ETS Review - What Does it Mean?

Research evidence excerpt

ETS Review - What Does it Mean?

Idea

July 17, 2026 07:19 PM GMT

Morgan Stanley & Co. International plc+MSustainability | Europe Rachel Fletcher, Ph.D.

Equity Strategist

ETS Review - What Does it Rachel.Fletcher@morganstanley.comRobert Pulleyn +44 20 7677-4089

Equity Analyst and Commodity Strategist

Robert.Pulleyn@morganstanley.com +44 20 7425-4388

Mean? Cedar Ekblom, CFA

Equity Analyst

Cedar.Ekblom@morganstanley.com +44 20 7425-4623

We summarise key takeaways from today's ETS review Alain Gabriel, CFA

announcement across Carbon EUAs, Cement, Steel, Airlines, EquityAlain.Gabriel@MorganStanley.comAnalyst +44 20 7425-8959

SAF, and Heat Pumps. We view the announcement as positive Axel Stasse

for green capital allocation in Europe. EquityAxel.Stasse@morganstanley.comAnalyst +44 20 7425-2429

Adahna Ekoku

Key Takeaways EquityAdahna.Ekoku@morganstanley.comAnalyst +44 20 7425-0578

As expected, the proposal aims to channel more ETS revenue back into industry Daniel Khajenouri

and reward companies investing in EU decarb with higher free allocation Daniel.Khajenouri@morganstanley.com +44 20 7425-3065

Alice Bergier Winograd

CBAM phase-in extension to 2038 as expected. LRF reduction and ETS extension

to 2046/47 expected - Phase V EUA supply impact more positive than expected Alice.Winograd@morganstanley.com +44 20 7425-0174

Arushi Agarwal, CFA

400mt Investment Booster Fund is phase 1 of Industrial Decarbonisation Bank. Equity Strategist

Projects to receive direct allocations for up to 10y, based on emissions reduction Arushi.Agarwal1@morganstanley.com +44 20 7677-3944

For Cement, changes are positive for producers with investment-ready CCS. For Morgan Stanley & Co. LLC

Stephen C Byrd

Carbon Steel, slower phase out from 2028 falls short of ETS pause at 2026 Equity Analyst