report april 2017 - action on climate and energy · pdf file3 brexit scenarios: implications...
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REPORT Apri l 2017
BREXITSCENARIOSTHE IMPLICATIONS FOR ENERGY AND CLIMATE CHANGE SHANETOMLINSON
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zTheauthorisgratefulforfeedbackreceivedfrommembersoftheGreenerUKcoalitiononanearlydraftofthesescenarios.Thejudgementsandanyerrorsremainthesoleresponsibilityoftheauthor
AboutE3GE3Gisanindependentclimatechangethinktankoperatinginthepublicinteresttoacceleratetheglobaltransitiontoalowcarboneconomy.E3Gbuildscross-sectoralcoalitionstoachievecarefullydefinedoutcomes,chosenfortheircapacitytoleveragechange.E3Gworkscloselywithlike-mindedpartnersingovernment,politics,business,civilsociety,science,themedia,publicinterestfoundationsandelsewhere.In2016,E3GwasrankedthenumberoneenvironmentalthinktankintheUK.www.e3g.orgBerlinofficeNeuePromenade6Berlin,10178–GermanyTel:+49(0)3028873405BrusselsofficeRuedelaScience231040Brussels,BelgiumTel:+32(0)28939212Londonoffice47GreatGuildfordStreetLondonSE10ES,UKTel:+44(0)2075932020WashingtonDCoffice2101LStNWSuite400WashingtonDC,WA20037UnitedStatesTel:+12024660573©E3G2016
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REPORT Apri l 2017
BREXITSCENARIOSTHE IMPLICATIONS FOR ENERGY AND CLIMATE CHANGE SHANETOMLINSON
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CONTENTSAboutE3G......................................................................................................................2Copyright........................................................................................................................2
EXECUTIVESUMMARY....................................................................................................5
INTRODUCTION..............................................................................................................8
BACKGROUNDANDASSUMPTIONSFORTHESCENARIOS...........................................10Uncertaintyoverprocess.............................................................................................10UnderstandingdifferentperceptionsofnationalinterestintheUKandremainingEU-27MemberStates........................................................................................................11
SCENARIODRIVERS.......................................................................................................17ScenarioDriver1:Interactionbetweenperceptionsofnationalinterest....................17ScenarioDriver2:Orderlyversusdisorderlynegotiationprocess...............................18Scenariodriver3:Timingandextentofeconomicimpacts.........................................20
POLITICALSCENARIOSFORBREXIT...............................................................................22Scenario1:SovereignTransition..................................................................................22Scenario2:HostileNationalism....................................................................................24Scenario3:EconomicTransition..................................................................................26Scenario4:EUinChaos................................................................................................27
CONCLUSION:THENEEDFORACOOPERATIONTRACK...............................................30
ENDNOTES....................................................................................................................33
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EXECUTIVESUMMARYTheofficialsubmissionbytheUKofitsArticle50notificationonthe29thofMarch2017hasstartedtheformalprocessofBrexit.Thereismassiveuncertaintyonhowthenegotiationsoverthenexttwoyearswillunfold.TheoutcomeofthisnegotiationwillhavemajorimpactsforallareasofpolicybetweentheEUandUK,includingenergyandclimatechange.Scenarioanalysisprovidesanopportunitytoexplorehowprogressintheoverallnegotiationsmayimpactspecificpolicyareas.Thescenariosarebuiltonfourkeydrivers:
• Hownationalinterestsareprioritizedbyeachside:TodateenergyandclimatechangeissueshavenotplayedaprominentroleinBrexitdiscussions.InsteadtheUKhaschosentoprioritizesovereigntyintereststomanageimmigrationandremovetheinfluenceoftheCourtofJusticeoftheEuropeanUnion(CJEU)andStateAidrestrictions.TheEUhassofarpromotedanintegrityagendafocusedonmaintainingexistingrulesandnorms(suchasthefourfreedoms)andtoholdtheUKaccountableforexistingbudgetliabilities.Asthenegotiationsprogress,howtheseinterestsinteractandevolvewillbecriticalindeterminingthefinaloutcome.
• Orderlyversusdisorderlynegotiationprocess:Thereisnoprecedentforthe
Brexitprocess.Themassivecomplexityinvolvedandpotentialattemptsbyeachsidetogainanadvantagethroughthestructureandsequencingofhowissuesareaddressedisofcrucialimportance.Anorderlyprocesswouldfacilitatetrustbuilding,enableaclearrepresentationofdifferentviewsandfacilitatecompromisetowardsafinalagreement.However,thereisasignificantriskthatthenegotiationscollapseintoadisorderlyprocess,suchashappenedinthefinalhoursoftheCopenhagenclimatenegotiationsin2009.Abreakdownofprocesswouldunderminetrustandmakereachinganydealmuchhardertoachieve.
• Thetimingandextentofanyeconomicimpacts:Sofartheeconomic
forecastsoflargenegativeimpactsintheUKfollowingthereferendumhavenotmaterialized.ThedevaluationofthePoundandthefactthattheUKcontinuestoenjoyaccesstoallexistingEUtradingarrangementsisasignificantfactorinachievingthis.However,thisdoesnotmeanthattherewillnotbeeconomicimpactsinthefuture.Thepotentialforrisinginflationandpoliticaluncertaintytoundermineinvestmentdecisionsoverthenexttwoyearsisnon-trivial.OntheEUsidethedevaluationofthePoundhasimmediatelyunderminedcompetitivenessvis-à-visUKcompanies.Ineffectcausingthemtoimmediatelybeginto‘pricein’thecostofBrexit.Dependingonhowthenegotiationsevolve,theeconomicoutlookinboththeUKandremainingEU-27MemberStatesmayshiftperceptionsonthetypeoffinalagreementthatwouldbedesirable.
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• MomentumaftertheArticle50negotiations:Thereissignificantuncertainty
overthefulltimeframefortheBrexitprocess.Bothsideshavepubliclydiscussedsomeformofcontinuationarrangement,withtheUKreferencing“implementationperiods”andtheEUconsideringthepossibilityforathreeyeartransitionalarrangement.ThusthemomentumfromtheArticle50processwillbeimportantfordeterminingfuturecooperation.Theremaybeanumberofstakeholdersthatwillattempttosecureacleanbreakafter2years,potentiallytopreventanyattemptstoretreatfromafullBrexitdeal.Ontheotherhandthedesiretoavoidcliffedgesforbusinessandcitizensmayleadtootherstakeholdersseekingtomaximizethepotentialforcontinuationarrangementsinordertoallowforthesmoothestpossibleprocess.WhethertheArticle50processisviewedasa‘one-shot’or‘repeated’gamewillsignificantlyimpactthefinaloutcome.
Fromanassessmentofthekeydriversandinterests,fourmainpoliticalspacesforlandingaBrexitdealwithinthenext2-3yearsemergeasshowninfigure1below.Thekeyaxesindefiningthescenariosareanorderlyversusadisorderlynegotiationprocessandwhethersovereignty/integrityorcooperationinterestsdominatenationalpositions.Thesescenariosarefocusedontheperiodto2020,withanassessmentoffuturemomentum(eitherupwardordownward).AllofthescenariosarepredicatedontheUKleavingtheEUanddonotexplicitlyconsiderthepotentialforasecondreferendumetc.tototallyreversethecurrentpoliticalcourse.However,theydoresultinverydifferentlevelsofcooperationgoingforward.Figure1:OverviewofpoliticalscenariosforBrexit
ThenegotiatingdynamicsareinitiallyheadedtowardsaSovereignTransitionscenariowherebytheUKcontinuestoprioritizenationalsovereigntyandtheEUpromotesthe
Cooperationinterestsdominate
Sovereigntyandintegrityinterests
dominate
Orderlynegotiations
Disorderlynegotiations
Sovereigntransition
Hostilenationalism
Economictransition
EUinChaos
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integrityofexistinginstitutions.However,thisisaveryunstablepoliticalspace.Anumberofdrivers,suchasfailuretoagreeonexistingUKbudgetliabilitiesorthefutureroleoftheCJEU,couldcauseacauseacollapseinthenegotiationprocessandanescalationtowardsaHostileNationalismscenario.InthiscasetherewouldbeahighprobabilitythatnofinaldealisreachedattheendoftheArticle50periodandbothsideswouldfaceamessyexitfortheUK.Thethirdscenario,theEUinChaos,representsavictoryforextremistpoliticiansinotherEUcountries(suchasintheforthcomingFrenchelections)orthepotentialforaEurozonecrisistoleadtoamajorcountrysuchasItalyorGreeceleavingtheEuro.InthisinstancetheEUfocusesitsattentionelsewhereandtheBrexitnegotiationswouldonceagainbereducedtodisorder.TheFinalscenario,EconomicCooperation,wouldrequireashiftinprioritizationofnationalintereststofocusonalonger-termandsmootherBrexit.Inthisscenariotheinitialfocusisonagreeingasetofstabletransitionalorimplementationarrangements,whichallowforamuchlongernegotiationoffutureUK-EUtradearrangementsandcooperationonotherareassuchasclimate,energyandsecurityissues.TheSovereignTransition,HostileNationalismandEUinChaosscenariosproduceverynegativeoutcomesforenergyandclimateissuesonbothsides.AnyrestrictedaccesstotheInternalEnergyMarket(IEM)fortheUKincreasesenergypricesandcreatesaccessissuesforEUMemberStatessuchasIreland.ThereissignificantinvestmentuncertaintyandtheUK’swithdrawaldisruptsimplementationoftheEU2030ClimateandEnergyPackageandtheEnergyUnion.CooperationonenergysecuritysuffersandRussiaissignificantlyempowered.TheUKswithdrawalfromEuratomunderminesit’scivilnuclearprogrammewhichalsohasimplicationsforEUbasedcompaniessuchasEDF.InboththeSovereignTransitionandHostileNationalismscenariosthenegativeimpactsarelargerfortheUKthantheEU;whilethepositionisreversedintheEUinChaosscenario.Nonetheless,anyoftheseoutcomesislikelytoprovideasignificantchallengetothelowcarbontransitiononbothsidesoftheChannel.Incontrast,theEconomicTransitionscenarioprovidesamuchstrongeroutcomeonenergyandclimateissues.Theinherentbenefitsofcontinuedcooperationaremaximized,providingstabilityforcontinuedinvestmentanddeliveryofexistingprogrammes.However,atpresentthisscenarioissignificantlylesslikelythaneithertheSovereignTransitionorHostileNationalismoutcomes.Theprobabilityofasuccessfuloutcomeonenergyandclimatechangecanbeincreasedthroughtheestablishmentofacooperationtrackontheseissueswithinthenegotiations.TheUKhasalreadysignaledthatitwouldliketoestablishabroadpartnershipwiththeEUthatgoesbeyondjustfuturetradingarrangements.However,ithassofarlimitedthescopeofthisagreementtohardsecurityissues.Bycreatingaspacetodiscussfuturecooperationonenergy,climatechangeandbroaderenvironmentalobjectivesbothsidescanincreaseoutcomesforthesepolicyareasandreducethechanceofacrashBrexitthatwoulddamageeveryone.
