Brexit: Make or break for Britain’s nuclear industry

The impact of Brexit on the nuclear energy industry was almost completely ignored during last year’s referendum campaign. It received similar scant attention during the recent General Election.

This neglect means very few people are aware of the consequences of Britain leaving Euratom, the treaty which governs the EU nuclear industry. These consequences are potentially devastating for Britain’s energy security and damaging for its economy.

Now, however, it’s possible that the Prime Minister’s weakened position has opened the door to a softer Brexit. Her favourite mantra that “no deal with the EU is better than a bad deal” is being heard less often. The risk that Britain will quit the EU with no deal, which would harm many industries, may have receded slightly.

This is a relief to many businesses such as car manufacturing where components are sometimes imported and exported more than once before construction of a vehicle is finished. Applying WTO rules to such situations would impose substantial costs and cause significant disruption.

But the nuclear energy industry, following the Government’s sudden announcement last January that Britain must quit the Euratom Treaty, could fare far worse. Without the seamless replacement of Euratom by individual nuclear cooperation agreements with over 20 countries, trade in nuclear materials becomes illegal.

That would halt the construction of all new nuclear plants in Britain, including Hinkley Point C. It would also disrupt the operation of existing plants and lead to their premature closure, thereby jeopardising one fifth of Britain’s electricity generation capacity.

This lost capacity could not easily be replaced by alternative sources of low carbon generated electricity. Brexatom would therefore weaken Britain’s energy security, increase consumer prices and prevent it from meeting its carbon emission reduction targets.

It should be inconceivable that such an outcome would be allowed to occur but nothing can be taken for granted. The forthcoming Brexit negotiations will be fractious and complicated. The unanimous consent of 27 countries and several institutions is required before a deal can be concluded. For the visceral opponents of nuclear energy within the EU the temptation to delay may prove irresistible.

Mandatory exit?

But is Brexatom an inevitable consequence of Brexit? Legal opinion is divided. At least one top UK law firm with a large energy practice argues convincingly that Euratom is a separate institution, constituted under its own treaty, and not an indivisible part of the EU itself. This means there is no obligation for Britain to withdraw from Euratom merely because it is quitting the EU.

If this interpretation is correct then Britain’s decision to leave Euratom was based on politics not law. So far the Government has shown no interest in disputing the claim made by some in Brussels that Brexit makes Brexatom mandatory. The changed domestic political climate makes this the ideal moment to do so.

This might at least pave the way for a compromise solution in the form of associate membership of Euratom. This would require more pragmatism than the more vocal Brexit supporters usually display because it would leave the European Court of Justice with jurisdiction over what happens in Britain.

But once consumers understand that staying in Euratom cuts the risk of the lights going out and the likelihood of price spikes, which the spread of smart meters will soon alert people to, then they may ask why in this matter, as in so much else in Brexit, dogma is defeating common sense.

If the option of staying in Euratom is definitively ruled out, the only alternative is to conclude nuclear cooperation agreements either with Euratom as a whole or with each of the EU member states with whom nuclear energy industry trade currently takes place, all of which are bound by Euratom rules and principles. Agreements would also be needed with other countries including USA, Japan, Canada, China and possibly South Korea.

Tight deadlines

All these agreements would have to be completed in the next 21 months. This is a challenging deadline, bearing in mind that when Euratom updated a nuclear deal with USA in the 1990s it took four years to agree. Transatlantic trade in nuclear material was halted for three months while the Senate delayed ratification.

The task is complicated by the need for agreements to cover a range of regulatory issues, including waste, and the establishment of new inspection regimes. Furthermore, failure to conclude agreements may obstruct acquisition of isotopes used in medical radiation. Though not strictly related to Euratom there would also be a need for free movement of EU workers involved in the nuclear industry.

Britain’s civil servants face a burdensome agenda whose successful resolution is made harder by insensitive and often ignorant interventions from pro-Brexit politicians and their tabloid press allies. Negotiating Brexatom is an additional complex process for which worryingly little preparation has been made. The need for transitional arrangements, in the event that agreements are not all concluded by March 2019, must be established at once.

As these negotiations begin in earnest top priority must be given to ensuring the survival of Britain’s nuclear industry. Without it energy security cannot be guaranteed, consumers and industries will be disadvantaged, and delivery of climate change obligations compromised.

 

This article first appeared on the Energy & Climate Intelligence Unit (ECIU) on 26 June 2017. You can view it online here