European carbon prices extended their decline on Monday, continuing the downward trend from the previous session. EUA Dec ’25 contracts ended the day at €70,42 nearly €4,5 below the three-month high recorded on Friday.

The decline was likely driven by profit-taking among speculators who appeared to overlook the news that the UK and EU have agreed to link their carbon trading systems as part of a broader effort to reset economic relations, nine years after Brexit.

“The United Kingdom and the European Commission should work towards establishing a link between carbon markets by way of a European Union–United Kingdom agreement linking the United Kingdom Emissions Trading Scheme (UK ETS) and the European Union Emissions Trading System (EU ETS),” stated the agreement.

In contrast to their European counterparts, prices for carbon allowances in the UK surged in response to the news. The UKA Dec ’25 contract closed at £52.43 (around €62), posting a significant 8.42% increase from Friday’s settlement.

This marks the largest single-day percentage gain since late January, when initial speculation about a potential linkage began to surface. The price gap between the two markets has now narrowed from over €42 earlier this year to just €8 — the smallest spread in two years.

Still, the agreement does not specify a timeframe. The EU and Switzerland negotiated a similar linking agreement, which has been fully operational since 2020. However, negotiations between the parties took nearly 10 years.

“Though this might still be a long procedure given all the technicalities, the collaboration between the EU and the UK will already inject positive momentum into global carbon pricing,” said Yan Qin, carbon analyst at ClearBlue Markets.