Why alignment matters
On 13 November 2025 the Council of the European Union gave the European Commission a green light to begin formal talks with the United Kingdom on merging their separate Emissions Trading Systems. Negotiators will meet in Brussels this week aiming to create a single allowance registry, compatible monitoring rules and a shared compliance calendar. The step follows months of preparatory work and responds to strong business calls to avoid duplicate carbon costs.
Immediate advantages for industry
The linked market promises tangible financial and administrative relief for manufacturers on both sides of the Channel. Analysts calculate that cooperation could prevent close to one billion pounds each year in carbon border charges. Officials believe an outline agreement could emerge by mid 2026 if technical teams progress swiftly.
· Goods traded between Dover and Calais will no longer require duplicate allowance surrender.
· Smaller producers gain access to deeper liquidity, helping them hedge price swings.
· A single registry simplifies audits, slashing paperwork for logistics firms and airlines.
A wider climate signal
One less discussed benefit is price formation. The UK auctions allowances quarterly while the EU does so nearly every weekday. Joining the calendars is likely to smooth price swings and create a predictable corridor. Such stability gives investors in low carbon steel, hydrogen and shipping better certainty when planning multi decade projects. It may also help green hydrogen producers because a steadier carbon reference price improves the economics of electrolysers that supply industry and heavy transport.
Conclusion
By choosing cooperation over fragmentation London and Brussels are sending a clear message that climate ambition and competitive trade can advance together. Finalising a deal will be technically complex, yet the potential rewards in lower costs, clearer signals and shared innovation make the journey worthwhile.