The European Union is set to announce reforms to its Emissions Trading System (ETS), the carbon market that forces heavy polluters to pay for their greenhouse gas emissions. The overhaul comes as the bloc faces pressure from energy-intensive industries, particularly in Germany, Italy, and Poland, who argue the system raises electricity costs and hurts competitiveness. At the same time, environmental advocates warn against backtracking on climate goals. Key changes under discussion include extending free allowances for industry beyond the current 2034 phase-out date, provided companies commit to long-term decarbonization. The EU is also debating whether to expand the ETS to cover waste incineration and international flights. A separate extension to road transport and building heating, known as ETS 2, has already been delayed from 2027 to 2028. Supporters of a strong ETS argue that companies which have already invested in decarbonization stand to lose their pioneering advantage if the system is weakened. The reforms are expected to be a political flashpoint, pitting carbon-intensive economies against those pushing for faster climate action.
