EU to soften emissions‑trading rules and extend free carbon permits for industry

The European Commission is drafting a major overhaul of the EU Emissions Trading System (ETS) that will be presented on 17 July. The proposal would let heavy‑polluting firms keep emitting beyond 2039, lower the linear reduction factor that drives annual cuts, and grant additional free carbon permits valued at about €6 billion. An “ETS Investment Booster” would allocate 400 million carbon rights to qualifying companies, with a further 400 million to follow after 2030, while revenues from permit sales would be directed to a fund supporting poorer EU members such as Poland in the clean‑energy transition. The reforms aim to balance the bloc’s target of a 90 % emissions reduction by 2040 with industry concerns over competitiveness and rising energy costs linked to the Middle‑East conflict.

Industry groups have welcomed the move, saying the extra free allowances and slower reduction path would ease the financial burden on sectors such as steel, cement and chemicals, while the Commission stresses that companies receiving free permits must invest in European decarbonisation projects.