Aldersgate Group reaction: New UK-EU Agreement including Emissions Trading Systems linkage

Rachel Solomon Williams, Executive Director at the Aldersgate Group, said: “We welcome today’s announcement of a UK–EU Agreement that includes a firm commitment to pursue linkage between our respective Emissions Trading Systems (ETS). The explicit recognition that linkage should enable UK and EU goods to benefit from mutual exemptions from respective Carbon Border Adjustment Mechanisms (CBAMs), was heartening. Enhanced cooperation on carbon pricing will deliver clear benefits for businesses, reducing administrative burdens, lowering costs, easing trade friction, and supporting both the UK and EU in meeting their decarbonisation goals.

“This Agreement signals the beginning of formal negotiations on ETS linkage, and it is essential that the UK Government maintains momentum. Timely progress is vital to provide the policy certainty that businesses and investors need. In particular, we call for urgent clarity on how these negotiations will intersect with compliance requirements under the EU CBAM. With the EU CBAM entering full implementation in 2026 and the UK’s expected in 2027, businesses on both sides of the Channel need a stable policy framework to inform strategic investment decisions.

“We also welcome the broader commitments to deepen cooperation on electricity markets, expand regulatory dialogue on emerging low-carbon technologies, and ensure long-term support for the steel sector. This government made a commitment to deliver growth underpinned by a modern industrial strategy and the decarbonisation of our energy systems, today’s agreement marks a significant step forward.

“As we look ahead to the Spending Review and the publication of the new Industrial Strategy, it is critical that today’s progress is matched by further action, particularly on high electricity costs, which continue to impede industrial electrification, erode competitiveness, and disproportionately affect vulnerable households. The UK’s net zero economy grew by 10% last year; continued, targeted policy support can ensure this trajectory accelerates.”