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INTRODUCTIONTheoutcomeoftheUK’snegotiationtoleavetheEuropeanUnionwillhavemajorimplicationsformanyissuescentraltopeople’slives,includingenergyandclimatechange.Differentoutcomeswillcreateverydifferentrisksandopportunitiesforpolicyandinvestmentasthegovernmentcontinuestomanageenergyandclimatesecurity,environmentandcompetitivenessobjectives.ScenarioanalysisprovidesatooltoassessarangeofdifferentBrexitoutcomes,andunderstandthecriticaldriversanddecisionpointsthatinfluencedifferentresults.TheUK’senergyandclimatechangepolicyisintimatelylinkedwiththeEU.Energyisa‘sharedcompetence’meaningthattheresponsibilityforpolicyhasbeendividedbetweencentralEUinstitutionsandindividualmemberstates.TheUK’senergymarketisphysicallyconnectedtotheEUwithBritainimporting7%ofitstotalelectricityconsumptionfromtheEU.1ThecombinationofEUstatesandNorway(whichisamemberoftheEuropeanEconomicArea)accountforover70%ofallUKimportedgas.2TheopenborderbetweenNorthernIrelandandIrelandisalsoanenergyborder.ThefuturerelationshipoftheUKinrelationtotheInternalEnergyMarket(IEM)willbehighlysignificant.TheUK’swholesaleelectricitypricesareamongthemostexpensiveintheEU.BeingabletobuycheaperpowerfromthecontinentthroughlinkedEUelectricitymarketsissavingtheUKconsumersabout£90millionayearatcurrentlevelsofinterconnection;butthisisexpectedtoriseto£160millionayearwithmoreinterconnectorsbytheearly2020s.Meanwhile,thedemandfromtheUKprovidesrevenuetoEUproducers.Thearrangementbenefitsbothsides.Similarly,futuregrowthinrenewableusebothintheUKandEU-27MemberStateswillrequiremoresystembalancingresources.ResearchshowsthatsharingbalancingresourceswiththeEUcouldsavetheUK£3billionayearinsystemcosts.3Moreco-ordinatedandstrategicgridplanningacrossonshore,offshoreandcrossborderregimescouldsavetheUKanadditional£1.5billionto£10billionby2030.4Giventheuncertaintyoffutureenergyfuelandtechnologyprices,thereisalsosubstantialoptionvaluetobegainedbysupportingthedevelopmentofaflexibleelectricitysystem.TheexistingEnergyCommunityagreementthatallowssomesouthernandeasternnon-EUMemberStatestoparticipateintheinternalenergymarketprovidesaprecedentunderwhichtheUKcouldcontinuetoparticipateinthemarket.ItisimportanttonotethatfortheUKtofullyparticipateintheInternalEnergyMarketitwouldneedtobewillingtofollowtherulesofthatmarket,includingrestrictionsonStateAid.EUStateAidrulesaredesignedtoprohibitMemberStateGovernmentsfromgivingspecificcompaniesorsectorsanunfairadvantageovercompetitorsinotherMemberStates.SuchrulesarenecessarytocreatealevelplayingfieldonwhichMemberStatescantradefreely.However,asoutlinedinthescenariosbelowthismayprovetobeacontentiousissuewithinthenegotiations.OnclimatechangepolicytheUKhasnegotiatedcollectivelyontheinternationalstagewithotherEUcountries;submittingajointNationallyDeterminedContribution(NDC)
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foremissionsreductionsby2030totheParisAgreementin2015.AsthecollectiveEUclimatechangetargetfor2030istranslatedintobindingtargetsforindividualmemberstatesthroughtheEffortSharingRegulationtheimpactoftheUKleavingcouldhavesignificantconsequences.SimilarlytheUKiscurrentlyamajorpartoftheEuropeanEmissionsTradingScheme(ETS),andsoBrexitcouldhavemajorimplicationsonitsfutureoperationandviability.
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BACKGROUNDANDASSUMPTIONSFORTHESCENARIOSUncertaintyoverprocessTherearemanyuncertaintiesaroundhowtheBrexitnegotiationswillprogress.ExtractingtheUKfromtheEuropeanUnionisanimmensetaskconsistingofnotone,butmanylinkedprocessesofwhichfivekeyareasareoutlinedbelow:• Process1:agreeingtheUK’stermsofwithdrawalfromtheEUunderArticle50
oftheTreatyonEuropeanUnionwithreferencetoaframeworkforfuturecooperation
• Process2:agreeingtheUK’snewtradingrelationshipwiththeEU
• Process3:agreeingtheUK’snewtradingrelationshipswiththerestoftheworld,includingover50countrieswithwhichtheUKwouldneedtonegotiatenewtradearrangements.
• Process4:changingtheUK’sdomesticregulatoryandlegislativeframeworkthroughtheGreatRepealBillandsubsequentaction
• Process5:negotiatingnewcooperativeactions/institutionswithEUandothermultilateralbodieswhichlieoutsidethescopeoffuturetradeagreements(e.g.coveringissuessuchasairquality)
Someoftheseprocessesmaybejoinedtogetheratanegotiatinglevelbutseveralmayremainseparateanddistinct.Theoveralltimeframeofthenegotiationishighlyuncertain.TriggeringArticle50providesatwoyearwindowtoconductnegotiationsandcanonlybeextendedbyunanimousagreementofallMemberStates,somethingthatmaybedifficulttoachieveinpractice.However,theotherprocesseshighlightedabovemaytakemuchlonger.ForexampleittookSwitzerland12yearstonegotiatethemajorityofitssectoraldealswiththeEUandithasstillnotbeenabletoconcludeanagreementonenergyissues;andtheCanada-EUCETAnegotiationshavebeenongoingforover7years.Assuch,indevelopingscenariosforBrexititisimportanttoconsiderthephasingandtimeframeofdifferentagreementsandthepotential‘momentum’,eitherpositiveornegative,whichcouldemergeaftertheArticle50processisconcluded.OntheEU-27sidetheEuropeanCommissionwillleadnegotiationsinresponsetoArticle50,guidedbyMemberStates(asoutlinedinfigure2below),withtheEuropeanParliamentgettingafinalvote.TheUKGovernmenthasalsopromisedafinalvoteforitsParliamentonthedeal,however,thiswillnowbea‘takeitorleaveit’voteattheveryendoftheprocessandsomaygivelittlescopeforadjustment.
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Figure2:OverviewofEUBrexitnegotiatingprocess(timingsareapproximate)
UnderstandingdifferentperceptionsofnationalinterestintheUKandremainingEU-27MemberStatesDifferentmodelsforBrexitarepopularlycharacterizedasbeingonaspectrumbetween‘hard’options,generallyassociatedwithWTOorfreetradeagreementmodels,or‘soft’options,associatedwiththeNorwayandSwissmodelsofdeeperintegration.However,inpracticeusingthisterminologycanleadtothecreationoffalsechoices.Thekeytoanynegotiatedsettlementistheonethatreflectstheunderlyinginterestsofthoseparticipatinginthenegotiation.Thusdeliveringa‘hard’or‘soft’Brexitisnotanendinandofitself,itishowthosesettlementsreflectdifferentnationalinterestsovertimethatwillbecriticalfordeterminingsuccessorfailure.InordertomapnationalinterestsforboththeUKandEU-27weneedtoconsiderseveraldimensions.Themostcriticalisbetweentheobjectivemeasuresofadifferentoutcome(e.g.higherorlowerGDP,judicialoversightbyonebodyoranother)andtheweightingdifferentstakeholdersplaceontheseoutcomes.Thismayleadtodeepdivisionsbetweendifferentstakeholdergroupswithinonesideoranother.Thesecondimportantdimensionisbetweenoverallintereststhatcutacrossallsectorsandareasofpolicyandthosethatrelatenarrowlytoenergyandclimateinterests.Thisisimportantinrelationtotrade-offsacrossdifferentareas.Thus,specificclimateandenergyobjectivesmaybesubsumedwithinbroadernegotiationsonimmigrationrightsetc.Thethirdishowtheperceptionsofdifferentstakeholdersmayevolveovertimeinresponsetoprogress(orlackthereof)inthenegotiationsorinresponsetorealworldevents.
