BusinessEurope calls on EU to reconsider scrapping free emission allowances

The BusinessEurope business association has called on the EU to reconsider the abolition of free carbon allowances. This is stated in a corresponding statement by the association.

BusinessEurope has supported the central role of the ETS in the bloc’s post-2030 climate program as a key market instrument for achieving climate neutrality by 2050. However, the business association notes an alarming situation for the EU’s competitiveness.

«Businesses are facing rising costs and fierce global competition, while the conditions that would make decarbonization a good business case are mostly missing. The ETS review should be adapted to the current challenges and the post-2030 context,» the document says.

Among other things, the association insists on introducing flexibility into the emissions trading system.

BusinessEurope also believes that the EC should review the planned phasing out of free allowances for all sectors. The association notes that if the CBAM proves ineffective in the assessment provided for in its regulation (to be carried out in 2027), the phasing out of free allowances for sectors covered by the mechanism should be postponed. This must be taken into account when revising the ETS.

In addition, an expanded list of sectors prone to carbon leakage and a more realistic comparison methodology are needed, as well as the abolition of conditions for free allocation of quotas.

The association notes that the mechanism for compensating indirect costs should be retained after 2030, extended to more sectors, and applied in more member states. To avoid carbon leakage in the maritime and aviation sectors, consistency with global trends must be ensured.

The European Commission intends to propose a review of the ETS in the third quarter of 2026. Under current policy, free CO2 emission allowances, which mitigate industry costs, are to be phased out by 2034.

It should be recalled that carbon prices fell in February amid calls for a review of the European emissions trading system.ми.