European Utilities & Clean Energy: Carbon Derby - EU ETS reform focuses on industrial competitiveness with more gradual decarbonization

Research evidence excerpt

European Utilities & Clean Energy: Carbon Derby - EU ETS reform focuses on industrial competitiveness with more gradual decarbonization

20 July 2026

European Utilities & Clean Energy

European Utilities & Clean Energy: Carbon Derby - EU ETS

reform focuses on industrial competitiveness with more gradual

decarbonization

The European Commission on 17 July unveiled its proposals for the review of the EU ETS, Bartlomiej Kubicki

+49 69 717 4418 alongside the Electrification Action Plan. Overall, the package is broadly in line with recent

bartlomiej.kubicki@bernsteinsg.com press reports and points to a more gradual decarbonisation pathway, while placing greater

emphasis on industrial competitiveness. The proposed reform could also appear CO2

Thibault Dujardin, CFA price-negative increasing the future availability of CO2 certificates vs current expectations.

+33 1 58 98 59 16

thibault.dujardin@bernsteinsg.com

EU ETS Review - Main Proposed Changes: The Commission’s review seeks to recalibrate

the EU ETS to align the system with the EU’s 2040 and 2050 climate objectives, while Jorge Alonso Suils

+34 915 893 913 enabling a more gradual decarbonisation pathway. The proposal reflects a growing

jorge.alonso@bernsteinsg.com emphasis on industrial competitiveness. To support these objectives, the Commission

has proposed a range of reforms, including: a) a more gradual reduction in the ETS

Rory Graham-Watson emissions cap from 2031 onwards; b) an extension of free allocation for CBAM- +44 20 7676 7093

rory.graham-watson@bernsteinsg.com covered sectors until 2038, compared with the current phase-out schedule ending in 2034,

alongside a separate proposal on benchmarks aims to increase free allocation to industry