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Labour leader Sir Keir Starmer is poised to make history as the first British Prime Minister since Brexit to attend a European Council meeting, whilst simultaneously pursuing an ambitious plan to reconnect British and EU emission trading schemes.
The groundbreaking initiative comes as Starmer prepares for a crucial informal gathering in Brussels focused on defence and security cooperation. The meeting, scheduled for 3 February, marks a significant step towards mending post-Brexit relations with the European Union.
Since the UK’s departure from the EU, British carbon permits have consistently traded at lower values compared to their EU counterparts. Industry experts at Frontier Economics suggest that reunifying these schemes would enhance market liquidity and support both parties’ transition towards net zero objectives.
Cabinet Office Minister Nick Thomas-Symonds, who oversees reset discussions, has expressed clear support for the initiative, stating that linking the respective systems remains the primary ambition. This position has been reinforced by Chancellor Rachel Reeves, who indicated openness to British participation in EU customs frameworks.
The proposed changes could prove particularly beneficial for British industry, which faces mounting pressure from the EU’s impending carbon border tax. The UK’s decision to delay its own Carbon Border Adjustment Mechanism until 2027, a full year after the EU’s implementation, has raised concerns among domestic manufacturers, particularly in the steel sector.
Despite Labour’s manifesto explicitly ruling out single market and customs union membership, these latest developments suggest a more nuanced approach to EU relations. The negotiations, however, face potential hurdles, with EU member states demanding full dynamic alignment with EU law and continued access to British fishing waters as prerequisites for any substantial agreements.
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