Energy UK response to Dynamic alignment call for evidence launched by the UK Parliament European Affairs Committee

Executive Summary

Energy UK’s submission addresses the UK’s prospective dynamic alignment with the EU in the electricity and emissions trading sectors, drawing on international precedents and practical industry experience.

Nature of Dynamic Alignment: Energy UK emphasises that dynamic alignment does not mean direct application of EU law in the UK, but rather an international obligation to approximate legislation to achieve equivalent outcomes and technical compatibility. The UK should retain the freedom to pursue domestic policies on pricing, supply security and grid stability. The Swiss bilateral electricity agreement, signed in March 2026, is identified as the most appropriate model, being deeper than the existing Trade and Cooperation Agreement but narrower than the EEA framework.

International Precedents: The EEA model, while offering the most structured form of alignment, does not automatically guarantee access to EU market platforms. The Swiss model is preferred precisely because it is targeted and operationally focused, securing market coupling, balancing platform participation and system operation cooperation without requiring wholesale legislative transposition. The EU-Switzerland ETS linkage is highlighted as a flexible, sector-specific precedent that preserves market integrity while allowing each party to retain meaningful domestic policy autonomy.

Decision-Shaping and Influence: Real influence over EU electricity rules is exercised through technical bodies, principally ENTSO-E and ACER working groups, rather than through political committees alone. Energy UK recommends that any future agreement explicitly secure UK participation in these organisations. The UK’s significant role in North Sea offshore wind (around a third of the 300 GW NSEC target) provides meaningful leverage, and formal reintegration into the North Seas Energy Cooperation body as a full member is strongly recommended.

Economic Benefits: The UK Government’s own analysis suggests ETS linkage could add 0.1% to GDP, while also avoiding approximately £800 million in EU Carbon Border Adjustment Mechanism costs by 2030. The absence of electricity market coupling is currently estimated to cost £120-370 million annually, a figure that is growing as interconnector capacity expands.

Key Conditions for Success: Energy UK stresses that the precise terms of any agreement matter considerably. Priority areas include a clearly signalled transition period for industry, alignment of guarantees of origin and renewable energy certification, pragmatic handling of ETS benchmarks on a case-by-case basis, and explicit mutual recognition of production attributes for electricity and energy commodities. Comparable certification frameworks for hydrogen, sustainable aviation fuel and biogas will also be needed in due course.

Parliamentary Scrutiny: Energy UK recommends re-establishing the European Scrutiny Committee, abolished in 2024, to provide informed parliamentary oversight of legislation introduced via secondary legislation under dynamic alignment, while preserving the speed and flexibility of the statutory instrument route.

Implementation: A sequenced approach to implementation is proposed: beginning with securing UK access to EU market platforms, formalising TSO cooperation with ENTSO-E, and aligning certification frameworks, before embedding these within a joint governance structure. Reestablishing the Joint European Stakeholder Group’s pre-Brexit advisory function is also recommended. Ideally, the necessary legislative and operational steps should be completed within one year.
Energy UK remains supportive of dynamic realignment with the EU on emissions trading and electricity market coupling and stand ready to answer any questions the Committee may have.