In brief
The European Union announced a new plan to slow the tightening of greenhouse‑gas limits for companies, as part of an overhaul of its climate policy. The changes would let some industries receive emission allowances until 2038 rather than 2034, provided they invest in decarbonisation. The proposal seeks to balance the EU’s 90% emissions cut goal by 2040 with business readiness, but faces criticism from politicians in Italy and Germany. Acceptance will take up to a year, making the final outcome uncertain.
The European Union announced a new plan to slow the tightening of greenhouse‑gas limits for companies, as part of an overhaul of its climate rules.
Under the proposal, firms in select sectors could keep receiving free emission allowances until 2038 instead of the previously planned 2034 deadline. This extension is conditional on investing in cleaner technologies, as part of a broader strategy to keep the EU’s 90% emissions cut target by 2040 on track.
The European Commission, which drafts legislation for 27 member states, said the tweak would make the Emissions Trading System (ETS)—the main EU tool for curbing greenhouse gases—more business‑friendly while still encouraging decarbonisation.
The ETS requires industrial and power‑plant operators to purchase a permit for every tonne of CO₂ they emit. To reduce costs, the Commission plans to lower the annual cap on permits at a slower pace: 3.7% per year from 2031 and 1.7% from 2036, compared with the current 4.3% rate.
The proposal also extends free permits for six more years, and awards 80% of them upfront to firms investing in decarbonisation, with the remainder distributed once projects are completed.
Critics such as Italian politicians argue the ETS functions as a hidden tax that keeps energy prices high, while Polish climate ministers see the plan as a partial win. German MP Michael Bloss warned that the delay could exacerbate climate pollution and harm future generations.
Europe’s rapid warming, reflected in record June temperatures across the continent, underscores the urgency of these policy shifts. A recent chart shows Europe’s temperature anomaly rising faster than any other region, reaching an average of 0.87°C above the long‑term baseline.
The final policy will only become binding after member states approve the EU regulation—a process that could take up to a year.
