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What could happen to the gas industry in even of a no deal Brexit?

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What could happen to the gas industry in even of a no deal Brexit?

With uncertainties still surrounding Brexit and the negotiations, no one has the answer for what will happen after Brexit, whenever it happens. The government has made preparations for every scenario with its negotiations with the EU, including a ‘no deal’ Brexit. As being a country that relies heavily on a mix of domestic and imported gas to meet a large demand for energy, the nation’s energy landscape is one area sparking debate as part of EU negotiations.

The question is though, what do these negotiations actually mean for the gas industry? Biomethane suppliers, Flogas explains what could potentially happen to the UK in event of a no-deal Brexit.

Brexit negotiations and UK gas – the story so far

Currently, there are two main areas to consider when we investigate the potential implications for Brexit: the current and future state of the UK’s gas supply, and laws and regulations governing how we source and use our energy.

  • Gas supply: As it stands, the UK produces just under half (44%) of the gas it uses. The rest is imported. The UK currently has direct gas pipelines (or gas interconnectors) with three EU states: Ireland, the Netherlands and Belgium.
  • Energy law: As an EU member state, the UK is currently subject to EU energy laws. These provide a Europe-wide framework around energy security and supply, as well as energy efficiency and safety – and there will be a change in the legislation applying to the UK if we do see a no-deal Brexit.

What no deal could mean to the gas industry

An important question to think about is whether the UK will be importing gas following Brexit, the way it does currently? Fundamentally, the mechanisms of cross-border gas trade aren’t expected to change – even in the event of a no-deal scenario.

The reason being is that the UK’s national suppliers or Transmission System Operators (who are the national grid in Great Britain and Premier Transmission Limited in Northern Ireland) and our European interconnector operators are currently trading via the same private owned platform. This is called PRISMA, which provides a range of services for EU and non-EU countries, and the government have revealed that both National Grid and Premier Transmission intend to continue using it.

Though, in the event of a no-deal there will be implications to the way they’d trade gas with EU’s 27 member states. As such, the government is advising interconnectors, code administrators and UK gas market participants to carry out contingency planning for a no-deal scenario. More information is available in the guidance document: Trading gas with the EU if there’s no Brexit deal.

UK energy law following Brexit

If there is a no-deal Brexit, the EU energy law will no longer apply to the UK. UK laws relating to energy will still apply (on the 17 December 2018 the government published its statutory instruments to ensure UK energy laws continue to work after Brexit).

There will be a number of changes to the licensing and industry codes of practice to ensure they’re still valid. Ofgem – the government regulator for the gas and electricity markets in Great Britain – published guidance on modifications to licenses and industry codes related to Brexit on 6 December 2018. In Great Britain, Ofgem is responsible for ensuring the technical rules of the domestic gas market are updated in a no-deal situation. As such, Ofgem will lead the licence change process in Great Britain (and the Utility Regulator will lead it in Northern Ireland).

Interconnector owners and operators will have to engage with relevant EU regulators to seek approval and to ensure they understand any changes to certificates. Support from Ofgem (and the Utility Regulator for Northern Ireland) will be available for interconnectors during this process.

Our current situation

Despite all the predictions that have been made and continue to be made in the future, it’s important to note that currently, the government is planning for possible scenarios. It has confirmed that it will continue to work with businesses, trade associations and gas market stakeholders on the implications of a no-deal Brexit, publishing updates online. For updated information and guidance visit: www.gov.uk.

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