Commission to give European industry more free emissions allowances than expected

The European Commission has previously said it is preparing a proposal to amend the emissions trading system under the EU ETS. It has now published a document that is open for feedback and available to anyone who wishes to comment on the proposal.  The proposed changes should help industry by providing more free CO₂ allowances. Europe is taking this step to mitigate the impact of climate policies on carbon-intensive sectors, which have also recently been struggling with significant competitiveness challenges.

The key change is an update to the so-called benchmark values used to determine the volume of emission allowances allocated free of charge to European industry. Under the new proposed benchmark values, industry will continue to receive free allowances covering an average of approximately 75% of its emissions.

The Commission is responding to industry concerns by making full use of the available legal flexibility. In practice, this means the Commission has opted for a more moderate percentage reduction in free allowances for the 2026–2030 period. This results in higher benchmark values, with a financial impact of approximately EUR 4 billion.

Since supporting the transition to industrial electrification remains a goal, the Commission is maintaining its updated approach, which includes indirect emissions from electricity consumption for 14 product benchmarks.

The EU ETS benchmark values for 2026–2030 will be adopted through an implementing act. Following a four-week public consultation launched on 11 May and an assessment by EU member states in the Climate Change Committee, the Commission will adopt the benchmark values by the end of June.

Pressure to ease the rules