EU Council increases free carbon allowances for heat and fuel benchmark sectors under EU ETS from 2026 to 2030

The EU Council has agreed to increase free carbon allowances for sectors covered by the heat and fuel benchmarks of the EU Emissions Trading System, applying from 2026 through 2030. The move gives certain industrial installations a larger share of free allocations, meaning they would not need to buy as many permits for emissions linked to heat generation and fuel combustion. The change is notable because free allocation rules shape how much industry actually pays for carbon. More free allowances can protect energy-intensive producers from carbon costs and reduce carbon leakage risk, but they also soften the incentive to cut emissions from industrial heat and fuel use. The brief CGTN report does not include the number of allowances or the conditions attached, so the market impact is not yet clear. For anyone tracking EU ETS prices or industrial decarbonization, this is a story to follow. The direction of policy matters for allowance supply, for projects competing against fossil heat, and for the credibility of the EU's carbon price signal.