UK- EU Reset Summit – Energy Co-operation

The major media interest in the UK-EU Reset Summit has been around the Defence and Stability Pact; the improvement of trade flows in food products; a Youth Mobility Scheme and a revision of the fishing agreement.  These are the policy areas that the UK media concentrated on in the questions to the UK and EU Leaders at the Reset Press Conference.

However, the policy ‘reset’ is much more far-reaching than that and sets out an EU-UK co-operation agenda that includes energy co-operation.   This section involves:

• Exploring the participation of the United Kingdom in the European Union’s internal electricity market.
• Working towards linking Emission Trading Systems of the European Union and the United Kingdom.
• New technologies such as hydrogen, carbon capture and storage and biomethane.

In the Press Conference, Sir Keir Starmer stated that interconnectors had  meant that the UK and EU were “physically connected” but that energy co-operation needed to go further in policy terms.  The agenda document states that the UK should be included in the EU’s internal electricity market.

The co-operations also has a paragraph on new energy technologies which are listed as “hydrogen, carbon capture, utilisation and storage and biomethane” and UK and EU “welcomes continued technical regulatory exchanges” in these technologies.

The introduction of carbon border taxes and tariffs require policy co-ordination and there is an intent to link the EU and UK Emission Trading Schemes (ETS) so that UK exports escape the EU Carbon Border Adjustment Mechanism (CBAM)  which will come into force in January 2026.

The ETS agreement “should ensure the dynamic alignment of the United Kingdom with the relevant European Union rules underpinning the functioning of the ETS link, giving due regard to the United Kingdom’s constitutional and parliamentary procedures.”

There is still much to agree over the linking of the ETS schemes.  For instance, the EU-UK co-operation agenda lists a number of sectors that should be included in the  linked schemes but admits that this list is not exhaustive.  It is highly likely that hydrogen will be included in the linked schemes and this will be important as the UK and, particularly Scotland, gear up to export hydrogen in greater quantities later in the decade.  One issue not dealt with in the co-operation agenda, is that the EU uses its ETS to fund the EU Innovation Fund but UK access to the Fund is not mentioned in the co-operation.

There has been a welcome for the energy co-operation initiative with calculations that linking of the two ETS schemes will save around £370 million in 2026 and around £800 million by 2030.

European Policy Solutions will follow developments as the energy co-operation agenda develops.