The UK/EU Trade and Cooperation Agreement – Electric Vehicles and Renewable Energy

Against the backdrop of increasing expectation of a no-deal Brexit, the UK and EU reached a trade agreement in principle on 24 December 2020. The 1,246-page early Christmas present and accompanying explanatory summary contained wide-reaching provisions in areas including trade, intellectual property, taxation and public procurement.For those involved in the electric vehicle and/or renewable energy markets, four provisions are of particular interest:

Preferential Electric Vehicle & Battery Tariffs

The UK and EU have agreed a preferential tariff for UK-produced electric vehicles (EVs) and batteries. Prior to the agreement, the EU were set to insist on a 10% tariff on EVs produced in the UK and with more than 45% of their original parts made outside the UK. This concession will assist in keeping down the cost of manufacturing EVs and batteries in the UK and assist the government in its commitment to ban the sale of new diesel and petrol vehicles by 2030.

Freedom of Electric Vehicle-Related Information and Innovation 

The agreement provides that neither party can restrict access to markets for motor vehicles, equipment or parts approved by either party on the grounds that the product being exported contains a new technology or feature that the other party has not yet regulated. The UK and EU have also agreed to cooperate and exchange information in relation to advanced emission reduction and emerging vehicle technologies.

Enhanced Cooperation in Renewable Energy

The UK and EU have agreed to enhance their cooperation in relation to renewable energy and security of energy supply. Measures include implementing new frameworks for development of offshore energy generation, efficient use of gas and electricity interconnectors (discussed below), gas decarbonisation and gas quality. The UK and EU have also agreed to develop hybrid projects in the North Sea, combining interconnectors and offshore windfarms to realise the region’s potential and create a reliable network to deliver a ‘Net Zero’ future.

Allocation of Electricity Interconnector Capacity 

There is an agreement to develop and implement a new and efficient energy trading arrangement by April 2022. This includes ensuring that capacity allocation and congestion management of energy interconnectors is market-based, transparent and non-discriminatory. A cost-benefit analysis and outline technical proposals are to be agreed within three months.It is hoped that these provisions will enable both the EU and UK to continue to develop as world leaders in renewable technologies and to allow both parties to meet their respective carbon reduction targets in accordance with the Paris Agreement.Energy, Waste and Sustainability

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