Commission presents updated EU Emissions Trading System benchmarks for consultation
The European Commission has today proposed the updated European Union Emissions Trading System (EU ETS) benchmark values for 2026-2030, which will now be open to public and Member State consultation before adoption.
The benchmark update is a key step in determining the level of free allocation of allowances for European industry. With the proposed benchmarks, industry will, on average, continue to receive free allocation covering around 75% of its emissions. The Commission is addressing industry concerns by making full use of the legal flexibilities available. To incentivise industrial electrification, the updated approach maintains coverage of indirect emissions from electricity use across 14 product benchmarks. This leads to higher benchmark values with a financial impact of around €4 billion for the 2026-2030 period.
The update to the benchmark values for the period 2026-2030 is required under the ETS Directive. It complements the proposed amendment to the ETS Market Stability Reserve presented on 1 April, which will adapt and better equip the reserve to respond to future market developments, including potential tightness in supply in the coming decades. Together, these measures will help support the competitiveness and decarbonisation of EU industry while further reinforcing the stability and predictability of the EU’s carbon market.
These measures should also be seen in the broader context of the EU ETS review due in July 2026, which aims to ensure that the ETS remains fit for the future and continues to support European industry in its decarbonisation transition.
Under the existing EU ETS, the free allocation of allowances is devised sector by sector based on the performance of the cleanest 10% of producers. All companies receive a level of free allowances, but those emitting more than the benchmark set by the cleanest producers must purchase additional allowances to cover these emissions. In so doing, ETS benchmarks reward the most efficient installations and ensure that free allocation provides a strong incentive to industries that lead the transition.
Next steps
The EU ETS benchmark values for 2026–2030 will be adopted by an implementing act. Following the 4-week public consultation launched today and the scrutiny by EU Member States in the Climate Change Committee, the Commission will adopt the benchmarks by the end of June. This act is required to allocate free allowances to industry. This allocation is expected shortly after the act’s adoption.
By July 2026, the Commission will review the EU ETS with a view to modernise the system. The Commission has listened carefully to the concerns raised by industry and the sectors most affected. In response, it will propose the introduction of sector-specific fallback benchmarks as part of the upcoming EU ETS revision. This would be implemented through a specific empowerment allowing the Commission to define such sector-specific fallback benchmarks and establish a methodology for determining the respective benchmark values. To provide timely and effective support to the sectors concerned, the revised methodology should become applicable as early as possible.
In March 2026, President of the Commission, Ursula von der Leyen, announced an ETS investment booster, with a budget of €30 billion financed by 400 million ETS allowances. The aim of the booster is to finance projects for decarbonisation. In designing it, the Commission will build on the experience gained through the industrial heat decarbonisation auction by facilitating access for small and medium enterprises and by targeting certain industrial processes, such as heat at different temperature levels, where tailored decarbonisation pathways are needed.
Background
The EU ETS benchmarks are calculated based on the performance of the most efficient installations and updated regularly to reflect technological progress.
The revised values are derived from data submitted by Member States in 2024 under the National Implementation Measures (NIMs) process and assessed by the Commission. In line with the ETS Directive, benchmark reductions are determined within a defined range based on observed performance improvements across sectors.
The EU ETS is a key driver for decarbonisation. It has massively reduced fossil fuel consumption, lowering the Union’s dependence on imports and strengthening its resilience. In addition, it has driven major investments in the clean energy transition in renewables and low-carbon energy sources. These are homegrown and enhance our energy independence.
