Industry groups, business call on Britain and the EU to link carbon markets, David Muil

In a significant move towards climate cooperation, over 50 European companies and industry groups are urging the UK and EU to link their carbon markets. This proposal, set to be discussed at the May 19 summit, aims to harmonize carbon pricing, prevent competitive distortions, and reduce costs for consumers on both sides.

Currently, the UK's carbon prices are approximately £48 per metric ton, trailing behind the EU's €66 per ton. Linking the Emissions Trading Systems (ETS) would likely elevate UK prices in the short term but could shield British exporters from the EU's impending Carbon Border Adjustment Mechanism (CBAM), which imposes emissions fees on carbon-intensive imports starting in 2026.

Energy firms like Equinor, Orsted, and RWE highlight that without linkage, UK exports of clean energy to the EU might face additional costs, potentially increasing EU power prices and emissions.

This initiative reflects a broader push for enhanced UK-EU collaboration on climate and energy security, especially as geopolitical dynamics evolve. Aligning carbon markets could serve as a foundation for a renewed partnership, emphasizing shared environmental goals and economic resilience.

“The EU and UK ETS linkage would create price convergence between the two schemes, whilst avoiding competitive distortions, preventing carbon leakage and reducing costs for both EU and UK consumers,” a letter signed by companies including Equinor (EQNR.OL), opens new tab, Orsted (ORSTED.CO), opens new tab and RWE (RWEG.DE), opens new tab seen by Reuters said. Linking the two schemes would also likely mean Britain would avoid penalties under Europe’s Carbon Border Adjustment Mechanism which will impose an emissions fee on imports to the EU of steel, cement, aluminium, fertilisers, electricity and hydrogen from 2026.

https://www.reuters.com/sustainability/climate-energy/industry-groups-business-call-britain-eu-link-carbon-markets-2025-04-30/

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