Revision of the EU emissions trading system

The EESC Youth Test is being applied to this opinion. The organisation Young European Federalists was chosen by a group of interested youth organisations to represent all of them during the opinion-making process.

Practical information

1. Composition of the study group
2. Administrators / Assistant in charge: Gaizka MALO, Caroline VERHELST / Lukáš ĎURECH
3. Contact

Background

The EU emissions trading system (ETS) is the key policy tool for achieving the EU's climate targets. The existing ETS (ETS1) aims to reduce greenhouse gas emissions from industrial and energy installations, aircraft operators and maritime transport by setting a price on carbon through a cap-and-trade system.

It has been progressively strengthened through successive revisions, most recently through Directive (EU) 2023/959 under the Fit for 55 package, which extends the scope of the system, tightens emissions caps and introduces new sectoral components while reinforcing the Market Stability Reserve.

To ensure that the EU ETS aligns with the EU's 2040 and 2050 climate targets, and contributes effectively to Europe's competitiveness and decarbonisation, the European Commission will review certain aspects of the EU ETS1, as announced in the 2026 Commission work programme.

The Commission's ETS revision proposal is expected to address several issues, notably the role of carbon dioxide removals, the expansion of the current scope to additional sectors and GHGs not yet covered by the ETS, new rules on how to account for non-permanent carbon capture and utilisation, and the risk of carbon leakage in sectors not covered by the carbon border adjustment mechanism.