Gas Tariffs Code (Amendment) (EU Exit) Regulations 2019 — House of Lords, 2019-09-26
Topic: Energy
Ian Duncan (Conservative, Centre-right): I thank all noble Lords for their participation in this short but none the less instructive debate. I will begin where the noble Lord, Lord McNicol, left off, to answer some of the questions specific to the statutory instrument The issue to remember is that because we did not leave on 31 March, the legislation that had been passed at that point as retained law had to incorporate the fact that this piece of EU law was passed on 31 May and therefore became part of EU retained law. The reason we have brought this back now is that there are certain elements of that retained law which would need to be adjusted to be functional after Brexit within domestic law. The changes are relatively modest but none the less critical The answer to why it was done via the affirmative procedure is simple: because it has elements in relation to fees. As to whether it represents any shift in our policy, at a fundamental level the answer is no. This is simply a tidying-up exercise, which is modest in its implications but none the less critical to make sure that there is a functioning statute book after Brexit. As to the transfer of powers to Ofgem—it was not in my briefing pack but it is now—in the transfer of powers from the EU regulator ACER to Ofgem, no additional powers are created Those are the specific answers to the questions on the statutory instrument. I will now turn to the questions raised by noble Lords and begin, in order, with the noble Lord, Lord Teverson. One of the important things to stress about the market on the island of Ireland is that it is a single electricity market, not a single gas market. The gas does not cross the borders, only the electricity. The UK Government remain fully committed—as do the Irish Government—to ensuring the single electricity market on the island of Ireland. We believe that will be a priority for both Governments to ensure There is an interconnector transferring gas from the United Kingdom into the Republic of Ireland and we do not anticipate that that will be affected by any of these issues. The gas market across the EU is a remarkably—I want to use the term without meaning it as a pun—liquid market, but it is a very significant and successful market When it comes to interconnectors with the EU, touching on some of the issues raised by the noble Lord, Lord Liddle, we secure only 5% of our gas from the EU. It is a modest amount. Will that be affected by some of the geopolitics on the continent of Europe? We do not anticipate so, but have reserves which will allow us to secure continued use of gas during any such period My noble friend Lord Howell raised the wider situation on the continent of Europe. It is important to look at some of the real challenges this creates for the continent, the EU and ourselves. The first thing to stress is that we believe the Nord Stream pipeline is a problematic reality, which is why we are supportive of where Ukraine stands. However, there are also serious issues for the states to the east of the European Union. In this country we are moving swiftly towards decarbonisation but Poland, the Czech Republic, Slovakia and others are presently faced by the impossible devil’s dilemma of having to continue with their indigenous coal reserves being utilised or importing from Russia. Noble Lords can appreciate the dilemma that creates for the EU as it seeks to determine a decarbonised agenda. We have been, as a number of noble Lords have noted, a very liberalising influence in trying to secure the movement going forward to help those countries decarbonise, but it is, as my noble friend Lord Howell correctly stresses, one of the greater challenges faced by the continent today We will seek to continue to be participants in the energy markets of the EU. Brexit will have an impact on that and it is very difficult for me to anticipate exactly how we shall continue in that area. For example, one of the issues on which we have been a great leader inside the European Union is emissions trading, where we have sought from a leadership position to encourage the decarbonisation through a market-based regime. Exactly how we will continue to do so after Brexit remains to be determined. Part of the difficulty, with which noble Lords will be very familiar, is that we are unable to begin to negotiate the future relationship until we have established the departure. Some of these questions which rightly should not only be answered now but should have been some time ago have not been answered. On that basis, we cannot do it unanimously and must wait until such time as we can move this forward with the EU after Brexit.