Brexit deal agreed and approved
EU Council vote European Parliament vote If a ‘mixed’ agreement, requires ratification by 38 national and regional parliaments
Commission leads negotiation (May-June 2017-late 2018)
Direct participation from European Council and EU Council presidencies
Coreper WP set up to monitor progress + GAC discussions
Perm Reps and European Parliament invited to preparatory meetings
Negotiation mandate agreed (May 2017)
Commission proposes mandate EU Council agrees mandate
EU responds to Article 50 letter
European Parliament agrees initial position: 3 April European Council agrees guidelines: Early May
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Theviewsofmanystakeholdersatthemomentare‘emergent’ratherthansharplyfixed.ThisisespeciallytrueontheEU-27sidewheretherehasbeenlessintensefocusonBrexitthanintheUK.Politicians,businessesandcitizensacrosstheEUhavebeenfocusedonothereventssuchastheemergenceofDonaldTrumpintheUS,therefugeecrisis,anddomesticfactorssuchastheDecemberreferendumwhichledtoPrimeMinisterMatteoRenziresigninginItalyandforthcomingnationalelections,notablyinFranceandGermany.AstrongfocusonBrexitpositioningwillonlynowemergefollowingtheUKssubmissionofitsArticle50notification,andeventhenforFrance,GermanyandCzechRepublictheprospectofnewleadershiporcoalitionsmaydelaythisprocessuntilmuchlaterin2017.AsummaryprovidingacharacterizationofoverallUKandremainingEU27countryinterestsinthenegotiationsisprovidedinfigure3below.Figure3:PerceptionofoverallUKinterestsinBrexitnegotiations
AtpresentthepositionsetoutintheUKWhitePaperonBrexitputsforward12negotiatingpriorities.ThishassignaledthattheUKisnotseekingcontinuedmembershipoftheEuropeanEconomicArea(EEA)througha‘Norway’-typemodelandprioritizesthecontrolofmigrationandjudicialsovereigntyovertheotherpriorities.However,theWhitePaperremainsanoutlinesketchofanegotiationposition,andthebalancebetweenmarketaccessandsovereigntycouldstillchange.InadditiontotheoverallinterestsinrelationtoBrexitthereareanumberofspecificenergyandclimatechangeinterestsfortheUKashighlightedinfigure4below:
Limitimmigration
• Immigrationwasthedefiningissueofthereferendumcampaign- seenasthecorepriorityforstrong‘leave’advocatestodeliveron• Tradeoffre.EUmarketaccessand4freedoms• Rightsofexistingmigrants
PromotesovereigntyofUKinstitutions
MaximiseUKtradeingoodsandserviceswithbothEUandothercountries
Maintainorincreaseinvestmentincluding
FDIintotheUK
KeeptheUKtogether
• Coreobjectiveforstrong‘leave’advocates• Particularlyrelevantinrelationto‘enforcement’mechanismssuchastheECJandStateAidrules
• KeytensionoverresolvingdegreeofEUmarketaccesswithinterestsonimmigrationandsovereignty.UnclearhowmucheconomicpainUKcitizenswillingtobear• LikelytobeamajorfocusinkeysectorssuchasCityofLondonpassportrightsandautomotivesupplychainaccess• Signalsontradingrelationshipswithothercountriese.g.USandChinawillbeimportantindefiningbroadercontext
• EUmarketaccessmaybeakeydeterminantoffutureFDIflowsfromcountriessuchasJapan• Inadditionuncertaintyduringnegotiationperiodmayreduceinvestment intheshort-mediumterm
• Brexit settlementhasimplicationsforfuturerelationshipwithdevolvedadministrationsespeciallyNorthernIrelandandScotland
AvoidnegativeimpactonUKeconomy
• Avoidmajoreconomicdisruptionand“cliffedge”forbusinessassociatedwithuncertaintyorthesuddenimpositionoftariffsetc.• ImpactonUKpublicfinancesandkeysectorsreliantoncurrentEUfunding(e.g.agriculture)
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Figure4:PerceptionofoverallUKenergyandclimateinterests
TheUKWhitePaperontheUK’sExitfromandNewPartnershipwiththeEUacknowledgesmanyoftheseissuesbutdoesnotsetoutaparticularlyclearprioritization,insteadsayingthat“weareconsideringalloptionsfortheUK’sfuturerelationshipwiththeEUonEnergy”.5Inpart,thecomplexityoftheBrexitprocesshasprovidedachallengetotheUKgovernmentinworkingthroughdeepimplicationsforallpolicyareas.InparticularthenewDepartmentforExitingtheEuropeanUnionwillneedtomanagetheinterdependentnatureofmanyoftheseissues,whiledrawingontheexpertiseofindividualgovernmentdepartmentsthatmaybemoreusedtooperatingintraditionalWhitehallsilos.Thismayprovideforflexibilityinthecomingnegotiationsbutalsogeneratessignificantrisksthatenergyandclimatecouldbesubsumedunderbroadernegotiatingpriorities.Box:1EuratomandtheimplicationsofBrexitfornuclearpower6The1957EuratomTreatyisoneofthethreefoundingtreatiesoftheEUandestablishedtheEuropeanAtomicEnergyCommunity(EAEC).AlthoughtheEuratomTreatyisastandalonelegalentity,theUKGovernmenthasindicatedinitsWhitePaperthatitalsointendstoleaveEuratomaspartoftheBrexitprocess;althoughitwillretainsomeflexibilityand“havethemostopenmindpossible”indiscussingfuturearrangements.ExitingEuratomcouldhavemajorimplicationsforthefutureofnuclearpowerintheUK.AtpresenttheEuratomSupplyAgencyisresponsibleforthesupplyofallnuclearmaterialtotheUKwith“exclusiverighttoconcludecontractsrelatingtothesupplyofores,sourcematerialsandspecialfissilematerialscomingfrominsidetheCommunityorfromoutside”.7EuratomisalsoresponsibleforoverseeingnuclearmaterialsafeguardsandstandardsintheUK,includinginspectionsofcivilnuclearsitesincooperationwiththeInternationalAtomicEnergyAgency(IAEA).EuratomalsohasitsownresearchanddevelopmentprogrammewhichcontributessignificantfundingtoUKprojects,includingforfusionresearch.
Energymarketaccessandregulation
• UKcurrentlyimportsasignificantproportionofbothelectricityandnaturalgasfromtheEuropeanEconomicArea(EEA).PotentialbenefitstoenergycostsandsecurityfromretainingaccesstotheInternalEnergyMarket(IEM).• Technicalstandardsforenergyregulationandtransmission(ENTSO-E,ENTSOG,ACERetc.)• Standardsforproductsandservices(whitegoods,carsetc.);Ecodesign directiveetc.
Euratom andnuclearpower
• EnsurecontinuedaccessandtradefornuclearfuelswhicharecurrentlygovernedundertheEuratom SupplyAgency(ESA)– thisalsoincludesmedicalradioisotopes.Euratom alsosetsstandardsfornuclearsafety,decommissioningandhandlingofradioactivewasteandspentfuel• Withouteffectivealternative/transitionarrangementsitispossibletherecouldbeamajordisruptionintheUKnuclearsector
Energysectorinvestment
• NeedtoavoidinvestmenthiatusasaresultofBrexit uncertainty• PotentialwithdrawalofmechanismssuchastheEuropeanInvestmentBank(EIB)forenergysectorlending• Linkstoindustrialstrategy– productivity,jobsandskillsvs energycosts
Climatechangeandenvironment
• DeliveryofdomesticcarbonbudgettargetsandUKclimatediplomacytoencourageactioninothercountries• FutureoftheEmissionsTradingScheme (ETS)• Cooperationontransboundary environmentalpublicgoods(e.g.airpollution)vs.thepotentialfora‘bonfireoftheregulations’
Energydiplomacy• ContinuedcooperationwithEUcountriesinengagingwithmajorenergyexportersesp.Russia• Membershipofearlywarningmechanism,gasadvisorycounciletc.
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OnleavingEuartomtheUKwouldneedtoestablishanewsafeguardsandinspectionsregimethroughtheIAEAandtheUK’sOfficeforNuclearRegulations(ortheestablishmentofanewagency).SuppliersofnuclearmaterialsfromcountriesoutsidetheEU,suchasCanadaortheUnitedStates,willberequiredbytheirnationallawsandobligationstoinsistthattheUKhasasufficientlyrobustsecurityandsafeguardsregimeinplacebeforeanyexportscouldtakeplace.WithouteitherestablishingnewortransitionalarrangementsbytheendoftheArticle50processitwillbeextremelydifficultfortheUKtocontinuetodevelopitscivilnuclearbusiness. InasimilarfashiontotheUK,itispossibletosketchoutsomeoverallperceptionsofinterestsandrisksonthesideoftheremainingEU-27countriesandtheEuropeanCommissionasshowninfigure5foroverallissuesandfigure6forenergyandclimatespecifically.AsnotedabovetherehasbeensignificantlylessfocusonBrexitinmanyotherMemberStatessofar.DifferentEUactorsarelikelytohavedifferentinterestsonBrexit,butsofarhavepresentedahighlyunitedpublicmessaging.ForexampleMemberStateswhoarenetrecipientsofEUbudgetpayments,inparticularCentralandEasternEuropeancountries,willbeparticularlyexposedtoanybudgetreductionfollowingtheUKexit.Intermsoftherightsofexistingmigrants,SpainandFrancehaveparticularlyhighconcentrationsofUKnationalsresidentintheircountries;whileCentralandEasternEuropeanMemberStateshaveadisproportionatenumberoftheirnationalscurrentlyresidentintheUK.AcoretestfortheEU-27willbehowtheymanageanytensionsordifferencesovertheprioritizationofdifferentissuesasthenegotiationsprogress,andtherelationshipbetweentheCommission,CouncilandParliament.
