The European Union and the United Kingdom have moved closer to an agreement on linking their emissions trading systems. Bloomberg reported this on November 8, citing knowledgeable sources. The deal may be presented at a summit on November 20.

For producers of steel, aluminum, cement, and fertilizers, the deal could open the way to reducing trade costs between the EU and Britain. Linking the markets should create conditions for mutual exemption of goods from border carbon payments — CBAM.

At the same time, for British industry, potential savings at the border are combined with the risk of the allowances themselves becoming more expensive. ABN Amro economist Moutaz Altaghlibi expects further convergence of British prices with European ones, which could increase companies' spending on allowances, Bloomberg reports.

For Ukrainian exporters, the provision on product origin is important. In the previously published negotiating framework of the EU and Britain, potential mutual exemptions apply to goods originating from these jurisdictions.

From this condition it follows that the agreement by itself does not exempt products of Ukrainian origin from carbon requirements. Merely registering a trading company in the EU or the UK is not enough to receive such a benefit.

In emissions trading systems, known as ETS, businesses are required to surrender allowances covering their greenhouse gas emissions. Part of the permits are allocated free of charge, the rest are purchased on the market, and their total volume gradually decreases. Linking the systems would allow allowances from one market to be used to meet obligations in the other, explains the UK government.

The CBAM border mechanism extends carbon requirements to certain imported goods taking into account emissions during their production. Its main regime has been applied in the EU since January 1, 2026. The UK plans to launch its mechanism on January 1, 2027.

The agreement has not yet entered into force, and exemption from border payments will not be automatic. The announcement of negotiation results at the summit will require subsequent approval procedures and separate legal decisions on CBAM. Therefore, November 20 cannot be considered the date when the benefits take effect.

Based on materials from: Bloomberg, the UK government, the EU-UK negotiating framework, the European Commission.