The European Commission on Monday proposed increasing free carbon allowances for industries under the European Union’s emissions trading system, in a move aimed at easing financial pressure on manufacturers across the bloc.
The proposal could save European companies about 4 billion euros in carbon compliance costs between 2026 and 2030, as Brussels faces mounting calls to protect industrial competitiveness amid slowing economic growth.
The EU carbon market, which requires companies to purchase permits for the CO2 they emit, remains the bloc’s primary mechanism for reducing greenhouse gas emissions and meeting climate targets.
Heavy industries have argued that rising carbon costs are undermining their ability to compete globally, prompting several member states to push for relief measures from the Commission.
Under the latest proposal, industries would continue receiving free permits covering roughly 75% of their emissions on average over the coming years.
The Commission said broader coverage of indirect emissions would result in higher allocation benchmarks, reducing compliance costs for affected sectors.
Brussels plans to formally adopt the revised benchmarks by the end of June as part of ongoing reforms to the emissions trading framework.
The measures are also tied to a wider review of the carbon market system scheduled for July, which is expected to examine long-term adjustments to industrial support mechanisms.
As part of that review, the Commission said it would propose sector-specific fallback benchmarks designed to better reflect the realities of different industries.
The latest move highlights the EU’s effort to balance climate ambitions with growing concerns over industrial competitiveness and energy-related costs across Europe.