Page 8 - European Energy Innovation - autumn 2017 publication
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8 Autumn 2017 European Energy Innovation
BREXIT AND IRELAND'S ENERGY SUPPLY
Brexit and Ireland's energy supply:
time to look seriously to LNG?
By Seán Kelly MEP (pictured) Irish power mix is significant. On top A diversification of Ireland's supply
of this, as part of the Clean Energy would therefore seem to be very much
The United Kingdom's Package, the Commission proposes to in the interests of the EU-27.
decision to leave the EU has put an emission performance limit on
brought with it significant electricity capacity payments, which The IEA's recent report "Gas 2017"
uncertainty that has been would effectively rule coal out of such offers some very interesting insights
well documented at this point. There subsidies. It is clear, therefore, that for into global gas markets and their
is no EU Member State that stands to Ireland, as an island country, gas will rapid development. Gas demand is
be more affected by Brexit, and the continue to have a crucial role in the expected to grow by 1.6% year-on-
ongoing negotiations, than Ireland. medium term at least. Maintaining a year to 2022, with the growth in LNG
With the Irish and UK economies still secure and competitive supply will be supply capacity predicted to grow at
closely linked, particularly in terms of vital for Ireland’s economic prosperity a faster rate than global demand. The
trade, for Ireland there is no upside to post-Brexit. most interesting parts of this report
Brexit - the question is, how bad will relate to the development of US LNG
it be? One area that has been given A key point here is that we are not exports. US production is expected
less media attention thus far, yet is fully clear exactly what impact Brexit to increase at an annual rate of 2.9%,
probably one of the key issues in the will have on the Irish energy system. and this is bringing changes to the
Brexit talks is energy, and particularly While we do not necessarily have an international gas market. LNG is
how Ireland will be impacted. impending security of supply crisis, creating competition with pipeline gas,
some interesting points made by and price and contractual rigidities are
Ireland currently has two main commentators recently raise some softening.
sources of gas supply - the Moffatt important concerns. Firstly, the UK
Interconnector from Scotland, and will no longer be under the same While piped gas will continue to
the Corrib gas field off our west regulatory regime as the EU, nor under dominate the European market, LNG
coast. Up to recently, Ireland was the jurisdiction of the European Court now offers significant market benefits,
around 95% dependent on the of Justice. as well as an option to diversify supply
Moffatt Interconnector for our gas and to mitigate the risk of shortages.
supply. While Corrib gives us some Regulatory divergences down the line Improving the EU’s capacity to buy
temporary relief from this almost total could put additional costs onto the LNG on the global market - which
dependence, we will likely be back gas that Ireland imports. Additionally, includes the better utilisation of
to that situation again sometime in as pointed out recently by Dr Thierry existing regasification capacity - will
the mid-2020s as the Corrib resource Bros of the Oxford Institute for increase flexibility and exert downward
depletes. During this time, according Energy Studies, imposing regulations pressure on the European gas spot
to Gas Networks Ireland, our gas on EU-UK pipelines to push up UK prices, to the benefit of EU consumers
demand is set to increase – likely by energy prices could be tempting for and industry.
around 30% by 2025. This increase some EU Member States seeking to
will be mainly due to a move away increase their competitiveness against With Brexit, Ireland's case is slightly
from coal and peat, and indeed the UK, something that would not different and arguably more pressing
the completion of the North South be in the interests of the Irish energy given our reliance on a country
Interconnector between Ireland and consumer. Similarly, Ireland's security currently preparing to leave the EU.
Northern Ireland, creating additional of supply is something that the UK An LNG terminal in Ireland would
gas demand in the power sector. could potentially use as a bargaining reduce our exposure to any potential
chip in Brexit negotiations; the UK is supply shocks; lest we forget, Ireland's
This projection also accounts for the well aware that EU negotiators cannot storage capacity is limited, and post-
expected drop in residential demand put at risk the energy security of Brexit, the UK will not be subject to
due to increased energy efficiency, one of their most pro-EU members. EU solidarity rules on security of gas
demonstrating that the expected
additional contribution of gas to the
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