While much of the attention on the UK-EU reset agreement has focused on e-gates, fish, and defence, a quieter but consequential shift is underway, laying the groundwork for greater cooperation in the energy transition.
What’s in the new agreement?
Below, Brevia Energy’s team sets out the key components of the new agreement related to energy.
Linking the UK-EU Emissions trading schemes.
As reported by the Financial Times last June, linking the UK and EU’s emission trading schemes was a priority for the Labour Government.[1]
Linking the two schemes creates a larger market, improving liquidity and price stability. In addition, and in the absence of linkage, the UK was facing increased costs from the incoming EU Carbon Border Adjustment Mechanism (CBAM) being introduced in January 2026. This could have seen UK companies paying up to £800m for exporting to the EU by 2030.
Linking the two schemes could also mean that UK projects can once again access the EU Innovation Fund, which is a key in supporting low-carbon and emerging technologies commercialise.
Exploring closer co-operation with the EU on energy
The two sides have agreed to explore closer co-operation on energy. A key option being considered as part of this is the potential of UK participation in the EU’s electricity trading platforms. This would be a considerable win for the UK Government.[2]
Since Brexit, UK energy firms have faced more complex trading arrangements, resulting in additional costs that are ultimately passed down to consumers. Energy UK has calculated this as adding between £120 million to £370 million per year, depending on wholesale prices.[3]
More importantly however, reintegration will support a more efficient and streamlined energy market, which will be crucial for integrating renewable energy at scale and delivering cost reductions in the longer term.
Putting the Trade and Cooperation Agreement’s energy chapter on a permanent footing
The energy chapter of the TCA was due to expire on 30 June 2026, unless there was agreement for review and renewal. The new agreement will put the Trade and Cooperation Agreement’s energy chapter on a permanent footing.[4]
Establishing the chapter on a permanent footing will remove uncertainty for businesses and help create conditions that support and enable cooperation in the net zero transition.
Next steps
While this agreement sets out clear political intent, much of the technical detail still needs to be worked through. Key priorities in the months ahead will include finalising the UK-EU ETS linkage and defining what closer energy cooperation will look like in practice, particularly in areas such as electricity trading.
These negotiations will shape the regulatory and market environment UK businesses operate in for years to come. For energy-intensive and export-facing sectors, there is both opportunity and risk. Active engagement will be critical to ensure business interests are reflected in the final arrangements.
Brevia Energy is a dedicated division of Brevia Consulting, and has a longstanding reputation for its expertise and experience in the Energy Sector.
To organise a discussion with Brevia Energy on how we can help you and your organisation, please get in touch via the link here. You can also contact the Brevia Energy Team on 020 7091 1650 or email contact@brevia.co.uk
Notes
[1] Financial Times, ‘Labour to forge closer EU ties on carbon tax’, 17 June 2024, Link
[2] The i news, ‘How the Brexit reset could lower your energy bills’, 20 May 2025, Link
[3] Energy UK, ‘Energy UK Explains: the cost of the UK-EU relationship for energy’, 24 October 2024, Link
[4] Cabinet Office, UK Government, Policy Paper ‘UK-EU Summit-Explainer’, 19 May 2025, Link
