Europe’s decarbonisation strategy increasingly depends on electrification. Transport, heating and cooling, and industry must switch from fossil to electric power, while the energy grids must be fitted to absorb rapidly growing volumes of wind, solar and other low-carbon generation. Focussing on localised energy production and storage alone will not be sufficient. Electricity must be able to flow efficiently across a continental market, under a coherent carbon price.
The post-Brexit separation of the UK and EU Emissions Trading Schemes has therefore become a material weakness. Both schemes cover power generation and use a declining emissions cap to favour low carbon investment. But their allowances are not interchangeable, and their prices can diverge. Generators connected through the same regional power network can consequently face different carbon costs, to the detriment of efficient energy flows. I would argue that, if Europe is to electrify efficiently, electricity must be able to move across the UK–EU energy markets without regulatory fragmentation.