The Council of the European Union has established its negotiating position on a revised regulation to increase free carbon emission allowances for sectors covered by heat and fuel benchmarks within the EU Emissions Trading System (ETS) from 2026 to 2030.
The agreement, reached at the EU ambassadors’ level, aims to support energy-intensive industries facing heightened risks of carbon leakage, ensuring local competitiveness during the broader reform of the EU ETS framework.
Under the agreed position, member states propose utilizing approximately 88 million allowances available for free allocation, which European Commission estimates value at €6 billion in cost relief for affected industries. The Council expanded this allocation by adding a further 33 million unallocated allowances previously withheld due to installations failing to meet existing ETS conditionalities.
Key procedural details and policy context include:
- Financial Relief Scope: Utilization of 88 million available allowances alongside 33 million previously unallocated units to support energy-intensive industrial operators.
- Legislative Background: The revision, introduced by the European Commission in July 2026, responds to concerns raised by member states and industry bodies regarding updated benchmark reductions published in June 2026.
- Next Steps: The Council will initiate trilogue negotiations with the European Parliament once the Parliament establishes its formal position, with the Irish presidency targeting a swift agreement to enable timely implementation.
Darragh O’Brien, Ireland’s Minister for Climate, Energy and the Environment, stated: “I welcome today’s agreement on the ETS benchmarks proposal. Excellent co-operation has helped us deliver an important file for the environment and EU industry. By giving more free allowances for energy-intensive sectors during this crucial transition period, we are safeguarding jobs and ensuring that our industries remain competitive, while we work towards our ambitious climate goals. I look forward now to constructive negotiations with the European Parliament.”
