“Not part of the European Union. But very much a part of Europe.” Greeting fellow leaders at the 2024 European Political Community (EPC) summit, the new British premier Keir Starmer made it clear that the era of Brussels-bashing was over. He spoke of the UK and the EU as sovereign partners’ and promised never to leave the European Convention on Human Rights. The verdict on the get-together was unanimous: the EPC might be a glorified talking shop, but as a statement of Britain’s positive new intent, it could scarcely have gone better.  

The quandary now facing the UK and the EU is a novel one for which there is no precedent. How much can Britain be a part of Europe without being part of the EU – or, at the very least, the single market? 

Forging a new path forward 

At the end of July, the German ambassador to the UK, Miguel Berger, said that his country would like to help negotiate what Politico called a “Brexit mega deal” (Berger distanced himself from the phrase). Such a deal would go beyond simply renegotiating the Trade and Cooperation Agreement and take in security, student and worker mobility, agriculture, and quite possibly fish. 

The European Commission, though, may not match Germany’s enthusiasm for a new deal. In the past, Brussels has been sceptical about reopening negotiations with London, feeling that the EU has little to gain. Any “mega deal,” therefore, would mean that Britain has to make significant concessions. This could be relatively easy when it comes to areas where there is a dynamic alignment with EU regulations. However, it would be harder for fish and mobility, which arouse strong passions in parts of the UK and its media. Starmer will be reluctant to do anything that could increase net migration figures or incur extra costs for universities, some of which are already struggling with the costs of teaching their students.  

But Britain hopes that by framing any new deal around “security” – which could encompass defence against Russia, migration, and a possible future without US military backup – it can win over the European Commission and soften opposition from the notoriously Eurosceptic British media. Speaking at the EPC summit, Starmer hailed the EU-UK partnership as “a powerful force for good across our continent, for peace, for security, for prosperity.”  

Starmer’s implicit message to a domestic audience was that to rein in Russia, lower energy prices and cut the number of small boat crossings, Britain would have to cooperate with Europe, and that the concessions would be worth it. In other words, the days when Brexit meant the UK would get “out and into the world” – as the right-wing Spectator magazine aspired to do in 2016 – are over. 

Another element of the UK’s newly cooperative stance gets little attention at home but could prove very important internationally: the transformation in energy policy. The UK’s electricity generation mix is currently 38 per cent gas, 29 per cent wind and solar, 15 per cent nuclear, and 11 per cent other renewables. Labour aims to decarbonise the grid by 2030, but most experts think this is over-optimistic (some use even stronger language).  

How much can Britain be a part of Europe without being part of the EU – or, at the very least, the single market? 

However, within days of taking power, the government made the new direction of travel clear. It approved three large solar farms and ended the de facto ban on onshore wind turbines. The new state-owned company Great British Energy (GBE) has announced it will carry out development work on offshore wind in an effort to make it more attractive to developers.  

“The important thing about Labour’s policy on energy is [that] it aligns the UK more broadly with the EU than before, to have a more ambitious industrial energy strategy,” says Joel Reland of the UK in a Changing Europe think tank. “The UK and the EU moving in the same pace and in the same direction could open up opportunities.” Significantly, the chair of GBE is Juergen Maier, the Anglo-Austrian former chief executive of Siemens UK – a big player in renewable energy. 

The North Seas Energy Cooperation, a collaboration between EU member states and Norway which focuses on offshore wind and grid development, represents another opportunity for cooperation. The UK used to be a member of the organisation but left after Brexit. However, London signed a memorandum of understanding with NSEC in 2022. Could its observer status become something more? 

Energising the collaboration 

The new industrial strategy embodied by GBE has been met with some scepticism in the offshore wind industry. One insider told the Financial Times that too much state involvement might slow down investment. Others warned that the real problem is not stimulating investment in offshore wind but building the grid connections necessary to bring power inland. New projects on average already face a long wait of five years to be hooked up to the grid, with 675GW of capacity awaiting connections at the beginning of 2024. 

Missing grid infrastructure is probably the biggest of several problems for Britain as it tries to decarbonise more quickly. Many rural communities dislike pylons and the planning system gives local people considerable potential to delay and refuse applications. Local councils are also underfunded and lack the resources to consider applications properly. This means that MPs come under pressure to oppose new infrastructure in their constituencies. 

An example of the difficulties caused by “net zero NIMBYs” is the plan for more than 100 miles of pylons to carry offshore wind-generated electricity from an East Anglian port to Norwich. One of the four new Green MPs represents the constituency of Waveney Valley, which is in the path of the pylons. Despite the Greens’ commitment to renewables, he has called for the project to be paused. Local campaigners want the cables to be laid around the coast instead, which would take far longer and be four to five times more expensive.  

If the pylons are approved, the groups opposing them will almost certainly demand compensation, which will push up electricity costs. The idea of generous compensation schemes is unacceptable to individuals and groups campaigning for a just transition; one which does not impose the burden of decarbonisation on the poorest consumers. However, as James Richardson, the acting executive of the Climate Change Committee, has argued, “if providing financial incentives to these people allows us to cut the costs, then it may well be worthwhile.” Richardson points out that the UK used to subsidise high-end electric cars, which in the end stimulated investment in charging points.  

