The ETS is widely regarded as a key driver of investment in industrial decarbonisation, including clean hydrogen, by increasing the cost of emitting carbon dioxide.
However, the European Commission argues the changes are needed to ease pressure on European industry as it faces rising competition from manufacturers in regions with lower energy costs and weaker carbon constraints.
Under the Commission’s proposal, between 2031 and 2035, the linear reduction factor (LRF) could become 3.7%, dropping to 1.7% between 2036 and 2040. This is slower than the expected 4.4% LFR from 2028 onwards.
Companies would also be able to use up to 2% high-quality international carbon credits between 2036 and 2040, allowing them to meet a small share of their ETS obligations through emissions reductions outside the EU rather than domestic decarbonisation.
Get unlimited access for just £1/month
Unlock full access to hundreds of features at the forefront
of the industrial gas sector with a gasworld subscription
