Britain’s emissions-trading system generated approximately €3.2 billion in auction revenue during 2025, nearly 5% more than in the preceding year despite a fall of approximately 19% in allowances sold. A UK government market review released on 4 November provides an updated financial picture and establishes the size of the country’s existing carbon market.
The review’s figures show revenue rising as auction supply declined, reflecting higher average realised prices. Total receipts also depend on the composition and timing of auctions, the review said. The euro equivalent is a reporting conversion using the European Central Bank’s exchange reference dated 4 November 2026, not a separate measure of market proceeds.
Carbon-market links and border obligations
The UK Emissions Trading System (UK ETS), Britain’s domestic emissions-trading system, operates separately from the European Union Emissions Trading System (EU ETS). Britain is negotiating closer links between the two systems, which can produce different carbon prices while they remain separate. The review’s updated figures describe the UK ETS, not the EU market.
For British manufacturers exporting goods covered by the EU Carbon Border Adjustment Mechanism (EU CBAM), participation in the UK ETS does not automatically remove EU carbon-border obligations. Any future mutual exemption would require relevant carbon-market linkage arrangements and implementing legislation.
The UK’s Carbon Border Adjustment Mechanism (UK CBAM) is due to begin on 1 January 2027. Domestic industrial carbon pricing and the UK CBAM will operate under separate legal rules; the review introduces no exemption and does not change the commencement date. UK ETS auction revenue is not UK CBAM revenue and does not measure importers’ expected carbon-border liabilities.
For exporters in Serbia and Montenegro, the development is relevant mainly to the future competitiveness of British industrial production and the evolution of carbon-price recognition. The figures also reinforce for lenders the importance of distinguishing domestic carbon-market prices from the effective carbon costs attributed to specific imported products.