EU member states have backed the European Commission's plan to issue an additional 121 million free carbon allowances to energy-intensive industries between 2026 and 2030. The allowances will be allocated based on heat production and fuel use, and are estimated to save companies around 8.25 billion euros in emissions costs. Chemicals, metal processing, ceramics, and glass producers are among the sectors that could benefit under the ETS fallback benchmark rules. The move is meant to protect European industry from carbon leakage while the bloc gradually reduces free allowances over time. But it also raises a key question: whether these extra permits will weaken the ETS price signal and slow industrial decarbonization. Final rules still need to be negotiated with the European Parliament, with an accelerated procedure aimed at adoption by the end of 2026. The outcome will determine whether this is a short-term competitiveness cushion or a real setback for the EU's climate targets.
