Carbon capture industry calls for clarity on UK-EU ETS linkage

More than 50 players in the carbon capture, utilisation and storage (CCUS) industry have called on the UK and EU to provide clarity on how linking their respective emissions trading schemes (ETS) will support them.

The EU and UK agreed to link their respective ETS systems in May 2025, in order to avoid extra costs for UK exporters. The deal also paved the way for cross-border carbon storage, with a clause allowing EU emitters to store carbon in the UK and vice-versa.

This cross-border cooperation is expected to reduce transport and storage costs by 28% or €16 per tonne, resulting in €2.7 billion in annual savings and making CCUS a more competitive climate solution.

Now, in a letter addressed to UK Prime Minister Keir Starmer and EU Commission President Ursula von der Leyen, the CCUS industry is asking for clarity on how the ETS linkage will work to avoid carbon leakage and competitive distortions.

“Negotiations on the recognition of cross-border CO2 transport and storage must advance as quickly as possible to ensure both the EU and UK meet their 2030 climate targets, and industrial actors can have the clarity, predictability, and security they need to enable making important investments towards decarbonising,” the signatories – which include Air Liquide, ARUP, Eni, Honeywell, Shell and Yara – write.

Call for CCUS working group

To support this goal, the sector is asking the UK and EU governments to create a working group under the Trade and Cooperation Agreement’s Specialised Committee on Energy to focus on Carbon Capture, Utilisation and Storage (CCUS). 

“This would allow for the discussions on ETS linkage and cross-border CO2 trade to progress in parallel, accelerating the timeline for developing cross-border CCUS projects – benefiting both EU and UK industrial stakeholders in the decarbonisation of their activities whilst staying competitive in Europe,” the group adds. 

As the EU begins to work on a framework for the ETS linkage, the CCUS industry also recommends ensuring that emission allowances eligible for compliance in one emissions trading system will be eligible for compliance in the other, and establishing a joint body to oversee registries and auctioning of emission allowances to maintain compatibility, avoid carbon leakage and distortion of competition between the two systems. 

In addition, they call for the creation of compatible market stability mechanisms, the compatible phase-out of free allowances, and alignment on transparency criteria, as well as coordination of the UK and EU’s respective CCUS regulatory regimes.