EU eases carbon market rules for industry: free allowances extended to 2038, international credits allowed from 2036

The European Union has proposed reforms to its Emissions Trading System (ETS) that give industry more time and lower costs to comply with carbon regulations. Under the plan, companies can receive free carbon allowances until 2038 instead of 2034, provided they invest in decarbonization. Starting in 2036, manufacturers may also purchase international carbon credits from projects outside the EU to meet their targets. The overhaul comes as the EU faces pressure from carbon-intensive economies like Italy and Poland, while also dealing with high energy prices linked to the US-Iran war and record heatwaves. The reforms aim to balance climate goals with industrial competitiveness, though critics argue they slow the pace of decarbonization. The EU also set a target for clean electricity to reach 46% of final energy consumption by 2040.