Extra supplies from Mainland Europe and elsewhere helped the UK avert natural gas problems in March during an unusual cold snap, but there is no guarantee it would happen again as easily once the country leaves the European Union, an Aug. 1 report from the University of Warwick’s School of Business warned.
“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,” observed the report’s author, Prof. Michael Shaw of the university’s UK Energy Research Center.
UK gas security will face challenges from increased import dependence and domestic demand constrained by climate change policy in the medium term, he said. “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 said.
“Our analysis concludes that gas will continue to flow after Brexit, but consumers may have to pay more to guarantee supplies as the UK competes in the global gas market,” he said.
The report specifically noted that:
• More than 80% of UK households rely on gas for their heating, while it gas is used to create 42% of the electricity the UK consumes.
• The UK imports approximately half of the gas it consumes, an amount likely to increase in the 2020s as domestic production falls, creating more reliance on the global market.
• Most of these imports come from the EU Internal Energy Market. Leaving the EU means the UK will cease being a member of the IEM and will lose any ability to influence EU energy and climate strategies - but still will be affected by them.
• Brexit also creates regulatory risk for the UK market. It is unclear how the interconnectors which move gas between Belgium, the Netherlands and the UK will be regulated once the UK has left the IEM.
• The UK’s supply infrastructure is ageing and was designed to move gas onshore and south from the North Sea fields. The system now is being asked to move gas in new directions over very short periods, and does not always cope. Uncertainty is delaying critical decisions with long-term consequences.
• The UK Government needs to provide clarity on gas’s future role there to allow the industry to make informed investment decisions. If it chooses to continue toward its ambitious decarbonization goals, the use of gas must decline. This would be disincentive to invest in infrastructure.
“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 said.
Contact Nick Snow at [email protected].
