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Linking UK-EU Carbon Markets Would Raise Revenue for UK

EMISSIONS

The UK is risking missing out up to £8bn of revenue over the next five years if it stays outside the European carbon market, a study by Frontier Economics and commissioned by National Grid, Centrica, and Drax Group and others showed.

  • UK carbon allowances are currently trading at a 36% discount to the European market.
  • Linking both markets and the resulting increase in UK carbon prices, however, could risk raising UK power prices.
  • Firms in the UK are currently pushing the UK’s reintegration into the European ETS system with the new Labour government, especially before the Europe’s CBAM comes into effect from 2026.

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