20 May 2025
The EU-UK reset will boost competitiveness and energy security
The EU and the UK reached a political agreement to extend their post-Brexit collaboration on energy. That’s good news for Europe’s competitiveness and energy security.
The EU and UK share the same climate targets and the same need of affordable and secure energy. They are increasingly interconnected – with over 10 GW of electricity interconnectors linking the UK and EU and more on their way. And they share the same vision and ambition for making the North Sea a clean electricity hub for the whole of Europe. The political agreement will help deliver on these common objectives.
Electricity Trading
The EU and the UK have agreed to explore the UK’s participation in the EU’s internal electricity market. Including participation in the European Union’s trading platforms in all timeframes. This is extremely positive. The inefficient trading mechanism in place today is adding to the burdens faced by industrial energy consumers.
WindEurope and large energy-consuming sectors – chemicals, ICT, aluminium, steel, automotive – had called before the Summit in a joint letter for the reestablishment of a system of price coupling in electricity between the EU and UK. The letter also called for the accelerated expansion of offshore wind in the North Sea. And for the North Sea to be treated as a single energy space in which European industry can access all the power produced, including in UK waters. This will help reduce electricity costs for consumers in the EU and the UK.
“The agreement at the Summit reflects that call. This is great news for energy consumers in the EU and the UK. UK participation in the EU electricity market will make it easier to trade electricity and reduce electricity prices in both the UK and EU. It’ll help with the top political priority of reducing energy costs for European industry.” said WindEurope CEO Giles Dickson.
Emission Trading System and CBAM
The UK and the EU also agreed to link up their respective Emissions Trading Systems. Once implemented, carbon allowances issued by either the EU or the UK could be recognised under the ETS system of the other party.
A 2024 study shows that effective ETS coordination would save electricity consumers up to €44bn per year by 2040 from lower electricity costs. It would also decrease emissions by circa 24% in 2040.
Crucially, the EU-UK agreement would lead to mutual exemptions from the respective Carbon Border Adjustment Mechanisms (CBAM), removing disruptions on trading of electricity, as well as steel, cement, and aluminium which are critical to the wind supply chains.
