EU member states have approved a plan to issue 121 million additional free CO2 allowances to heavy industry between 2026 and 2030. The extra permits, based on heat production and fuel use, could save chemical, metals, ceramics and glass producers about $9.52 billion in carbon costs, according to Reuters calculations. The decision expands free allocation under the EU Emissions Trading System beyond what the European Commission originally proposed. Policymakers are fast-tracking negotiations with the European Parliament to finalize the fall-back benchmarks before the end of 2026. The goal is to protect energy-intensive industries from carbon leakage and high energy costs while keeping the ETS on track to tighten over time. A broader reform of the EU carbon market is scheduled for 2027. The trade-off is clear: extra free permits give industry breathing room, but they also reduce near-term carbon cost exposure. How the EU balances competitiveness with decarbonization will shape investment decisions across Europe's heavy industry.
