In a significant signal of post-Brexit cooperation, the 27 member states of the European Union (EU) unanimously approved a mandate on Wednesday to begin negotiations with the United Kingdom (UK) to link their respective carbon trading systems.
The decision was announced by Denmark’s rotating EU presidency after a closed-door meeting of ambassadors and ahead of formal approval by EU environment ministers on Monday, as reported by Reuters.
The aim of the linkage is to exempt both sides from each other’s impending carbon border tariffs, which are scheduled to take effect on imports such as steel, cement and other carbon-intensive goods into the EU.
British businesses estimate the tariff could cost them around £800 million (more than $1 billion) a year.
Despite the mandate, officials caution that implementation is likely years away due to the complexity of aligning trading systems and regulatory frameworks, meaning UK companies could still face the tariff before a formal linkage is operational.
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According to Reuters, industries on both sides have voiced support for the move.
For UK firms, the linkage offers relief from the EU’s border levy and a smoother climate-policy alignment.
For the EU, it marks a diplomatic reset in relations with its former member state, merging climate strategy with trade considerations.
«Government support gives confidence in carbon markets,» Fiona Perera, Gold Standard
The UK government has meanwhile announced plans to introduce its own carbon border tax in 2027.
While the headlines suggest swift action, the real work lies ahead in negotiating technical details, harmonizing allowances and offset rules, and aligning enforcement regimes.
Until then, the possibility remains that UK exporters will face the EU tariff regime even as the dialogue proceeds.
Read more: UK And EU To Link Emissions Trading Schemes In Major Climate Deal