What will Brexit mean for the energy sector?
It looks like Brexit means departure from the European common nuclear market too, writes Norton Rose Fulbright lawyers
Although much of the initial Brexit focus had been on whether the UK would leave the EU single market for trade, it had been unclear until recently what Brexit would mean for the UK’s participation in the European common nuclear market; known as the European Atomic Community, or Euratom.
The cause of the uncertainty is because membership of Euratom is governed by a separate treaty, the Treaty Establishing the European Atomic Community 1957 (Euratom Treaty), which is subject to a separate notification and withdrawal process, albeit one that mirrors the withdrawal terms of Article 50 under the Treaty on European Union — i.e. service of notice and a two year negotiating window prior to exit.
However, the UK government recently indicated that as well as leaving the EU the UK would be leaving Euratom, and that this would be included as part of the broader Brexit process. To affect this, the UK government included the power to withdraw from Euratom in the European Union (Notification of Withdrawal) Bill 2017.
Whether this is the right course or is necessary is now something of a moot point — the UK government’s reasoning appears to be that in order to withdraw fully from the sphere of influence of the EU’s institutions the UK must withdraw from Euratom, as the terms of the Euratom Treaty include using the same institutions as the EU (including the Commission, the Council of Ministers and the Court of Justice) and accepting a variety of EU-origin legislation. Continuing to accept the jurisdiction of these institutions would be inconsistent with the UK government’s stated intention to “take back control”.
Now that the decision has been made, the most important question for the UK nuclear industry is what will replace membership of Euratom? One thing is certain — there cannot be a vacuum, not least because Euratom is the legal owner of all “UK” nuclear materials but there are other ramifications too. There are uncertainties surrounding the UK’s participation in nuclear research projects such as the International Thermonuclear Experimental Reactor (ITER) in southern France and the Joint European Torus (JET) project, a nuclear-fusion facility in Culham, UK, and some commentators suggest that it could increase the costs of regulating existing nuclear facilities and delay or, indeed, jeopardise the building of new nuclear facilities in the UK.
As with much previous Brexit commentary, Norway provides an example of how a bespoke arrangement might work. It is not a member of Euratom (indeed, there are no non-EU Member States who are members) but it does participate in research projects co-ordinated by Euratom. It does not receive EU funding for such participation (as Euratom members do) but instead secures assistance from Norway’s own Research Council. If the UK was to pursue a similar option, it might perhaps satisfy the critics from the scientific community, who have already expressed concern about where this leaves the UK in terms of its participation in some ground-breaking projects.
Professor Steven Cowley, former chief executive of the UK Atomic Energy Authority, said leaving Euratom would be a “tremendous blow” to UK nuclear research and ITER. The UK government has taken pains to express in its White Paper its commitment to nuclear research and development and international collaboration, describing it as “an important priority”. A bespoke arrangement with ongoing Euratom members would certainly back this up.
To date, the UK Government has given no detail around its proposed exit from Euratom beyond stating that it intends to do so. The terms of the UK’s exit from Euratom remain unclear but a number of important issues in addition to participation in research and development projects will need to be resolved, including:
- ownership of nuclear fuel currently in use in the UK’s existing fleet of nuclear plants, and the UK’s right to procure replacement fuel in future;
- the terms of nuclear cooperation with other Euratom members, and non-Euratom members (such as the USA and Japan) that the UK currently works with under frameworks established through Euratom; and
- who will bear the cost of decommissioning current Euratom projects (JET decommissioning costs are currently estimated at £289 million)?
Perhaps the more interesting question is whether the UK should be withdrawing from Euratom at the same time as it withdraws from the EU. It is more important to get the right deal, rather than a quick deal pushed through simply for convenience of timing. A staggered withdrawal would give the UK government more time to finalise appropriate post-Euratom arrangements and allow it to focus on the Article 50 negotiations meanwhile.
Peter Hall is a partner at Norton Rose Fulbright. Penny Cygan-Jones is a Senior Knowledge Lawyer. Thomas Lindley is an associate.
This article originally appeared on Norton Rose Fulbright‘s ‘Inside Brexit’ blog.
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