Energy and Natural Resources
The Brexit challenges facing the Energy and Natural Resources sector are unique given the physical interconnection between the United Kingdom and European Union energy markets and the mutual benefit each provides the other in respect of security of supply.
The UK's stated position is that it is considering all options for the UK’s future relationship with the EU on energy, in particular, to avoid disruption to the all-Ireland single electricity market operating across the island of Ireland.
Ultimately, the UK's Brexit energy strategy looks to be consistent with its broader Brexit strategy, namely to get the freest and most frictionless trade possible in goods and services and there are good arguments for thinking that both sides would be happy to retain the energy status quo. However, the European Union has been adamant to date that is sees a refusal by the United Kingdom to accept the four fundamental freedoms, most notably freedom of movement, as incompatible with continued access to the single market. There is therefore a material risk of collateral damage to the single energy market from the wider Brexit process.
The Hogan Lovells' Constitutional Change Taskforce has been a leading contributor to the Brexit debate since its inception. On the Energy front, the firm's specialist energy and natural resources lawyers continue to monitor, advise clients and provide thought leadership on how Brexit will impact the United Kingdom and European Union energy markets and in particular on the impact:
• of the fall in the value of Sterling
• on UK energy policy, the energy mix and support mechanisms for new renewable, fossil fuel and nuclear generation
• on the single energy market and the potential for the introduction of new tariffs on imports and exports between the UK and the EU
• of Brexit on the single energy market on the island of Ireland
• on interconnection, energy trading and security of supply
• on LNG and gas flows and gas storage
• on energy and commodity trading, ACER, REMIT, MIFID, MIFID II and EMIR
• of the United Kingdom's departure from Euratom, which provides the legal framework for civil nuclear power generation and radioactive waste management between members of the EU
• on state aid, competition and procurement rules, EU funding and grants
• on climate change targets and the UK's commitment to decarbonisation
• of Brexit on investor confidence