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EU ETS reform and electrification plan progress

Updated 3 times since CLSTR started tracking revisions of this situation.

What changed

2026-08-06 17:44 UTC → 2026-08-09 16:45 UTC · added removed

The European Commission’s July 2026 ETS review kept the linear‑reduction factor at 3.7 % yr⁻¹ for 2031‑35 and 1.7 % yr⁻¹ for 2036‑40, halved the Market‑Stability‑Reserve trigger and linked up to 80 % of free allocations for high‑emitting sectors to verified decarbonisation investment plans. A Sustainable Maritime and Propulsion (SMAP) scheme was added to narrow the price gap between fossil and alternative fuels and to channel ETS revenues to green‑fuel and technology projects. On 28 July July, the Commission unveiled an Electrification Action Plan that aims consisting of 15 actions to raise electricity’s share of final EU energy consumption from the current 23 % 23% to 46 % 46% by 2040, 2040. The plan aims to cut gas imports by more than 70 % and over 70%, oil imports by over 40 %, 40%, and save up to €260 billion annually. The plan includes Key measures include lower regulated electricity prices for industry, expanded heat‑pump and electric‑vehicle uptake, and greater flexible demand installing 4 million heat pumps annually by 2030, and storage. expanding electric vehicle uptake. Further ETS developments include draft benchmark values for steel (lowered allowance rates for coke, agglomerated iron ore and hot metal) and a public consultation on free permits until June 2028. slowing the annual emissions-reduction rate to balance climate ambition with industrial competitiveness, which analysts suggest could allow up to 2 billion additional tonnes of CO2 emissions by 2040. The Commission proposes extending free emission certificates system’s scope will expand to industry include waste-incineration plants, small vessels, and certain international flights—specifically departures within 5,000 km of Frankfurt. The latter expansion has drawn concerns from January 2027, tying the benefit to 50‑70 % decarbonisation investment, International Air Transport Association (IATA) regarding duplicate compliance costs. Industry groups and launching an ETS‑2 carbon‑tax a coalition of member states (including Poland, Italy, and the Czech Republic) continue to push for buildings slower reduction rates and road transport. higher free permits, while others (Germany, France, and the Netherlands) support the draft. A €100 billion Industrial Decarbonisation Bank and an “ETS Investment Booster” of €400 million are earmarked for qualifying firms. Industry groups – notably ArcelorMittal, Thyssenkrupp, Voestalpine and a coalition of over 30 energy‑intensive firms – have urged a pragmatic reform, warning that the current trajectory could cut steel output by up to 40 % and jeopardise up to five million jobs. Poland leads a twelve‑state coalition pushing for a slower allowance‑reduction rate, higher shares of free permits and a delayed ETS‑2 carbon price.

Versions

  1. 2026-08-09 16:45 UTC EU ETS reform and electrification plan progress
  2. 2026-08-06 17:44 UTC EU ETS reform and electrification plan progress
  3. 2026-08-01 04:38 UTC EU ETS reform and electrification plan advance
  4. 2026-07-29 15:30 UTC EU ETS reform ties permits to decarbonisation

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