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Report urges UK to prepare a post-Brexit roadmap for natural gas

A Warwick School of Business report warned of the recurrence of natural gas problems, as the country prepares to leave the European Union

Extra supplies from Mainland Europe and elsewhere helped the UK avert natural gas problems in March, during the cold snap – but there is no guarantee that it will happen again, once the country is out of the European Union – warned the report.

Prof. Michael Shaw of the university’s UK Energy Research Center stated: “The UK needs a flexible, adequate and resilient gas supply chain into the 2020s and beyond. But the industry is wrestling with an uncertain future.”

He also emphasized that the UK gas security is set to face challenges from increased import dependence and domestic demand constrained by the climate change policy in the medium term.“While there is this degree of uncertainty, it is difficult for industry to justify investments in the supply chain, whether to maintain existing capacity, deliver new sources of flexibility, or explore carbon capture solutions,” Shaw added.

According to Shaw, the analysis in the report concluded that while gas will continue to flow after Brexit, the consumers may have to pay more to guarantee supplies – due to the UK’s competition in the gas market.

The report also identified that more than 80% of UK households rely on gas for their heating, and gas is also used to create 42% of the electricity that the UK consumes. The UK imports also counted for half of its gas consumption, an amount that is likely to increase in the 2020s, as domestic production is set to fall, and more reliance on the global market is set to rise.

Since most of these imports will come from the European Union Internal Energy Market – leaving it will mean that the UK will cease being a member of the IEM, and will lose any ability to influence European Union energy and climate strategies – all the while still being affected by them. Brexit will also create regulatory risk for the UK market. It remains unclear how the interconnectors that move gas between Belgium, Netherlands and the UK will be regulated after it.

There is also a problem with UK’s supply infrastructure, which is ageing—and is unable to move gas in new directions over very short periods. The UK government needs to provide clarity on gas’s future role in the country’s ambitious plans towards decarbonisation.

“While Brexit is a complicating factor, responsibility for strategic leadership rests with the UK Government, and we urge [it] to provide a clear roadmap for gas in the low carbon transition and to draw up a proper long-term gas security strategy,” Shaw stated.

-GBO Correspondent

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