If you’ll pardon the use of French, is there beginning to be a slight feeling of “plus ca change, c’est plus la meme chose” in the air? Having cleared away the sound, fury and political change resulting from Brexit, the world seems to be going on pretty much as before.
We have had the drama of the referendum outcome, a change of Prime Minister, the largely unlamented disappearance of DECC, a new set of energy ministers (of course), the renewed drum-beat of Scottish Nationalism . . .
Otherwise, it’s pretty much business as usual. The challenges are no fewer but arguably no more.
Of course, this discounts the stuff we don’t know about or can’t quite put the finger on. By and large, companies don’t announce that they have quietly made a different investment decision from the one that might have happened if the referendum result had gone the other way. Nor do they want headlines about the discreet relocation of jobs, just in case . . .
Brexit may mean Brexit, but the energy industries demonstrate both the complexity of potential change and the probability of much staying the same. The same applies across the whole spectrum of relationships with the EU which explains the coyness about triggering the fabled Article 50 of which hardly anyone had heard of barely six weeks ago.
Certainly on the “leave” side of the argument, and probably also among “remainers”, there were expectations that a Brexit vote would have immediate consequences. But then up pops Article 50, which hardly anyone wants to go near for the foreseeable future. So everything is on hold because implications and obstacles remain so unclear.
Part of the reason for this is that we have been misinformed for so long about what the EU is actually responsible for, in terms of government policy. The mantra has been that we are only doing such-and-such because Brussels says that we must. In energy policy, as in many other fields, this has seldom stood up to scrutiny.
It was the UK that led the way in liberalising energy markets, privatising utilities and putting rather blind faith in competition as the best way to serve the consumer. The French, German and Spanish have been delighted to take advantage of the openness of our market but have been consistently less willing to reciprocate.
The single European energy market remains a chimera while the EU Commission continues to face the intransigence of enlightened national self-interest when it comes to creating the same kind of conditions in other EU countries as prevail in the UK.
Clearly, the UK government will have no future leverage in driving the process of market liberalisation, but neither will it reverse its own attachment to that doctrine.
So what changes? Not very much.
Similarly, the UK’s support for the physical joining up of Europe’s energy infrastructure is driven by self-interest rather than EU rules. And that won’t change either.
So what about carbon reduction and all that?
Again, targets and obligations derive from the 2008 Climate Change Act, rather the big, bad hand of Brussels.
It can be argued that domestic legislation was prompted by a desire to go beyond EU obligations, but that is past history. Our approach has been set by domestic priorities and unless these change, nothing dramatic will happen.
Will Britain start re-opening coal-fired power stations because we will be outside the EU? This seems unlikely.
As far as the North Sea is concerned, the biggest concern is uncertainty rather than anything more substantive. The most commonly quoted worry is that recruitment would be adversely affected by any change to the free movement of labour. However, that is a wider problem for the UK economy which is going to feature large in future negotiations.
There are two pertinent facts. First, the EU is not going to offer the UK the kind of trade relationship we need while surrendering the principle of free movement. Second, the UK economy needs net in-migration of several hundred thousand a year to meet growth targets and compensate for an ageing workforce. So regardless of rhetoric, some solution consistent with these principles will have to be found.
Then we have the Scottish question. A pretence has developed that nobody in Scotland voted to leave the EU and that this is a Scotland v England issue.
It is remarkable how the 38% Scottish “leave” vote – much higher in the north-east – has been airbrushed out of very recent history while the 44.7% who voted for Scottish independence are treated as a sainted minority, permanently entitled to demand a second referendum.
Yet none of the objective circumstances has changed. The oil price has not doubled overnight, to get within touching distance of what was assumed in 2014 as the basis of a Scottish budget. I find it encouraging that the North Sea industry, with Sir Ian Wood to the fore, has been much more willing this time to warn of the damage that a second referendum would cause to the North Sea industry’s parlous condition.
Last time round, there was near-unanimity about the right of the SNP to call a referendum, having won a Holyrood majority. This time the same demand is widely seen as sheer political opportunism, entirely careless either of past promises or prospective economic damage.
The North Sea industry is right to say so for the last thing it needs is that additional layer of uncertainty.
As a firm supporter of remaining in the EU and like Energy’s editor and fellow columnist Dick Winchester, I regret the outcome and have no doubt there will be unwelcome consequences.
However, the ground is shifting all the time and the eventual outcome may not look all that different from what we are living with at the present time. Let’s wait and see.
Meanwhile, we might hear a little of less of Brussels being held responsible for things it had nothing to do with!
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