EU Updates ETS Benchmarks to Support Industrial Decarbonisation
The European Commission has launched a consultation on updated benchmark values under the EU Emissions Trading System (EU ETS) for the 2026–2030 period, aiming to balance industrial competitiveness with the bloc’s long-term decarbonisation goals.
The revised benchmarks will determine the level of free carbon allowances allocated to European industry. According to the Commission, companies will continue to receive free allocations covering around 75% of their emissions on average, while the system will maintain incentives for cleaner production and industrial transformation.
Under the proposed update, the Commission is making full use of legal flexibilities to address concerns from energy-intensive sectors. One of the key measures includes continued coverage of indirect emissions linked to electricity consumption across 14 product benchmarks. The adjustment is expected to provide an estimated €4 billion in financial impact for industry during the 2026–2030 period.
The benchmark revision forms part of broader reforms to the EU carbon market. It follows the Commission’s recent proposal to strengthen the ETS Market Stability Reserve, designed to improve resilience against future supply pressures and maintain market predictability.
The Commission said the measures are intended to support both competitiveness and decarbonisation, while reinforcing confidence in Europe’s carbon pricing framework ahead of a wider EU ETS review scheduled for July 2026.
Under the current ETS structure, free allowances are based on the emissions performance of the cleanest 10% of producers within each sector. Facilities that emit above the benchmark threshold must purchase additional allowances, creating financial incentives for companies investing in cleaner technologies and lower-carbon industrial processes.
The consultation process will run for four weeks before the updated benchmarks are reviewed by Member States through the Climate Change Committee. Final adoption is expected by the end of June 2026, allowing free allocation decisions for industry to proceed shortly afterwards.
The Commission also confirmed that the 2026 ETS review will examine the introduction of sector-specific fallback benchmarks to better support industries facing unique decarbonisation challenges. In parallel, the EU is preparing a €30 billion ETS investment booster funded through the sale of 400 million allowances, aimed at accelerating industrial decarbonisation projects across Europe.
