The EU Referendum and the energy industry: An insight from JDR Energy


The European Union is a political and economic partnership that bands 28 European countries together. It was created after the Second World War to harvest co-operation between the countries within the European region in an attempt to encourage a common ground on economic and political decisions.

The EU Referendum will take place on Thursday 23rd June and will be the decider on whether the UK will remain in the European Union or become an independent nation. This decision will not only affect Great Britain’s own economy, but it will also impact trading standards across Europe. If the economy is facing major change in the next 2 years following the referendum, this begs the question: What impact will either decision have on the UK’s energy industry? The UK has its own plans for energy security, but how achievable will these objectives be after the vote is cast? Will the current energy goals still be in place?

The energy sector is a particularly interesting case when it comes to the impact of leaving or staying in the EU. The European Union was actually settled at the Treaty of Rome thanks to the creation of the European Coal and Steel Community in 1952. It was realised at this time that there was huge opportunity for energy cooperation between the countries within Europe.

Centrica and SSE, two of the UK’s largest energy companies have shown small levels of support towards staying in the EU. However, Perth based SSE has claimed that they are not declaring a “stay-in” vote and are merely warning the public about the increased risk to its business and customers if the votes favour the Brexit cause. It’s thought by many industry leaders that energy security can only be obtained by countries cooperating with each other and sharing each other’s energy strengths, whilst benefiting from markets where your own country is slightly weaker in capability.

There are also some obvious concerns about UK energy projects that have or are planning to receive funding from EU insider organizations. Projects that have already arranged funding from organizations outside of Britain will need to inspect the terms of the projects’ credit to judge whether a Brexit vote would have an impact on funding schemes for these projects.

In regards to Renewable Energy, if Britain was to stay in the EU, it would be freed from its current renewable energy targets, as appointed by the EU Renewable Energy Directive. This vote could actually enable the UK to lean even further away from investing in Renewable Energy. However, the UK would still be required to meet its national and international decarbonisation obligations, which means it would still be necessary to invest in clean energy to combat climate change on a global spectrum. The UK in particular, is one of the few countries that is struggling to achieve its Renewable Energy targets of 15% renewable energy. It’s thought that leaving the EU would allow the UK room to invest in more Nuclear and Gas projects, where there is a great amount of potential for Britain. To invest heavily in both Nuclear and Renewable projects is very difficult as both demand a huge amount of investment and flexibility, which is having a heavy influence on the UK’s failure to meet clean energy targets.

There are some that believe a Brexit outcome would have little effect on the current energy industry in the UK. It’s thought that by standing alone the UK’s gas sourcing will not be imposed due to it already possessing mitigation against security of supply risks built into the system. According to some industry experts, physical energy links such as power transmission cables sent to France and Gas pipelines exported to Benelux areas will still be very much apparent regardless of a Brexit vote. These countries within the EU will want to continue these partnerships with the UK as both parties can and have benefited from energy cooperation.

A Brexit outcome wouldn’t necessarily cut off all of the UK’s ties with Europe. Norway, for example, is a non-EU member, but has continued its membership in the European Economic Area, which is also an option for the UK after deciding to leave the European Union. If the UK takes this route, like Norway it will still be very much a part of the EU’s energy processes.

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