The European Commission has unveiled its proposed update to the European Union Emissions Trading System (EU ETS) benchmark values for the 2026–2030 period. The proposal, which is now open for public and Member State consultation, marks a critical step in determining the volume of free carbon allowances granted to European industry.
The updated benchmarks are designed to balance the competitive needs of EU manufacturers with the bloc’s stringent climate targets. Under the proposed values, European industry will continue to receive free allocations covering approximately 75% of its emissions on average.
In a move to address industrial concerns, the Commission is utilising legal flexibilities to incentivise the shift toward electricity-led production. The updated approach maintains the coverage of indirect emissions across 14 specific product benchmarks. This adjustment is expected to result in higher benchmark values, providing a financial cushion of roughly €4 billion for the 2026–2030 period.
“The Commission has listened carefully to the concerns raised by industry and the sectors most affected,” the executive body stated, noting that the benchmarks continue to reward the most efficient installations—defined as the cleanest 10% of producers in each sector.
The benchmark update follows the April 1st proposal to amend the ETS Market Stability Reserve, intended to protect against supply tightness in the coming decades. These initiatives are being positioned as a precursor to a comprehensive EU ETS review scheduled for July 2026, which aims to modernise the system.
Further supporting the transition is the “ETS investment booster” announced by President Ursula von der Leyen in March. Financed by 400 million ETS allowances, the €30 billion fund will target decarbonisation projects, with a specific focus on:
- SMEs: Facilitating easier access for small and medium enterprises.
- Industrial heat: Targeting processes such as heat at various temperature levels where tailored pathways are required.
As part of the upcoming July 2026 revision, the Commission intends to introduce sector-specific “fallback” benchmarks. This new methodology is designed to provide more precise support for certain industries and is intended to be implemented as early as possible to ensure timely decarbonisation.
A four-week public consultation period began today. Following this, and scrutiny by EU Member States in the Climate Change Committee, the Commission plans to adopt the final benchmarks by the end of June. The subsequent allocation of free allowances to industrial installations is expected to take place shortly thereafter.
The EU ETS remains the Union’s primary tool for reducing fossil fuel reliance and enhancing energy independence. By updating benchmarks to reflect technological progress, the Commission aims to ensure the system remains a robust driver for investment in renewable and low-carbon energy sources.
