The Commission’s proposal to revise the EU Emissions Trading System (ETS) comes at a critical time when European businesses face high energy prices, regulatory burdens, and an uneven global playing field. Eurochambres therefore welcomes the revised ETS trajectory, the extension of free allocation and the stronger financing framework for decarbonisation. These changes provide businesses with a more realistic and economically viable decarbonisation pathway while preserving the EU’s climate ambition. At the same time, the proposal limits the use of international carbon credits and the new conditionalities attached to free allocation risk increasing regulatory complexity. The chamber network urges co-legislators to reconsider the proposed conditionalities, adopt a more ambitious approach to international credits and substantially increase the share of ETS revenues earmarked for industrial decarbonisation and the necessary enabling infrastructure.

1. Executive summary

 The proposed changes to the ETS respond to several key demands from the chamber network, including a more gradual decarbonisation pathway and the inclusion of carbon removals. Nevertheless, further improvements are needed to ensure that the EU ETS remains workable and safeguards European competitiveness. Eurochambres highlights the following key priorities for the negotiations:

• Ensure a realistic decarbonisation pathway and strengthen flexibilities: The more gradual trajectory is welcomed, as it keeps allowances available into the 2040s. International credits and carbon removals should be integrated earlier, while the scope of eligible carbon removals should be expanded to all CRCF-certified removals.
• Deliver a coherent and targeted financing framework: The Industrial Decarbonisation Bank and other ETS funding instruments must provide accessible, technology-neutral and geographically balanced support, with particular attention to SMEs. The share of national ETS revenues dedicated to industrial decarbonisation and enabling infrastructure should be increased substantially.
• Provide effective carbon leakage protection: The extension of free allocation remains essential for industries exposed to carbon leakage. However, the proposed investment conditionalities should be reconsidered, as they risk increasing administrative burdens, restricting investment flexibility and penalising companies where the necessary infrastructure or technologies are unavailable.

Recalibrate the proposed ETS scope extensions: The proposed changes to the aviation and maritime sectors require stronger safeguards against traffic diversion, carbon leakage and loss of connectivity, alongside greater support for sustainable fuels and clean technologies. The timing of surrender obligations for waste incineration should also be reconsidered until effective circular economy measures, safeguards against landfill diversion and viable abatement options, such as carbon capture, are in place.