EU raises free carbon allowances for energy-intensive industries: what it means for carbon markets

EU policymakers have agreed to raise the amount of free carbon allowances allocated to energy-intensive industries under the Emissions Trading System. The move gives sectors like steel, cement, and chemicals more headroom before they have to buy permits at auction. It is a policy shift that directly affects the supply of allowances and the effective carbon price those industries face. The change comes at a time when the EU is also rolling out its carbon border adjustment mechanism, which applies a carbon cost to imports. More free domestic allowances could reduce the gap between what EU producers pay for emissions and what importers pay at the border. That matters for competitiveness, but it also weakens the short-term incentive for heavy industry to cut emissions. The full article is paywalled, so the details on conditions and timing are not available from the preview. Anyone tracking EU ETS prices or planning industrial decarbonization projects should watch for the official proposal and the final allocation rules.