Overview
- The Commission formally presented the ETS revision on July 17, 2026, setting new linear reduction factors of 3.7% for 2031–2035 and 1.7% from 2036 and opening a legislative negotiation between the Council and Parliament.
- The proposal includes a safeguard review on 1 January 2033 to check the availability and quality of international carbon credits before any use from 2036, and it links free allowances to firms’ investments in European decarbonisation.
- The package requires member states to spend at least 50% of national ETS auction revenues on reconverting energy‑intensive sectors and bars use of those funds for investments that prolong fossil fuel use.
- The Commission also unveiled an electrification action plan that targets an indicative 46% share of electricity in final energy demand by 2040 and measures to narrow the electricity‑to‑gas price gap to support industrial competitiveness.
- Industry groups and several Italian ministers said the measures are too small to protect competitiveness, environmental MEPs warned the move weakens climate ambition, and EU carbon prices rose after the announcement, signalling persistent political and market contention.