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Figure5:PerceptionofoverallEU-27andEuropeanCommissioninterestsinBrexitnegotiations
Figure6:PerceptionofEU-27andEuropeanCommissionenergyandclimateinterests
Inparticularthereisanemergingdynamicbetweenanintegrity/punishmentagendathatwouldseektominimizeflexibilityinthenegotiationsandseekto‘win’businessandinvestmentswitchingawayfromtheUK;versusamorecooperativeagendathat
Maintainintegrityofthesinglemarketandcustomsunion
• Integrityofthefourfreedomsandcustomsunion• ProtectionofEUrules• Avoidcherrypickingofsectors/interests• Rightsofexistingmigrants
‘Punish’theUK– IthastobeworseoutsidetheEU
thaninsdie
Maximiseeconomicopportunities/Minimise
risks
DefendEUbudget
GetonwithcorebusinessandavoidBrexit
contagion
• Therehavebeensomestatementsmadebyalimitednumberofstakeholdersthatgobeyond therealmofmaintainingintegrityofexistingEUrulesandinstitutionsandcouldbecharacterisedasseeking‘punishment’fortheUK• Populistpoliticiansmayattempttoexploitthisagendawithdomesticconstituencies insomememberstates
• BestpossiblerelationshipwithUKesp.innumberofkeysectorse.g.cars• ‘Win’foreigndirectinvestment (FDI)andbusinessswitchingfromtheUK• ‘Fairness’acrossremainingMS– esp.importantforIrelandinrelationtoenergy
• SecuresettlementfromUKforexistingliabilities(estimatesrangefrom€40bn-€70bn)• ConcernoverimpactofUKleavingonoverallbudgetlevels,especiallyamongstnet-recipientcountriesinCentralandEasternEurope(UKleaves~€10bnperannumhole)
• AvoidapositionwheretheUKis‘holdingBrusselshostage’byblockingprogressonnewlegislation• ElectionsinFrance,Germany,CzechRepublicandBulgariain2017• Getonwithmanagingotherissues:Eurozone, refugees,Trumpetc.
Playthelonggame
• MaximisetheadvantagesofincumbencybyutilisingtheabilitytowaitouttheUKonceArticle50istriggeredandthetwoyearwindow(unlessunanimouslyextended) begins• UtilisethesignificantlylargerstaffandlevelofexpertiseavailabletoEUinstitutionswithrespecttotradenegotiations
Energymarketaccessandregulation
• Delayeddevelopmentofinterconnection, animportantsourceofflexibilitytosupportahigh-renewables powersystem.• DelayeddevelopmentofoffshorewindintheNorthSeas(UKhasoverathirdofEuropeanoffshorewindpotential)• Disruptedsupplychainsforlowcarbongoodsandservices
Euratom andnuclearpower
• SpecificFrenchinterestinensuringHinkley PointCcancontinuetogoahead
Energysectorinvestment
• UncertaintycausescleanenergyinvestmenthiatusinbothUKandEU-27• TheEIBlosesamajorshareholder(providing16%ofitscapital),constrainingitsabilitytosupportclimateandcleanenergylending• SignificantreductioninfutureEUbudgetmeanslessEUinvestment inclimateandenergy
Climatechangeandenvironment
• UKwithdrawalfromtheEU’sUNFCCCnegotiation‘bubble’ lowersEU’sheadlinetarget(fromatleast40%to~36%• UKwithdrawalfromEU-ETSleadstoincreasing‘hotair’inthesystemfromlegacyUKemissionsallowances• Aradicalderegulationary economicstrategyfrompost-Brexit UK(‘SingaporeoftheNorthSea’)forcesa‘racetothebottom’onenvironmentalstandards• SomeMemberStatesmayuselackofUKcompliancetoavoidimplementationofEUenvironmentandclimaterules
Energydiplomacy • ContinuedcooperationwithEUcountriesinengagingwithmajorenergyexportersesp.Russia• Membershipofearlywarningmechanism,gasadvisorycounciletc.
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wouldseektomaximizecontinuingcontributionsfromtheUKtotheEUbudgetandprotectexistingtradingrelationships.
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SCENARIODRIVERSFromtheassessmentofdifferentprocessesandperceptionsofnationalinterest,anumberofkeydriversforfutureBrexitscenariosstandout.ScenarioDriver1:InteractionbetweenperceptionsofnationalinterestThefirstmajordriverishowtheUKandEUchoosestoprioritizetheirperceptionsofnationalinterest.Asoutlinedabovethereisnosingleviewthatissharedacrossallstakeholdersoneachsideofthenegotiation.Howeachsidechooseswhichaspectstopromoteascoreprioritiesversuswhatitisacceptabletotrade-offinordertoachievethemwilldeterminetheavailablespaceforafinalagreement.GiventhecomplexityofBrexitthereisasignificantriskthatmistakesaremadeinunderstandingofissuesandpotentialoutcomesoneitherside.Clarityoverintentionsandthecreationoftrustwillthereforebeimportantincreatingasuccessfulnegotiatingdynamic.WithintheUKthemainobjectiveforPrimeMinisterTheresaMayintheshort-termistocontrolherparty.AsTheresaMaypersonallycampaignedforremainingintheEUduringthereferendum,thepro-Brexitforceswithinherpartyarecloselywatchingtoensuredeliveryoftheresult.GiventheweaknessoftheoppositionLabourPartyintheopinionpolls,thegreaterrisktothecurrentgovernmentisaninternalsplit,eitherwithinherownpartyorwiththedevolvedadministrations,ratherthanimmediateelectoraldefeat.ThereisastrongagreementacrosstheConservativepartyontheneedtocontrolimmigration,andthiswasacentralthemeofthereferendumcampaign.However,thepro-BrexitforceswithintheUKareafarfromhomogenousgroup.Insteadthereisaspectrumofopinionrangingfromahighlyderegulatorywing,ledbyfiguressuchasLiamFox,focusedonmaximizingtradeandincreasingglobalization;toamuchmoreprotectionistwingwhichseekstotryandrollbackfromcurrentglobalizationtrends.SofarinherpublicstatementsonBrexit,andthe12mainprinciplesoutlinedintheGovernmentsWhitePaper,thePrimeMinisterhassoughttoalignmorecloselywiththepro-globalization,deregulatoryforceswithinherparty.However,thereareinherenttensionsinthisposition.InparticularpursuinganactiveglobaltradeagendahasledthePrimeMinistertoseekarapidtradeagreementwiththenewDonaldTrumpadministrationintheUS;atthesametimethatPresidentTrumpispursuingastronglyprotectionistapproachtotradeandconsideringoptionstolimitUSinvolvementintheWorldTradeOrganization.DependingonhowtheseeffortstoforgenewtraderelationshipsinparallelwiththeArticle50negotiationsplayout,alongwitharangeofotherfactorsexplainedinthedriversbelow,theUKmaydecidetoevolveitsprioritizationofnationalinterests.
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OntheEU-27side,asnotedabove,therehasbeenalesspublicfocusonsettingoutadetailednegotiatingposition,althoughthisdoesnotmeanthatpreparationshavenotbeendevelopinginprivate.ThemainthemestoemergesofarareprotectionoftheintegrityofexistingrulesandinstitutionsandseekingasettlementontheEUbudgetthatwouldseebotha‘divorce’settlementandpotentiallycontinuedcontributionsfromtheUKforongoingprogrammesthatitmaystillparticipateinonceBrexitiscomplete.Althoughstatementsabout‘punishing’theUKhavebeenlimitedtodate,itisclearthatthereisthepotentialforsignificantescalationbetweenthetwosides.Thus,whilemanyintheEUwillstartwithapositionthattheUKwillendupworseoffasaresultofleaving,themainfocuswillbeonmaintainingintegrity.However,alimitednumberofstakeholders,especiallypopulistpoliticiansinsomeMemberStatesmaygofurtherandactivelyseektopromoteapunishmentagenda.ThisunderlyingissuecouldemergeandescalaterapidlyinthefaceofhostilityorbelligerencefromtheUK.ThereisalsoadeepsenseontheEUsidethatbyplayingalonggametheycanmaximizetheadvantagesofincumbency.ThetwoyeartimelimitonArticle50negotiationsmassivelystrengthenstheEU’shand.AlthoughtheUKPrimeMinisterhaspledgedto‘walkaway’fromabaddeal,inrealitythereisnowhererealisticallytowalktootherthantheveryhardestofBrexits.GametheorysuggeststhattheclosertheexpiryoftheArticle50windowcomesthestrongertheEUpositionwillbe.
