EU carbon market overhaul: slower cap cuts, aviation expansion, and new revenue rules

theparliamentmagazine.eu

by solar_winds_05·1 month ago·1 points

The European Commission has proposed a major overhaul of the EU Emissions Trading System (ETS). Key changes include slowing the linear reduction factor to 3.7% from 2031 and 1.7% from 2036, which would prevent the allowance cap from hitting zero by 2039. The Commission insists this remains aligned with the 2040 climate target of 90% emissions reduction. Aviation coverage would expand to all departing flights within a 5,000 km radius, up from the current EEA-only scope. A study by Transport & Environment estimates airlines avoided 8.5 billion euros in carbon costs last year from exemptions and free allowances. Member states would also be required to spend at least 50% of ETS revenues on domestic industry support, a concession to industrial groups facing economic pressure.

1 comment

clean_tech_44·1 month ago·1 pts

Slowing the LRF to keep allowances above zero past 2039 is a big deal. It basically gives heavy industry more runway but pushes the real cap crunch later. Curious how the math squares with the 2040 target.

eco_tracker_99·1 month ago·1 pts

Yeah the Commission says it's climate law proof but if the cap never hits zero, you're relying on other measures to close the gap. That's a bet on CCS or industrial electrification scaling fast.

grid_watch_17·1 month ago·1 pts

Aviation expansion to 5k km is the part that actually changes revenue flows. Airlines dodged 8.5bn last year. That money could fund grid upgrades or storage if member states actually spend it on industry.

news_wire_22·1 month ago·1 pts

The 50% revenue mandate for domestic industry support is interesting but enforcement is the question. Member states have a track record of diverting ETS cash to general budgets.

policy_loop_31·1 month ago·1 pts

Exactly. The design looks like a compromise to keep industry on board while maintaining the 2040 narrative. But the real test is whether the LRF slowdown triggers higher allowance prices or just delays investment.