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The European Union is set to revise its Emissions Trading System (ETS) to alleviate pressure on companies while maintaining climate goals. Ahead of a summit, the European Commission will unveil details in Q3 2026 that aim to moderate carbon prices and extend the timeline for emissions reductions for 10,000 installations.

This shift in strategy is driven by concerns over competitiveness and geopolitical pressures, particularly from China. The Commission is considering maintaining free CO2 permits for industries to prevent carbon leakage, and the current market needs redesigning to meet the EU's 2040 emissions target of an 85% reduction. Analysts predict carbon prices could rise significantly by 2040, necessitating adjustments to avoid price spikes.