EU and UK approaches to carbon pricing

This discussion paper from the City of London Corporation and Norton Rose Fulbright LLP investigates global climate ambitions and carbon pricing instruments.

As the EU and UK’s almost identical emission trading systems run in parallel and remain unlinked, industries are exposed to additional compliance costs. Siloed regulation could cause a globally divisive landscape from the outset.

Comprehensive international collaboration is required to ensure creation of an equal level-playing field across multiple jurisdictions. The more systems resemble one another the lower the risk of carbon leakage and incompatible domestic policies.

As standards emerge at a global scale, the financial sector can accelerate the efforts by companies and incentivise consumers. This in turn can help shape new innovations pursuing long-term solutions on the road to net-zero.