EU-UK carbon market link: announcement possible at November 20 summit

In a major post-Brexit deal, the European Union and the United Kingdom are preparing to reconnect their carbon markets. According to a draft document seen by a European news outlet, the conclusion of talks to link the two sides' Emissions Trading Systems (ETS) could be announced at the November 20 summit.

The summit is expected to cover a package of measures aimed at resetting relations between Britain and the bloc, with climate and energy cooperation among the leading items.

If linked, EU and British carbon allowances would be mutually recognised on both sides, allowing producers on both sides to avoid additional carbon border charges. However, critics warn that close alignment could raise costs for British industry.

Under an ETS, companies must hold allowances for each tonne of carbon they emit, and a linked market would let those allowances trade across both jurisdictions. Supporters say relinking would cut compliance costs and give businesses a bigger, more liquid market, while easing friction created when the United Kingdom left the EU scheme after Brexit. Details of any agreement, including how the two systems' rules would align, are expected to be set out at the summit.