The U.K. government needs to provide clarity on the future role of gas in the U.K. to allow the industry to make informed investment decisions after Brexit, a report by Warwick Business School said on Tuesday.
The new report explored the challenges facing the U.K. natural gas market and identified the potential impact of Brexit on how the market operates, and highlighted the key issues that the U.K. government needs to address in a post-Brexit U.K. gas security strategy.
The paper, which is based on a series of stakeholder meetings involving government, business, think tanks and academia, noted that over 80 percent of U.K. households rely on natural gas for heating, while 42 percent of electricity production comes from natural gas in the U.K. The country imports around half of the natural gas that it consumes, the report highlighted, adding that this is likely to increase during the 2020s as domestic production is falling, creating greater exposure to the global market.
"The majority of U.K. imports come from the EU Internal Energy Market (IEM). Leaving the EU’s institutions means that the U.K. will no longer be a member of the IEM and will lose any ability to influence EU energy and climate strategies - but will still be affected by them," the report said.
It also argued that Brexit creates regulatory risks for the U.K. market as it is unclear how the interconnectors that transfer gas between Belgium, the Netherlands and the U.K. will be regulated once the U.K. has left the IEM.
"The U.K.’s supply infrastructure is aging and was designed to move gas onshore and south from the North Sea fields. The system is now being asked to move gas in new directions over very short periods of time, and does not always cope. Critical decisions with long-term consequences are being delayed by uncertainty," the report warned.
Therefore, the report called for the U.K. government to clarify the future role of gas in the U.K. at a time when the U.K. is pursuing decarbonization goals. "If the U.K. government chooses to continue towards its ambitious decarbonization goals, the use of gas must decline. This is a disincentive to infrastructure investment," it argued.
The Department for Business, Energy and Industrial Strategy (BEIS) unveiled its Clean Growth Strategy in October 2017 with the aim of cutting residential, industrial, transport and power sector greenhouse gas emissions while boosting economic growth.
(Anadolu Agency)
