EU ETS Back on the Agenda: Expectations Ahead of 17 July Reform

Research evidence excerpt

EU ETS Back on the Agenda: Expectations Ahead of 17 July Reform

Equity Research

European Chemicals & Ingredients

15 July 2026

EU ETS Back on the Agenda:

Expectations Ahead of 17 July

European Chemicals & IngredientsReform

NEGATIVE

The EU ETS review returns on 17 July, with potential reforms European Chemicals & Ingredients

Katie Richardsincluding slower cap tightening, extended free allocations

and MSR reforms.While we view the update as a potential +44kathryn.richards@barclays.com(0)20 3555 0315

positive catalyst, we do not expect a repeat of February's Barclays, UK

outsized sector move. Alex Sloane

+44 (0)20 3555 0645

alexander.sloane@barclays.com

Our view: We believe the 17 July ETS Review is more likely to be a positive catalyst for Barclays, UK

European Chemicals than a negative one, although we do not expect a repeat of February's Anil Shenoy

rally, when the sector delivered its strongest trading day in roughly four years. Investor +91 (0)22 6175 2487

sentiment was significantly weaker at that time, whereas the STOXX Europe 600 Chemicals anil.shenoy@barclays.com

Index is already up ~14% YTD and investors are well aware that ETS reform is under Barclays, UK

discussion. We expect incremental industry-friendly measures, including a slower decline in Setu Sharda

the emissions cap, an extension of free allocations and/or Market Stability Reserve (MSR) + 91 (0)22 6175 1934

reform, all of which would be supportive for chemical producers via lower carbon costs. setu.sharda@barclays.com

However, much of this has already been flagged publicly, limiting the scope for upside Barclays, UK

surprise, in our view. We therefore see the review as a likely incremental positive for the

sector, with potential for low-single-digit share price gains rather than a repeat of February's