The European Parliament’s Committee on the Environment, Climate and Food Safety has proposed amendments to EU Emissions Trading System (EU ETS) rules governing free emission allowances for industrial heat and fuel use. The amendments, dated 20 October 2026, concern revised benchmark values for 2026–2030 and aim to provide additional protection against carbon leakage.
The committee proposes increasing the allowances available for free allocation under heat and fuel benchmarks. Its amendments refer to approximately 88 million allowances available for 2026–2030, alongside an additional 11 million allowances from reductions in free allocation. The proposal indicates average heat and fuel benchmark values of 41.4 and 37.3 allowances/TJ, respectively, representing an indicative 12.5% reduction compared with 2021–2025.
The amendments would also redistribute allowances resulting from reductions in free allocation. One-third would support additional free allocation, one-third would be transferred to the Modernisation Fund, including for investments in district heating system modernisation, and the remaining third would go to the Innovation Fund.
Another proposed change would introduce sector-specific fuel sub-benchmarks where significant discrepancies exist between EU-wide benchmarks and the emissions performance of particular industrial processes. These sub-benchmarks would be based on the average greenhouse gas emission intensity of the 10% most efficient installations in the relevant sector. Priority would be given to activities classified under NACE codes 23.20 and 23.31.
The amendments also propose reducing the maximum annual benchmark reduction rate for 2027–2030 and establishing procedures for determining sector-specific benchmarks. The European Commission would be required to define relevant criteria within three months and establish sub-benchmark values within six months of publication of the amending regulation.
The measures remain proposed amendments to the regulation rather than adopted EU ETS rules.
