EU loosens carbon market rules to let industry pollute for longer

illuminem summarises for you the essential news of the day, reviewed by our editorial team. Read the full piece on POLITICO or enjoy below:

🗞️ Driving the news: The European Commission has proposed a major revision of the EU Emissions Trading System (ETS) that would allow heavy industries, including steelmakers, chemical producers and power generators, to continue emitting greenhouse gases into the 2040s
• The reform slows the pace of emissions reductions, extends free carbon allowances and introduces new flexibility mechanisms for industry

🔭 The context: The ETS is the EU’s flagship carbon pricing system, requiring companies to pay for every tonne of CO₂ they emit
• Under current rules, the emissions cap was expected to fall to zero by 2039
• The new proposal reduces the annual decline rate of the cap, known as the Linear Reduction Factor, from 4.4% to 3.7% between 2031 and 2035, and to 1.7% after 2036

🌍 Why it matters for the planet: The ETS has been one of Europe’s most effective climate policies, significantly reducing emissions from power plants and industry
• Supporters of a stronger carbon market warn that weakening the system could delay industrial decarbonisation, reduce incentives for clean technology investment and make it harder for Europe to achieve climate neutrality by 2050

⏭️ What’s next: The proposal will now face negotiations in the European Parliament and among EU member states
• Climate-focused governments and lawmakers are poised to push for stricter rules, while industrial groups and countries concerned about competitiveness will argue for greater flexibility

💬 One quote: “In the midst of a Europe gripped by extreme heat, the Commission has chosen to back down and weaken the EU's most powerful tool for cutting emissions.” – Romina Pourmokhtari, Swedish Climate and Environment Minister

📈 One stat: Starting in 2036, companies will be allowed to use international carbon credits to offset emissions, while the Commission will introduce 250 million tonnes of domestic carbon removal credits into the ETS between 2031 and 2040.

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