EU Proposes Slowing Carbon Market Phase-Out to 2048 to Boost Industry Competitiveness
The European Commission has proposed a reform of the EU's Emissions Trading System (ETS) that would significantly delay the deadline for industrial decarbonisation. Under current rules, the cap on emissions allowances was set to reach zero by 2039, but the new proposal extends this to 2048. The annual reduction rate (linear reduction factor) would be lowered from 4.3% to 3.7% from 2031, and further to 1.7% from 2036, reducing the yearly cut from 80 million tonnes of CO2 to 35 million tonnes. The reform also ties free emissions allowances to concrete decarbonisation investment plans, requiring 80% commitment for eligibility. Additionally, it provides a massive subsidy package worth around €50 billion for poorer EU member states, primarily in Eastern Europe, through the Modernisation Fund and a new €30 billion investment booster. The move aims to balance climate goals with industrial competitiveness concerns raised by industry lobbyists and about half of EU member states.
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