Policy & regulation

Leaked paper outlines European Parliament’s terms for negotiation

The UK will have to abide by EU environmental and climate change standards in order to conclude a future trading agreement with the rest of the trading bloc, according to a leaked European Parliament paper.

A draft resolution, setting out the parliament’s parameters for EU-UK negotiations on the latter’s withdrawal from the union, identifies the environment and climate change as two areas where common benchmarks must continue to apply.

Regarding future EU-UK relationships, the document stresses that “any future agreement between the European Union and the United Kingdom is conditional on the United Kingdom’s continued adherence to the standards provided by the Union’s legislation and polices, in among others the fields of environment, climate change, the fight against tax evasion and avoidance, fair competition, trade and social policy”.

In her letter delivered at midday yesterday to European Council president Donald Tusk, which formally triggered the beginning of Brexit, prime minister Theresa May identified network industries as one of the areas that should be covered by a new free trade agreement between the EU and the UK.

She said the “bold and ambitious” agreement should cover “sectors crucial to our linked economies such as financial services and network industries”.

The letter also confirmed that the government will publish a white paper today (Thursday), which will incorporate the vast bulk of EU legislation into UK law in order to minimise disruption and provide business with as “much certainty as possible”.

Responding to the triggering of the Article 50 process, Stuart Cook, PwC’s head of utility strategy and regulation, warned that energy bills could rise if Brexit had an impact on the operation of the gas and electricity interconnectors that link the UK’s energy networks with those of its European neighbours.

He said: “The UK energy market is supported by physical connections with continental Europe through the gas and electricity interconnectors. The status of these interconnectors will be an important feature of the arrangements established with the 27 remaining EU nations. Security of supply and the affordability of energy could be put at risk if Brexit has an adverse impact on the operation of the interconnectors.

“Wherever possible, securing early commitments on the status of key energy sector policies and regulation, post-Brexit, should be a priority.

“The UK energy and utilities sector, like many others across the economy, is hoping that Article 50 negotiations will result in as much access to European markets as possible. This includes Europe’s energy trading markets, sources of investment funding and the European markets for goods and labour.”

Lawrence Slade, chief executive of Energy UK, said it was “essential” for the UK to retain strong cross-border energy relationships with the EU.

“Trade with Europe has given the UK access to competitive and diverse sources of energy and thus contributes to our security of supply. It is therefore essential we continue to have a relationship with the European Union that allows the efficient flow of electricity and gas across borders, and benefits UK energy customers.

“A positive outcome to the Brexit negotiations, supported by a long-term, stable framework delivered through the industrial strategy, could significantly help the UK to meet climate change targets, but also to deliver a bold and ambitious plan for energy – with more jobs, investment and environmental benefits, as we transition to a digital, decarbonised future.”

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