ScenarioDriver2:OrderlyversusdisorderlynegotiationprocessThesecondmaindriveriswhetherornottheprocessofnegotiationisorderlyordisorderly.Anorderlyprocessisoneinwhichthereisagreementonthesequencingofdifferentprocessesinthenegotiationsandthereissuchasufficientleveloftrustthatbothsidesbelievetheothertobenegotiatingingoodfaith.Adisorderlynegotiationiswherethereisabreakdownorstalemateintheformalprocessand/orabreakdownintrust.TheCopenhagenclimatechangenegotiationsin2009areanexampleofadisorderlyprocesswherebytheformalnegotiatingmechanismsfailed,resultinginadhocgroupingsofheadsofstatemeetinginbackrooms(whilesomehadtoleaveearlytocatchflightsbacktotheircapitals),tryingtodrafttextbythemselvesandultimatelyfailingtogeneratesufficienttrusttoresolvetheirdifferences.GiventhecomplexityandpoliticaldynamicsinvolvedacrossthedifferentcountriesandinstitutionsinvolvedinBrexit,itwillbeasignificantchallengetostructureengagementinamannerthatisconducivetoconstructivelyidentifyingandresolvingdifferences.AlreadytheremaybedifferencesbetweentheUK’sapproachsetoutinitsArticle50letter,whichenvisagesdiscussinginparallelthetermsofwithdrawalandanewpartnershipincludingafreetradeagreement,andthedraftEUnegotiatingguidelineswhichstressesthatsufficientprogressmustbemadeonwithdrawalissuesbeforeworkonthenewrelationshipcanbegin.8Howthenegotiationsarestructuredwillmateriallyimpactthepotentialtrade-offsandfinaloutcome.Thusthereislikely
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tobesignificanteffortinvestedbybothsidesina‘negotiationaboutthenegotiations’todeterminethisstructureinthecomingmonths.However,failuretoreachagreementonthewayforwardwouldsignificantlyunderminetrustandentrenchhard-linepositionsonbothsidesratherthanworkingtowardsareasofcompromise.Thereareclearlessonsfrompreviousinternationalnegotiations(suchasintrade,sanctionsdisputes,environmentandclimatechange)thatestablishingtrustbetweenthemainPartiesisanessentialprecursortoconcludingasuccessfuloutcome.IftheBrexitnegotiationscollapseintoadisorderlymessdominatedbynarrowconcerns,thiswouldseverelylimitthescopeofpotentialagreement.Thetimingofbroaderpoliticalprocesses,especiallytheFrenchandGermanelectionsin2017,willalsohaveasignificantimpactonthenegotiationprocess.Changesingovernment(historicallyitcantakeseveralweeksfornewGermancoalitionstobeagreed)mayleadtonewsignalsandprioritiesfortheEuropeanCommissionandcouldmeanthattheEUmaynothavefinalizeditspositionsonmanyissuesuntillate2018.Thiscouldfurtherincreasethechanceofconfusionintheprocessandcompressthetimeforfullnegotiations.Thedesiretopresentnegotiationoutcomesasasuccessathome,canleadtoasituationwherenegotiationsareuniquelyfocusedontheareasofleverageinsteadofthoseofmutualbenefit.IntermsofleverageinthenegotiationtheUKperceivestheimpactofitswithdrawalontheEUbudget(approximately€10bnperannum),it’scontributiontomilitarydefence,andthethreatofcreatingahighlyderegulatedeconomyontheperipheryofEurope(sometimesreferredtoas“SingaporeintheNorthSea”)asbeingcentraltoitsnegotiatingstrategy.FortheEUthepowerofincumbency,theabilitytomaintaintheintegrityofexistingrulesandinstitutions,andthetickingclocktheUKfacesoncetheArticle50processistriggeredareacoresourceofleverage.Therearemanyareasformutualbenefitandcooperationbeyondtheseissues,suchasclimateandenergyissues,butwithoutskilfuldiplomacythereisalsothepotentialforthenegotiationstoquicklybecomestranded.Anorderlynegotiationprocesswouldfacilitategreatercooperationandunderstandingofmutualinterest.Incontrastadisorderlyprocesscouldlimitthescopeforagreementregardlessoftheunderlyingintentthatmightexistacrossthedifferentparties.Thisisalsoimportantinrelationtotheleveloftransparencyandtheinvolvementofdifferentinstitutions(e.g.theUKandEuropeanParliaments)atdifferentstagesofthenegotiation.Inanynegotiationitiscommonplaceforpartiestoattempttoconcealtheirfinal‘redlines’(theboundaryofminimalacceptance)inadvanceofadeal.However,inmostformsofinternationalnegotiationattemptstoultimatelydefeatoneorotherpartyareoftencounterproductive.AgreementcomesfromestablishingwhetherthereisamutuallyacceptablespacebetweenthedifferentPartiesredlines.Thisisnottoexcludeformsofpoliticalposturingandpressure,thisisnecessaryinordertofullytestandexploreotherparties’positions;butultimatelyasuccessfulresolutionisonewherebothsidescanclaimvictory.Constructinganorderlynegotiationprocessthatincludeselementsonthefuturerelationship
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betweentheUKandEUandbroaderaspectsofcooperationwillbeimportanttoachievingthis.
Scenariodriver3:TimingandextentofeconomicimpactsAkeyuncertaintyisthelevelofeconomicpainthatbothsideswillexperienceunderdifferentoutcomesduringthecourseofthenegotiations.Economicpaininapoliticalsenseisnotnecessarilythesameassimplycalculating‘cost’,inparticularperceptionsofpublicconfidencecanbeverydifferentinrelationtoavoidedgainsratherthanactuallosses.Forexampleaneconomythatisgrowingmoreslowlythanitwouldotherwisewillcreatedifferentpoliticaldynamicstoonethatisinafullrecession,eveniftheeconomiccostofslowergrowthisextremelylarge.IntheinitialmonthsfollowingBrexitamassivedevaluationofthePoundhasactedasabufferintheUKagainstnegativeshocks.Althoughimpactswerenotuniformacrossallsectorstheprojectionsforanimmediaterecessionfollowingthereferendumvotehavebeenprovedwrong.However,itislikelytoincreasedomesticUKinflation,whichhasbeenathistoricallylowlevelssincethefinancialcrisisin2008.Thereisanimportanttimingissuewithinthenegotiations.CurrentlyUKexporterstotheEUhavethedualbenefitofmaintainingtarifffreemarketaccesswhilegainingacompetitivenessadvantagefromthedevaluation(thepoundhasfallenbymorethan16%againsttheEuro,meaningUKexporterscouldtechnicallyreduceeuropricesbythisamountandstillreceivethesamerevenueinpoundsastheydidbeforethereferendum).InascenariowheretheUKsuddenlymovedtoWTOonlyrulesthiswouldmeanthattheeconomicimpactintheUKwouldonlyberealizedaftertheinitialArticle50negotiationhadbeencompleted.FortheEUthereverseistrue:EUexporterstotheUKarealreadyundergoingaperiodofadjustmentowingtolossofcompetitivenessfromthefallinthepoundandsowouldlikelytobelessimpactedbyanyfuturemovestoaWTOsystem.AtthesametimethefullpotentialbenefitsofcompaniesorinvestorsswitchingawayfromtheUKwouldonlyberealizedafterthenegotiationshadconcludedandthereiscertaintyoverthenewarrangements.IneffectitcouldbearguedthattheEUisalreadypricinginthecostofBrexit,whiletheUKwillpotentiallyonlydosoaftertheconclusionoftheArticle50process.TheresolutionofthesedifferentinterestsandhowtheuncertaintyovereconomicimpactsarevaluedwillthereforebeamajordeterminingfactorinshapingdifferentBrexitscenarios.However,theresultoftheseimpactsisfarfromcertain.WithintheUK,ifthereality/expectationofeconomicriskssharplyincreasesthismayleadtothePrimeMinisterseekingamorecooperativeoutcomeandcouldunderminepoliticalsupportforthehardestformsofBrexit.AlternativelyifeconomiclossesareseenassunkcoststhismayhardensupportforcleanerformsofBrexit,andpotentiallyempowernationalistpoliticalvoices.Thus,althoughperceptionsofeconomicimpactwillpotentiallybeasignificantdriver,itisimportantnottodrawnarrowlinearinterpretationsarounddifferentimpacts.
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Scenariodriver4:MomentumafterArticle50negotiationsThefourthmajordriverofthescenariosisthemomentumcomingoutofanynegotiationsandthetimeframeoverwhichtheyareundertaken(ingametheorytermswhetherthisisviewedasa‘oneshot’or‘repeated’game).ThecomplexityofBrexitmeansthatthereisunlikelytobeasingleandneatresolutionofallissueswithinthetwoyeartimeperiodfromtriggeringArticle50.Insteadthereislikelytobeaninitialsettlementandprocessfollowedbyanextendedperiodofengagementandadjustmentbasedonsubsequentevents.Iftheinitialroundofnegotiationsendinacrimonyandmutualdistrustthiswillmakefuturecooperationmuchharder.Ontheotherhand,ifthereispositivemomentumandaclearunderstandingoffutureprioritiesthiswouldleadtomoreproductiveengagementsgoingforward.IntheUKtherehavebeenargumentsputforwardinsupportofbotha‘clean’Brexitanda‘phasedtransition’toavoidcliffedgesanduncertaintyforbusiness.Howtheseviewsinteractwillbeimportantinshapingfuturemomentum.TheaspirationforacleanBrexithasseveralpotentialdriversrangingfromadesiretogetresolutionasquicklyaspossibleandhencelimitfutureuncertainty;topotentiallymorecynicalmotivesontheneedto‘lockin’theresultofthereferendumbeforeageneralelectionorotherfactorscouldleadtoremainforcesregainingpoliticalpower.Similarlytheargumentsforaphasedtransitioncoveraspectrumoffactorsincludingmanagingthecomplexentanglementthatexistsafter40yearsofEUmembership;butalsoasapotentialwaytomanagefearsofahardBrexit.OntheEUsideinitialinstinctsappeartobeinfavourof‘playingthelonggame’asnotedabove.However,thisdoesnotmeanthattherearenoforcespullinginthedirectionofseekingaquickresolutiontoBrexitandsoallowingthemtomoveonwithcorebusinesselsewhere.InparticulartheremaybeasensethattheEUpositionwillbestrongestbypushingtheUKintoahardexit,thusstrengtheningEUpowerinanyfuturetradingnegotiations.Whatisclearfrommanypolicyareasincludingenergyandclimatechange,butalsobroaderconcernssuchasdefence,crimeanddigital,isthatsomeformoffuturecooperationbetweentheUKandEUwillbeinevitable.Howandwhetherapotential‘cooperationtrack’aroundtheseissuesmightemergemaybeadriverforgreatertrustandpositivemomentumfollowingtheinitial2yearArticle50period.Theimpactsofacooperationtrackforenergyandclimatearediscussedinmoredetailbelow.
