Relying on natural gas to fuel Europe’s second-largest economy was never going to be easy for the U.K., even before Brexit.
Britain’s once vast North Sea gas fields are fading, and even after a decade of trying, the island nation hasn’t replicated the fracking boom that turned the U.S. into the world’s largest producer. Gas imports have jumped 87 percent in the past decade. That’s left the country at the mercy of foreign suppliers just as the U.K.’s planned exit from the European Union signals trade rules for the fuel probably will have to be rewritten.
Already, the U.K.’s $445 billion manufacturing industry, which uses gas to run machines, heat buildings and mix chemicals, is having to go as far as the Amazon rain forest to source fuel. An aging storage reservoir off the east coast that holds most of the country’s winter reserves has deteriorated so much it’s partly closed. Gas will become even more important as the government plans to quit using coal by 2025.
“The U.K. could do a lot better,” said Russel Mills, director of energy and climate policy at Dow Chemical Co., the world’s second-biggest chemicals maker. “The country’s already taking a bit of a risk in terms of the low level of gas storage. Brexit is going to complicate matters.”
National Grid Plc, which manages the nation’s pipelines, estimates power output from gas plants may drop as much as 64 percent by 2025, according to a scenario where the nation focuses on climate protection. A business-as-usual scenario has gas output rising.
“Nobody will build gas plants with these sorts of numbers being bandied about,” said Eddie Proffitt, chairman of the natural gas group at the U.K.’s Major Energy Users’ Council. “I’m not sure the government itself is clear what it wants.”