The government has told the European Union that it wants Ofgem to retain observer status on the pan-European umbrella bodies for energy regulators.
Yesterday, (19 May) No 10 Downing Street published the draft text of the comprehensive free trade agreement the UK wishes to strike with the EU. Alongside this over-arching text, it published a suite of sector specific documents, including a draft energy agreement.
This agreement states that the UK’s regulators should be allowed to participate as observers in meetings of the general assemblies of both the European Network of Transmission System Operators for electricity and gas (ENTSO-E and ENTSO-G).
The draft agreement, if adopted, would also provide the UK’s regulators with observer status on the electricity and gas working groups of the EU’s Agency for the Cooperation of Energy Regulators (ACER).
Some non-EU countries, like Norway, have observers on these technical bodies. This move would enable the UK to have a continued role in the shaping of the wider EU energy system after it formally leaves the Internal Energy Market under the current timetable for ending the Brexit transition period.
The agreement would enshrine the right of UK transmission system operators (TSOs) to be members of the European Network of TSOs and maintain full UK participation in the existing voluntary energy cooperation structures between North Seas countries.
However, the proposed draft agreement leaves a grey area on whether the UK will retain a linkage between any future emissions trading system it may develop and the existing EU scheme.
It says additional legal provisions on carbon pricing may be inserted into the text subject to “further discussions”.
The government is currently mulling over whether to develop an ETS linked to the EU’s system or its own carbon tax.
More broadly, the agreement sets out the government’s negotiating objective of continued co-operation on policies and rules that contribute to meeting the goals of the Paris Climate Agreement while the UK retains the right to establish its own priorities.
The draft agreement also affirms continued cooperation on decarbonisation of gas and “cost-effective” deployment of renewable energy, including offshore wind generation and interconnection in the North Sea.
And it sets out the objective of endeavouring to avoid barriers to cross-border trade in natural gas.
The agreement has been published as part of the UK’s efforts to flesh out its negotiating position on a future trade agreement with the EU ahead of talks next month, which will be the last set scheduled before a decision must be taken on whether the Brexit transition arrangements are postponed beyond the current cut-off date at the end of this year.