UK and EU agree to link carbon markets: what it means for your business

On 7th October, Politico reported that Britain and the EU have agreed a deal to link their carbon trading schemes. These are the schemes that make big emitters, such as steelworks and power stations, pay for their carbon. The deal is expected to be announced at a UK–EU summit in November. If you make, sell or buy steel, aluminium, cement or fertiliser, it's worth five minutes of your time.

What it could change

Since 1st January 2026, EU companies importing these goods have paid a carbon charge on them, a kind of carbon border tax. That includes goods made in the UK. To work out the charge, your EU customer needs to know how much carbon went into making your product. If you can't tell them, they have to use standard figures that usually make your product look worse.

The EU has said UK goods will only be let off once the two carbon markets are properly linked. That link is what this deal is meant to deliver.

What it doesn't change, yet

• Nothing is signed. The deal is reported to be part of a wider package, alongside food trade and youth visas, and won't go ahead on its own.
• Until a link is actually in force, the EU charge still applies to UK exports.
• The UK starts its own version on 1st January 2027. If you import £50,000 or more of these goods in a year, you'll need to register with HMRC. The law lets the government exempt goods from countries with a linked market, so EU goods could drop out of that, but imports from elsewhere would still count.
• UK carbon prices are currently lower than the EU's, so critics say linking could push them up, at least at first. That can feed through into energy and material prices.

What we'd suggest for now

Carry on as if nothing has changed until the deal is in force. If you sell into Europe, keep answering your customers' carbon questions with good numbers, because that keeps you the easy supplier to deal with. If you import, check whether you're near the £50,000 mark for 2027.

If you're not sure whether any of this touches your business, we're happy to talk it through. It's a short, no-obligation conversation.

Sources: Politico, 7th October 2026 and HMRC guidance on when to register for the UK carbon border tax.