The European Union is slowing down the required emissions cuts for roughly 10,000 industrial facilities covered by its carbon market. The proposed change drops the annual reduction rate for carbon allowances from 4.4% to between 2% and 2.4% starting in 2036. Steel mills, cement plants, and fertilizer factories are the main facilities affected. The EU says the slower pace is meant to keep heavy industry competitive with the US and China, especially as energy prices rise due to geopolitical tensions. The long-term target of a 90% emissions cut by 2040 compared to 1990 levels stays in place. The reform also allows up to 250 million tons of domestic carbon removals and lets up to 2% of the cap be covered by international credits. After 2030, the Market Stability Reserve will halve its absorption rate of surplus allowances from 24% to 12%. Carbon prices were at 81.16 euros per ton after the announcement. The policy shift reflects a balancing act between meeting climate goals and keeping energy-intensive industries from relocating to regions with weaker rules.
