Emissions trading: more free allowances for industry to curb carbon leakage
On Thursday, MEPs will vote on a targeted change to the EU emissions trading system (ETS) to increase free allocation for industries covered by heat and fuel benchmarks until 2030.
The Commission proposal on which MEPs will vote would redeploy around 80 million unallocated ETS carbon allowances still available for free allocation to businesses in 2026–2030. The aim of the move by the Commission is to soften the lowering of heat and fuel benchmarks, which were updated by the Commission in June 2026. According to the Commission, the redeployment of these allowances would save the industries concerned around €6 billion and give them extra protection against the risk of so-called “carbon leakage” (when energy-intensive businesses relocate their activities outside the EU to countries with looser climate rules).
Parliament is dealing with the file under its urgent procedure. The Environment, Climate and Food Safety Committee will vote on the report by rapporteur Adam Jarubas (EPP, PL) on Monday 19 October. Once plenary has adopted its position, negotiations with the Council can begin.
Background
Companies covered by the EU ETS must hand in one allowance for every tonne of CO2 they emit. Companies at risk of carbon leakage receive free allowances based on benchmarks established by the European Commission, which reflect the most energy-efficient installations in each sector. Where no product benchmark exists, the allocation of free allowances is based on heat and fuel use ("fallback benchmarks"). The benchmark values for 2026–2030 were updated in June 2026, prompting concerns from several industrial sectors about sharp cuts in the amount of ETS allowances that would be available for free.
Vote: Thursday 22 October
Procedure: ordinary legislative procedure, first reading; urgent procedure