EU, UK to start carbon market negotiations next week

EU-UK Carbon Market Negotiations

By Kate Abnett

Background on Carbon Market Linkage

BRUSSELS, Jan 14 - The European Union and Britain will launch negotiations next week on linking their carbon emissions trading systems, the EU's climate commissioner told Reuters.

Implications for UK Industries

Billed as part of a "reset" in relations after Britain's 2016 exit from the EU, the two sides agreed last year they will link their carbon emissions trading systems, a move that would allow UK companies to avoid the bloc's carbon border tariff.

Expected Outcomes of Negotiations

"We're going to start the negotiations next week," EU climate commissioner Wopke Hoekstra said in an interview.

"The UK has been doing, over the years and across the political aisle, a great job in terms of climate action. So, in my view, this is imminently doable."

Hoekstra said Brussels was ready to have "speedy" talks, but declined to say whether the EU is aiming to land a deal by a certain date. 

British companies have urged the government to quickly link the carbon markets to avoid the levy, which the government has said would apply to 7 billion pounds worth of UK exports to the bloc.

A UK government spokesperson declined to comment on when negotiations would launch.

"We are delivering on our commitment to secure a carbon linking agreement with the EU as soon as possible," the spokesperson said.

Starting this month, the EU's carbon border tariff imposes CO2 emissions costs on imports of goods including steel and cement, a move designed to put European industries on a level footing with producers abroad.

UK industries had hoped to get a temporary exemption from the EU border fee while the carbon market linkage negotiations were underway, but Brussels has said it cannot offer exemptions until the link is complete.

In principle, British power exports to the EU should not face the carbon border costs because British power plants already pay CO2 costs higher than those in the EU, the Commission has said. But the same is not true for other goods including steel.

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(Reporting by Kate Abnett in Brussels; additional reporting by Susanna Twidale in London; Editing by Alexandra Hudson)