EU Commission to unveil major ETS reform; France-Germany reset defence ties

By Nicoletta Ionta in Brussels, with Eddy Wax

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Need-to-Knows

• 🟢 Commission to unveil emissions market reform
• 🟢 France, Germany seek defence reset
• 🟢 EU still issues 'too many' Russian visas, Brunner says

From the Capital

Commission to Unveil Major Carbon Market Overhaul

The European Commission is set to unveil a major rewrite of the EU's carbon market today, bowing to mounting pressure from industry and national governments demanding relief from Europe's flagship climate policy.

The proposed changes to the Emissions Trading System (ETS) — long regarded as the bloc's most effective tool for cutting greenhouse gas emissions — drive another nail into the coffin of the Green Deal's original vision. Countries including Italy, Poland and Greece are pushing hard for a more industry-friendly reform, while the Nordics and Spain are resisting any weakening of the bloc's climate ambitions.

Since its launch in 2005, the ETS has roughly halved emissions from covered sectors, eliminating around 1 billion tonnes of greenhouse gases a year.

But energy-intensive industries argue the costs are becoming unsustainable and have won backing from an alliance of central, eastern and southern EU countries.

Free emissions allowances that have shielded heavy industry for more than a decade are being phased out, while the emissions cap is tightening at a faster pace, cutting the annual supply of permits by an additional 80 million tonnes — roughly equivalent to Austria's annual greenhouse gas emissions. At the current pace, no new allowances will be issued after 2039.

For boardrooms across Europe, the deadline to decarbonise is fast approaching.

Read Nikolaus J. Kurmayer's full story.

Macron and Merz Move Beyond the Jet

France and Germany will try to turn the page on their long-troubled next-generation fighter jet project at a joint meeting today, shifting the focus to fresh defence cooperation as the EU races to rearm.

Emmanuel Macron and Friedrich Merz are expected to push ahead on joint military plans, including closer coordination on nuclear deterrence, while also tackling competitiveness, the EU budget, digital rules and efforts to combat disinformation.

The meeting marks Macron's final Franco-German ministerial council before leaving office next year, with the Franco-German partnership entering an uncertain new chapter as Marine Le Pen's far-right National Rally remains a key contender ahead of France's 2027 presidential election.

Zelenskyy Fires Defence Minister, Taps EU Ambassador

Ukraine has a new chief negotiator in its quest to join the EU, and it's a familiar face to many in Brussels. Vsevolod Chentsov, Ukraine's ambassador in Brussels since 2021, was appointed deputy prime minister for European integration on Thursday as part of a government reshuffle.

We reported the move in Thursday's edition, noting that many saw it as a straight swap with his predecessor Taras Kachka. Kachka has yet to be confirmed as ambassador to Brussels.

Volodymyr Zelenskyy also appointed SBU chief Yevhenii Khmara as acting defence minister after dismissing Mykhailo Fedorov, a move that surprised allies in Brussels. "We were working with him in a very good way," EU Defence Commissioner Andrius Kubilius told Pietro Guastamacchia.

Read Pietro and Eddy's full story.

Betting on Fitto

The appointment of Raffaele Fitto as the European Commission's special representative for Cyprus signals Brussels' intent to play a much more political role in efforts to resolve Europe's longest-running frozen conflict.

With renewed talks expected in the coming weeks and momentum boosted by the EU's recognition of Turkey's role in Europe's defence and security architecture, officials see a rare opening for diplomacy. One diplomat told Sarantis Michalopoulos that Fitto is well placed for the job, pointing to Italy's traditionally strong ties with Ankara.

But his arrival has already drawn fire from Turkish Cypriots, who dismissed the appointment as "unilateral and illegitimate" and questioned whether he can act as a neutral broker.

Read Sarantis's full story.

Brunner: 'Still Too Many' Russian Visas

EU home affairs ministers used an informal gathering in Dublin to revisit a long-running divide over Russian travel to the bloc, after several Baltic states urged tougher restrictions on Russian citizens still holidaying in Western Europe.

Euractiv was first to report that France and Italy issued the highest number of visas to Russian nationals in 2025. "We need to do more," EU migration chief Magnus Brunner said. "It's still too many. (…) We can't always talk about supporting Ukraine and, on the other hand, issue visas to Russian citizens."

His remarks came a month after Sweden and a coalition of 10 EU states called on the Commission to act.