The European Commission has proposed a major rollback of its Emissions Trading System (ETS), slowing the annual pollution cap reduction from 4.4% to 3.7% between 2031 and 2035, and then to just 1.7% after 2036. That means industrial emissions from steel, chemicals, and power generation will continue well into the 2040s, years longer than previously planned. The proposal also extends free carbon allowances for sectors covered by the carbon border tax until 2038, and for the first time allows companies to buy international carbon credits starting in 2036. The plan introduces 250 million tons of domestic removal credits for auction between 2031 and 2040. These changes are a clear shift in ambition and will likely spark debate in the EU Parliament over how fast the bloc should decarbonize.