The lack of energy storage to ensure reliable supplies when the UK moves away from gas poses another challenge. The National Infrastructure Commission anticipates that the need will be met by a combination of hydrogen-fired generation and natural gas with carbon capture and storage. While potential storage spaces exist, they are not ready yet. “There appears to be a significant mismatch” between the current plans and likely demand, said a report from a House of Commons committee earlier this year. “Thousands of terawatt hours of hydrogen storage capacity are theoretically available in the form of salt caverns and depleted oil and gas reservoirs” ^– but it will take up to a decade to put them to use.  

When these spaces are functional, EU countries will probably want to take advantage of them. This presents another opportunity to collaborate on safe technical standards that will be acceptable to the European Commission. In the meantime, Energy UK says, European interconnectors can help the UK manage troughs in energy supply caused by the limited capacity of renewables – provided that trading arrangements improve. 

“The EU can’t ignore the UK,” says Reland from UK in a Changing Europe. “We are still physically connected to the continent by ten interconnectors. We are critical to the EU energy supply, and that’s become even more acute since the war in Ukraine.”  

Continuing this kind of cooperation does not mean renegotiating the EU–UK Trade and Cooperation Agreement (TCA) or signing a new deal, but it requires the UK to cooperate in ways it has been reluctant to do since Brexit. The fact that the UK is no longer part of the EU energy market means that the way energy is traded through daily auctions is less efficient than before, costing Britain hundreds of millions of pounds a year. Reland argues that addressing this issue is a “very technical” process and that Britain has failed to show the political will to do it. 

In addition, Energy UK has urged the government to finalise electricity trading arrangements with the EU as soon as possible and to link their Emissions Trading Schemes (ETS). Unfortunately, the Conservative government made little progress on either front. Linking the EU and the UK’s ETS would help cover the additional costs that the Carbon Border Adjustment Mechanism will impose on electricity from 2026. As the current CBAM methodology disincentivises clean energy generation, suspending it until a better solution is found might be the best way forward. 

Since the UK badly wants to become less reliant on China, pooling resources can be an area of potential collaboration with the EU.

Thirdly, Britain has a shortage of skilled workers in electrification and heat pump engineering. The new Skills England body, which is intended to match up training with the economy’s needs, should help to address this. Demand for heat pumps is still quite low because of the high upfront costs and scepticism about their efficacy. “You’ve got to stop adding extra costs to electricity,” the Climate Change Committee’s Richardson told the Resolution Foundation think tank. He believes gas is still too cheap to encourage people to get rid of their gas boilers. 

Lastly, critical minerals are essential for many green technologies, but the UK’s critical minerals strategy has lagged behind the EU’s. Under former prime minister Boris Johnson, the government was bullish about potential mineral reserves in the UK, but the Foreign Affairs Committee was soberingly blunt: “The UK is almost completely dependent on imports for critical minerals and mineral products. It currently lacks the necessary mines to be self-sufficient and faces many obstacles to developing them. Existing mineral deposits within the UK, even if exploited, would take years to produce a yield.” Since the UK badly wants to become less reliant on China, Reland identifies pooling resources as an area of potential collaboration with the EU. 

The immigration tightrope 

The opportunities for energy collaboration and cooperation are numerous, and they are desirable in their own right. These openings are unlikely to arouse much opposition in the Eurosceptic media; similarly, increased military cooperation with Europe is expected to be welcomed, particularly if it boosts Britain’s arms industry and the status of its armed forces. The question for Starmer is whether he can forge closer links with the EU while holding the line on freedom of movement and cutting the number of small boat crossings in the Channel – which will require a better agreement with France, and possibly even an asylum processing centre there. Both of these issues are Labour manifesto commitments, and they are linked to the rise in support for the populist right-wing party, Reform, which won 16 per cent of the vote in July’s general election. 

On its own, Reform does not pose a threat to the government; it is too unprofessional and divided for that. The danger lies in its ability to convince the Conservative party that only a hardline stance on immigration can return the Tories to power. Labour won a very large parliamentary majority because the right-wing vote was split: a revived Conservative party could pose a threat in 2029. 

Starmer has no objection to youth mobility on ideological grounds. Reportedly, he did not immediately dismiss proposals on the issue by Spanish PM Pedro Sánchez at the EPC summit. What concerns the UK’s new prime minister is whether his opponents can portray the liberalisation of youth mobility as a return to freedom of movement (which was ruled out by the Labour manifesto). Starmer is also wary of the potential for such a decision to increase the already high net migration figures and put further pressure on university finances if the high fees paid by international students have to be cut for those coming from the EU. There are convincing arguments for taking students out of the net migration figures, but doing so would inevitably be seen as “fiddling the figures.” It does not help that many more Europeans would want to study and work in Britain than vice versa. Britons lack the language skills to make the most of staying in other European countries, so even if youth mobility does return, some sort of quota looks inevitable. 

The war in Ukraine and the consequent energy crisis have given Labour plenty of opportunity to make the case for closer links with the EU. The party must find a way to convince the electorate that better collaboration will help tackle irregular migration without leading to large numbers of young Europeans overstaying their welcome. That argument has not yet been made successfully.