UK Carbon Prices Surge as Minister Talks About EU Market Linkage

(Bloomberg) -- UK carbon futures jumped on Wednesday after a Treasury minister said the government would consider linking the country’s emissions market to the European Union’s system.

The UK continues “to explore all options to improve trade and investment with the EU, which includes the UK and EU giving serious consideration to linking our emissions trading schemes,” Spencer Livermore, financial secretary to the Treasury, told lawmakers in the UK’s House of Lords. He didn’t elaborate further.

Benchmark UK carbon futures for December rose as much as 11% earlier Wednesday, the most since late-January. Investors are eager to hear more from the government on whether it wants to unite the two emissions regimes, which would make permits issued in one system redeemable in the other. 

The comments echoed language in the trade agreement between the UK and EU that followed Britain’s withdrawal from the bloc in 2020. After that departure, Britain set up its own carbon market. Britain’s emissions permits trade at a significant discount to the EU’s, so linking to the bigger European market could boost prices.  

UK carbon prices saw a steep increase last summer, with the incoming Labour government expected to use the market to help achieve ambitious climate goals. However, to date, the government has produced little in the way of new policies.

©2025 Bloomberg L.P.