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EU Proposes Weaker ETS Caps, Sparks North-South Split

7/17/2026

Summary

EU Commission Proposes ETS

The EU Commission proposed cutting ETS cap reductions to 3.7% for 2031-35 and 1.7% for 2036-40, extending allowances to 2048.
Italy and Poland favour a weaker ETS, while Sweden and Denmark push for stricter caps, prompting negotiations.
Carbon permits trade at €80 per ton and have generated €260 billion revenue since 2013.
The revision will set the future length of free allowances worth €250 billion that have been given to industry.

Summary

EU ETS Cuts

EU ETS cut industrial emissions 41% from 2021-2023, eliminating about 800 million tonnes of CO2 annually.
Bogachev and Venmans report ETS sectors cut emissions 50% from 2005-2024, placing output 1 billion tonnes below 2005, whereas non-ETS sectors fell 17% (?0.3 billion tonnes per year).
ETS-linked industries lowered emissions faster than sectors in the United States, Japan, New Zealand and Australia, and larger plants achieved bigger cuts, implying the impact may exceed reported figures.

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EU Commission Proposes ETS

The EU Commission proposed cutting ETS cap reductions to 3.7% for 2031-35 and 1.7% for 2036-40, extending allowances to 2048.
Italy and Poland favour a weaker ETS, while Sweden and Denmark push for stricter caps, prompting negotiations.
Carbon permits trade at €80 per ton and have generated €260 billion revenue since 2013.
The revision will set the future length of free allowances worth €250 billion that have been given to industry.

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