ETS: Council agrees targeted measure to protect energy-intensive sectors from carbon leakage
Today the Council set its position on a revised law to increase, from 2026 to 2030, free carbon allowances for the sectors falling under heat and fuel ETS benchmarks. This revision will help these energy-intensive sectors, which are at higher risk of carbon leakage, to remain competitive. It is part of the broader reform of the EU’s emission trading system (ETS).
Member states (at EU ambassadors’ level) agreed to increase the free allocation of emission allowances by utilising around 88 million allowances available for free allocation. This represents €6 billion of cost saving for these sectors, according to Commission estimates. The Council further added to this sum another 33 million allowances that had not been previously allocated due to installations not meeting existing ETS conditionalities.
I welcome today’s agreement on the ETS benchmarks proposal. Excellent co-operation has helped us deliver an important file for the environment and EU industry. By giving more free allowances for energy-intensive sectors during this crucial transition period, we are safeguarding jobs and ensuring that our industries remain competitive, while we work towards our ambitious climate goals. I look forward now to constructive negotiations with the European Parliament.
Darragh O’Brien, Ireland’s Minister for Climate, Energy and the Environment
Next steps
Negotiations with the European Parliament will commence as soon as the European Parliament has set its position. The goal of the Irish presidency is to reach a swift agreement on the final text, allowing for the timely implementation of the revised benchmarks and ensuring continued support for those industries.
Background
This revision, presented by the Commission in July 2026, addresses competitiveness concerns raised by industry and member states regarding the reduced ETS benchmarks for free allowances (which were updated in June for the period 2026 to 2030) and the need to prevent carbon leakage. In June 2026, EU leaders had taken note of the Commission’s intention to present a separate proposal to address these concerns.
