Britain will start its own market for trading fossil fuel emission permits this week, but with no sign of a link to the European Union’s market, prices could end up being more volatile than the EU’s.
The UK emissions trading system (ETS), which charges power plants and other industrial entities for each tonne of carbon dioxide they emit, is part of Britain’s plan to reach net zero greenhouse gas emissions by 2050.
When Britain left Europe at the end of 2020, it also quit the EU’s carbon market. The two sides agreed in a post-Brexit trade deal to give “serious consideration” to linking their carbon markets, allowing permits to be traded between them to create one shared carbon price.