Britain’s emissions-trading system generated approximately €3.2 billion in auction revenue during 2025, nearly 5% more than in the preceding year even as the quantity of allowances sold fell approximately 19%. The figures are in a UK government market review released on 4 November, which updates the financial picture and sets out the scale of the existing UK carbon market.
The review links higher revenue alongside lower auction supply to higher average realised prices, while noting that total receipts also depend on auction composition and timing. The euro equivalent uses the European Central Bank’s exchange reference dated 4 November 2026 and is a reporting conversion only.
EU links and carbon-border obligations
The UK Emissions Trading System (UK ETS) is Britain’s domestic carbon market and operates separately from the European Union Emissions Trading System (EU ETS). Britain is negotiating closer links between the systems, which can produce different carbon prices while they remain separate.
For British manufacturers exporting goods covered by the EU Carbon Border Adjustment Mechanism (EU CBAM), UK ETS participation does not automatically remove EU carbon-border obligations. A 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 start date.
UK ETS auction revenue is not equivalent to 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.
For lenders, the figures underscore the need to distinguish domestic carbon-market prices from effective carbon costs attributed to specific imported products.