Dear Sir or Madam,
Last week, the United Kingdom and the European Union announced their intention to link their emissions trading systems (ETS). The linking of the UK and EU systems is intended to create a larger and more efficient market, which will reduce the costs of emissions reduction while increasing the effectiveness of the measures.
Linking the UK and EU emissions trading systems offers a number of advantages. A larger market increases liquidity and reduces price volatility, leading to more stable and predictable prices for emission allowances. This, in turn, gives companies greater planning certainty and facilitates investment in decarbonisation technologies.
By linking the systems, the UK ETS and the EU ETS can better coordinate their climate policies. This is particularly important at a time when international cooperation and ambitious measures are needed to achieve the goals of the Paris Agreement. Close cooperation between the UK and the EU can also serve as a model for other countries and regions to link their emissions trading systems and create global markets for emission allowances, as is already the case between the Swiss trading system and the EU ETS.
In addition, trade barriers such as the carbon border adjustment mechanism (CBAM), which the UK will also introduce in 2027, would be removed, benefiting both parties.
The UK and EU governments have announced that they will work closely together in the coming months to plan and implement the linking of the systems. This includes consultations with stakeholders, technical feasibility studies and the adaptation of the legal framework.
The prices of British and European emission allowances responded to this information with corresponding price gains, with UKA rising by 6% in the short term.
Following US President Trump’s announcement that he intends to impose tariffs on imports of goods from the EU from 1 June 2025, prices on the markets fell significantly and EU emission allowances also lost ground, dropping from a daily high of 73.00 euros to a daily low of 70.00 euros in the benchmark contract.
By the end of the trading day, the market uncertainty triggered once again by Donald Trump had subsided somewhat and the closing price recovered to 71.56 euros. On a weekly basis, the trading week ended with a moderate gain of 0.8%.
After a conversation that was certainly not particularly pleasant for Ms von der Leyen, Trump decided yesterday to postpone the tariffs on EU goods until 9 July.
Due to the public holiday, auctions at the EEX will only take place on Tuesday and Wednesday this week, with a total volume of 5,318,000 EUAs.
| Instrument | 16/05/25 | 23/05/25 | Change |
| EUA (December-25-Future) | 70.99 EUR | 71.56 EUR | +0.57 EUR |
| EUA 2 (December-28-Future) | 79.16 EUR | 81.03 EUR | +1.87 EUR |
| nEZ (national Emission Allowances (D)) | 55.00 EUR | 55.00 EUR | +0.00 EUR |
| UKA (December-25-Future (UK)) | 48.36 GBP | 51.69 GBP | +3.33 GBP |
| UK Natural Gas (December-25-Future) | 96.12 GBP | 98.93 GBP | +2.81 GBP |
| ICE Brent Crude Oil (December-25-Future) | 63.70 USD | 63.15 USD | -0.55 USD |
| EURO (Forex) | 1.1164 USD | 1.1364 USD | +0.0200 USD |
(EUA, EUA 2, UKA, Natural Gas, Crude Oil and Euro Currency shows day-end-exchange quotes of the benchmark contract. This market information has just an informational character and are no advice or offer to trade emission allowances or their futures and options. If you want to unsubscribe, please reply to this mail.)
Please call our international carbon desk if any further questions exist: +49.2831.1348220 or book here a call with one of our specialists.
With kind regards,
Your Advantag – Team