Brussels and London eye post‑Brexit cooperation by opening negotiations to connect their emissions‑trading regimes.

In a significant move for European climate‑policy cooperation, the 27 member states of the European Union (EU) have unanimously backed a mandate to begin formal negotiations with the United Kingdom to link their respective carbon‑markets systems. The decision signals Brussels’ desire to deepen cooperation with the UK in the wake of Brexit and to align climate mechanisms at a pivotal moment.

The linkage under discussion pertains to the EU’s flagship cap‑and‑trade scheme, the EU Emissions Trading System (EU ETS), and the UK’s equivalent framework. By aligning the two markets, both sides expect stronger climate outcomes, greater cost‑efficiency for businesses, and a reduction of competitive distortions — a theme that UK and EU industry groups have long emphasised.

A Pragmatic Reset in Post‑Brexit Relations
The decision reflects more than environmental commitment: it underscores a broader pivot in EU‑UK relations. Since the UK’s withdrawal from the EU, cooperation in areas like trade, energy, and regulation has been under re‑negotiation. The linkage talks are part of a “reset” of sorts, where climate‑economy mechanisms offer one of the most tangible areas of alignment.

From Brussels’ perspective, a functional link with the UK helps to prevent regulatory fragmentation of the carbon market, reduce administrative burdens, and safeguard the integrity of the EU’s carbon‑pricing architecture. For the UK, the advantage lies in access to the much larger EU market and in mitigating the risk of duplicative border levies or trade frictions tied to emissions.

What’s Involved?
Behind the political announcement lies a technical and regulatory heavy‑lifting task. Key issues include:

• Harmonising the cap and allowance frameworks.
• Setting up tradability and equivalence of allowances.
• Addressing timing and transitional phases.
• Managing the Carbon Border Adjustment Mechanism (CBAM) implications.

Business Response and Stakes
Industry stakeholders on both sides have welcomed the move. More than fifty firms, from major utilities to manufacturers, had already urged the start of talks earlier in the year, citing cost uncertainty and market fragmentation as a threat to competitiveness.

For UK businesses, without a linkage in place, exporters could face higher costs due to the EU’s border carbon measures, potentially undermining their access to European markets. Conversely, UK carbon prices may rise to align with EU levels, which could raise domestic costs in the short term.

Political Nuances and Challenges
The unanimity in the EU decision‑making body masks underlying tensions. Some member states had delayed endorsement of the mandate due to broader disputes — including the UK’s financial contributions and regulatory alignment post‑Brexit.

Moreover, environmental watchdogs caution that linking markets should not become a back‑door to weakening climate ambition. They stress that terms must ensure strong integrity, credible oversight and no allowance for regulatory arbitrage.

Road Ahead
With the mandate approved, formal negotiations now commence. The process will likely be iterative: drafting technical terms, legal verification, stakeholder consultation, and eventually ratification. Observers anticipate that operational linkage will not occur imminently — several years of transition are expected.

If successful, the UK‑EU linkage could become a model for inter‑regional carbon market cooperation, consolidating one of the world’s largest carbon‑pricing regimes and reinforcing climate ambition on both sides of the Channel. However, the success of the scheme will hinge not only on technical alignment but political will, stakeholder confidence and sustained regulatory coherence.

In sum, the EU’s member‑states’ decision to engage in linkage talks with the UK marks a notable milestone in post‑Brexit climate and economic cooperation. As of mid‑November 2025, stakeholders in London and Brussels alike appear ready to explore a future where emissions markets converge — representing, in many respects, a pragmatic bridge between ambition and implementation.