Q&A: What the EU’s carbon market review means for climate action
The European Commission has proposed reforms to the EU Emissions Trading System (ETS) to slow emission cuts from 2031 while introducing new climate investment incentives. The proposal aims to balance business-friendly policies with long-term climate targets, though it faces criticism for potentially weakening the system.
Why it matters
As a cornerstone of EU climate policy, changes to the ETS significantly impact industrial emissions and the transition to renewable energy across Europe.
The European Commission has put forward new plans to cut emissions under the EU carbon market more slowly, from 2031 onwards.
On 17 July, the commission presented its long-awaited proposal for reform of the EU’s Emissions Trading System (ETS).
It recommended a number of changes, including giving companies free allowances to cover their emissions for longer than previously planned, conditional on climate investment plans.
The proposal offers a more business-friendly and “savvy” approach, argued EU climate commissioner Wopke Hoekstra in a press conference.
But critics believe it could “weaken” the system and put EU climate targets at risk.
Alongside the proposal, the commission also announced a new target for electricity to make up 46% of energy consumption by 2040, doubling the current rate of 23%.
This could cut EU spending on imported fossil fuels by €260bn annually, according to the commission.
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