EU and UK prepare emissions trading deal for November summit
A draft envisages mutual recognition of carbon allowances and possible exemptions from border charges, subject to legal procedures.
Negotiations over linking British and EU emissions trading systems are expected to conclude with an announcement at a Brussels summit on 20 November, a draft document indicates. The proposed arrangement could shield manufacturers trading across the Channel from extra carbon charges.
Under the draft, which remains open to revision, allowances issued by either market would be recognised by the other. Goods originating in the two jurisdictions could also gain exemptions from their respective Carbon Border Adjustment Mechanisms (CBAM), subject to the required laws and procedures. The EU's mechanism began in January 2026; the UK intends to introduce its equivalent in January 2027.
Without an agreement, exporters could face carbon charges on top of the emissions costs they already bear at home. Some officials from both sides say a link could ease administrative requirements and spare energy-intensive producers additional costs, including in steel, aluminium, cement and fertilisers.
British MP David Tufnell warned that integration could push Britain's carbon prices closer to EU levels. He argued that British manufacturers receive fewer free allowances than EU rivals, potentially increasing their relative emissions costs. The markets also differ in sector coverage and rules, including their treatment of buildings and transport. Linking them would require Britain to maintain sufficient alignment with EU carbon-pricing requirements.
