Overview
- The Commission published the package on Friday, July 17, proposing to slow the annual ETS cap cut to about 3.7% from 2031 and to 1.7% from 2036, which will leave more permits available in future years.
- Brussels would extend free carbon permits for heavy industry to the end of 2037–2038 and make 80% of those allowances immediate for firms that pledge European decarbonisation investments and grant the rest after projects are delivered.
- The draft forces stricter spending rules by asking that at least half of future ETS revenues be reinvested in domestic industry decarbonisation and creates a €30 billion permit reserve to fund clean technology uptake.
- The package adds a Europe-wide electrification goal to replace fossil-fuel combustion with direct electricity by 2040 and signals large cuts in gas and oil use if the target is met, while details on renewable sourcing remain undecided.
- Member states are deeply split, with countries such as Poland and Italy pushing for looser rules and Nordic and climate-ambitious governments resisting, and EU ministers and the Parliament will now negotiate final text over the next year.