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POLITICALSCENARIOSFORBREXITFromanassessmentofthekeydriversandinterests,fourmainpoliticalspacesforlandingaBrexitdealwithinthenext2-3yearsemergeasshowninfigure7below.Thekeyaxesindefiningthescenariosareanorderlyversusadisorderlynegotiationprocessandwhethersovereignty/integrityorcooperationinterestsdominatenationalpositions.Thesescenariosarefocusedontheperiodto2020,withanassessmentoffuturemomentum(eitherupwardordownward).AllofthescenariosarepredicatedontheUKleavingtheEUanddonotexplicitlyconsiderthepotentialforasecondreferendumetc.tototallyreversethecurrentpoliticalcourse.However,theydoresultinverydifferentlevelsofcooperationgoingforward.Figure7:OverviewofpoliticalscenariosforBrexit
Scenario1:SovereignTransitionThisscenarioisprobablythemostrepresentativeofthecurrentUKnegotiatingposition.TheUKwouldnotseektoremainamemberoftheEuropeanEconomicArea(EEA)andthefourfreedoms–enablingittosetanindependentimmigrationpolicyandrestrictfreedomofmovementfromotherEUcountries.ThecentreofthenegotiationsislikelytorevolvearoundtheUKdesireforeitheranewfreetradeagreement(FTA)orabespokeCustomsUniondeal,whichwouldenableittosimultaneouslysignnewtradedealswiththirdpartycountries(e.g.theUS,ChinaorIndia)whilealsoretainingmarketaccesstotheEUatlowtariffs.FortheEUthedesireforbothsettlingexistingUKbudgetliabilities(variousestimatesfrom
Cooperationinterestsdominate
Sovereigntyandintegrityinterests
dominate
Orderlynegotiations
Disorderlynegotiations
Sovereigntransition
Hostilenationalism
Economictransition
EUinChaos
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€40billionto€70billionhavebeenproposed)andthepotentialtoseekfurtherbudgetcontributionsgoingforwardwouldbecentraltoitspriorities.OtherareasofsignificantfocuswouldlikelybeonthefutureroleoftheCJEU,andinparticularitsroleinfuturetradedisputeresolutionmechanisms.Whileitisnotimpossiblethatthisnegotiationcouldmoveforwarditwouldalsocreateahighlyunstablepoliticalspace.TheFTA/CustomsUnionagreementtheUKisseekingwouldbeamajorconcessionbytheEU,andwouldraiseanumberofconcernsovertheapplicationofStateAidrulesandotheravenuesforunfaircompetition.IntheabsenceofEUflexibilitytheUKcouldbeleftwithlimitedoptionsbeyonddefaultingontoWTOrules.SimilarlyalthoughtheUKPrimeMinisterhasgivenherselflatitudewithrespectto‘appropriatecontributions’toanyfutureEUbudget,expectationsarelikelytobesignificantlybelowthatoftheinitialEUasks.Thusthereareanumberofdriversinthisscenariowhichcouldcreateabreakdowninorderlynegotiationsandadrivetowardszero-sumpolitics.Ifthenegotiationsbecamelockedonissuesofbudgetcontributions/CustomsUnionagreementwithoutconsideringwidercooperationintereststhiswouldrapidlyshiftintoadisorderlyprocessandthescenariothe‘HostileNationalism’outcomedescribedbelow.Figure8:SovereignTransitionassessmentofclimateandenergyissues
ASovereignTransitionscenarioresultsinrelativelyweakoutcomesforclimateandenergyissuesonbothsidesasthesepolicyareasarelargelysacrificedinpursuitofhighlevelobjectiveswithinthenegotiations.TheUKdesiretohaveacleanbreakfromtheEEAandEUinsistenceonstrongintegrityleadstoarapidexitfromtheIEMwithnegativeconsequencesforbothsides.Thereissomeasymmetryoninvestmentandclimatechangeissueswhereitislikelythattherapidexitwouldincreaseinvestment
Energymarketaccessandregulation
Euratom andnuclearpower
Energysectorinvestment
Climatechangeandenvironment
Energydiplomacy
ImpactonUKperceivedinterests ImpactonEU/Cion perceivedinterests
Negative:UKunlikelytoretainIEMmarketaccesscausingariseinenergybillsandincreasedcostoflowcarbontransition
Negative:UKlikelytoleaveEIBcuttingoffanimportantsourceofenergysectorinvestment
Neutral:UKfreetosetownclimatechangetargets.However,mayenduppassivelyacceptingmanystandardssetinEUwithlittlesayintheircreation
Neutral:ScoperemainsfordiplomaticcooperationandengagementwithRussiaandothermajorexportcountries
Negative:UKwouldneedtorapidlyestablishnewarrangementsortransitiondeal.Riskofsignificantdisruption
Negative:IrelandlikelytobecutofffromrestofIEM.UKmayimportlesselectricityfromcontinentalsuppliers.IncreasedcostoflowcarbontransitionandriskUKpursuesderegulatoryagenda
Neutral:UKwithdrawalmayimpactEIBandotherEUfundingforenergyinvestment.However,broaderEUinvestmentlandscapemorerobust
Negative:EffortsharingregulationdecisionscouldbesignificantlycomplicatedbyUKwithdrawal.Couldleadtoreopeningof2030climateandenergypackageanddelayinEnergyUnionimplementation
Neutral:ScoperemainsfordiplomaticcooperationandengagementwithRussiaandothermajorexportcountries
Neutral:Althoughshort-termriskwhilenewarrangementsestablishedimpactmuchlowerforEUasawhole(however,wouldbenegativeforFrancegivenHinkleyPointCexposure)
Momentumgoingforward:DownwardUnstablepolicyspacethatcouldquicklydescendintoahostilenationalismscenario
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uncertaintyintheUK,makingitarelativelylessattractivevenueforinvestmentthantheEU.However,thelackoftransitionarrangementsonclimateissuescouldcreatesignificantcomplicationsfortheeffortsharingregulationandviabilityoftheETSfortheremainingEUcountries.ThepursuitofacleanbreakbytheUKalsomeansthatthereisariskthateithertransitionalornewarrangementsarenotputinplacewithrespecttoEuratom,whichcouldcausecomplicationsintheUK’snuclearpolicyintheshort-term.Themomentumafter2020fromthisscenarioisdownwardforenergyandclimateissues.Therearesignificantrisksofeconomicshocksandotherimpactsonbothsideswhichcouldrapidlyleadtoescalatingblameandabreakdownoftrust.Theemphasisonsovereigntyandintegritycouldberelatedtogreaterlevelsofhostilenationalismgoingforwardandlimitthescopeforfuturecooperativearrangements.
Scenario2:HostileNationalismThisscenarioispartofaconnectedpoliticalspacewiththeSovereignTransitionscenariowhereprovocationonbothsidesleadstoamajorbreakdownoftrustandafocusonzerosumpolitics.Thusalthoughthestartingdynamicsareverysimilartoscenario1thefailuretoconstructanorderlynegotiationprocessleadstoamorenegativeoutcome.ForexampleifagreementontheUK’spaymenttosettleoutstandingliabilitiescannotbereachedortheUKdenysanyrolefortheEUCJinfuturetradearbitration,itcouldquicklyleadtofragmentationandthenegotiationprocessdescendingintochaos.TheUKthreateningtounderminesecuritycooperationwiththeEUcouldalsoleadtoahostileresponsefromtheremainingEU-27countries.Thiswouldcreateaselfreinforcingdynamicwhichcouldfeednationalistinstinctsinboththemediaandwiderpopulationonbothsides,promotingevermoreintransigentpositions.ThiswouldrapidlyincreasetheprobabilitythattheUKrespondsbythreateningamassivederegulatoryagendatoundermineEUcompetitivenessandrefusestomakeanypaymentsforoutstandingliabilities.TheEUthenrespondsinkindandthosestakeholderswhomaywanttofocusona‘punishment’agendainsomeMemberStateswouldbeempowered.TheUKcould,inextremis,alsotryandblockprogressonallexistingEUlegislationwhichcouldfurtherentrenchEUpositions.InthisscenarionosuccessfulagreementisreachedastheArticle50timelimitexpires,leadingtoUKexitingfromtheEUinachaoticdefault.Thiscreatesstrongnegativemomentumandalackoftrustforfutureengagementwithongoingargumentsaboutoutstandingbudgetliabilities/punitivetariffsetc.Thisscenarioislikelytogeneratemaximumeconomiccostsonbothsides.
