EU and UK Begin Talks on Joint SPS Area and Linked Carbon Markets

The Council of the European Union (EU) today formally authorised the European Commission to open negotiations with the United Kingdom (UK) on two new agreements: one on the creation of a common sanitary and phytosanitary area (SPS) and the other on the linking of emissions trading systems (ETS).

The European Union and the United Kingdom are preparing to merge their emissions trading systems (ETS), a step that could create the world’s largest carbon market. The decision, which follows a political agreement reached last May, aims to prevent carbon leakage and simplify cross-Channel trade, marking a reversal after years of post-Brexit disagreements.

EU moves to align standards and connect emissions trading systems with the UK

The Council of the European Union has thus launched negotiations between the EU and the UK, which will not only concern the linking of emissions trading systems (ETS), but also the creation of a common sanitary and phytosanitary area (SPS) for agri-food products. The aim is to realign the two economies in key sectors separated after Brexit, simplifying trade and strengthening cooperation in the fight against climate change.

“Last May, we agreed with the United Kingdom to open a new chapter in our relationship. With today’s decision, we are beginning to translate that commitment into concrete results. An agreement in these areas will significantly reduce the burden on businesses in both the EU and the United Kingdom and bring benefits to consumers. We therefore approach these negotiations with the hope of a swift conclusion,” said Marie Bjerre , Danish Minister for European Affairs.

Towards a common health and phytosanitary area

The SPS agreement would aim to align Britain’s sanitary and phytosanitary standards with those of the European Union, eliminating the need for most certificates and checks on animals, plants and related products traded between Britain and the EU.

Under the Windsor Framework , these benefits would also extend to movements of goods between Great Britain and Northern Ireland , while maintaining Northern Ireland’s dual access to the European single market and the UK internal market.

Linking Emissions Trading Systems (ETS)

Linking the ETS would allow emissions allowances to be traded between the two parties, fostering cooperation on climate issues and preventing the risk of carbon leakage . The future agreement should clearly define how the two linked systems will operate, the sectors involved, including electricity and industrial heat generation, heavy industry, aviation, and domestic and international shipping, and a mechanism to include new sectors in the future, thus preventing carbon leakage and ensuring fair competition.

Linking the EU and UK ETS would also allow goods produced in both territories to benefit from reciprocal exemptions from each other’s Carbon Border Adjustment Mechanisms (CBAMs).

Next steps

With today’s decision, the European Commission is now authorized to formally open negotiations with the United Kingdom on the two agreements. Once concluded, the agreements will need to be approved by the Council before they can enter into force.

Post Brexit, the context of the negotiations

The EU-UK Joint Understanding , reached at the 19 May 2025 summit , stipulates that the creation of a common sanitary and phytosanitary area would solve many of the problems related to the movement of agri-food products between the two sides.

The same agreement states that linking the ETS would allow goods from both jurisdictions to obtain reciprocal exemptions from the CBAM , provided that the relevant legal requirements are met.

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(Featured image by chris robert via Unsplash)

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First published in ESG NEWS. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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