Billions in free certificates? EU Commission presents emissions trading reform proposal

The European Commission has put forward a proposal to reform the EU Emissions Trading System (ETS), the bloc's primary tool for reducing greenhouse gas emissions. The reforms come amid concerns over rising energy prices and the competitiveness of European industries.

Industry players can anticipate potentially billions of euros in free certificates as part of the proposed changes. The proposal will now be deliberated by the Council of the EU and the European Parliament.

However, critics have voiced concerns that the reforms might significantly dilute Europe's climate protection commitments. A key worry is the potential for the system to incorporate international certificates, which could undermine domestic reduction efforts.

The EU remains committed to its goal of climate neutrality by 2050. The current proposal outlines the future of the ETS beyond 2030 and sets conditions for the allocation of free certificates. Additionally, for the period between 2026 and 2030, the existing benchmarks are set to be relaxed, allowing industries to receive more pollution allowances. Austria, for instance, had advocated for such free certificates to shield European industry from relocation.

The reform specifically targets ETS-1, which covers energy producers, industry, and parts of the aviation and maritime sectors. A second system, ETS-2, is slated to launch in 2028, addressing emissions from buildings and road transport.