Ireland Proposes EU Carbon Market Compromise: Earlier International Credits, Softer Free Permit Rules

Ireland, holding the EU presidency, has put forward a compromise for reforming the Emissions Trading System. The plan would let companies use high-integrity international carbon credits from 2031, five years earlier than the European Commission proposed. It also adjusts the emissions cap reduction range to between 1.7% and 2.7% depending on how many credits are bought. The proposal also changes how free emissions permits are allocated. Benchmarks would be based on the cleanest 10% of production and updated annually instead of every five years. Some small facilities would be exempt from certain requirements. The goal is to bridge a split between member states that want faster emissions cuts and those worried about energy costs and competitiveness. EU ambassadors will discuss the text on Wednesday, with environment ministers meeting on December 11. The European Parliament is still working on its own amendments. The outcome will shape how the EU's carbon market operates from the 2030s, affecting industries like steel, cement, and fertilizer, as well as the pace of grid decarbonization and clean energy investment.