EU makes moves that will support the carbon market and industrial decarbonisation

The European Commission has set new values under the European Union Emissions Trading System (EU ETS) for 2026-2030

The new set of values under the EU ETS is now open for public and Member State consultation before their expected adoption by the end of June.

These will determine the level of free carbon allowances granted to European industries under the ETS. According to the European Commission, industries will continue to receive free allocations covering around 75% of their average emissions, helping businesses remain competitive while encouraging cleaner production methods.

Focusing on cleaner and more efficient industry’s

Under the EU ETS, free allowances are distributed based on the performance of the cleanest and most efficient industrial producers. The system rewards installations that emit less carbon, while companies with higher emissions must purchase additional allowances from the market.

The updated benchmarks are designed to reflect technological progress and improvements in industrial efficiency across sectors. The Commission said it has used all available legal flexibilities to address concerns from energy-intensive industries facing rising decarbonisation costs.

One of the key features of the EU ETS update is continued support for industrial electrification. This maintains coverage of indirect emissions linked to electricity use across 14 product benchmarks. This adjustment is expected to increase benchmark values and deliver an estimated financial benefit of around €4 billion for industries during the 2026–2030 period.

Europe’s carbon market

The EU ETS revision comes shortly after the Commission’s proposal to amend the ETS Market Stability Reserve, presented earlier this year. That reform aims to improve the system’s ability to respond to future market pressures and potential supply shortages in the coming decades.

Together, the update and Market Stability Reserve reform are intended to improve predictability within Europe’s carbon market while supporting industrial competitiveness during the transition to low-carbon production.

The Commission also confirmed that the wider EU ETS framework will undergo a full review by July 2026 to ensure it remains aligned with Europe’s climate and industrial objectives.

In response to concerns raised by certain industrial sectors, the Commission announced plans to introduce sector-specific fallback benchmarks as part of the upcoming ETS revision. These benchmarks would provide more tailored support for industries facing particular challenges in reducing emissions.

The Commission said it plans to establish a methodology to enable sector-specific benchmarks to be implemented as quickly as possible once the revised legislation is adopted.

A push for decarbonisation

Alongside the changes, the Commission highlighted a new ETS investment booster announced by Commission President Ursula von der Leyen earlier this year. The initiative will have a budget of €30 billion, financed through 400 million ETS allowances.

The funding is intended to support industrial decarbonisation projects across Europe, with a particular focus on small and medium-sized enterprises and industrial heat processes that require tailored solutions.