European Aluminium has welcomed the European Commission's proposal to review the EU Emissions Trading System (ETS) Directive, but wants adjustments to keep aluminium producers competitive while they decarbonise. The group proposes a 1.7% linear reduction factor from 2031 to 2035, with the higher 3.7% rate applying only after that. It also wants indirect cost compensation extended through 2040 and no new conditionality on free allocation. The industry group calls for the EUR 100 billion Industrial Decarbonisation Bank to support both capital and operating expenditures, and for ETS revenues to be directed more specifically to energy-intensive sectors. It also asks for sector-specific benchmarks for alumina refining, aluminium recycling, and semi-fabrication. These changes aim to balance emissions reduction with international competition, since aluminium producers face limited ability to pass on higher carbon costs. The outcome will affect how quickly European aluminium can cut emissions without shifting production overseas. For carbon market watchers, the debate over the LRF and ICC terms is central to the EU's 2040 trajectory.
