EU advances overhaul of emissions trading system

EU environment ministers met informally in Dublin on 23‑24 July as Ireland took over the EU Council presidency. The ministers discussed a revision of the EU Emissions Trading System (ETS), aiming for a common bloc position by the end of 2026 and formal approval at a December 11 meeting of environment ministers in Brussels.

The European Commission’s proposal keeps free allocation of permits for energy‑intensive industries beyond 2030 but ties it to verified decarbonisation investment plans. It also slows the annual reduction rate of the emissions cap, proposes auctioning permits after 2040 and allows up to 2 % of high‑quality international credits in the system from 2036‑2040. The reforms are presented as a way to protect European industry from carbon leakage while maintaining a predictable price signal for investment.

Switzerland, invited as a partner state, will need to align its own ETS with the EU system to avoid market distortions. German Environment Minister Carsten Schneider stressed the ETS’s role as a reliable framework for investment, and investors have viewed the overhaul as a potential opportunity for a “pollution‑plan” approach.