, the system was already under a lot of strain, and the UK was taking a lot of gas from Europe that was stored in Europe”.

Alvera also pointed out the decline in the UK’s own gas supplies in the North Sea and the shutting down of parts of its gas storage infrastructure as issues which exacerbated reliance on European energy.

However, he believes that converting disused North Sea gas fields into storage facilities could help remedy the issue.

In 2017, figures from British Gas showed that 44 per cent of UK gas is domestically produced, with 47 per cent coming from Europe (Russia and Norway) and the remaining nine per cent from liquefied natural gas (LNG) imports.

The figures have since prompted questions over UK reliance on Russian energy sources while diplomatic relations remain tense.

In the case of Norway, although it is not an EU member state, it does fall within the Internal Energy Market and is therefore bound by EU rules.

A 2017 report from the House of Lords on the issue declared it “unlikely” that the EU would hit gas and electricity supplied to Britain with tariffs after Brexit, even if the UK leaves with no-deal.

However, it did say that tariffs may occur elsewhere in the energy industry, including on products widely used in building and maintaining the energy system.

By all accounts, any associated shortage risks would most likely come about after the UK leaves the EU’s Internal Energy Market.

Under the Withdrawal Agreement, this may occur at the closing of the transitional period on December 31, 2020.

Should the UK leave the bloc with no-deal, the UK would theoretically depart the Internal Energy Market with immediate effect.

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Authored by

Scott Challinor
Business Editor
June 30 2019

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