Big firms push for unconditional free pollution rights in ETS reform

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illuminem summarises for you the essential news of the day. Read the full piece on Euractiv or enjoy below:

🗞️ Driving the news: Major industry groups, led by BusinessEurope, are lobbying for looser conditions on free carbon allowances under reforms to the EU Emissions Trading System (ETS)
• They argue companies need unconditional free pollution permits to remain competitive
• The debate comes as the EU tightens climate targets and phases in the Carbon Border Adjustment Mechanism (CBAM)

🔭 The context: The ETS caps emissions from power plants and heavy industry, requiring firms to buy or receive allowances for each tonne of CO₂ emitted
• Free allowances were designed to prevent “carbon leakage,” where industries relocate to regions with weaker climate rules
• Policymakers are now weighing stricter decarbonisation conditions for receiving those free permits

🌍 Why it matters for the planet: Free pollution rights without firm decarbonisation requirements risk slowing emissions cuts in hard-to-abate sectors like steel, cement and chemicals
• The ETS is the EU’s flagship climate tool, responsible for significant emission reductions since 2005
• Weakening conditionality could undermine the bloc’s pathway toward net zero and dilute price signals meant to accelerate clean technology deployment

⏭️ What’s next: Negotiations between EU institutions will determine whether future free allocations are tied more tightly to climate performance benchmarks

💬 One quote: BusinessEurope is calling for “looser conditions” on carbon allowances.

📈 One stat: The EU ETS covers around 40% of the bloc’s total greenhouse gas emissions

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