The European Commission has proposed major changes to the EU Emissions Trading System (ETS), Europe's main carbon market. Key changes include slowing the annual emissions cap reduction from 4.3% to 3.7% in 2031 and 1.7% in 2036, and extending free CO2 permits for heavy industries like steel and cement until 2038 instead of ending them in 2034. The EU also plans to buy international carbon offsets to cover 2% of required reductions, softening domestic industry targets. On the funding side, the Commission wants governments to spend at least 50% of future ETS revenue on domestic industries, up from the current estimated 5%. A new 400 million permit booster fund (worth around 30 billion euros) will support clean tech investments. The ETS would also expand to cover flights departing Europe up to 5,000 km away, smaller ships from 400 gross tonnage, and waste incineration emissions. EU countries and the European Parliament will negotiate final rules over the next year.
