EU countries have approved a proposal to issue heavy industry an additional 121 million free CO2 permits between 2026 and 2030. The move is meant to shield chemical, metals, ceramics and glass producers from carbon costs that rivals outside the EU do not face. At current prices, the extra allowances are worth about €8.25 billion. The permits sit within the EU Emissions Trading System, which normally phases out free allocations over time. This decision temporarily increases them through updated fall-back benchmarks, and the rules are being fast-tracked into negotiations with the European Parliament. A broader ETS reform is still scheduled for 2027. For carbon market watchers, the key tension is whether extra free allocation protects competitiveness without weakening the incentive to cut emissions. The outcome of the fall-back benchmark talks will determine how much of the ETS constraint is effectively softened for heavy industry.