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Figure9:HostileNationalismassessmentofclimateandenergyissues
Thisscenarioleadstohighlynegativeimpactsforenergyandclimateissues.TheUKislikelytobeparticularlydamagedasbusinessandinvestorsstrugglewithasharpcliffedgeasthenegotiationsdescendintochaos.ThiscouldleadtoasignificantinvestmenthiatusintheUKandundermineclimatechangeobjectivesascompetitivenessconcernsleadtoafocusonderegulationtolimiteconomicdamage.AlthoughtheEUwouldlikelyremainasomewhatmoreattractiveplaceforinvestmentthantheUK,therewouldstillbenegativeimpacts(especiallyrelatedtoEUbudgetliabilitiesandfuturecontributions)asIrelandfacesbecominganenergyislandandtheUKexitcouldundermineeffortsharingregulationandtheETS.ThethreatofastrongderegulatoryresponsefromtheUK(“SingaporeintheNorthSea”)couldhavesignificantmediumtermimpacts.ContinuedcooperationonenergydiplomacywithcountriessuchasRussiawouldbesignificantlyunderminedinthisscenariowhichcouldraiseenergysecurityrisksforboththeUKandEUMemberStates.Themomentumfromthisscenarioisstronglydownward.Theescalatinghostilitythatleadstoacollapseinthenegotiationswouldresultinsignificantbitternessonbothsides.Shortofafulldiplomaticresettherewouldbelittletrusttodrivecooperationonenvironmentandclimateissues.
Energymarketaccessandregulation
Euratom andnuclearpower
Energysectorinvestment
Climatechangeandenvironment
Energydiplomacy
ImpactonUKperceivedinterests ImpactonEU/Cion perceivedinterests
Negative:UKhasasharpexitfromIEMcausingariseinenergybillsandincreasedcostoflowcarbontransition
Negative:HighuncertaintycouldleadtosignificantinvestmenthiatusasUKbusinessandinvestorsfaceasharpcliffedge.MessyexitofUKfromEIB
Negative:Cliffedgeexitmayundermineclimatechangeobjectivesinfavourofsharpderegulatoryagendafocusedoncompetitiveness.Majornegativeimpactsforbroaderenvironmentalobjectives
Negative:BreakdownoftrustwouldunderminecooperationandempowercountriessuchasRussia
Negative:Significantchanceoffailuretoagreeinterim/transitionalmeasures
Negative:IrelandlikelytobecutofffromrestofIEM.UKmayimportlesselectricityfromcontinentalsuppliers.IncreasedcostoflowcarbontransitionandriskUKpursuesderegulatoryagenda
Neutral:EUpotentiallysignificantlymoreattractiveplaceforforeignFDIinvestmentthanUK.However,stillsignificantriseinpolicyrisk
Negative:EffortsharingregulationdecisionscouldbesignificantlycomplicatedbyUKwithdrawal.Couldleadtoreopeningof2030climateandenergypackageanddelayinEnergyUnionimplementation
Negative:BreakdownoftrustwouldunderminecooperationandempowercountriessuchasRussia
Neutral:EUlessimpactedthanUK(however,wouldbenegativeforFrancegivenHinkley PointCexposure)
Momentumgoingforward:StronglyDownwardBreakdownoftrustwouldseverelylimitfutureengagementwithoutfulldiplomaticreset
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Scenario3:EconomicTransitionThereisrecognitionbybothsidesthatitisimpossibletosuccessfullydisentangletheUKfromEUwithinatwoyeartimeframe.Followinganinitial‘testofstrength’inthenegotiationstodeterminetheseriousnessofbothsides,theUKandEUchosetofocusoneconomiccooperationintheshort-termratherthansovereigntyorpunishmentissues.Negotiationsthereforefocusoncreatingasetofstable,interimarrangements,afterwhichlengthiernegotiationscouldtakeplacetomovetowardsamorecomprehensivesolution.Thestructureofthenegotiationsrecognizethatthisisnotnecessarilyadurablesettlementinthelong-run;butthatcreatingaworkabledealthatdoesnotgeneratesignificanteconomicharmwilllikelyrequirea5-10yearwindowratherthan2years.FortheUKthereisalsorecognitionthatsecuringmeaningfultradedealswiththirdcountriessuchastheUnitedStates,ChinaandIndiamayalsotakeanextendedperiodoftime.ThisresultsintheUKretainingmembershipofthecustomsunionandpotentiallyalsofullEEAmembershipinthefirstinstance.ItwouldalsorequiretheUKtocontinuetomakesomeformofcontributiontotheEUbudget,thoughtheremaybescopetonegotiatenewlevels.ThisscenariodoesstillleadtotheUKformallyexitingtheEUaftertheArticle50negotiationsconcludein2019,andsothemandateofthereferendumisdelivered.However,thefocusisoncreatingapositivemomentumtoconcludelongernegotiationsthatcouldeventuallyresultineitheradeep‘Canadaplus’stylefreetradedeal,orSwissstylesectoralarrangements,inthemediumtolong-term.
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Figure10:EconomicTransitionassessmentofclimateandenergyissues
AnEconomicTransitionscenarioleadstolargelypositiveimpactsforenergyandclimatechangeissues.ThisscenariowouldenabletheUKtoretainIEMaccesswhichwouldbringbothsignificantdomesticbenefitsbutwouldalsoensurecountrieslikeIrelandarenotisolated.BypoolingpotentialrenewableresourcesandtheabilityforbalancingacrossthewholeEUthecostsofdecarburizationarereducedforbothsidesaswell.Thisscenarioprovidesthemostpositivebasisforinvestment,althoughtheUKmaystillhavetonavigatesomeissuesinrelationtomembershipoftheEIBetc.Thescenariowouldalsoenableactivecooperationonenergyandclimateissues.FortheEUthiswouldminimizerisksofpossibledisruptiontothecurrentEnergyUnionand2030ClimateandEnergypackageagenda;andprovidestabilityfortheETS.TheUKwouldstillhavetonavigateEuratomarrangementsbutthisscenarioprovidesthemostpositivebackdroptoaccomplishthis.Themomentumfromthisscenarioisupwardforclimateandenergyissues.Byemphasizingeconomiccooperationandrobusttransitionarrangementsthereistimeandastablediplomaticrelationshiptomoveforwardwithlongertermarrangements.Scenario4:EUinChaosInthisscenariopoliticaleventsinotherEUMemberStatesprecipitateadeepcrisiswhichswitchesfocusawayfromBrexit.ThiscouldbeacountrysuchasItalyorGreecesufferingadeepcrisisinthenexttwoyearswhicheventuallyleadstoexitingtheEuro,
Energymarketaccessandregulation
Euratom andnuclearpower
Energysectorinvestment
Climatechangeandenvironment
Energydiplomacy
ImpactonUKperceivedinterests ImpactonEU/Cion perceivedinterests
Positive:UKlikelytoretainIEMmarketaccesshelpingtoreduceenergybillsandcostoflowcarbontransition
Neutral:Avoidcliffedgeforbusinessandinvestors.However,maystillneedtowithdrawfromEIB
Positive:Strongbasisforfuturecooperationonclimateandenvironmentissues.
Positive:Strongbasisforfuturecooperationonenergydiplomacy
Neutral:Goodbasisforestablishingnewarrangements/transitionalmeasuresbutmaystillfaceatighttimeline
Positive:Noenergy‘islands’createdforremainingEUcountries.UKcontinuestoprovidedemandforEUenergyandlowersoverallcostofdecarbonisation
Positive:EUpotentiallysignificantlymoreattractiveplaceforforeignFDIinvestmentthanUK.However,stillsignificantriseinpolicyrisk
Positive:Strongbasisforfuturecooperationonclimateandenvironmentissues.
Positive:Strongbasisforfuturecooperationonenergydiplomacy
Positive:Goodbasisforcontinuitygoingforward
Momentumgoingforward:UpwardGoodbasisforfuturenegotiationswhichcouldresultinarangeofoutcomes(e.g.CanadastylefreetradeagreementorSwissstylesectoral dealsetc.)
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oravictoryforpopulistcandidatessuchasMarineLePeninthe2017Frenchelections.TheUKattemptstocontinueorderlynegotiationswiththeEuropeanCommissionbuttheprocessspiralsintochaosasnoclearmandateisforthcomingfromotherEUMemberStatesandthefutureshapeoftheEUasawholeisputinconsiderablerisk.InthisscenarioalargepoliticalspaceopensupformajorreformoftheEU,butintheshort-termcrisismanagementdominateswhichmakesthetimingdifficultforthe2yearArticle50process.Theultimateoutcomeofthehighlychaoticnegotiationbackdropisuncertain,butitislikelythattheUKisnotabletonegotiatesignificantnewarrangementsforanewFTAorbespokeCustomsUnionagreementetc.andsomayendupinahardBrexitontoWTOrulesintheshort-term.Momentumfromthisscenarioisalsoincrediblyvolatile.Thereislotsofpotentialfornegativeenergytoemergeandmakefuturecooperationchallenging.However,iftheEUdoesgothroughamajorreformprocessthiscouldalsoprovidesignificantopportunitiesfortheUKtonegotiateanewbasisforfuturecooperation.Figure11:EUinChaosassessmentofclimateandenergyissues
Thisscenarioresultsisanegativeshort-termoutcomeforenergyandclimateissues.ThechaoticendtotheArticle50negotiationprocessislikelytoleadtoasharpcliffedgeastheUKexitstheIEMwithsignificantimpactsonbothsides.InvestmentuncertaintyintheUKwouldbeveryhighinthisscenario,butrelativelyspeakingtheUKmightbeperceivedmoreattractivethanEurozonecountries.ThisscenariowouldresultinmaximumdisruptiontotheEUEnergyUnionprocessandCleanEnergyforall
Energymarketaccessandregulation
Euratom andnuclearpower
Energysectorinvestment
Climatechangeandenvironment
Energydiplomacy
ImpactonUKperceivedinterests ImpactonEU/Cion perceivedinterests
Negative:UKhasasharpexitfromIEMcausingariseinenergybillsandincreasedcostoflowcarbontransition
Neutral:UKmaybeperceivedasamorestablecountryforinternationalinvestors.However,stilllikelytohavetowithdrawfromEIBetc.
