Australia and the EU took a step towards an international carbon trading market after today announcing they will fully link their emissions trading systems in 2018.

This means carbon credits under both schemes will count in either system, the EU’s Climate Commissioner and Australia’s Minister for Climate Change and Energy Efficiency said today.

The two cap and trade systems are designed to cut pollution by making businesses pay for producing too many greenhouse gas emissions.

Today’s news is a “significant” move, said EU climate chief Connie Hedegaard: “The European Union is the first regional emissions trading system and spans the largest part of the European continent. We now look forward to the first full inter-continental linking of emission trading systems.

“This would be a significant achievement for both Europe and Australia. It is further evidence of strong international cooperation on climate change and will build further momentum towards establishing a robust international carbon market.”

Mr Combet said: “Linking the Australian and European Union systems reaffirms that carbon markets are the prime vehicle for tackling climate change and the most efficient means of achieving emissions reductions.”

Before the full link up, Australian businesses will be able to use EU allowances to help meet liabilities under the Australian emissions trading scheme from 1 July 2015.