What does the UK-EU Summit mean for energy and emissions?

19 May 202526 July 2025By admin

The UK and the EU have agreed a substantial cooperation agreement in relation to trade and free movement. Included in the package are two energy and emissions trading arrangements.

UK EU energy cooperation

Closer co-operation with the EU on energy has been agreed. This will give clarity to industry to invest by putting the Trade and Cooperation Agreement’s energy chapter on a permanent footing, meaning certainty for businesses in the long term.

UK participation in the EU’s electricity trading platforms will be explored. Since the UK left the EU it has experience electricity inefficiently, adding costs and friction. Participating in EU platforms will streamline electricity trading which the UK Government says is crucial to reducing the cost of electricity across the UK and EU, and developing new renewables in the North Seas.

The UK Government says it will maximise cooperation on clean energy technologies, including hydrogen, carbon capture use and storage, and decarbonised gases. These technologies will hopefully support thousands of jobs, boost growth, and support a long-term solution to a secure and sustainable energy future.

UK-EU agreement to link emissions trading systems (ETS)

Emissions trading, says the UK Government, is one of the most powerful tools to decarbonise industry and achieve net zero goals. Following Brexit, the UK left the EU emissions trading scheme and had to establish a separate market.

The UK market is smaller and less liquid. This can make prices less stable and feed through to investment. The UK’s separate system also means that UK industry stands to be hit by the EU Carbon Border Adjustment Mechanism on around £7bn of trade.

To avoid this, the UK trading scheme will be linked with the EU scheme, meaning: a cheaper path to net zero as part of a larger more stable market; more stable prices that will support industry to invest in new technologies and jobs and decarbonise faster; saving UK industry from paying EU Carbon Border Adjustment Mechanism (this could have led to UK exporters paying up to £800m into the EU budget by 2030); and streamlined regulatory barriers.

carbon capture, cooperation, emissions, growth, hydrogen, net zero, trade

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