Energy ‘will have to get more expensive’ post-Brexit, says academic

Energy “will have to get more expensive” following the vote to leave the European Union, according to a leading academic at University College London (UCL).

Professor of international energy and climate policy Michael Grubb told Utility Week prices will be pushed up by “a higher cost of capital on investment” and “lower investor confidence”. He said it would also be a “reasonable precaution” to invest in more gas storage “when you don’t quite know if anything’s going to change”.

Whilst he said there will not be a security crisis as a result of Brexit, “you’re basically just weakening the ties with the continent that might otherwise help out in various scenarios”. “That cannot be good news for British consumers or the energy system,” he added.

He said the vote had left the energy sector with lots of uncertainty over the domestic political landscape and what access Britain will have to the single market: “You just get the sense that nobody’s in control and nobody really knows.”

The UK “does not have a clue what it has voted for”, he argued, because most economic issues “hinge on whether you’re part of the single market”. On that issue he said “we’ve still got wildly contradictory assertions”.

Grubb continued: “The Brexit camp seem to span everyone ranging from Andrea Leadsom, who broadly would be a continuation of policy, through to Dominic Raab, claiming that you can just ignore environmental legislation now, and then some deeply climate sceptic people… The uncertainty on the domestic front is huge.”

He compared the current situation to the ‘phoney war’ at the beginning of World War II, when “for six months there was virtually no fighting”.

Politicians have been left with a very difficult choice, according to Grubb, as retaining access to the single market will probably mean retaining the free the movement of people as well, which could be “political suicide”. He said a second referendum may be needed to resolve this issue.

Grubb said ahead of the vote the “establishment and the markets” assumed the UK would never actually leave the EU. He cautioned people against similarly reassuring themselves that we will “never really leave the single market”. “I think that is an equally dangerous assumption,” he added.

In the wake of the EU referendum Lisa Nandy quit her post as shadow energy secretary yesterday. It was part of a mass resignation within Labour’s shadow cabinet because of concerns over Jeremy Corbyn’s leadership abilities. Rachel Maskell has been appointed as the new shadow environment secretary after her predecessor, Kerry McCarthy, resigned.