I propose to take Question Nos. 616 to 618, inclusive, together.
While the result of the UK referendum is not the one that we hoped for, we fully accept and respect the outcome of the democratic process in the UK. There will be major challenges ahead, for the EU, the UK, and for Ireland and we will meet these challenges and minimise adverse impacts on our economy and the free movement of people, goods and services on these islands. We will also work with both our EU partners and our colleagues in the UK, with the aim of ensuring a strong EU-UK relationship and a well managed withdrawal.
We are now at the beginning of a new phase in Britain’s relations, not just with Ireland, but with Europe as a whole. We expect this period of negotiated withdrawal to last at least two years and during this time businesses will continue to trade as normal and people will continue to travel as normal between Ireland and the UK, including Northern Ireland. Key actions will be required throughout to address the contingencies arising from the UK’s decision. A summary of these actions has been published, and the Government has developed a Contingency Framework which maps the key issues that will be most important to Ireland in the coming weeks and months.
Contingency planning in this context is challenging because many of the impacts on Ireland depend on the new arrangements that can be agreed between the UK and the EU. Managing contingencies will be, by definition, an iterative process as issues emerge and recede in the course of negotiations. Nevertheless, substantial work has been undertaken across Government to identify the key strategic, policy and operational risks. This work will be intensified and prioritised across all Government Departments and agencies. It is important to note that, in the negotiations, we would be one of twenty-seven Member States on the EU side. In matters of EU competence, the scope for bilateral arrangements has to be seen in that context. Our primary objective remains to protect and advance this country’s interests.
The all-island Single Electricity Market has delivered an efficient, competitive and secure market for customers since its establishment in 2007. The governance framework that applies to the all-island electricity market remains in place and is based on national legislation adopted by the Oireachtas and the British Parliament. The Regulator-led Integrated Single Electricity Market or I-SEM project is amending the technical trading rules of the market and will be in place by the end of 2017. This project does not affect the existing legislative and governance structures of the Single Electricity Market. I will be proceeding with the necessary legislation in the Energy Bill 2016 to facilitate the Regulators in amending the detailed operating rules of the wholesale electricity markets, to deliver efficiencies that will benefit consumers and also provide more flexible market arrangements, for generators, suppliers, demand and renewable electricity producers.
Existing energy and trading arrangements between Ireland and the UK, ensuring the continuity of mutually dependent energy arrangements and maintaining the long standing history of beneficial co-operation in this sphere, are very important to both jurisdictions on an enduring basis. As outlined by the Taoiseach, a full assessment of the issues that may arise for energy supply are a priority area under our contingency management arrangements and in this context the Single Electricity Market will be discussed bilaterally with the UK and will form part of our priority discussions with Brussels.
The relevant Departments, Regulators, and stakeholders in Ireland and Northern Ireland continue to work in the all-island context of the Single Electricity Market and are preparing for the consequences of the UK referendum as they arise, to ensure timely assessment, to minimise any negative impact on energy customers, while continuing to deliver a safe, secure, competitive and reliable supply of energy.
Ireland has always been highly dependent (over 90% typically) on imports of energy products and in recent years the value of imports was approximately €6.5 billion per year. This is expected to decline now that Corrib is on stream. These imports take the form of normal trading by firms in Ireland with firms overseas and inherently involve a degree of currency risk, principally with the US Dollar and sterling. Volatility in the currency markets is not unexpected in light of the uncertainty caused by the referendum result but as this recedes it could be expected that the markets will stabilise. In the recently published Government Contingency Framework, economic and trade impacts have been prioritised and a contingency plan was pre-prepared by the Central Bank. The enterprise agencies are factoring this issue into their own contingency planning.
In relation to oil, through the National Oil Reserves Agency (NORA), Ireland has a stockholding of 90 days which is in accordance with EU legislation and International Energy Agency rules. This is held as a strategic reserve to be used in the event of a supply disruption. Over 60% of NORA’s stocks are held in Ireland with the rest held in other EU Member States, including the United Kingdom. There is no short term risk to Ireland from this arrangement. In the longer term, in line with settled policy in the Government White Paper on Energy launched in December 2015, NORA is continuing to maximise the level of its stocks held on the island of Ireland subject to storage availability and value for money considerations. In the absence of available storage in Ireland, the continued holding of stocks in the UK, including in Northern Ireland, continues to be necessary. This issue will also be part of any discussions Ireland will have with the EU and the UK.
Ireland is connected with the UK by a number of gas pipelines and electricity lines and further development of an additional electricity North-South electricity interconnector is ongoing. The Energy Union project by the European Commission sets out targets for interconnection between Member States and feasibility studies are underway with France in relation to an electricity interconnector. When the UK withdraws from the EU we would expect that there would be little impact on the operations of these interconnectors or on supplies of electricity and gas imported from the UK.
Finally, it is worth noting that the possibility of facilitating liquid natural gas in Ireland will be examined as part of the Programme for Government. On gas security, there are well-established provisions in place and these are set to continue and indeed a proposal of the EU Commission on reviewing measures to safeguard security of gas supply is currently being negotiated in Brussels. A key part of this proposal is increased and improved regional cooperation between Member States.
There is excellent co-operation between the UK and Ireland on gas and electricity issues and both countries have cooperated very closely at EU level. It is important that this good cooperation with the UK continues and Ireland will emphasise this point and l will continue to work with both our EU partners and our colleagues in the UK, with the aim of ensuring an ongoing strong EU-UK relationship in the context of energy security.
