What will happen to the UK energy sector after Brexit?

We recently arranged for Dr Sara Budinis to attend the Westminster Energy Forum seminar on the 30 June. She has kindly written us blog post reporting on what happened at the event. With the event less than a week after the EU referendum result unsurprisingly the main topic of discussion was the effect on the UK energy sector, in the short and long term.

Dr Sara Budinis
Dr Sara Budinis

In a week of unprecedented uncertainty both politically and economically for the UK, the agenda and speakers for the day had been changed multiple times. However, this wasn’t really surprising given the aim of this particular seminar was to discuss the UK energy scenario post-referendum;  it seems to me that many speakers invited to the event had not anticipated the outcome and had to decline being unprepared to take a position yet on the topic.

However, there was still a substantial turnout to the seminar in both speakers and delegates. The list of speakers included senior representatives from the UK Government (Ian Liddell-Grainger MP, House of Commons, and Chair, Parliamentary Group on Energy Studies), the industrial sector (Andy Hirsch CFO, ENGIE; Dan Lewis, Senior Infra Adviser, Institute of Directors; Gareth Davies, MD Poyry; Eirik Wærness, Chief Economist, Statoil) and the investment sector (Liam O’Keeffe, Managing Director, Head of Special Projects, Crédit Agricole; Adrian Scholtz, Partner, Corporate Finance, KPMG; Keith Waller, Senior Adviser to Infrastructure and Projects Authority, HM Treasury; James Pay, Partner, Clifford Chance).

Some key priorities were identified, and these included:

  • Energy security, which must be granted by having access to a wide portfolio of energy sources including fossil fuels (with a special focus on Liquefied Natural Gas [LNG] and fracking), renewables (offshore but also onshore wind) and nuclear
  • Maintaining long term commitments as to combating climate change.
Primary energy demand by fuel. Source: Statoil Energy Perspectives 2016.

A specific example on energy security came from Statoil, which recently published its Energy Perspective Report [PDF], suggesting that fossil fuel will have a stronger role in the future (up to 2040). This was in agreement with what suggested by the International Energy Agency [PDF] but in contrast with what reported by the EMF27 project (for those scenarios meeting climate mitigation targets).

This is clearly a period of high uncertainty for the UK economy and therefore also for the UK energy sector. In the short term, these uncertainties will affect macro-economic variables (such as the GBP-EUR exchange rate). In the longer term, according to the speakers, energy security and climate change mitigation are still on the top of the list of priorities.

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