Utility Week

UTILITY WEEK | 5TH - 11TH APRIL 2019 | 7 News EU has to grapple with, Hinde pointed out. "Things are fluid. A year ago, the majority of opinion in the EU probably would have liked us to stay and find a way to a second referendum and a revocation. I'm not sure that's the case now. It's not good for us in terms of our long-term relationship. "They want this over and done with." And he reminded the Energy UK event that the conclusion of the withdrawal agreement is only the first step in the Brexit process. Officially, an agreement on the future EU-UK agreement is due to be drawn up by December 2020 to tie in with the end of the transition period, which could be extended for another two years. But even this extended timescale is not "realistic", Hinde said, pointing out that Canada has been negotiating its free trade deal since 2002, which has only recently been concluded. "It may be quicker because we are in an arrangement, but it's highly unlikely we will be able to do this in one-and-a-half or three years. "This is a five-year negotiation and at every stage there is going to be another difficult conversation." Added to this, Hinde said the idea that the UK will be ready to start negotiating the terms of its future relationship immediately aŠer it leaves the EU is "optimistic". A soer Brexit? But while the chaos surrounding the UK's withdrawal from the EU is destabilising the economy, the soŠer Brexit the House of Commons is inching towards could be welcome in energy circles. In last week's indicative vote process, out of the menu of options presented to MPs, the one that came closest to succeeding was former chancellor of the exchequer Ken Clarke's motion that the UK should remain in a permanent customs union with the EU. While the implications of a customs union hasn't been "really thought through" yet, said Hinde, this option could facilitate the kind of close relationship between the EU and the UK energy sectors that the industry is keen to retain. A customs union, coupled with the kind of high alignment on energy matters mooted in the political declaration, could end up with full participation in the internal energy market, he said. "In terms of energy it would help in terms of access to the market and getting stuff across borders. "If we end up with high alignment there is scope for something that looks like membership of the internal energy market." Add to these factors the UK's good performance over recent years on cutting carbon emissions, and scope emerges for a "grand bargain" with the EU on an area that is central to its mission, Hinde said: "The Paris agreement is one of those things that is viewed as the reasons for the EU to exist and the UK is pretty important in that." A strong commitment Alison Conboy, deputy director for EU exit climate and energy at BEIS, told the meeting that the UK is in a "pretty strong place" on cutting emissions. "The path is clear and the commitment from the centre is very strong." And she insisted the UK government is continuing to make progress on energy issues, pointing to next month's upcoming round of contracts for difference auctions, and the recently concluded sector deal for offshore wind. "Having worked through a number of different governments, the focus still feels right up there." EDF's Hepworth agreed the industry has the "right mechanism in place from a policy perspective" that would provide the sector with the stability it craves. However, if the UK leaves without a deal, the ramifications will be "extremely difficult", said Hinde. Even though EU has concluded its own no deal arrangements, he expressed doubt that the EU would thwart an extension because "the consequences of no deal will be awful". But the ball is in the UK's court, said Mo Hussein, head of public affairs and campaigns at Westminster lobbying firm PLMR: "The focus is on us in the UK to say what we want: we need to have a plan going forward." Hinde agreed. "If we ask [for an extension] we will get it, but we have to give people a reason." "There is complete consternation about how a government of a developed country can reduce its influence in the world quite so dramatically." MATT HINDE, DIRECTOR OF ENERGY, FLEISHMAN HILLARD

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