Last week we reported on the CC EU conference on the implications of the forthcoming EU ETS2 policy, putting forward the benefits of a Climate Income scheme as adopted by Austria. On Friday the Guardian reported how Brexit has put £370m a year on price of power from EU since 2021 when a stand alone UK ETS was established. The article is based on the findings of trade body, Energy UK’s briefing paper...’Energy UK Explains: the cost of the UK-EU relationship for energy’.

Summary of the key points made in the paper:

• The UK and EU have deeply interconnected energy systems. The UK remains part of a broader European energy system that supports security of supply and the transition to Net Zero.
• The UK’s post-Brexit energy relationship with the EU introduced significant barriers to trade. If left unaddressed, these barriers will lead to higher energy bills and run the risk of disincentivising investment in clean homegrown energy.
• Unless the UK moves toward closer cooperation with the EU on energy and climate, it may lead to additional costs of up to £10bn this Parliament through higher energy bills and lower Treasury revenues.
• This amount is set to increase from 2030 as the UK loses out on the advantages of an integrated energy system, jeopardising our ability to capitalise on clean homegrown energy by becoming a net exporter of electricity.

The paper states that CBAM charges incurred from 2026 to 2030 are estimated at 800 million and if continued the low UK ETS prices will mean foregone revenue of £3.5 billion-£8 billion. The budget confirmed that the UK will be introducing CBAM (a year later than the EU implementation) levying carbon intensive imports from countries without a comparable carbon price from the start of 2027.

The benefit for the UK of realigning with the EU internal energy market and carbon pricing systems is self evident and could lead to a strong case for implementing a national Climate Income in the UK.