The Scottish government has proposed linking the UK and EU emissions trading schemes to help reduce costs and barriers to trade, and accelerating the adoption of more efficient UK-EU electricity trading arrangements to bring down energy costs for consumers. Those measures to more closely align with the European Union on energy matters, among others, were published in a new paper ahead of upcoming UK government talks with the EU.

Estimates by Energy UK predict that unless the UK moves toward closer cooperation with the EU on energy and climate, it may lead to additional costs of up to £10bn in 2024–2025, through higher energy bills and lower Treasury revenues.

In Scotland, Acting Cabinet Secretary for Net Zero and Energy Gillian Martin says: ‘We will always be a voice for closer co-operation with our fellow Europeans – in particular around issues which impact us all such as lowering energy bills and driving up investment in renewables. This paper highlights the key areas where working together is vital for achieving our shared ambitions – driving economic growth, reducing costs, strengthening energy security and substantially contributing to our shared climate goals.’

Call for action on carbon border adjustment mechanism

Meanwhile, Energy UK has published a report drawing attention to the impact of the EU’s forthcoming carbon border adjustment mechanism (CBAM) on Northern Ireland’s economy.  

From 1 January 2026, the EU CBAM will become fully active, imposing a new levy on goods crossing from Great Britain to Northern Ireland, as well as to those produced in Northern Ireland but exported to the Republic of Ireland or other EU countries. This levy will align with the EU’s domestic carbon price under the EU Emissions Trading System.

Energy UK’s analysis suggests the implications of the EU CBAM on Northern Ireland are ‘likely to be disruptive, expensive, and highly controversial’. The anticipated financial burdens include new payments of up to £200mn/y – equating to £1bn over a parliamentary term – on trade between Great Britain and Northern Ireland. Additionally, households in Northern Ireland could face increased energy bills amounting to £45/y. Furthermore, over 1,100 jobs in Northern Ireland are at risk due to the EU CBAM, surpassing the number of jobs secured in the recent acquisition of the Harland & Wolff shipyard, warns Energy UK.

The report argues that the solution to this problem is through linking the UK and EU emissions trading systems, which would negate the need for a CBAM between the UK and EU. ‘There is strong industry and civil society consensus for linkage,’ asserts Energy UK, which is calling for the UK and EU to commence linkage negotiations following the upcoming UK-EU summit in March/April.

Energy UK’s Director of Policy and Advocacy, Adam Berman says: ‘The only way to avoid the damage to Northern Ireland’s economy is through linking the UK and EU emissions trading systems. The existing UK-EU Trade and Cooperation Agreement opens the door to linkage, but it’s time for both sides to walk through. With less than a year until the EU CBAM is fully active, there’s no time to lose.’

Similar goals were echoed by UK energy utility SSE last year, on the sidelines of the launch of the Eurelectric Barometer in Brussels.