The UK could reenter the EU's net zero scheme without a parliamentary vote under the new "Brexit Betrayal Bill".
Labour's proposed plans for "dynamic alignment" would see Britain and Brussels tied together on various areas of regulation.
This could see EU regulations take effect in Britain automatically without needing Parliament's approval.
Under the arrangement, Britain would be bound to EU rules covering food standards, animal welfare and pesticide regulations on a permanent basis.
But Government sources have confirmed the legislation would also implement a new arrangement with Brussels on the Emissions Trading System (ETS), which governs how much carbon companies can release into the atmosphere.
Since leaving the EU, Britain has operated its own independent carbon trading scheme.
However, negotiations currently underway would transfer oversight of the UK's carbon credit system to European authorities.
Sir Keir Starmer is preparing legislation that would enable EU regulations to take effect in Britain automatically
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The Government has argued the move will lower trade barriers with the continent.
Yet because the EU's carbon credit scheme carries higher costs than Britain's current system, the change could burden domestic businesses with increased expenses for meeting net zero targets.
Many UK exporters already choose to follow European standards voluntarily, ministers note, as this simplifies selling their products across the Channel.
The Prime Minister has signalled his desire to deepen ties with Brussels further still, following a trade agreement reached earlier this year.
In an interview with the BBC, Sir Keir said: "I think we should get closer, and if it's in our national interest to have even closer alignment with the single market, then we should consider that, we should go that far."
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Britain has operated its own independent carbon trading scheme since leaving the EU
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The Prime Minister has signalled his desire to deepen ties with Brussels further
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He described the decision to align more closely with Europe as a "sovereign decision" already taken by his Government.
While acknowledging he had previously championed customs union membership for years, the Prime Minister indicated circumstances have changed significantly since then.
He dismissed rejoining either the customs union or the single market, describing both as "red lines" in his negotiations with Brussels.
But his Bill represents the first surrender of British sovereignty over standards since leaving the EU, when the Conservative Government ensured Parliament had to approve all new rules taking effect domestically.
Shadow Foreign Secretary Dame Priti Patel accused Labour of a fresh "Brexit betrayal" that is "becoming clearer by the day".
Dame Priti Patel accused the Government of 'Brexit betrayal'
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She added that Sir Keir was "trying to undo the democratic decision of the British people".
The Conservatives and Reform UK are expected to mount fierce opposition to the legislation, arguing Labour is attempting to reverse the Brexit process entirely.
Both parties have raised concerns that the Government harbours ambitions for even deeper integration with Brussels.
And Deputy Prime Minister David Lammy and Health Secretary Wes Streeting have already indicated in recent interviews they would back rejoining the customs union, despite the Prime Minister's so-called "red lines".
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