EU and UK set to link carbon markets in major post-Brexit deal

The European Union and the United Kingdom are preparing to reconnect their carbon markets. The move could spare manufacturers on both sides of the Channel from additional carbon border charges. Carbon markets are designed to encourage industries to invest in decarbonization by putting a price on emissions. The two sides are expected to announce the conclusion of negotiations to link their respective emissions trading systems at the EU-UK summit in Brussels on the 20th of November. It also paves the way for goods originating in the EU and UK to be exempted from their respective carbon border adjustment mechanisms. Analysts say that linking the systems would create a larger carbon market, making it easier for companies to trade emissions permits. But closer integration would also bring regulatory obligations As the two carbon markets have different rules on transport and buildings, the deal would represent a significant step in the post-Brexit rapprochement between London and Brussels.