Europe EditionUpcoming Revisions to EU Carbon Pricing and UK Linkage
- The UK and EU agreed on linking their Emissions Trading Systems during the first EU-UK summit on Monday, 2025-05-20, to coordinate carbon pricing post-Brexit.
- The deal arose from negotiations aimed at maintaining market access while respecting UK manifesto red lines, including no return to the single market or freedom of movement.
- The agreement covers sectors such as electricity generation, steel, and aviation, with plans to extend the UK ETS to the waste sector by 2028 amid concerns from local authorities about charging and infrastructure challenges.
- Following the announcement, UK benchmark carbon prices rose 8.4% to $80 per metric ton , while industry figures warned the linked system could raise costs and impact competitiveness.
- This ETS linkage aims to create a larger integrated carbon market supporting emissions reduction and protecting UK exporters from EU carbon border taxes, though uncertainties remain over market impacts and regulatory details.
17 Articles
17 Articles
UK Carbon Price Soars 8% as London Agrees to Link Emissions Trading With EU
The UK’s benchmark carbon price surged by more than 8% on Monday after the UK and the EU agreed to link their emission trading systems in the first major reset of trade relations since Brexit. The UK’s government announced on Monday that the UK has secured a new agreement with the EU post Brexit, which will include “closer co-operation on emissions through linking our respective Emissions Trading Systems.” This, the UK government says, will impr…
Carbon prices jump 8% after emissions deal
UK carbon prices surged more than 8% on Monday after the government confirmed it will link its emissions trading system (UK ETS) with the EU’s, sparking fears of rising costs for industry. The deal – the first major reset of UK-EU trade ties since Brexit – promises closer cooperation on carbon pricing. The move is aimed at boosting energy security and shielding UK exporters from EU carbon border taxes due in 2026, which the Prime Minister claime…
Cross-commodity correlation between TTF, power and carbon prices continued to strengthen
Despite strong volatility, the cross-commodity correlation between TTF, power and carbon prices continued to strengthen since the start of the year, highlighting the increasing integrated nature of trading strategies. The correlation between TTF and carbon prices grew from an average of 0.45 in 2024 to near 0.9 since the start of the year. Similarly, the interplay between German power and carbon prices (not shown on the graph) strengthened from …
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