The European Commission is preparing a major revision of the EU Emissions Trading System (ETS) that would slow the pace of emissions cuts and increase free pollution permits for industrial companies. The proposal, expected on July 17, aims to align the ETS with the EU's 2040 climate target of 90% emissions reduction while addressing concerns about industrial competitiveness. Key changes include extending the ETS timeline past 2039, lowering the annual emissions reduction factor from 4.3%, and expanding free permit allocations beyond 2034 for sectors covered by the Carbon Border Adjustment Mechanism (CBAM). The extra free permits could be worth around 6 billion euros. The Commission is also debating how to integrate international carbon offset credits into the ETS. The proposal must still be approved by the European Parliament and member states, a process that typically takes months. This overhaul represents a significant shift in EU climate policy, balancing decarbonization goals with industrial competitiveness concerns amid a tense geopolitical environment.
