EU Council authorises negotiations to link the EU and UK emissions trading systems
EU Council authorises negotiations to link the EU and UK emissions trading systems, CBAM expected to generate €1.4 billion annually, Egypt proposes new green industrial platform to support CBAM readiness.
At a Glance:
- Council Authorises Opening of Negotiations to Link EU and UK Emissions Trading Systems
- CBAM expected to generate around EUR 1.4 billion annually, on average
- Egypt Proposes New Green Industrial Platform to Support CBAM Readiness
Council Authorises Opening of Negotiations to Link EU and UK Emissions Trading Systems
At the request of the European Commission, the Council has authorised the opening of negotiations between the European Union and the United Kingdom to link their respective greenhouse gas emissions trading systems (ETSs). This comes just days after the European Parliamentary Research Service published a briefing offering an overview of the potential linkage between the EU ETS and the UK's emissions trading system (UK ETS).
On 19 May 2025, the EU and the UK held their first summit since Brexit, demonstrating a shared political commitment to establish a linkage between the two carbon markets. This linkage would exempt UK exporters from the obligations under the EU CBAM, and reciprocally, exempt EU exporters from obligations arising from the forthcoming UK CBAM.
Since 1 January 2021, the EU and the UK have operated separate cap-and-trade systems, with the exception of Northern Ireland, where the EU ETS continues to apply to wholesale electricity markets in accordance with Article 9 and Annex 4 of the Windsor Framework.
While the EU and UK ETS share many core design elements, they have gradually diverged since 2021. Notably, since 2024, the EU ETS covers both domestic and international maritime transport and has a broader scope regarding international aviation. Differences also exist in the level of allowances, contributing to varying carbon prices between the EU and the UK.
CBAM Expected to Generate Around EUR 1.4 Billion Annually, on Average
On 16 July 2025, the European Commission presented its proposal for the Multiannual Financial Framework (MFF) for 2028–2034, amounting to nearly EUR 2 trillion, or an average of 1.26% of the EU’s gross national income over the period.
According to the Commission's estimates, CBAM is expected to generate approximately €1.4 billion annually, on average, with 75% of the revenue allocated to the EU budget and the remainder to national budgets. This contrasts with the EU ETS, which is expected to generate an average of €9.6 billion annually.
Egypt Proposes New Green Industrial Platform to Support CBAM Readiness
H.E. Lieutenant General Eng. Kamel Al-Wazir and H.E. Dr. Rania A. Al-Mashat held a high-level meeting to enhance coordination between ministries in support of Egypt's green industrial transformation. A key outcome was the proposal to establish a new national platform—modeled after the successful "NWFE" initiative—to mobilize international financing and technical assistance for decarbonization projects in the private manufacturing sector. This initiative is part of Egypt's broader strategy to prepare its industrial sector for compliance with the EU CBAM.
The meeting highlighted ongoing collaboration with international development partners such as the European Bank for Reconstruction and Development (EBRD) and the Green Climate Fund (GCF), particularly through the Sustainable Green Industries (GSI) program. These efforts aim to provide targeted support for emissions reductions, energy efficiency, and clean production technologies—critical elements in aligning Egyptian exports with CBAM requirements and maintaining competitiveness in international markets.
Understanding EU CBAM Obligations: Transitional vs. Definitive Phase
The EU Carbon Border Adjustment Mechanism (CBAM) transitional phase, which began in October 2023, is drawing to a close. With the definitive phase set to begin in January 2026, stakeholders across the supply chain are preparing for a significant shift in obligations and enforcement. We've published a blog post with the key challenges importers and manufacturers encountered during the transitional phase and explain what changes they can expect as CBAM enters its definitive period