Alistair McGirr

Keir Starmer looks to link UK and EU emission trading schemes PM is becoming more ambitious for post-Brexit ‘reset’ talks ahead of key Brussels summit

Very positive smoke signals on EU-UK carbon market linking ahead of the upcoming EU-UK Summit in the Spring.

www.ft.com/content/f03d...

Could Keir Starmer’s AI dream derail his own green energy promise? As PM pins hopes on AI, what effect will building energy-hungry datacentres have on Labour’s clean power pledge?

Good write up on the impact of AI on the GB energy system.

Need for a better informed discussion on how the energy policy and regulatory framework can help unlock potential opportunities.

www.theguardian.com/technology/2...

+++NEW ANALYSIS+++

UK electricity was the cleanest ever in 2024, with emissions per unit falling by more than two-thirds in a decade

Highlights:
🏭end of coal power after 142yrs
🔥fossil fuels at record-low 29% share
🌄renewables at record-high 45%

www.carbonbrief.org/...
1/9

Timely report ahead of Govt's Clean Power 2030 response (expected tomorrow) highlighting just how significant the Welsh, Scottish & N Irish Govts are for delivering renewables (look at wind 👇)

Cross-Govt collaboration has definitely been increasing, and we need it to continue

Know your SSEP from your CSNP?

Really useful overview of the upcoming strategic energy infrastructure planning processes from the GB National Energy System Operator (NESO).

www.neso.energy/document/350...

Really useful resource on what makes up an electricty bill in Great Britain from @ben-jamez.bsky.social

www.electricitybills.uk

Chart showing the share of electricity produced from fossil fuels in Great Britain. Their share fell from 75% in 2010 to 25% (est) in 2024. Carrying on this pace will not be easy, but will get us to 5% by 2030 💪

The UK's Clean Power Mission aims for 95% clean generation by 2030! Gas will only be used sparingly for things like flexibility and balancing.

This requires a huge effort over the next five years...
but it's in line with our last decade of progress.

Chart from www.electricinsights.co.uk

The UK is introducing its own CBAM in 2027.

Given both have carbon markets of equivalent ambition, CBAM’ing each other will just cause mutual pain.

If the carbon markets were ‘linked’, then they wouldn’t need to apply their CBAMs on EU-UK trade.

The EU and Swiss already have linked markets

Whether the EU and the UK can agree on how to avoid the application of the EU CBAM to the UK over the next year is such a massive test for the future EU-UK cooperation and climate politics.

Have political decision makers on either side of the Channel worked that out yet?

Fingers crossed 🤞🏻

And while it’s good news there’s scope for improvements in the EU-UK TCA, there’s a risk ETS linking gets swept up in a broader negotiation.

With the EU Carbon Border Adjustment Mechanism (CBAM) coming in 2026, thats a problem just 12 months away.

And if fishing gets brought into the discussion…😬

As a comparison, the existing EU-Swiss ETS link doesn’t include a requirement for dynamic alignment or financial contributions.

And consideration of ETS linking is already in the EU-UK Trade and Cooperation Agreement (TCA).

But, the TCA is reviewed in 2026….

Similarly, if UK ETS revenues need to be transferred to fund investments in EU Member States - then no chance.

If it’s to contribute to innovation funds, then why not?

If it’s to cover admin costs, yeah, for sure.

But, as always the devil is in the detail…

If dynamic alignment means EU policy changes have to be automatically applied in the UK (eg ETS2), then ETS linking is isn’t happening

If it’s agreed automatic operational changes (eg Market Stability Reserve (MSR)) then obviously that needs to be dynamic

Good article on status of EU-UK relations following the EU and UK elections 🇪🇺🇬🇧

Some thoughts from a carbon pricing perspective:

✔️ - Linking Emissions Trading Scheme (ETS) gets a mention in the article/EU doc

❌ - Article suggests dynamic alignment and financial contributions required

Map of the UK showing various weather warnings

⚠️⚠️ UK red, amber and yellow weather warnings issued ⚠️⚠️

Stay well clear of any downed power lines and call 105 to report for free.

Dial 999 if there’s an immediate threat to life ⚠️

More advice: www.powercut105.com/en/be-winter...

#StormDarragh @metoffice.bsky.social @michaelshanksmp.co.uk

Thanks to @iain-staffell.bsky.social and the team at @imperialcollegeldn.bsky.social for all the work

Graph showing % low carbon electricity in the G7. Full alt text in the article.

Lots of debate about what ‘clean power’ means, but how does the ambition of the UK’s Clean Power Mission compare against its peers?

Well, if delivered it would lead the G7 🇬🇧⚡️

Have a read of the analysis here👇🏻

www.sse.com/news-and-vie...

And this letter from DECC at the end of 2015 doesn’t make for pretty reading:

assets.publishing.service.gov.uk/media/5a7586...

And disbanding the Electricity Networks Strategy Group (ENSG) in 2017 probably wasn’t the best idea in hindsight.

www.gov.uk/government/g...

Strategic plans for the GB electricity transmission network:

2020 - www.geni.org/globalenergy...

2025 - [Missing…]

2030 - www.neso.energy/publications...

2035 - www.neso.energy/publications....

One from the history books:

assets.publishing.service.gov.uk/media/5a7586...

The answer?

Easy, link carbon markets. But it will take time? So, get started then!

(Carbon market linking is actually in the EU-UK Trade and Cooperation Agreement)

And that’s before you consider the political optics of UK exporters paying into the EU Budget rather than the UK Treasury, or the implications for trade between GB and the island of Ireland.

So lots to consider on CBAM/carbon pricing for the agenda of the upcoming EU-UK Summit in Q1 2025….

And to add to that the methodology for electricity has yet to confirmed, and won’t be until Summer 2025.

The applied emission intensity is expected to be ~5x higher than actual imports, and there’s no clarity about carbon prices paid elsewhere will be accounted for…

Whilst industrials will be gradually phased in as free allocations of allowances are phased out. Electricity imports will be 100% from day 1.

An example of many that will become more apparent ahead of the EU Carbon Border Adjustment Mechanism (CBAM) starting to bite in 2026.

Who says things never change? On the left shows major UK electricity generation assets in 2000, on the right the situation in 2023. Just look at all the #solar and offshore #windpower. Source: assets.publishing.service.gov.uk/media/660445...