EU set to begin talks with UK on linking carbon markets

European Union member states have agreed to start negotiations with the United Kingdom to link their carbon trading systems — a move seen as part of a broader reset in post-Brexit relations and aimed at easing the impact of new carbon border tariffs.

According to Denmark’s EU presidency, ambassadors from all 27 EU countries gave their unanimous backing to open talks with London. The linkage, once established, would allow both sides to exempt each other from carbon border levies, such as the EU’s new tariff on imported steel, cement and other emissions-intensive goods that takes effect on January 1. However, officials warned that technical and regulatory hurdles mean the link will not be completed in time for UK companies to avoid the new charges.

The EU’s mandate for the negotiations is expected to receive formal approval from ministers next Monday, with no major changes anticipated. The move has been welcomed by industry groups on both sides of the Channel, who argue that a joint carbon market would strengthen competitiveness and simplify cross-border trade.

For now, British firms are bracing for the financial impact — estimated by the UK government at around £800 million per year — until an agreement is reached. The UK plans to introduce its own carbon border levy in 2027, a year after the EU system becomes fully operational.