Carbon Emissions, Pricing and Removals 

Since the publication of the EU Green Deal in late 2019, greenhouse gas (GHG) emissions mitigation has been perhaps the single most debated policy area for both the UK and EU.  

The respective levels of ambition in industrial carbon reductions will define the trajectories of our economies over the coming years and given the agenda setting role both jurisdictions have on the world stage, it will impact whether the world can meet the targets under the Paris Agreement, thus limiting global warming to 2 degrees and ‘keeping 1.5 alive’.   

Key decision makers are currently finalising significant reforms to the regulatory frameworks in these inter-linked policy areas, which may pose both risks and opportunities for businesses leaders. If a coherent and fair regulatory regime regarding carbon emissions and carbon leakage can be put in place, this will make significant strides towards European decarbonisation.   

However, given that the new emissions reduction regime comes at one of the most challenging periods in the past 10 years for European businesses, it is imperative there is alignment across both the EU and UK, to avoid business divestment in one jurisdiction, or exposure to new initiatives such as carbon import levies between the trading blocs.  

Furthermore, with soaring gas and electricity prices, it is critical that both UK and EU policymakers provide for strong carbon leakage protections from third countries, or many companies risk be driven out of business, or out of the European market.  


Ibec Global Divergence Watch - Winter Carbon Emissions pdf | 1279.6 kb


"I am pleased to present to you Ibec Global’s third edition of Divergence Watch, our quarterly publication which looks at the shifting relationship between the EU and the UK to help business leaders navigate the cost and complexity of doing international business. In this issue, we focus on EU and UK divergence and cooperation in the interlinked areas of carbon emissions, carbon pricing and carbon removals.  
"Following hot on the heels of COP 27 and with governments around the world stepping up their climate ambitions and providing significant incentives and opportunities for companies to begin or ramp-up decarbonisation, this will be a key issue for business leaders to keep a close eye on in coming months.  

"The key takeaway for business is how important it is for both the EU and the UK to align their policies in these areas to support a future of environmentally friendly industrialisation, rather than risk driving companies out of business, or out of the European market."

Overview from Jackie King

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Jackie King

Executive Director, Ibec Global