Negative:Cliffedgeexitmayundermineclimatechangeobjectivesinfavourofsharpderegulatoryagendafocusedoncompetitiveness.Majornegativeimpactsforbroaderenvironmentalobjectives
Negative:BreakdownofengagementwouldunderminecooperationandempowercountriessuchasRussia
Negative:Significantchanceoffailuretoagreeinterim/transitionalmeasures
Negative:IrelandlikelytobecutofffromrestofIEM.UKmayimportlesselectricityfromcontinentalsuppliers.IncreasedcostoflowcarbontransitionandriskUKpursuesderegulatoryagenda
Negative:DisruptionacrossEUincreasesinvestmentriskwhichcouldhaveamajorimpactontheenergysector
Negative:Likelytobesignificantimpactonabilitytomoveforwardwith2030ClimateandEnergypackageandEnergyUnion
Negative:BreakdownofengagementwouldunderminecooperationandempowercountriessuchasRussia
Neutral:EUlessimpactedthanUK(however,wouldbenegativeforFrancegivenHinkley PointCexposure)
Momentumgoingforward:MixedAsEUresetsrelationshipsfollowingbreakdownpotentialforpositivemomentumtoemerge– butalsorisksofrisinghostility
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Europeanspackage.ItcouldalsosignificantlyundermineclimateobjectivesintheUKasothershort-termcompetitivenessprioritiescrowdoutlonger-termobjectives.ThescenariocouldleadtoasignificantbreakdowninenergydiplomacyandempowerexportercountriessuchasRussiarelativetotheircurrentposition.ThisscenariowouldalsocarryahighriskthattheUKwasunabletosecureeitheralternativeortransitionalarrangementswithregardtoEuratom.Themomentumfromthisscenarioismixed.Althoughthescenarioishighlychaoticthereisnotthesamelevelofacrimonybetweenthetwosidescomparedtothehostilenationalismscenario.AstheEUrebuildsfollowingaperiodofchaostherewouldbeopportunitiestoforgeapositiverelationshipwiththeUK.Energyandclimatemayappeartobelesspoliticizedissuesthantradeorsecurity,andsomayenablethemtoactasapathfinderforrebuildingcooperation.However,thisscenarioisnotwithoutriskandthenegativeimpactscouldalsoempowerhostileforcesonbothsidestopromoteadestructivepunishmentagenda.
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CONCLUSION:THENEEDFORACOOPERATIONTRACKInassessingtheoutcomesofthedifferentBrexitscenariosforenergyandclimatechangeitisclearthattherearestarkdifferencesbetweennegativeoutcomesforthosescenariosdominatedbyanarrow‘oneshot’focusthatemphasizeszerosumpoliticsbetweenthetwosides;andmorepositiveoutcomesfromabroader‘repeatedgame’focusthatemphasizescooperation.Giventhestrongpathdependency(wherebyinitialchoiceslimitfuturedecisions)fromabreakdownintrustandashifttoadisorderlynegotiationspaceitisthereforevitalthatacooperativetrackisestablishedinthenegotiationstokeepopenthepoliticalspacetobuildpositiveoutcomes.However,giventhepotentialfornarrowinterpretationsoftheArticle50processtofocusmostly‘onthedivorce’,itisbynomeansautomaticthatthistrackwillbeestablished.Brexitwillbeauniquediplomaticeventandnavigatingthedifferentrisksandopportunitieswillrequiresignificantstatesmanshipfrombothsides.Asillustratedinfigure12themostlikelyscenarioundercurrentdriversistomovetowardshostilenationalism.TheinitialUKnegotiatingpositionislikelytotryandmovetowardsasovereigntransitionoutcome.However,asoutlinedabovethisisahighlyunstablepoliticalspaceandwouldrequiremajorconcessionsfrombothsides.Intheabsenceofthoseconcessionscomingforwardthemostlikelyresultwillbeanescalationinhard-linepositionsandadescentintohostilenationalism.Maintaininganorderlynegotiationprocesswillalsobeachallenge.Inparticulartheremaybeanumberofpoliticalforcesonbothsidesofthechannelthatmaythinkthattheycouldnarrowlyprofitfromadisorderlynegotiationprocess:eitherbyensuringthereisnowaybackfortheUKtoremainintheEUorbecausetheyperceivetheircountry/sectormaybenefitfroma‘hardBrexit’.
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Figure12:Assessmentofmostlikelyscenarioundercurrentdrivers
Thecreationofaspecificcooperationtrackforenergyandclimateissueswouldbethebestwaytomitigatetherisksofmovingtowardsahostilenationalismscenario.Therehasalreadybeensomediscussionoftheneedforongoingcooperationonsecurity,crimeanddigitalissues.Makingacooperationtrackarealityandexpandingittoincludeenergyandclimateissueswouldcreateapositivepoleinthenegotiationstobuildtrustanddemonstrateprogress.Asuccessfulcooperationtrackforclimateandenergywillrequiretransparencyandaccountabilityonbothsides.Thisisnotthesameasrequiringnegotiatorstorevealtheirredlines(finalnegotiatingpositions)assomecriticshaveargued.Ratheritiscreatingaspaceforthevoiceandinvolvementfromthepublic,businessandParliamentonareasofcommoninterest.Inparticularfourareasstandout:
• Integratedenergymarket:TheUKhasadeeplyintegratedenergymarketwiththerestoftheEUandasingleenergymarketwiththeRepublicofIreland.Inbothcasesdisentanglementcouldbetechnicallyandpoliticallychallenging.TheUKhassignaledaredlineregardingthejurisdictionoftheEuropeanCourtofJustice(ECJ).However,thecurrentUKpositionismorenuancedasitdoesnotexcludeitsroleintradearbitration,meaningtherecouldbeaninterimrolefortheECJ.Inthelongrun,newformsofcooperationsuchasanEnergyUnionbeyondEUborderscouldalsobeconsideredorpossibleextensionstotheEnergyCommunitymodel.CooperationonenergydiplomacyandenergysecurityinparticularwithregardstoRussiawouldbepartofthosediscussions.
Cooperationinterestsdominate
Sovereigntyandintegrityinterests
dominate
Orderlynegotiations
Disorderlynegotiations
Sovereigntransition
Hostilenationalism
Economictransition
EUinChaos
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• Climatechangetargets:TheEUiscurrentlyintheprocessoftranslatingthejointinternationalclimatechangecommitmentitmadeintobindingnationaltargetsuntil2030.AstheUK’sownlegallybindingtargetsfromitsClimateChangeActarehigherthantheEUaverage,theUKcanmakeapositiveoffertotheEUofcontinuedcooperationonoverall2030greenhousegasreductiontargetsandtheEUEmissionsTradingScheme.
• Climatediplomacy:TheUNFCCCwilllaunchafacilitativedialoguein2018toincreaseoverallambition.InthecontextofothermajoreconomiessuchasChinaandIndiaalsotakingaction,thisprovidesanopportunityfortheEUandUKtoshowcontinuedgloballeadership.WhiletheUKmightwanttogoitsownwayintermsofclimatediplomacytoplaceitselfmoreprominentlyontheinternationalstage,itcanpotentiallybecomeanimpactfulallyfortheEUtobuildnew,climatebasedglobalpartnerships,e.g.withtheCommonwealthcountriesorLatinAmericancountriessuchasColombia,Peru,Chile,Mexico.
• Environment:NothingtechnicallypreventstheUKortheEUfrommaintainingorincreasingstandardsontrans-boundaryimpactscurrentlysetbyEUdirectives,e.g.theIndustrialEmissionsDirectivereducingindustrialpollution,withoutformalcooperation.Developingcooperativearrangementshoweverwillincreaseagencybeyondtheirownborders.NeithertheUKnortheEUwouldwanttoriskaregulatoryvacuumaboutpropertyrightsinareasofsharedresourcessuchasfisheriesorthemanagementofimpactsacrosssharedlandbordersandriversbetweenIrelandandtheUK.
Inestablishingacooperationtrackintheseareastherearealsoanumberofdifferentpoliticallevelsthatneedtobeconsidered.Firstly,howandinwhatformatwilltheseissuesbeaddressed?WillthisbepartoftheArticle50processor,perhapsmorelikely,aparallelprocess?Therewouldthenneedtobeconsiderationofhowdifferentissueswouldtranslateintoindividuallandingpointsforagreement.Wouldthisinvolvethecreationormodificationofinstitutionalbodies,formpartofanewfreetradeagreementetc.?Atthispointitmaybemoreusefultodisaggregatedifferentpolicyareasandtreatthemasseparatestreamswithinthecooperationtrack.AddressingthesequestionsislikelytorequiredecisionsbyHeadsofState.However,itwillbeimportantforarangeofactorsfromcivilsociety,business,financeandacademiatomakethecasethatacooperationtrackcanbeasuccessfultooltomanagenegativerisksinthenegotiationprocess.
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ENDNOTES1https://www.entsoe.eu/Documents/Publications/Statistics/Factsheet/entsoe_sfs2015_web.pdf
2DECC(2015)‘DUKES:ForeignTradeStatistics’
3http://ec.europa.eu/energy/sites/ener/files/documents/20130902_energy_integration_benefits.pdf4https://www.e3g.org/docs/Transmission_planning_and_regional_power_market_integration.pdf5TheUnitedKingdomsexitfromandnewpartnershipwiththeEuropeanUnion(2017)pg.43
6https://theconversation.com/brexatom-the-uk-will-now-leave-europes-nuclear-energy-authority-721367EuratomTreaty,Article52,http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A12012A%2FTXT
8https://www.gov.uk/government/publications/prime-ministers-letter-to-donald-tusk-triggering-article-50