Business body calls on government to remain close to EU's internal energy market, Euratom, and Emissions Trading System
Close alignment with EU rules on energy and climate change during the Brexit transition period and beyond are in the "clear interest" of both UK and European businesses, according to the CBI.
The influential business body, which represents 190,000 firms, will today argue efforts to deliver on the UK and EU's shared goal of securing an affordable and clean energy supply will be best served by continued close co-operation on energy and climate matters.
In a report to be published today, it will set out some of the key post-Brexit regulatory asks relating to the energy sector, including barrier-free trade access and appropriate regulatory convergence with the EU's Internal Energy Market in a bid "to ensure the UK and the EU can continue to trade effectively".
It added the UK would benefit from ongoing influence within key EU energy and environmental agencies and bodies in order to help both sides manage regulatory alignment. In particular it urged the government to ensure the UK maintained the benefits of Euratom membership - the nuclear safety body - either through continued membership or new arrangements.
Moreover, full participation in the EU's Emissions Trading System (ETS) should be maintained until the end of 2020 "with at least equivalence thereafter" in order to help the UK's efforts to decarbonise, the CBI said.
It also argued a bespoke solution to preserve the single electricity market across the island of Ireland would be "critical" to protect the interests of business and consumers in the Republic of Ireland, Northern Ireland, and the rest of Great Britain.
The energy-related recommendations are part of a wider report on businesses' concerns about the government's Brexit plans.
Based on "thousands of conversations" with UK businesses and trade associations, CBI's Smooth Operations report sets out the key "rules that will matter after the transition period", covering 23 sectors of the UK economy.
Neil Carberry, CBI managing director of infrastructure and people, said the report provided "unparalleled evidence" from businesses' experience that will help inform decisions during Brexit negotiations.
"In a rapidly changing world, a close relationship between the UK and the EU on energy objectives is in the clear interests of both sides," Carberry said. "Alignment with EU energy and climate change rules will help achieve secure, an affordable and low-carbon energy supply for customers, as well as help the sector, which supports one in forty-eight jobs across the UK."
Of the 23 UK industry and service sectors covered in the report, 18 prefer convergence or alignment for the majority of key business regulations after Brexit, according to the CBI.
But while the report also sets out opportunities for British business from potential regulatory rule changes after Brexit, it adds that overall opportunities for divergence are "vastly outweighed by the costs of deviating from rules necessary to ensure smooth access to the EU market".
Moreover, it finds that changes to rules in one sector could have significant knock-on effects for companies in other sectors and throughout supply chains.
Lawrence Slade, chief executive of trade body Energy UK, said maintaining a close trading relationship with the EU on energy was "essential" for UK customers and businesses.
"The Internal Energy Market is a collaborative project with a long-term vision," he explained. "It has delivered clear benefits to EU and UK customers and is vital in supporting the Single Energy Market on the Island of Ireland. This is why Energy UK is leading calls for a comprehensive Energy and Climate chapter as part of the future agreement, advocating close collaboration and alignment."
In response, a spokesperson for the Department for Exiting the European Union (DExEU) said that it was committed to the "strongest" standards for manufactured goods, as well as ensuring regulatory standards "remain substantially similar in the future" - but provided few specific further details.
"We want the broadest and deepest possible partnership - covering more sectors and co-operating more fully than any Free Trade Agreement anywhere in the world today," DExEU said in a statement. "And - as the Secretary of State for Exiting the European Union has said, this is a race to the top on global standards, not a race to the bottom."
Previously, the government has said it wishes to maintain or strengthen environmental rules and standards post-Brexit, has promised to maintain nuclear standards, and hinted it plans to remain part of the ETS until at leats 2020. But as the CBI's latest intervention makes clear, with less than a year to go many key energy and climate-related issues remain unresolved and business leaders are becoming increasingly vocal in their calls for long term clarity.
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