The EC has proposed the updated European Union Emissions Trading System (EU ETS) benchmark values for 2026-2030, which will now be open to consultation.

Under the existing EU ETS, the free allocation of allowances is devised sector by sector based on the performance of the cleanest 10 per cent of producers. All companies receive a level of free allowances, but those emitting more than the benchmark set by the cleanest producers must purchase additional allowances to cover these emissions. In so doing, ETS benchmarks reward the most efficient installations and ensure that free allocation provides a strong incentive to industries that lead the transition.

The Commission is now considering giving more free allowances that it hopes will help industries decarbonise, but potentially these industries may need to make stronger cases for this largesse and come at the price of greater scrutiny over the entire system.

Any more to increase bureaucracy would also go against the EU’s stated intention to remove red tape as it seeks to drive any form of growth.

Wopke Hoekstra, commissioner for climate, net-zero and clean growth added: “Strengthening the Market Stability Reserve as proposed on 1 April will improve resilience to volatility, while updating the benchmarks further incentivises investments into the clean transition. This ensures the EU ETS continues to drive decarbonisation, competitiveness and clean investment.”

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