Is price volatility the new normal for commodities in 2025?
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At the mid-point of 2025, we take a look back at the dramatic developments in global policy we've seen, how that compares to our predictions at the start of the year, and what this means for commodities.
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EU-UK ETS Link-up: Big Win for Traders, Tight Timeline Ahead
A critical development for EU-UK commodity traders, simplifying cross-border compliance. But watch for political headwinds over alignment with EU regulations
By Frank Eich
On 19th May, the UK government and the European Commission, on behalf of the European Union, agreed to link their emission trading schemes as part of a wider reset of UK-EU relations following the UK’s departure from the EU in 2020.
By doing so, the UK would become the fifth non-EU country to align itself with or participate in the EU ETS – the others being Norway, Switzerland, Iceland and Liechtenstein.
This is big news as it means that exports from the UK into the EU CBAM region (comprising the EU member states and those already aligned or participating in the EU ETS) and vice versa will be exempt from the EU and upcoming UK CBAM regulations. It will make life a lot easier for a lot of businesses; even after ‘Brexit’ the UK and continental Europe remain very close trading partners, including in commodities.
Aligning the two trading schemes will mean that emission allowances issued by the UK and EU authorities would become fungible, in other words a business operating, say, in the UK can purchase UK or EU (or indeed Swiss) allowances for compliance purposes. To make that work, EU ETS and UK ETS carbon prices will have to converge, requiring alignments in the EU and UK carbon budgets.
This should be achievable as the EU and UK have similar emission reduction targets. However, we expect the UK government to face political backlash for having to agree to dynamically align the UK ETS with the EU ETS in the future.
With the EU unlikely to postpone the launch of the EU CBAM permanent phase in early 2026 as a result of this agreement, negotiators will only have a few months to finalise the link-up. With political and economic uncertainties increasing rapidly, the need to stay on top of policy developments is greater than ever.
CRU has been closely monitoring policy developments in commodities markets and keeping our subscribers and followers informed as the situation evolves. Visit our dedicated CBAM page to access our latest special reports, expert insights, and past webinars — all designed to help you navigate this complex and rapidly changing market.
About the author
Frank Eich is a Principal Analyst in CRU's Economics and Sustainability team.
On-demand - Emergency webinar
What does Trumps doubling of tariffs mean for aluminium and steel industries?
Following President Trump’s announcement to double the tariff on US imports of aluminium and steel, CRU experts, Josh Spoores , Matthew Abrams and Ross Strachan , examined the implications for industry value chains and global trade flows in this emergency webinar. The recording of the webinar is now available to watch on demand here.
Featured media coverage
The recent move by President Donald Trump to double import tariffs on steel and aluminium — from 25% to 50% — has reignited global debate on protectionism and supply security. Our Principal Analyst at CRU Group, Matt Watkins, offered timely insight to The National.