The European Commission intends to substantially weaken the EU Emissions Trading System for the energy sector and industry (EU‑ETS‑1), according to the “Handelsblatt” mid‑week edition citing senior EU officials. The market‑based mechanism is considered the EU’s most important climate‑policy tool because it caps the amount of CO₂ that can be emitted by limiting the total number of certificates.
The Commission plans to increase the supply of available certificates relative to earlier projections, which would lift CO₂ emissions. Today the number of certificates is reduced by 4.4 % each year, with the allocation running out by 2039. The new strategy would slow this decline, allowing industry to emit more for a longer period.
In addition, the Commission would extend the period of free certificate allocation. Previously it had outlined a sharp reduction in free allotments starting this year, and from 2034 the free distribution for certain sectors would be discontinued entirely.
In Germany, proceeds from the CO₂ trading scheme fund the Climate and Transformation Fund. The money supports renewable energy expansion, electric mobility, building energy efficiency upgrades, hydrogen projects, and climate‑friendly industrial processes. Reduced trading revenues would therefore affect financing for climate protection initiatives in other areas.
