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19 min ago 2 min read
EU-UK cross-border projects are currently stalling in part because the legal recognition of transport and storage of captured carbon dioxide is lacking, according to UK trade body, The Carbon Capture and Storage Association.
Alongside greater regulatory certainty, it wants policymakers to grasp the nettle on linking emissions trading schemes (ETS) at the upcoming EU-UK Summit, which is tentatively scheduled for 13 July.
The ETS is a market-based ‘cap and trade’ mechanism designed to reduce greenhouse gas emissions. Governments set a strict cap on total emissions, and companies must buy or trade emission allowances to cover their pollution.
The EU ETS is ahead of the UK ETS in both market price and policy integration. The EU’s carbon price is consistently higher (trading around €73 per tonne, compared to the UK’s lower rate), and its regulatory framework includes more advanced stabilising mechanisms and border controls.
Project developers and investors require clear policy signals to support investment in CO2 transport and storage infrastructure and delays in establishing a legal framework could hinder investment and industrial competitiveness.
Implementing legislation is expected to be introduced in the UK Parliament around 2027 to finalise the integration, after both governing bodies agreed to pursue a linked carbon market in May 2025.
But the process is complicated by divergent carbon prices, different market stability tools, and the UK’s lack of a formal vote in setting future EU-aligned policies.
The EU uses a market stability reserve to regulate the supply of allowances and stabilise prices. Historically, the UK system lacked this, leading to market oversupply. While the UK has explored implementing a similar supply adjustment mechanism, aligning these regulatory safeguards is technically complex.
European industries will continue to receive free allocations covering around 75% of their emissions under new EU ETS benchmarks announced .
The CCSA, Hydrogen UK and Electrify Industry recently called on the UK government and investment signals to drive industrial decarbonisation.
