Europe’s most effective tool to cut greenhouse gas emissions ‘risks being weakened’
European Commission proposal to overhaul emissions trading system would give companies less demanding pathway to reductionsEurope’s most effective method of cutting dangerous plane
By The Guardian
Europe’s most effective tool for cutting greenhouse gas emissions risks being weakened after the European Commission proposed an overhaul of its flagship carbon market that gives companies a less demanding pathway to reductions, critics have said. The proposal, unveiled on Friday 17 July 2026 in Brussels, allows heavy industries to emit CO2 for longer while offering more financial support to invest in clean technologies.
Under the new plan, the annual reduction in the emissions cap would slow to 3.7% from 2031 and drop further to 1.7% from 2036, compared with the current rate of 4.3%. Free pollution permits for sectors such as steel and cement would not be phased out until 2038, rather than the previously planned 2034, though companies must demonstrate plans to invest in clean production in Europe to receive them.
The commission would allocate 80% of free permits upfront to firms with clean investment plans, with the remaining 20% distributed after spending is verified. The European Commission also proposed extending the emissions trading system to include municipal waste and flights within a 5,000km radius of a central point in Europe, affecting airlines flying to north Africa and the Middle East but not to China or the US.
Critics, including the European Environmental Bureau, warned the proposal rewards polluters and undermines businesses investing in fossil-free production by introducing new flexibilities that reduce pressure on high emitters. The proposals will form the basis of negotiations between EU member states and the European Parliament over the next year.