EU and UK set to link carbon markets in major post-Brexit deal

illuminem summarises for you the essential news of the day, reviewed by our editorial team. Read the full piece on Euronews or enjoy below:

🗞️ Driving the news: The EU and UK are preparing to link their Emissions Trading Systems (ETS), with an announcement expected at the EU-UK summit in Brussels on 20 November
• The agreement would mutually recognise carbon allowances and could exempt goods traded between the two markets from their respective Carbon Border Adjustment Mechanisms (CBAM), subject to domestic procedures

🔭 The context: The move follows the EU's introduction of its carbon border mechanism in January 2026 and the UK's planned equivalent for January 2027
• Without alignment, manufacturers could face overlapping carbon costs when trading across the Channel
• Linking the systems could reduce administrative burdens and create a larger market for emissions permits
• However, differences in sectoral coverage and rules remain, while closer alignment would require the UK to keep its carbon pricing sufficiently consistent with EU requirements

🌍 Why it matters for the planet: Carbon pricing is intended to incentivise industrial decarbonisation by making emissions costly
• Recognising each other's allowances could help preserve that incentive while reducing trade friction
• However, the effectiveness of the arrangement would depend on the strength and alignment of both systems, including their treatment of emissions across different sectors

⏭️ What’s next: The proposed deal is expected to be announced on 20 November, although the draft remains subject to change
• Negotiators are urged to address regulatory differences and the implications of future carbon pricing for buildings and road transport
• In the UK, critics warn that alignment could raise industrial costs and affect competitiveness, while supporters see it as a way to protect trade with Europe

💬 One quote: “Pursuing UK-EU ETS linkage threatens to push UK carbon prices up even further towards EU levels,” - British MP David Tufnell

📈 One stat: 49% of Britons backed rejoining the EU, compared with 28.5% opposed, according to the October Messina Group Megapoll.

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